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WWE Just Gained Full Control Over Its Broadcast Contract Negotiations

Jan 9 2014, 8:26am CST | by

WWE Just Gained Full Control Over Its Broadcast Contract Negotiations
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According to expert Chris Bevilacqua on an October episode of Forbes SportsMoney on the YES Network, WWE is the most dominant sports entity in the Unites States, second only to the NFL. And with total yearly revenue topping out at $480 million in 2012, there’s no denying the company’s a monster. Currently, the sports entertainment giant is in negotiation with various networks to host flagship programs RAW and Smackdown (among others) following the conclusion of the company’s current contract with NBC|Universal. But a recent announcement made at this year’s Consumer Electronics Show (CES) could give Vince McMahon all the leverage he needs to control the conversation behind closed doors.

To a packed crowd at last night’s presentation, various members of the WWE roster unveiled the soon to be launched, WWE Network, which will be run in partnership with MLB Advanced Media. The network will be new-media based and grant users access to both on-demand and live content (including the company’s monthly pay-per-views) for just $9.99 per month with a 6-month commitment. All of which will be accessible through devices including Roku, Apple TV, Playstation and X-Box, in addition to PCs and smart phones. For any audience members who regularly purchase the monthly pay-per-view events that can run upwards of $50 an order, the yearly savings are a no-brainer.

But what does this mean for the current negotiations? It means WWE now holds all the cards. Recent broadcasts of Monday Night Raw have averaged 4 million viewers across its three hour programming block, which also happens to be the exact amount of subscribers required to match WWE’s 2012 revenue. It’s the kind of data the company needs to put itself in a perfect position to name its own price

Live programming has become a hot commodity for new-media companies, with everyone from Netflix to Microsoft trying to get in on the action. Seeing this push for demand, many major sports leagues have gone so far as to launch their own internet services to broadcast games directly to fans for a small fee. But, except for the NFL, none of them hold the size audience WWE does. Recent data points to there being at least one WWE fan within 50 million television households in the U.S. alone.

WWE knows it can hold its own, and this is their way of proving it. It’s no accident the company waited until the beginning of 2014 to make this announcement. Right now, nearly every major network wants WWE under its banner (its 18-49 ratings are just too strong to ignore), but it’s not enough to just have strong ratings. WWE wants to prove it can support itself independently. To McMahon and his team, this is all one giant game of chess, and they just called “check.”

Source: Forbes

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