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Here's Why It Might Be Time For WWE To Consider A Sale

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World Wrestling Entertainment, Inc. NYSE:WWE, Comcast Corporation NASDAQ:CMCSA - Here's Why It Might Be Time For WWE To Consider A Sale

World Wrestling Entertainment, Inc. WWE has been a family-controlled business for nearly a century. However, there have been some rumblings recently about whether the sports-entertainment company should put itself up for sale. Following last week's Comcast Corporation CMCSA-Dreamworks Animation Skg Inc DWA $3.8 billion news, BTIG thinks it's time for WWE to seriously consider it.

Success In New Media

"Virtually no traditional media company we cover has found a way to consistently reach audiences on digital platforms," BTIG analyst Brandon Ross said in a note, citing the firm's critical stance on traditional media for its lack of understanding digital (especially mobile) and social content.

"WWE had over 8 billion views of their content on YouTube in 2015. In H22015 it was the number one creator on YouTube," Ross said. "In recent months, Facebook video streams have taken off, as well. Tubular Labs estimated WWE had over 300 million video streams in Q12016, growing rapidly. In addition, WWE has over 600 mm social media followers around the world."

He went on to say WWE has been one of the few media companies with a successful direct-to-consumer relationship, as well as a large global market; the WWE Network has a little over 1.8 million subscribers, 1.45 million of whom are paid subscribers.

Who Should Be Interested?

Ross compared WWE to Walt Disney Co DIS, for its ability to monetize across multiple channels, such as live events, consumer products and gaming. Ross mentioned WWE could easily be integrated into a theme park.

Among those that would be natural suitors include Comcast (with whom WWE already has a relationship under its NBC subsidiary), Disney and Twenty-First Century Fox Inc FOXA.

"We believe there could be significant cost savings if WWE was part of a larger organization," Ross continued. "While the company generated $61 million in EBITDA in 2015, it had corporate expenses of $165 million. We believe there would be significant opportunities to cut costs both within corporate expenses and other parts of the business if WWE was integrated into a larger media company."

The McMahons Stay

One caveat? Vince McMahon and his family should have a significant stake in the business. Ross questioned whether WWE's business could be properly handled by anyone else.

"Perhaps the best course of action would be a sale of a stake in the company with a put option given to the McMahon family for an eventual full sale – setting up an orderly transition for both buyer and seller," he concluded. "That is, if WWE should do something at all."

BTIG has a Buy rating and $25 price target on WWE stock, which traded up more than 5 percent to $17.51 on Monday.

DateFirmActionFromTo
Apr 2016Pacific CrestMaintainsOverweight
Apr 2016KeyBancMaintainsOverweight
Mar 2016Pacific CrestInitiates Coverage onOverweight

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