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Speaker 1: Hello, and welcome to the Bloomberg Business of Sports podcast.

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Speaker 1: We explore the big money issues in the world of sports.

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Speaker 1: Sign Michael Barr. I'm Dan Schwartzman. Oh, we're gonna talk

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Speaker 1: about wrestling or wrastling as we used to call it

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Speaker 1: back in Detroit many years ago. Let's call it sports entertainment.

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Speaker 1: Goliath WWE seeking buyers for its media empire, but returning

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Speaker 1: chairman Vince McMahon's nine billion dollars asking prize for WWE

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Speaker 1: maybe too much for prospective buyers to grapple with. Joining

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Speaker 1: us to talk about this massive asking price is Bloomberg

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Speaker 1: Technology and Media analyst Githa Raganathin. So, Gaithera, let's ring

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Speaker 1: the bell. See we're into wrestling. Yeah, absolutely, Gaither, Welcome

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Speaker 1: to the Bloomberg Business and Sports. Thank you so much. Well,

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Speaker 1: let's let's start with the obvious here. It's like nine

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Speaker 1: billion dollars now, I mean, I know it's an empire,

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Speaker 1: but that's a lot of money. It sure is. It's

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Speaker 1: about a thirty five percent premium to where the company

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Speaker 1: is currently trading there at about six and a half

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Speaker 1: billion in enterprise value, so definitely a fairly rich asking price.

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Speaker 1: And if you just kind of look, you know, in

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Speaker 1: terms of multiples and what it means for the rest

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Speaker 1: of the media landscape. So it translates to about twenty

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Speaker 1: two times ev to forward ebit down multiple. That's at

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Speaker 1: least twice the median for general entertainment companies including you know, Disney, Netflix,

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Speaker 1: Warner Brothers, Paramount. So definitely a pretty big premium there.

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Speaker 1: But then if you look at it versus just pure

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Speaker 1: entertainment companies that don't have any legacy TV networks, So

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Speaker 1: if you look at it versus an endeavor or a

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Speaker 1: formula one, the multiple then seems to look a lot

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Speaker 1: more reasonable and justifiable. Isn't this the perfect storm though?

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Speaker 1: In terms of timing for WW, what I mean by

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Speaker 1: that is you have the Saudi's throwing money around in

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Speaker 1: sports like it's growing on trees, right. I mean, they've

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Speaker 1: invested in soccer productions in their country, you know, boxing

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Speaker 1: matches as well. They're probably willing to throw a ton

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Speaker 1: of money here. Also, sports entities are just you know,

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Speaker 1: the value of them just continue to rise when you

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Speaker 1: talk about teams for instance, So for the WW to

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Speaker 1: hit the market now, isn't this kind of the perfect timing. Oh,

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Speaker 1: it absolutely is and for them, you know, you made

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Speaker 1: some excellent points in terms of valuations. When we kind

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Speaker 1: of look across the landscape at you know, recent rights

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Speaker 1: deals that have come up, We've seen at least fifty

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Speaker 1: to seventy percent increases in recent renuals. So if you

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Speaker 1: just kind of look at the media landscape, I mean,

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Speaker 1: this is an area where investors tend to be really

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Speaker 1: really bullish. Sports is the glue that kind of holds

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Speaker 1: the entire TV ecosystem together, and so for WWE in particular,

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Speaker 1: this is a great time because this is you know,

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Speaker 1: their new TV rights. So so they currently have deals

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Speaker 1: with both NBC for Raw as well as with the

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Speaker 1: Fox for SmackDown, and those deals are five year deals

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Speaker 1: that come up for renewal in twenty twenty four. But

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Speaker 1: actually the renewal process starts right now. I mean, they're

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Speaker 1: going to start their talks right now. The deal ends

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Speaker 1: in twenty twenty four, and so they want to kind

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Speaker 1: of I guess from that perspective too, that the timing

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Speaker 1: kind of makes sense for them. I want to talk

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Speaker 1: about Vince McMahon's daughter, Stephanie mcmahn, because there was a

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Speaker 1: moment when she ran the WWE, and she did a

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Speaker 1: fairly good job, and it's you know, I wonder, you know,

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Speaker 1: with the unfortunately the turmoil that has happened now, you know,

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Speaker 1: with the McMahon family, how much of an impact will

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Speaker 1: that play on the price of them trying to sell

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Speaker 1: the WWE. Yeah, it's a really interesting question. I mean,

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Speaker 1: I'm not sure if Vince McMahon's return is necessarily a

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Speaker 1: good thing or a bad thing. So, you know, kind

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Speaker 1: of with all the controversies surrounding him, you know, I'm

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Speaker 1: a little skeptical about certain parties and whether they want

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Speaker 1: to engage. And also we really don't know what his

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Speaker 1: intentions are, so I mean, you have to think about it.

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Speaker 1: This he's a founder, he is you know, he's the

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Speaker 1: former CEO, He's the creative force behind this company. This

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Speaker 1: is his life's work. I mean, is he ready to

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Speaker 1: kind of just walk away from it all, I'm not

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Speaker 1: so sure. And if he kind of lingers on after

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Speaker 1: a sale, again, I'm not sure whether you know, partners

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Speaker 1: would really like that or not. So it's a little

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Speaker 1: bit of a gray area. And you know, I think

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Speaker 1: investors also kind of wonder what exactly his intentions are

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Speaker 1: here or whether this was just a way for him

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Speaker 1: to kind of get back to the company and not

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Speaker 1: really seld the company. Again, I'm not really sure, but

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Speaker 1: Keith that said, though, McMahon hasn't been a silent owner, right,

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Speaker 1: I mean, he's embedded himself his family within storylines and

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Speaker 1: let's face it, regardless of what he's been outside of

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Speaker 1: the ring, and again it doesn't seem like a great guy.

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Speaker 1: The reality is he is a part of the storyline.

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Speaker 1: So if somebody buys him, and this is a hypothetical,

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Speaker 1: I guess, does it make sense to kind of sideline

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Speaker 1: the McMahon's completely or is it possible to continue to

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Speaker 1: have them play a role because of the fact they're

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Speaker 1: so embedded. Yeah, so it kind of depends who buys them. Right,

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Speaker 1: So if you have like a Comcast I'm not necessary,

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Speaker 1: or even a Netflix for instance, I'm not so sure

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Speaker 1: they would want all that controversy. Yes, you would want.

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Speaker 1: You know, Peter Levesque, who currently runs the creative and

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Speaker 1: the content he has done just a fabulous, fabulous job

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Speaker 1: with that and he's kind of really revamped the programming significantly,

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Speaker 1: So I think they would definitely want him to stay on,

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Speaker 1: There's no doubt about it. But as for the rest

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Speaker 1: of the you know, for Vince, I'm I'm not so sure.

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Speaker 1: Now again, if the potential partner was an Endeavor, it

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Speaker 1: might be completely different, because I think that actually makes

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Speaker 1: for a nice fit. You know, you look at Endeavor,

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Speaker 1: which owns UFC, which is closely associated with Dana White

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Speaker 1: and Dana White still runs UFC, and so you know,

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Speaker 1: there you kind of have um, you know, you could

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Speaker 1: have that nice um fit between WWE McMahon and then

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Speaker 1: you have UFC and Dana whiteen and you know there,

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Speaker 1: I think he can continue to be involved, But with

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Speaker 1: other partners, I'm not so sure. One thing about the

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Speaker 1: WWE compared to like sport like the NFL, or or

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Speaker 1: the NBA or whatever, you the WWE, if you don't

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Speaker 1: have the star wrestlers, you don't have a product. Yeah, yeah,

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Speaker 1: And I just wonder now, it's what are some of

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Speaker 1: the participants thinking about, who are the wrestlers in the

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Speaker 1: w w E about this sale? Now that's a great question. Um,

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Speaker 1: you know. So obviously they have had a lot of

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Speaker 1: success recently with their programming and we've kind of seen

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Speaker 1: that even with you know, TV ratings, and arguably TV

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Speaker 1: ratings are across the board, but if you look at

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Speaker 1: you know, these two pieces of programming, both Raw and SmackDown,

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Speaker 1: they've they've actually held up relatively well. So they're down

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Speaker 1: about thirty percent over the past ten years, but if

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Speaker 1: you just kind of look across the board in terms

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Speaker 1: of other properties, they've held up really really well. So

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Speaker 1: I think their current strategy is working well, and so

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Speaker 1: obviously they will want to kind of, I think continue

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Speaker 1: with that going forward as well. But again it really

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Speaker 1: depends on who is willing to kind of make a

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Speaker 1: bid for the company either. Before I gets my question,

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Speaker 1: I do have to ask you this. Doing your research

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Speaker 1: for this article, have you now become a huge wrestling fan? Admitted? Admitted,

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Speaker 1: Come on, unfortunately, No, I mean, yeah, I need to

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Speaker 1: get a little bit, a little bit deeper into it. Yeah,

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Speaker 1: I got to ask you. You brought up them deavor earlier.

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Speaker 1: The company that's me kind of makes sense. They may

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Speaker 1: not have the cashlow to make a deal by themselves.

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Speaker 1: You know, I'm impressed with what Liberty Media is done

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Speaker 1: in terms of you know, buying Formula one and making

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Speaker 1: the deal with Netflix for that great show a Drive

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Speaker 1: to Survive. They've really kind of increased the value of

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Speaker 1: that what they've done with ownership and Michael, I mean,

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Speaker 1: I think you've seen it in sports with the Atlanta

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Speaker 1: Braves as well. Is Liberty Media one of those companies

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Speaker 1: that kind of might be sitting back, They're looking and saying, well,

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Speaker 1: if the price is right, or we find the right investor,

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Speaker 1: this could be a product that we feel there's growth too. Oh. Absolutely.

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Speaker 1: I mean if you think of John Malone and Greg Muffe,

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Speaker 1: I mean, these they're really media veterans. They have extensive

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Speaker 1: track records at maximizing media valuations and they are really good.

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Speaker 1: You know where they really have a lot of expertise

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Speaker 1: is they go out acquire these media assets for less

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Speaker 1: than ten billion, and that's where kind of WWE fall

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Speaker 1: square right into that. But you look at all their

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Speaker 1: prior acquisitions, whether it's a Formula one, whether it's a

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Speaker 1: serious x Pandora, I mean, all of they've had so

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Speaker 1: much of success with all of those companies. I think

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Speaker 1: it definitely could provide a roadmap for, you know, a

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Speaker 1: future strategy with WWE as well. I know we're running

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Speaker 1: out of time do you apologize? But I always wonder

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Speaker 1: about the WWE because you know, you're going up against

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Speaker 1: Dana White and his product, and you know, back in

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Speaker 1: the day, you just had wrestling and that was it.

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Speaker 1: Uh if you wanted, you know, the wrestling entertainment. Uh,

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Speaker 1: where do you see the future of wrestling in general

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Speaker 1: as we head forward? Do we do we keep the ring?

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Speaker 1: Do we keep the octagon? What's going to happen? I

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Speaker 1: mean it's held up really really well. I mean, if

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Speaker 1: that's what you know, there's obviously this there's a great

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Speaker 1: market for it. Um. You know, obviously maybe a little

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Speaker 1: bit lower in terms of total TV viewership versus you know,

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Speaker 1: back in the heyday, but it's still it's still very

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Speaker 1: very valuable. IP. It translates really well. And there is

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Speaker 1: the super fan base that you have that's extremely engaged,

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Speaker 1: you know, that tunes into the programming, you know, very

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Speaker 1: very frequently. UM, So I think it definitely, you know, UM,

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Speaker 1: as we kind of look forward, these these TV rights

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Speaker 1: or you're just the media deals in general hold a

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Speaker 1: lot of value for any partner that's either going to

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Speaker 1: acquire it or partner with it. So you know, definitely,

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Speaker 1: future definitely seems bright for all sports properties and definitely

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Speaker 1: WWE as well. Bloomberg Technology and Media analyst Keith rock

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Speaker 1: Enough and you know what, Dan getha, They're gonna make

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Speaker 1: her a wrestling fan. He's going to confer. I can

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Speaker 1: see it. One day. Keith is out and in this

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Speaker 1: out there and then watching the crowd the Hawkster T shirts,

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Speaker 1: Oh yeah, yelling give them a bild driving watching Ron SmackDown. Keith,

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Speaker 1: thank you so much for joining us here on the

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Speaker 1: Bloomberg Business of Sports. Thank you. This has been the

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Speaker 1: Bloomberg Business of Sports podcast. We explore some of the

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Speaker 1: big money issues in the world of sports on Michael Bar.

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Speaker 1: You can follow me on Twitter at Big Bar Sports

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Speaker 1: and I'm Dan Schwartzmen follow me at Dan Underscore Schwartzman.

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Speaker 1: By the way, you can download this show all the

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Speaker 1: podcasts every Monday, Wednesday and Thursday and download the show

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