WWE Stock Plunges Over 20% – Details Inside

Earlier today, WWE and NBC/Universal announced a new multi-year deal for RAW and SmackDown to continue airing on USA Network and SyFy. The press release did not note the length of the contract, the terms of the deal or whether SmackDown will stay on Fridays or go live. It is worth mentioning that SmackDown is referred to as “Friday Night Smackdown” although that is the full name of the show on SyFy, so it doesn’t preclude the possibility of it going live.

The agreement also notes that Total Divas will continue to air on E!, which isn’t a surprise.

Vince McMahon said of the deal, “We are proud to continue our long-standing partnership with NBC/Universal given their premiere position in the marketplace and vast promotional platforms. We are excited about our future as we further the reach and popularity of our live, family-friendly entertainment programming 52 weeks a year.”

The press release was light on details and doesn’t answer whether RAW and SmackDown will get earlier debuts on the WWE Network, which was one of the last sticking points in negotiations.

More information will surely filter out, but as of now WWE is officially set to continue on their current networks for the next several years.

With that being said, WWE’s stock PLUNGED following the announcement of their deal with NBC/Universal. The stock closed at $15.31, which was up 3%, but was down $4.24 (down a HUGE 21%) in after-hours trading. The reason for this is the announcement that the new deal will be for $200 million, which is contrary to Vince McMahon’s statement on last year’s earnings call that they expected to at least double the value of their TV deal. Last year’s numbers were about $160 million.

You can see the full financial details in a press release here. The company is using a bit of wordsmithing (which may be perfectly reasonable) in the release, noting that the $200 million number is “representing an increase of more than $90 million, that is nearly three times the increase achieved in the previous round of negotiations.”

The release also notes that there are about 77 million broadband homes between the US and certain international markets that “have an affinity” for WWE content and that based on the percentage of homes who have signed up for the WWE Network, they should have between 2.5 million and 3.8 million subscribers. They estimate that 1.3 million to 1.4 million subscribes will be required for the network to offset the “complete cannibalization of the company’s Pay-Per-View and SVOD businesses” as it would generate about $40 million, on par with the company’s Pay-Per-View and SVOD businesses in 2012.

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