Seeking Alpha

Steven Borovay,...'s  Instablog

Steven Borovay, CFP
Send Message
My name is Steven Borovay and I have been investing in stocks for over 36 years. I am a CFP(R), licensed since 1988. I was a CFO/Financial principal (series 7, 24 and 27) of a retail brokerage firm, at one time a R.I.A. (Registered Investment Advisor) and worked as a Sr. Financial Analyst for... More
My company:
Bottomups.org
  • Netflix: A Model For WWE 0 comments
    Aug 1, 2014 9:49 AM | about stocks: WWE

    With the evolution in our market leading to high speed trading based on momentum, stocks move to extremes either up or down based on market evaluation of fact based news and/or speculation. In general, I prefer to hold stocks long term and might miss the buy in point due to these fluctuations. I can not out think a computer.

    Which brings me to World Wrestling Entertainment (NYSE:WWE). I've established a long term position due to the recent demolishing of the stock. When the stock went over 30 there was no rhyme or reason for this on a fundamental basis. When it failed to meet it's new subscriber base estimates and only came in 50% of what the expectation was for the new NBC/Universal Cable contract..bottom fell out of the stock. Again there was no rational reason as to why it dropped so much. The WWE new online venture, much like when Netflix made a conversion, was not going to go as smoothly as anticipated. Smooth transitions only happen on paper.

    If you read the Forbes Online article by Peter Cohan on 'How Netflix Reinvented Itself' from April 2013, you can see the similarities with WWE.

    (www.forbes.com/sites/petercohan/2013/04/.../)

    The World Wrestling Entertainment model should succeed for the following reasons:

    1. Fan base is too large in the US and they have only begun to tap the foreign base. This form of entertainment has had very high cable ratings for many years. I grew up with Freddie Blassie. Law of large numbers pertains as did it with my logic in investing in Facebook. Too many subscribers. Facebook just needed to monetize the large subscription base. WWE just needs to get a very small percentage of its exceptionally large fan base to subscribe to achieve break-even.

    2. The biggest compliant I've read from WWE fans is the site format. Fans have been left guessing as to when events are to appear. Old school.....WWE needs to think TV Guide.

    3. The fan base will realize it's financially a better deal to subscribe to streaming for a small monthly fee increasing the amount of content that includes PPV events. Those who fail to subscribe for the streaming now have to pay event fees that can equal a 4 month subscription to streaming.

    4. Two words....George Barrios. The man has the background to guide this company into the new media era. Listen to any CC. He knows what he's talking about and offers no excuses. He will take the required strategic actions to insure long-term profitability including cuts of excess staff, hiring key individuals, bringing on key board members (Laureen Ong) and being flexible enough to change direction to fit the long term goal.

    5. This analysis does not include WWE's other forms of revenue that should increase based on an expanded global presence.

    6. As in the case of Netflix, it will be difficult to predict the point in time that the WWE model will kick in and breakeven will be achieved, however, WWE has enough cash and access to cash that time should not be a major concern.

    7. Finally, from my all-time favorite movie, Field of Dreams, 'if WWE builds it, they will come'.

    Disclosure: The author is long WWE.

Back To Steven Borovay, CFP's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.