WWE stock was down nearly 7.5% on Wednesday, the biggest drop in a long time, and word now is that the drop was caused by “panic” over FOX’s interest in renewing WWE SmackDown.
LightShed Partners’ Brandon Ross and Rich Greenfield, who are frequently present on WWE investor calls, revealed on their latest podcast episode that a meeting was held earlier in the week, and Endeavor representatives expressed concern that FOX might not be a good partner for WWE.
The issue is that FOX is unwilling to pay the 1.75x renewal fee to keep SmackDown on their network. Ross went on to say that word of the meeting spread, causing a “complete panic,” which resulted in the stock drop.
Ross said, “This week, there was a meeting. This is what triggered everything. There was a meeting that we got tons of calls from investors about in which, apparently, the Endeavor team said that FOX was not a good partner and they don’t want to renew a deal with them, and that the 1.75x renewal that’s out there is too high. That set off a complete panic. The stock was, like, tanking the day after. What’s amazing to me is that it was probably a 10-person meeting, and it took this entire stock down because of probably the game of telephone and panic, and all these things that happen in the, quote, ‘media mafia’ hedge fund world.”
Following that, Ross and Greenfield discussed FOX’s relationship with WWE. The conversation went as follows:
Ross: The reality is — it seems to be — we’ve heard around that FOX is definitely talking down their interest.
Greenfield: No, no. They have interest. It’s just, there are two things that stood out.
Greenfield: One is — and this is something that I don’t think you saw a lot of reporting on — the entire FOX upfront, where WWE was a very visible part in the past, had no WWE this time.
Ross: Totally. Absolutely.
Greenfield: No presence of WWE. So that’s, you know, an interesting development.
Ross: That signal and the word around town, so to speak, is that FOX does not want to pay an increase on this, which makes sense in the context of —
Greenfield: And “this” means SmackDown, to be clear.
Ross: Which makes sense of Endeavor coming back and saying, apparently, we weren’t there, but it’s what set the stock panic off that they’re not a good partner and we don’t want to do a deal with them.
Ross and Greenfield then discussed potential new SmackDown locations, which have been rumored in recent weeks. Ross wondered if there would be enough credible bidders to justify an increase in the rights fee.
Ross said, “And so now you have a situation where, if FOX isn’t willing to pay an increase on SmackDown, who is the bidder that is going to step in? And it isn’t immediately obvious to the street who that bidder is. There are possibilities out there. Could Disney come in? I mean, it is a content fit for Disney. Disney is slashing costs right now. I don’t think they really know what ESPN is going to be. Could NBCU move from one package and go back and take SmackDown as they have in the past? Sure. What’s the price they’re willing to pay? But the bottom line is — I mean, think about it — you need multiple bidders for any property in order to get any kind of increase, or substantial increase.”
As PWExclusive.com previously reported, FOX and NBCUniversal (parent company of USA Network) had a one-month exclusivity window for TV rights fee negotiations with WWE, but that window appears to have expired. There has been no mention of any other networks actively negotiating RAW and SmackDown TV deals with WWE.