WWE officials were close to finalizing a WWE Network rights deal with a major partner, but the deal fell through due to the coronavirus pandemic.
We've noted for a few months now how WWE had been in talks with multiple streaming partners for a deal to stream WWE pay-per-view events, and possibly other content. WWE had been in continued talks with ESPN for their ESPN+ streaming service and it looked as if a deal was going to be reached, but that was before the COVID-19 impact hit.
WWE Chairman & CEO Vince McMahon spoke of a potential WWE Network deal in his opening statement from last week's Q1 2020 earnings call with investors.
"We continue to believe in the viability of alternative strategic options for WWE Network," Vince said (H/T to MotleyFool for the transcript). "Our confidence is based on our discussions with multiple potential partners and consideration of broader media industry factors such as the evolution of new streaming services and increasing value of live sports content. As our potential partners have been impacted by COVID-19, these discussions have been extended. Currently, we are unable to estimate when an alternative option will be completed, but still believe the potential for a transformative transactions as possible."
Later on during the Q&A portion of the call, one analyst asked about the third-party deal for the Network content, and wanted clarification - was it an issue with potential partners not wanting to finalize deals during the current coronavirus environment, or did WWE feel like those potential partners wanted to fully re-evaluate how they might view licensing for WWE programming, and has the current crisis changed WWE's thinking of how they want to distribute some of their content.
WWE's Interim Chief Financial Officer Frank Riddick responded and said they remain excited about the performance of the Network.
"Well, the main issue has been they just -- they have their own issues to deal with in trying to respond to COVID-19," he said. "We haven't heard that, they don't have a lack of interest in the property. That's not the case. I think we're excited about the performance of the Network in this environment. I think it only enhances the value of it, and it gives us more options, but we're still pursuing a strategic transaction."
The same analyst asked about the different pricing tiers to the Network, or if WWE has maybe thought about asking subscribers to commit to a number of months. Riddick said the company would consider anything that would optimize the value of the Network.
"I think we would consider anything that would optimize the value of it," Riddick said. "And we have some of those things. We've also looked at some of those specific things. We have a plan for the Network in absence of doing a deal this year or having it delayed. So we continue to be in this environment pretty excited by the response we've gotten. And if there are things we can do to add value to that, we will."
Vince then chimed in and talked more about COVID-19 having a negative impact on the WWE Network third-party deal. He said WWE continues to invest in the Network.
"I think maybe the COVID-19 stuff caught everybody with their pants down," Vince said. "We had a number of individuals who are very interested in our Network and of course, and just when you think you're getting close, the bottom fell out. Very close with a number of individuals that really want our Network. On the other hand, we're continuing to invest in it with a free tier. We are going to do in a number of improvements and what have you and different marketing for it. So it's a complete go from the standpoint of not doing anything with anyone else just doing it right here. And if something happens with someone else after this, COVID-19 is over and they look at our balance sheet, etc., then that will happen too."
Another analyst asked for an update on the free tier of the WWE Network. Riddick responded and said they are now looking at the fourth quarter of 2020 for the full roll-out, something they experimented with before WrestleMania 36 in giving limited access to Network content.
"Current thinking is sometime in the fourth quarter," Riddick said of the free tier. "I mean we already tried, you know, to put it out around WrestleMania. In terms of putting it out there with the revenue model that we might use with it, sometime in the fourth quarter I think is the current [timeframe]."
WWE has recently reached content deals with FOX Sports (FS1) and ESPN to air throwback programming during the coronavirus pandemic, a time when networks are looking for sports-based programming to air. These deals were also touted during the Q1 2020 earnings call last week.
Stay tuned for updates on the WWE Network rights and content deals.