Ronda Rousey's Potential Effect On WWE Business

At any other point in time Ronda Rousey is surely a star WWE would be interested in. Her signing with the world's biggest pro wrestling company is especially beneficial to that company at this moment when WWE's three biggest TV rights contracts are being renegotiated.

WWE's top three most lucrative TV contracts are with USA Network parent NBCUniversal in the United States, Sky's BSkyB in the United Kingdom and Sony's TEN Sports in India.

WWE Investor Presentation, p. 21

Escalating, guaranteed fees from those networks make up a large portion of WWE's overall revenue. Money from TV rights fees made up 34% of all company revenue in 2017.

Almost half of WWE's profits now come from TV fees. Channels continue to pay WWE increasing fees to keep its live programming on their lineups. In the current media landscape most scripted programs have been suffered sharper declines in traditional viewership than that of WWE's main programs, which are still among the top performers on cable. Despite RAW and SmackDown having seen more popular days, live programs like WWE's are increasingly sought after to keep networks' viewership competitive. Popular live programming is thought to "help [networks] stay in the bundle", as WWE CFO George Barrios noted at a talk in January, as cable and satellite subscription rates have started to fall.

Every analysis I've seen so far from firms looking at WWE stock, such as from JPMorgan, predict an increase in fees of the major TV contracts. Most are projecting somewhere around a 1.7x increase for the biggest deal, with NBCUniversal. Of course, WWE would prefer an even more favorable contract.

Rousey's signing is more than just a play to increase Network subscribers or sell more tickets at higher prices or sell more merchandise like the "Rowdy" T-shirts; her signing serves as a signal to TV partners, and advertisers too, that WWE will have a proven mainstream sports star as a regular part of its flagship programming.

Rousey is a proven commodity to advertisers. She's had sponsorship deals with at least Monster Energy, clothing brand Buffalo David Bitton, fast food brand Carl's Jr. and athletic brand Reebok. This is value that may be beneficial to WWE's and its TV partners' ability to acquire attractive sponsors.

WWE has orchestrated a well-timed media campaign to maximize the attention for Rousey's signing, to grab the attention of not just of fans but to also grab the attention of business partners.

Her debut at the Rumble was timed with an interview granted to ESPN, discussing her move into pro wrestling. She'll be featured Sunday at WWE's following pay-per-view, Elimination Chamber, maybe with the notion of her advertised contract signing as an element to garner more mainstream news coverage. The hype will probably culminate at WrestleMania on April 8, just weeks before we enter the range of months when WWE says you can expect it'll announce a new US TV deal.

It's curious the company has positioned Rousey this way, as a difference-making star, while in the very same recent investor conference call CEO Vince McMahon affirmed the comments of one analyst, saying, "You're right about [how] no one individual is like the panacea of our talent and things of that nature," before handing off to Paul Levesque (Triple H) to talk about the former UFC champion. WWE wants the financial rewards of having Rousey but none of the risk of admitting that star power drives the business.

Levesque made sure to note Rousey's time in WWE won't be a one-off during the conference call earlier this month.

"Just to be clear, it's a multi-year deal [with Rousey]. We are her #1 focus and goal," he said.

"As she has stated, she wants to be ingrained in the fabric of WWE. This is not a journey into something quick where she wants to come in and do a few events. This is her life now."

There's a subtext to Levesque's comments. The new TV deals will almost certainly be multi-year agreements. The current major deals were each for four-years. Any new deal won't take effect until September 2019 (in the case of the US deal) and January 2020 (in the case of the UK and India deals). If Rousey is to be valuable to these negotiations WWE has to send the message that she'll be on WWE TV into the term of the next rights contracts.

When considering Rousey's global appeal, it's notable that UFC isn't very popular in India. Sony Six (also the home of Impact Wrestling) airs UFC fights in the country. At last year's WWE Business Partner Summit presentation, WWE executive vice president Ed Wells noted RAW alone is viewed by about 13 million viewers per week in India. While UFC TV viewership in India is said to be growing, about 2 million are reported to have watched UFC 204 live on Sony Six. It should be noted too that RAW is aired live and has 3 replays which I expect comprise the viewership total Wells claimed.

Nonetheless Google web searches for WWE in India are far higher than those for UFC. Likewise, WWE's YouTube videos, which are available worldwide and are especially popular in India, of Rousey's debut at the Royal Rumble were outperformed by clips showing Rey Mysterio's surprise appearance. As of this writing, the clip of Mysterio's return at the Rumble has 13 million views. The most popular clip of Rousey debuting has 3.2 million views. Money from YouTube views is improving for WWE but is still tiny compared to the rest of the business. The areas of business her signing may best help, TV and the WWE Network, are the company's two most lucrative segments.

Her impact on the company's live events business also may be benefited depending on how frequently she wrestles. It's not known what her schedule will be like, but her signing should benefit the PPV events has matches on and whatever RAW tapings she's advertised for.

I'd expect her to impact WWE Network subscribers by adding a lot of new free trial subscriptions and some paid ones around WrestleMania. How many of those added subs convert to paid and stick around with the service long-term will depend on how well Rousey gets and stays over, how well she's booked and how well she adapts to becoming a pro wrestler and can deliver promos that make people want to see her matches and how well she performs in the ring to make fans want to see her again.

Follow Brandon on Twitter at @BrandonThurston. He co-hosts Wrestlenomics Radio, a weekly podcast on wrestling business.