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WWE's stock smackdown is a blow to Vince McMahon's credibility

  • World Wrestling (NYSE:WWE) shares plunged 43% Friday after CEO Vince McMahon failed to wring a huge increase in TV fees from NBCUniversal, raising questions about WWE's future and highlighting a shortcoming in McMahon's leadership style: While an unbeatable promoter, he has at times struggled to master corporate negotiations and dealings with Wall Street.
  • McMahon took the TV negotiations personally: He played hardball in talks with NBCUniversal, demanding to more than double the value of their previous ~$100M deal, but he wound up renewing the deal with an increase analysts estimate at 50% - nice, but well short of what Wall Street had come to expect, and what McMahon may have bragged he would get.
  • "The bottom line is no other entities were willing to pay a higher price tag for the programming than its current partner.” analyst Daniel Moore says.
  • Despite being short WWE two months ago, Lemelson Capital is now long WWE and calling for the board to replace the management team or explore a sale of the company.

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Comments (7)

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User 195396 profile picture
IMHO, Vince is not the brightest bulb on the tree but hey, he has tons of money, maybe less now, but still-maybe Linda is the brains-interesting to follow.
Good luck to Lemmingson ousting McMahon with his 52% +/- of the stock. Who would they install to run the Company anyhow? It's a headline grabber at best. That being said, Mgmt really blundered in setting expectations. Aside from the optimistic TV contracts hype, they originally said 1mm subscribers to WWE Network to break even, now 1.4 to 1.5mm to break even or small profit. Vince really "jumped the shark" with the "Kiss my Ass Club" circa 2000.
KSR FLMI profile picture
Hopefully, Hulkamania can run wild just one more time and save the WWE.

Long WWE.
If you take out October 1st 2013 to May 15th 2014, just drawing a straight line from Sept 30th to May 16th, the chart pretty much makes sense.
What was WWE doing in the 30s, rising 200% anyway?

Payout ratio 200%?
Falling earnings?
Falling equity?
SG&A as a percent of revenue rising 700 basis points over 3 years while cost of revenue also rose 500+ basis points?

Justifying WWE at 10x price/book 2 months ago was an EMH (efficient market hypothesis) supporter's nightmare.
User 195396 profile picture
Timing on Lemelson going long not so good-I guess I will never understand the attraction here but there is a lot I do not understand these days.
SoldHigh profile picture
Good. Content providers have gotten too greedy.
Does this mean Linda can't afford to run for the senate again?
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