WWE and FOX billion dollar handshake deal; Rebel outsiders Murdoch's and McMahon's


WWE and FOX billion dollar handshake deal; Rebel outsiders Murdochs and McMahons -
May 2018

Kings and queen of entertainment, media world will lay the SmackDown; Rupert Murdoch, Lachlan Murdoch, Triple H (Paul Levesque), Stephanie McMahon; Wrestling godfather figure Vince McMahon

Ongoing out-of-the ring storyline and article in progress

FOX deal may have positive flow on effects for Australia, Dwayne 'The Rock' Johnson, John Cena, Ronda Rousey, Brock Lesnar, Miz and perhaps Hulk Hogan in movie and documentary sector

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The Murdochs

by Greg Tingle

The sports entertainment / professional wrestling, sports media and media / entertainment world has been buzzing for weeks about new, exciting and very lucrative media deals in the winds for the WWE. Well readers, media insiders and fans alike, it appears to be happening, based upon a handshake deal between WWE powers that be (read Triple H Stephanie McMahon and likely Vince McMahon), and their legal council, and FOX top brass including Rupert and Lachlan Murdoch.

By all accounts it was an affable, positive, aggressive to a degree, yet warm business meeting, with both WWE and FOX having the utmost of respect for the other. Note that not all media or entertainment industry types have always respect sports entertainment, sometimes known as professional wrestling, so when FOX showed respect, vision, integrity and wads of cash, you know that the Murdoch's would have all but won over Triple H, Mrs. Stephanie McMahon, and the godfather of professional wrestling - VKM: that's Mr Vincent Kennedy McMahon, who fans often refer to as Mr. McMahon. If you didn't already know, think of Mr McMahon at the P.T. Barnum of processional wrestling, but richer and even more media and marketing savvy.

Rupert Murdoch knew how to bring out the fire, passion and emotions out of the McMahon's. According to The Hollywood Report and other media sources, the elder Murdoch said to the McMahon's "[They're] embarrassed by your product,” in reference to USA Network’s handling or is that mishandling of the pro wrestling promotion prior to offering $1.025 billion over five years for 'Smackdown' while competitor of sorts, the NBC will pay $265 million to retain Monday-night flagship show 'Raw.’ But, many an insider says that with recent developments SmackDown will become the show to watch - if its now already.

WWE top brass Stephanie McMahon and her husband, Paul Levesque aka Triple H met with FOX top brass on the 44th floor of 21st Century Fox's Manhattan headquarters. They were there in person for what may prove to be one of the most important meetings of their lives. Pitch for Fox, who by all accounts were positive minded in doing business with the global leader in sports entertainment, looking to secure WWE's programming, which includes the weekly running Raw and SmackDown Live.

Both programs have been staples on NBCUniversal cable networks, and NBCU was fully expecting to keep things that way with a new decade duration deal worth $360 million, The Hollywood Reporter reported. But Mr. Peter Rice, chairman and CEO of Fox Networks Group, knew via his first rate intel that NBCU's exclusive negotiating window was due to lapse at 4:59 p.m. ET on May 16. By the conclusion of the meeting, WWE and FOX had shaken hands on a five-year deal for SmackDown worth $1.025 billion.

FOX has huge plans for its handling, broadcasting and collaboration with the WWE. It's far more than just providing a broadcasting platform, which they already head. Professional wrestling, especially WWE style of sports entertainment is key in network strategy, as the Murdoch's ready to launch "New Fox" after most of its assets are sold to Walt Disney or Comcast. Sports will become a paramount piece of the new company, which will include sports cable nets FS1 and FS2 and the Big Ten Network. Speaking of Paramount, Paramount Network has a nice deal in place with UFC competitor, Bellator MMA, and the world has already read about the mega deal between the UFC and ESPN, which in a number of ways set the tone for billion dollar plus deals between sports brands and major networks.

It was just one week after Fox's WWE handshake that competitor ESPN closed the second half of a deal with the UFC — a five-year, $150 million annual linear pact that followed another streaming agreement to put 15 mixed martial arts events a year on ESPN+, the Disney-owned network's nascent OTT service. ESPN will remunerate UFC $1.5 billion over five years.

At the WWE meeting with Mr. Rice were Fox Sports executives Eric Shanks and Larry Jones and Rupert Murdoch, Fox's 87-year-old godfather, if you will. CEO Lachlan Murdoch, the likable Australian, joined the meeting on the phone. Along with McMahon, WWE's chief branding officer, were co-presidents Michelle Wilson and George Barrios as well as CAA's Nick Khan and Alan Gold, a partner at EMC (the investment advisory part-owned by CAA). When they walked into the conference room, they saw a huge television monitor projecting a shot from WrestleMania 34, with wrestler - martial artist Ronda Rousey lifting the 256-pound Triple H in a fireman's carry. That photo displayed next to the Fox Sports and FS1 logos superimposed on it, acted as an awesome icebreaker for a negotiation that would last two and a half hours.

The Hollywood Reporter, understood to be the first to break this story, advised that the deal first starting developing when Mr. Rice telephoned Khan (representing WWE) many weeks earlier and requested to meet immediately should NBCU not exercise an option to retain SmackDown, which averages 2.6 million viewers a week on USA. NBCU had the right to match any offer of $200 million or less per year, but decided not to pursue SmackDown and focus instead on keeping Raw, which averages 3 million viewers and features leading superstars including John Cena. Fox came in with $205 million, but the company was offering a lot more cash and showed great respect for the WWE brand and form of entertainment. Rupert Murdoch advised NBCU was "embarrassed by your product." Fox, he said, would fully embrace WWE, with SmackDown promos airing across sports programming every night of the week, along with a weekly studio show on FS1. More than that, the deal, Lachlan Murdoch told McMahon during a private call at the end of the meeting, would herald the marriage of the Murdochs and the McMahons, rebel outsiders who had built media empires. (McMahon's father, Vince, took over WWE from his father in the '80s.)

That pitch nailed it. Commencing October 2019, Fox will air SmackDown for five years, if the deal progresses and closes as expected. NBCU will retain Raw, paying $265 million per annum, sources say, with the two deals valued at a total of $2.35 billion over five years. This is a huge leap up from the $130 million per year that NBCU currently pays for both programs.

Four days earlier at Radio City Music Hall, Stephanie McMahon, Rousey and female sports entertainers Charlotte Flair and Nia Jax participated in NBC's annual glitzy upfront presentation. McMahon, 41 and a mother of three daughters, projected WWE as a bastion of female empowerment and good family entertainment. It was the most prominent placement yet for WWE at NBC's annual pitch to Madison Avenue buyers. As McMahon spoke, a wrestling ring containing Rousey, Flair and Jax rose from the depths of the Radio City stage.

"We could not sell UFC" at Fox, says a former staffer. "And wrestling is family friendly. If you have wrestling you can find cash. I think it's a big win for Fox; it's a great trade-off."

The deals mark a historic and significant shift for both companies. ESPN needs to find an audience for its streaming network. Newly appointed ESPN president Jimmy Pitaro noted that his "top priority at ESPN is audience expansion [and] how we can be more relevant to more people, especially the younger generation? The median age for UFC is 35 years old. Combat sports in general are interesting to us. We want ESPN+ to be the destination for combat sports."

The deals are a mammoth for WWE and UFC, who enjoy somewhat of a cross over audience - a topic which is often debated. It's no secret that many UFC and MMA fighters have become professional wrestlers, and more want to be. Brock Lesnar and Ronda Rousey are the most famous, with Bobby Lashley quickly following their trail.

"Live entertainment rights remain very important to the linear carriers," says Neal Pilson, a former president of CBS Sports who now runs a sports consultancy. "It's like beachfront property. They're not making anymore sports franchises.

But with sports rights climbing ever higher, is the scramble for rights at networks beset by dwindling appointment viewing sustainable? Fox will finish the 2017-18 television season down double digits among total viewers and the advertiser-coveted adults 18-49 demographic. ESPN's ratings have fallen with its subscriber base, which is now about 89 million, down from 100 million in 2011. (Note that WWE is not a sport purse, since the outcomes are pre determined and the performances rehearsed. But like UFC, it is at its core a live-event company with an impressive and versatile pay-per-view and media rights portfolio.)

"I think that the theory that live entertainment and live sports rights have a ceiling is something media companies want to believe," says Mark Shapiro, co-president of WME-IMG, which owns UFC. "They want to believe that it's getting under control, that the leagues are going to get a comeuppance and things are going to level off. It's not happening. Live sports and live entertainment are more important than ever before. Other television fare just doesn't offer the same engagement."

Meanwhile, the multi-million and multi-billion dollar media and broadcasting deals have given new hope and optimism to other sports franchises, who have long believed in the world of their own leagues.

Even 'Down Under' in Australia word has spread to Australian based pro wrestling companies such as the IWA (International Wrestling Alliance) of the big deals breaking in the U.S, and this can only help motivate Aussie promoters and performers to do better, in their quest to run with or get signed up by the big guns in the U.S. The Australian wrestlers get trained locally, then often go to Canada and or Japan, to hone their craft, gain skills, respect and build a name. Every pro wrestler wants to be the next John Cena, Hulk Hogan or Bruno Sammartino. In the meantime WWE powerhouse Roman Reigns divides the audience with cheers and boos, but always gets a response and mega paycheck. Let's be honest - there's only so many wrestlers who are willing to keep getting back in the ring to cop a SmackDown from the likes of Brock Lesnar, Kevin Owens and Braun Strowman.

Vince McMahon remains the Ringleader and ultimate decision makers the WWE, but increasingly Triple H and Stephanie McMahon are playing a major role. Now FOX is having more input, as well as WWE shareholders, and fans get to say their say, be it at the annual general media or even by social media. You would have heard of the 'Keyboard Warriors', not to be confused with the late Ultimate Warrior. Fan's audience participation is high at arenas and via the internet - something McMahon and co. need to always keep in mind. Without a loyal fan base, the business model would suffer. Fans, let the top brass know what matches and storylines you want to see. Super fans already have the WWE Network for all you can eat wrestling viewing, and what the latest Fox deal exactly means for the WWE Network is yet to be fully determined.

It's a great time to be a fan, if you like athletic pro wrestles matches, and perhaps even a better time to be a world class promoter, if you can ink deals with the likes of FOX and co. Clearly for the McMahon's WrestleMania has come early. Keep the fans and advertisers happy, and everything else should fall nicely into place, and from then on its Money In The Bank - which of course you can watch via WWE Network later this month. Buy in or cash out - McMahons and Murdoch's are buying in - what will you do?

 

Vince McMahon. Circa 1985

 

FOX Studios Australia. Photography by Greg Tingle

 

 

Ronda Rousey and Brock Lesnar. Both world class cross over MMA - WWE stars. The financial investment and risk of signing the above appears to have been well worthwhile. Rousey and Lesnar have been worth their weight in gold from a brand recognition and brand leveraging point of view. UFC's / MMA's loss is WWE's gain.

 

The McMahon's, prior to wrestling genius Triple H entering the fray.

 

Triple H and Stephanie McMahon

 

World Championship Wrestling used to run shows in Australia, namely Channel Nine. Hordern Pavilion at Moore Park was also a popular stop for WCW, and Festival Hall in Melbourne was Australia's weekly version of WrestleMania until circa 1978.

 

King Curtis, Spiros Arion and Mark Lewin. Australia. Circa 1975

 

Mario Milano and Andre The Giant. World Championship Wrestling. Australia circa 1975

 

 

Hulk Hogan and Bruno Sammartino helped build the company to the powerhouse it is today. One may argue that without either gentleman the WWE would not be where it is today. Sammartino made the WWE, then WWWF millions, and Hogan billions. Hogan is currently in talks with WWE about a return. Triple H is heavily involved in the negotiations. Hogan's name is getting mentioned a lot more often on WWE television, via the website and WWE Network, so this is a positive sign for Hogan fans. Hogan wants to help spread his message of learning from mistakes and being a good role model. This would fit in with the WWE values.