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World Wrestling Entertainment: Acquisiton Possibility

Summary

WWE has hit record highs in terms of revenues and is still growing internationally.

The UFC sets a strong precedent for the possibility of a sale.

A sale would make strategic and economic sense.

There has been a lot of talk in recent years/months that the WWE might be potentially sold. However, skeptics often cite that Vince McMahon, a man who loves being in control, would never do such a thing. The sale of WWE would make sense, especially given the recent acquisition of UFC for $4 billion by WME/IMG. In 2015, WWE had total revenues of $658.8 million (a company record) and UFC had revenues of roughly $600 million. Moreover, UFC's net profit was $157 million and WWE's was approximately $24.4 million. Besides solid fundamentals, WWE is an iconic brand with world-renowned properties, is the clear leader in sports entertainment, and has a global presence that is embodied by the growing WWE network.

Moreover, the network recorded approximately 1.52 million averaged paid subscribers for the second quarter 2016 (a 25% increase YOY). Not to mention, WWE is expanding its global presence, in a major way, through a multi-year content distribution deal in China with PPTV, the return of a WWE live event to Shanghai in September and the signing of the first-ever Chinese talent.

This article will argue that WWE could be purchased within the next couple of years. The following reasons will be outlined: recent willingness from management to engage in talks, signals from Vince McMahon, the success of the UFC, and the general economic/operational sense it would make.

Management Signals: George Barrios said on the second quarter 2016 conference call that in regards to the sale of the company "they are always open to listening to ideas if that's what's best for fans and employees." This statement may seem harmless, but in my opinion it is not something Barrios would have been allowed to say if it was not true. This goes back to reports that John de Mol, a reality TV...


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