WWE was asked to today whether it would consider merging with a larger media company. While not wanting to take anything off the table, CEO Vince McMahon’s response was: “We’re open for business.”
AT&T and Time Warner are currently discussing a possible merger. Zuffa made a lucrative sale of UFC to WME-IMG in July. In light of these developments, multiple analysts on WWE’s quarterly conference call for investors today tried to get an idea of how open the wrestling company would be to a merger with a larger media company.
McMahon expressed openness to any business discussion, but also sounded hesitant.
“We’re open to anything. I think controlling your own destiny is so important,” McMahon said regarding the notion of selling WWE. “I don’t know how much you lose control of that by being sold.”
BTIG analyst Brandon Ross followed up: “If there was a deal that had a structure that allowed you to manage your own destiny, would that be attractive to you?”
McMahon abruptly replied, “We’re open for business.”
Analyst Robert Routh later asked Chief Financial and Strategy Officer George Barrios if WWE would be open to a stock swap of some kind with Comcast. Comcast is the parent of NBCUniversal, which broadcasts WWE programming in the U.S. on the USA Network. A stock swap would in theory further solidify the company’s relationship with NBCUniversal. Routh also asked about possible opportunities WWE might have to work with its television partner on theme park attractions, since Universal Parks & Resorts is also a subsidiary of Comcast.
Barrios was evasive to the question but reiterated McMahon’s openness to discussion. “To quote Vince: ‘We’re open for business.’”
Analysis: McMahon has had complete control of his business since he took it over from his father in 1982. Ceding to a larger entity would be well out of the norm for WWE. The company and its predecessor entities have been run as a family business, promoting pro wrestling since Vince’s grandfather Jess McMahon began promoting in the early part of the twentieth century. Meanwhile his daughter Stephanie McMahon-Levesque and son-in-law Paul Levesque are his likeliest heirs for the time being.
It would be difficult to imagine Vince McMahon giving up control of his company, as his response to the question hints. Despite selling off some stock as of late, Vince maintains a decisive share of the company’s stock.
More importantly, he maintains about 83% of WWE’s voting power since his class B family shares each count ten times more than class A shares that all other non-family members hold.
McMahon could gain hundreds of millions or even billions of dollars from a sale of WWE. The feeling from listening to analysts ask questions was that a merger with another media company would be good for the stock price. To speculate, potential buyers could be media companies like Comcast (WWE’s TV partner’s parent), MLBAM (WWE’s partner for managing the WWE Network) or Disney (WWE is already cozy with its subsidiary ESPN).
To give an example of his personality, Vince is still micromanaging his creative team at age 71. It doesn’t seem within his character to give up much of his company and to fracture the family lineage associated with WWE for nearly a century. As long as Vince remains healthy, it’s difficult to imagine an offering valuable enough to wrest Vince away from control of the job he loves.
Like Ross suggested, however, perhaps there’s a deal that could be made to allow Vince to keep controlling interest of voting power, but that remains to be seen. Judging my McMahon's comments, it sounds like he may be skeptical about how such a deal would actually unfold and whether he'd truly maintain control even if it was apparently promised to him.
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