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by Brian Sozzi

I grew up watching wrestling. There, I said it. Previously going by the name World Wrestling Federation, sitting back with dad and watching wrestling was a tradition that I have not forgotten (almost feels like it was yesterday). There was my trip to the 1991 "Summerslam" event at Madison Square Garden, where dear old dad snagged me a bright orange baseball cap as a souvenir. There was a family venture to Nassau Coliseum later in the year to watch a regular weekend event, where mom plunked down the bucks for a Hacksaw Jim Duggan foam finger and corresponding t-shirt. There was even a ritual where my dad, brother, and yours truly picked up ice cream on Saturday nights and viewed "Saturday Night Main Event", yearning for a glimpse of Hulk Hogan walking down the entrance ramp to "I am a Real American."

At my advanced age, where work and real life has replaced momentary television watching, I have obviously lost track of the now World Wrestling Entertainment (NYSE:WWE). Occasionally I tune in, but the new generation of wrestling characters is lacking something. I think they are spoiled prima donnas to be honest, missing the determination to achieving the true mastery of their craft like the immortals of yesteryear such as Bruno Sammartino, Hulk Hogan, and Triple H. Different discussion, nevertheless. So, it was with a sense of sadness and nostalgia that I read Bill Alpert's piece in Barron's "Popular Vote Against World Wrestling." Bill did a great job explaining the financials surrounding WWE and its stock, including (1) on a P/E multiple basis, the stock trades at a 45% premium to the S&P 500 using forward earnings; (2) 10% dividend yield is likely unsustainable; and (3) pay-per-view buys are down. Bill was understandably bearish on WWE as an investment, as am I. However, I wanted to flesh out Bill's argument a bit more, especially as my good friend asked in response to reading the piece "will the WWE fold?"

Talent
WWE's franchise is built around its in-ring talent. The company had the 1980s generation of wrestlers running things for some time, followed by the Triple H generation gradually taking hold (but never really as popular as the 80s guys in my view), and now a new crop of guys that are not making connections with the fans because they don't do the intangibles. Tired storylines plus uncompelling characters are not a recipe for success. In the next 10 years, we are likely to see the stars of the 80s stars fade into memories, the Triple H generation retire or move behind the scenes, thereby leaving the new crowd that is currently failing to excite long-time watchers and bring in new viewers.

Tradition
Many baby boomer men grew up viewing wrestling before the bright lights, large arena crowds, and $49.99 pay-per-view events. In turn, that tradition was passed down to the children of baby boomer men, such as me. The generation of 20 somethings has been exposed to so many other attention grabbing things, chiefly Facebook, MySpace (NASDAQ:NWS), in depth videogames, iPods, iPads (AAPL both), and countless other technological miracles. It's that competition from new forms of media, which did not exist for baby boomer men that make the passing of the wrestling watching torch unlikely for my generation. Forget about my kids when I have a few, they are likely to clamor for a jetpack than a night out at a WWE event.

Other considerations
* Succession (Vince McMahon not getting any younger, and he is the driving force of the company).
* New forms of sports entertainment (such as UFC).

Final Note

Is WWE about to disappear in one year? No. Two years? No. Ten years? I say there is risk, despite there being a chance that Triple H drops a pedigree on me for muttering such a thought publicly.

Source: Story Behind the Story: Barron's Goes Negative on World Wrestling Entertainment