WWE timed the announcement of Vince McMahon’s exit to come after the market closed last Friday (July 22). With time to process the news the company’s long-time Chairman & CEO was out with a hush money investigation looming over him, investors decided to buy.
Share price hit a new 52-week high today (July 25), despite an SEC filing that revealed WWE would be restating some past earnings — and expecting more legal action & regulatory fines — as a result of not reporting payments McMahon made to undisclosed parties over the past 16 years.
According to Indie Wire business editor Tony Maglio, Vince used personal funds in these transactions. But because they had a “qualitative benefit” to WWE’s business (e.g. they may have helped avoid unflattering press during negotiations of, say, a new television contract, or a live events deal with a foreign government), they should have been reported as expenses by the company.
Class action suits or worse didn’t scare investors though. Some of that may be because they like the stability represented by WWE’s transition plan of having Vince’s jobs taken over by Stephanie McMahon, Nick Khan & Paul “Triple H” Levesque. But more of it seems to be because analysts believe a sale of the company is more likely now that VKM is gone.
Media analyst Alan Gould of Loop Capital wrote to his customers (via Deadline)...
“This is a challenging environment with the equities of most of the logical buyers depressed, but there is demand for live event programming, and it is the first time that one could realistically think that WWE could be for sale.”
For prospective buyers, he included major streamers like Comcast, Disney, Amazon, and Netflix. The idea being that rather than pay a large fee to license WWE content like Comcast-owned Peacock currently does, one of these companies would rather just buy WWE outright and own all existinf and future programming for their service.
CNBC’s Jim Kramer and Lightshed’s Brandon Ross also mention UFC’s owner Endeavor as a potential buyer, with cross-promotional synergies and potential cost savings inherent in running similar businesses as reasons why that merger makes sense.
The stock price settled by close, but still finishing up 8.5% at $71.81 per share.