The WWE pro wrestling empire is now officially for sale, and Netflix is a known potential suitor. And the streaming service should be taking this opportunity very seriously.
No, don't laugh.
I've heard chuckles about this possible purchase from colleagues, but even CNBC lists Netflix as one of the possible buyers. This might sound weird, but WWE's back catalogue of WrestleManias and SummerSlams would be a perfect addition to Netflix's library — though its live events are the bigger reason for a deal with Netflix to happen.
How did we get here? While whispers of WWE being for sale have kept its stock price healthy for years, 2021 saw former CEO Vincent Kennedy McMahon "retire" in July of 2022. This followed reports of McMahon spending more than $12 million of his own money to get four women to sign NDA's to silence their "allegations of [his] sexual misconduct and infidelity."
In December, a Wall Street Journal report revealed McMahon was plotting a return to WWE, believing he'd been given bad advice to step down. This same report revealed McMahon had been dealing with new legal demands from former wrestling referee Rita Chatterton (who accused McMahon of rape) and a spa manager that accused him of a 2011 assault.
Cut to last Friday (January 6), when McMahon announced he was back as executive chairman, and stated "WWE is entering a critical juncture in its history with the upcoming media rights negotiations coinciding with increased industry-wide demand for quality content and live events and with more companies seeking to own the intellectual property on their platforms." This is long-hand for saying "we're thinking about selling WWE." McMahon stated his involvement, as controlling shareholder, was crucial to such a deal. Whether it is or isn't is debatable.
Things got more suspicious yesterday (Tuesday. Jan. 10), when recently re-instated WWE co-CEO Stephanie McMahon shockingly announced her resignation from the company (which may be her renewing her May 2022 leave of absence). This was followed by McMahon becoming the Executive Chairman of the Board ... again.
Editor's note: At the time of publication, unconfirmed reports of WWE's sale to Saudi Arabia's Public Investment Fund have been swirling.
What we do know, though, is that a big list of media megapowers could be footing the bill, were a sale to happen. This stack of mega-rich companies includes Amazon, Disney, Comcast, Fox, Netflix and Warner Bros. Discovery. Some, of course, are more likely than others (I'll get to that below). Here's why Netflix, though, should definitely pursue a purchase of WWE.
Netflix needs a WWE to help staunch the bleeding
Netflix's 2022 was seen as a year of loss and stagnation. Not only did the company have its first financial quarter with an overall loss in subscribers in more than a decade, but its estimated subscriber growth for Q4 2022 was only half the amount that joined in Q4 2021.
McMahon's argument that he needed to be a part of a sales process or any licensing deal raises some doubt. WWE President Nick Khan, who handles these big deals, was installed by Vince on the board. Yes, McMahon owns a controlling amount of shares in WWE, but the company has run well (if not better) without him in the last six months. This has led to speculation that McMahon wants in on these negotiations to broker a deal where he regains more control of the company after a purchase. And it also makes one wonder what Vince's role would be in the company if nobody buys WWE.
Yes, even while Wednesday, Stranger Things 4 and Monster: The Jeffrey Dahmer Story posted record-high viewership numbers, Netflix has been in trouble. To solve its problems, Netflix is doing a few different things, including getting into live events (starting with a live Chris Rock standup special) — and it's reportedly exploring airing live sports, such as Formula 1 racing.
Everyone knows live sports are the king of content these days, as the NFL live streams continues to rule the ratings (and WWE can often be found as a runner-up to Monday Night Football).
In February 2022, WWE reported that 3.5 million paying Peacock subscribers watch WWE content — and that's just in the U.S., the only region where Peacock has WWE rights. (Peacock is the exclusive North American distributor of the WWE Network and WWE's live-streamed events.) It's unclear how many of those viewers already have Netflix accounts, but this is a strong sign that there's a decent audience for the content overall.
That said, this past October, Netflix reported around 223 million subscribers worldwide, so a purchase of WWE won't be a silver-bullet fix. Nevertheless, I bet WWE being available with Netflix would cause plenty of former fans to give the streaming service another chance. Given Peacock's reported 18 million paid subscribers, WWE would open itself up to a wider audience (by a magnitude of over 10x as many members) by shifting to Netflix.
That said, WWE is a valuable acquisition for a streaming service because it targets one of every service's biggest problems: churn (subscribers canceling and returning, thus making profits less reliable). While the WWE audience might be upset if Vince McMahon returns full-time (more on that chance below), the audience is likely pretty stable.
Unlike most live sports, pro wrestling is a year-round occurance. There is no off-season. This might be terrible for workers and potentially lead to more injuries without time off, but it also means that I have little expectation that I'll ever churn my way out of Peacock, as WWE PPV exclusivity is one reason why it's one of the best streaming services. For as long as they have WWE, and for as long as I feel OK supporting the WWE, I'll have Peacock.
Yes, you can buy that kind of audience stability. And the more Netflix can turn its existing subscribers into members of the WWE audience, the more it can possibly retain them.
Also, WWE (save for McMahon's legal troubles) fits perfectly into the Netflix family of content. Netflix doesn't attack any particular "brow," but its exclusive originals and especially reality TV programming do suggest the company is open to junk-food viewing. And I say that as someone who buys tickets to WWE events.
Can Netflix afford WWE?
While the WWE is not going to be cheap for whomever buys it, its market capitalization of $6.64 billion at the time of publishing suggests it would cost around $8 billion total. Netflix spent around $17 billion per year in 2022 alone, though, so this kind of deal wouldn't be done lightly.
That said, since Netflix isn't in the live streaming game just yet, there is admittedly a lot of money to be made from owning WWE and selling its rights to other companies. WWE's deal with Fox — which brought the SmackDown show to Fox affiliates on Friday nights — was reportedly valued at $1 billion total over five years. Its current deal with NBCUniversal is around $265 million per year. And the renegotiated deals referenced in McMahon's statement will likely yield higher results for WWE — or whomever sells it.
That means, the right bidder can start to make their money back immediately once TV deals are finalized.
Outlook: Netflix isn't the most likely suitor
There are two companies I think are more likely to buy WWE than Netflix.
Amazon, with a market cap of $916.82 billion USD — and a proven track record with hosting Thursday Night Football — Amazon seems like a very viable suitor for WWE. The rumored $8 billion cost is chump-change to Jeff Bezos' brand, and it's easy to see the WWE's Roman Reigns sit next to Amazon's Reacher in the lineup.
Comcast, NBCUniversal's parent company, is a clear favorite. NBCU's already in bed with WWE, paying around $200 million per year for WWE Raw on USA, and the same amount for WWE on Peacock. If Comcast/NBCU believes it will be sticking with WWE for a long-term future, why not buy now and spread that investment over the next however-many years? WWE's other money-making opportunities (for example, it has a toys deal with Mattel) are icing-on-top income.
That said, the possibility of a WWE to Netflix deal should not go ignored. The closer you look, the more opportunities arise. Netflix could advertise its originals to WWE audiences around the world, during ad-breaks and before the shows, as the company tours around the world. This deal is far from a lock, but it's the kind of move that would reshape how people see Netflix (and WWE).
That said: I'd just like to note that buyers should beware any contracts that give Vince McMahon a way to retake hold of WWE's direction. As a viewer who has his pulse on the wider WWE audience's opinions, the WWE without Vince McMahon is a far more interesting and compelling WWE. His version of the WWE has been stale and repetitive for many more years than fans who keep up with the product would like to admit. On top of that, reports have immediately surfaced that morale has plummeted backstage since his return. I haven't bought tickets to WrestleMania this year, and the news of Vince's return almost made me glad I haven't.