Sports entertainment and media company Entertainment World Wrestling (wwe) (WWE -1.23%) had an exclusive broadcasting relationship with Peacock – part of ComcastS ‘ (CMCSA -1.01%) NBCUniversal segment– as of spring 2020. This deal has given Peacock premium subscribers access to WWE’s extensive back catalog of classic wrestling matches and the ability to watch live events such as Royal Rumble, WrestleManiaAND SummerSlam. However, WWE’s weekly live programming, Raw AND SmackDown, still debut on linear TV, and arrive on Peacock just a day later.
During WWE’s second quarter investor call, co-CEO Nick Khan suggested that the company is open to the idea of transferring the live broadcast rights to Raw AND SmackDown on air. Here’s why forging an even closer relationship could be a smart move for both WWE and Peacock.
The linear TV landscape is changing
WWE negotiated one last time Raw AND SmackDown agreements in 2018. Raw airs on USA Network — also owned by NBCUniversal — in a deal said to be worth $1.3 billion over five years. Fox Corporation FOX Network broadcasts SmackDown in a deal worth about $1 billion, also over five years.
Raw draws approximately 2 million live viewers per week during its three-hour broadcast time, while SmackDown draws about 2 million during its weekly two-hour broadcasts. By comparison, these numbers are in the range of the average viewership for a National Basketball Association game. However, with cord-cutting on the rise and some experts predicting a decline in live TV ad spending over the next few years, this could be an opportune time for WWE to move its flagship weekly shows to the Peacock.
WWE is not new to the broadcast space
WWE first entered the US broadcast market with WWE Network, which it launched in February 2014. Within a year, WWE Network had over 1 million subscribers. But despite that promising start, she struggled to grow. Its US subscriber base peaked at around 1.9 million in 2017.
At the time WWE signed the deal with Peacock in early 2020, the WWE Network had just 1.1 million subscribers. It is estimated that 1 million of them subsequently moved to Peacock. However, a year after the deal went into effect, Khan revealed that more than a third of Peacock’s premium subscribers had watched WWE content.
Streaming services are embracing live content
As Khan noted on WWE’s investor call, broadcast companies are “hungry” for premium live content. The executive quoted Apple$2.5 billion contract with Major League Soccer and AmazonThe $11 billion deal with the National Football League. As a provider of live programming, Khan went on to suggest that WWE is in a unique position because it draws massive audiences and operates year-round.
For NBCUniversal, its enduring relationship as a partner for WWE Networks and Raw certainly puts it in a strong position should WWE decide the time is right to make the full transition to broadcast. As Khan said on the earnings call, “We always talk to him [NBCUniversal] first to whatever is going on.”
Peacock is operating on a relatively small budget
Comcast reported that Peacock had 13 million premium customers as of the end of the second quarter of 2022 — the same figure it had three months earlier. The potential to attract millions of additional viewers with live weekly WWE programming is certainly an attractive prospect for Comcast — depending on the cost of such a deal.
NBCUniversal reportedly spent more than $1 billion to secure the WWE Network rights to the Peacock through 2025. Considering WWE earned more than $2.3 billion the last time it sold the telecast rights to Raw and SmackDown, it’s reasonable to wonder if NBCUniversal has the appetite to spend big to make both shows exclusive to the Peacock. But as Khan has pointed out, Peacock’s main streaming competitors are already spending billions of dollars a year on premium live content.
If WWE decides to relocate Raw AND SmackDown for broadcast only, Peacock would do well to secure the rights. By its very nature, pro wrestling is scripted, meaning viewers are presented with feuds and storylines that often go on for months, if not years. In a world where subscribers can and do cancel and add streaming services every month, WWE’s live content could bolster the Peacock’s ascendancy — and its growth.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tom Wilton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends Comcast and World Wrestling Entertainment and recommends the following options: long March 2023 $120 Apple calls and short March 2023 $130 Apple calls. The Motley Fool has a disclosure policy.