BloggingStocks' Peter Cohan suggests it's time for management changes at World Wrestling Entertainment Inc. While the Chris Benoit murder-suicide beams a spotlight on the company, Cohan offers additional concerns about founder Vince McMahon faking his own death as a TV stunt. Cohan writes:
A risk noted in WWE's financial statements is that if CEO Vince McMahon left, it could hurt the company. And since McMahon faked his death, the stock has lost 11% of its value. I realize that these kinds of stunts are part of the entertainment. But as an investor, I would be concerned that WWE lacks the depth of management to replace McMahon.
Continue reading below
Its not that McMahon is a masterful executive. Anyone could probably replace him in that role. It's his position as chief "writer" that could be irreplaceable for WWE. He oversees the "story arcs" or the rivalries amongst the wrestlers.
As for Cohan, he doesn't offer any suggestions as to who are the likely acquirers of the WWE other than the vague reference to a major media player. However, one major media outlet had mixed results owning a wrestling league: Time Warner Inc. When Time Warner bought Turner Broadcasting in 1996, it inherited WWE's main rival, the WCW. After a brief honeymoon, WCW began to lose ratings. By 2000, analysts had estimated WCW had lost $80 million leading Time Warner to sell it to the WWE in 2001, according to a story in TheDeal.com's archives.
However, Time Warner's CW, which is co-owned with CBS, has a ratings success story in its WWE broadcasts, as does Viacom Inc., which airs WWE matches on various cable channels, making both CBS and Viacom likely contenders. —Matthew Wurtzel
See story from BloggingStocks
See related story about WWE-Viacom relationship from TheDeal.com
See related story about WCW sale from TheDeal.com
Comments
Any sale of WWE is highly unlikely. CEO Vince McMahon and family hold 60 million Class B shares with 10x the voting power of everyone else's Class A stock. McMahon inherited the business from his father and built it up himself, crushing any and all little guys along the way. His kids are deeply involved in running the company as well, with his daughter married to one of his top wrestlers. After decades of running a company where his word is law, there very little chance Vince, his wife or their kids are going to let some VP at a media company call the shots. Any serious buyer would have to make an offer that makes Murdoch's bid for Dow Jones look low-ball to pry him and his kids out of the company.