The retirement of WWE boss Vince McMahon has heightened sale rumors, driving shares to soar.
World Wrestling Entertainment’s annual report for 2021 includes a risk element for the repercussions of Vince McMahon’s retirement, which occurred last week.
“The unexpected loss of the services of Vincent K. McMahon could adversely affect our ability to create popular characters and creative storylines or could otherwise adversely affect our operating results,” WWE wrote in the corporate filing, dated Dec. 31. “The loss of Mr. McMahon due to unexpected retirement, disability, death or other unexpected termination for any reason could have a material adverse effect on our ability to create popular characters and creative storylines or could otherwise adversely affect our operating results.”
That appears to be terrible news for WWE stockholders. So, what happened to WWE stock when Vince McMahon announced his surprise retirement after the bell on Friday? They surged up, reaching more than 8% on Monday.
The increase was caused by increased investor expectations of a sale. Newly appointed co-CEO Nick Khan publicly explored the possibility of selling the company earlier this year, months before McMahon stepped down in the aftermath of a Wall Street Journal investigation that showed compensation to women who claimed sexual misbehavior and adultery. McMahon personally paid $14.6 million in previously unreported costs, according to the WWE.
The date of a transaction might be determined by the WWE’s impending U.S. TV rights renewal, which is tentatively planned for mid-2023. An acquirer may determine that purchasing the firm rather than striking a temporary rights arrangement makes more sense. The two WWE TV assets, “Smackdown” and “Raw,” are owned by Fox and NBCUniversal, respectively. Both agreements expire in the fourth quarter of 2024.
Global media firms are looking for intellectual property that may be used to create recurrent TV shows, films, and theme park attractions for those who own it. WWE is particularly appealing as an acquisition target since a media company can sell real-time advertising on live programming while still potentially keeping fans paying for traditional pay-TV, a declining but valuable income source. WWE’s “Raw” is presently available on the NBCUniversal cable network USA Network. In comparison, the NFL nearly quadrupled its predicted TV revenue in its most recent rights renewal contract last year.