WWE is expected to have their most profitable year ever in 2020 thanks to the mega television deals they signed with FOX Sports and the USA Network, that officially kicked in last October. From a financial perspective, WWE is essentially idiot-proof for the next few years due to the sheer magnitude of this money.
Despite the great short-term financial position the company is in, more eyeballs are now paying attention to what’s going on underneath the surface, where WWE’s ratings decline cannot be ignored. WWE’s television rights fees are its primary source of revenue by a wide margin, so the viewership decline is a problem they’ll need to fix by the time negotiations for the next television deal come up. And they’ll need to address it much sooner than that if more market firms decide to not recommend WWE stock.
There’s an article at Variety that dives into the downward trend of WWE’s ratings over the past few years. One interesting angle they provide is a look at all the excuses Vince McMahon has used to dodge accountability himself:
“More recently, falling ratings have been blamed on COVID-19 and an influx of new talent (Q1 2020), it taking time to be able to develop the right storylines for the right talent (Q4 2019), needing to focus on the in-ring product (Q3 2019) and needing to have deeper, better storylines (Q2 2019).
It’s possible that for Q2’s declines, McMahon will revisit the trope that new stars need to be made, given the absence of several superstars due to the pandemic, notably Roman Reigns. This should be treated with short shrift.
If the downturn in ratings in Q4 2018 and Q1 2019 were down to superstar absences, this should have been the incentive to create new stars. Should this line be trotted out in the earnings call, it should be exposed as the hollow excuse that it is, and questions should be asked why no new stars have been created since January 2019, when WWE first publicly noted the need in the Q4 2018 earnings call.
Investors should be worried. No improvement has been made in ratings. If audiences continue to trend down, there’s little chance that last year’s huge renewals will be repeated when the current deals are up.
Given how often McMahon referred to the need to improve storylines, it’s a wonder that investors are yet to hold him accountable for the consistent line that things have to improve.”
Vince McMahon will discuss WWE’s second quarter 2020 results later today, after the stock market closes. He will once again have to explain why ratings are down, and how he’ll turn it around. Like the Variety article mentions, he’ll probably talk about the effects of COVID-19, as well as missing top stars like Becky Lynch and Roman Reigns. And it’s not that these aren’t valid topics to bring up, it’s just that there’s an even bigger problem going on that underlies all of it. He can try to repeat his common talking points that top stars are out, or it takes time to develop new stars, or the need for better storylines. But the bottom line is that Vince McMahon is the one who oversees and has direct influence on most of those things. The same old excuses ring hollow after hearing Vince say them so many times.
Professional wrestling is a star-driven sport, and it seems like Vince McMahon has doubled down on emphasizing past stars rather than creating new ones. It’s a poor strategy for long-term growth. McMahon firing Co-Presidents George Barrios and Michelle Wilson earlier this year, with no replacement plan in place, was alarming enough to raise more questions about WWE’s long-term strategy. AEW’s emergence in the pro wrestling scene during the last year may perhaps help some folks finally realize that Vince McMahon is not the god of pro wrestling, and he’s not the only person who can do it. Even worse, we have reached the point where his decisions are driving away the television audience, especially young males, at a very high rate.
Vince McMahon is running out of excuses, so we’ll have to see what he manages to come up with later today when WWE holds its second quarter investors’ call. Do you think the investors will buy that Raw’s downward ratings trend this quarter was all Paul Heyman’s fault?