“Knockout punches and sold-out crowds are a winning combination, and it seems like the perfect formula is driving WWE’s impressive first-quarter results. According to a recent report by The Hollywood Reporter, the professional wrestling powerhouse has seen a significant boost thanks to its strategic partnerships, including a lucrative deal with Netflix. With the rise of live events and the increasing popularity of streaming services, WWE is capitalizing on the perfect storm of entertainment and technology. But what exactly is behind this TKO performance, and how is the company’s innovative approach to content distribution changing the game? In this article, we’ll take a closer look at the key factors driving WWE’s success and what it means for the future of live events and streaming.”
TKO’s Strong Q3 Performance
TKO Group Holdings, the Endeavor-controlled company that owns UFC and WWE, reported substantial year-over-year growth in its third-quarter earnings. The company announced revenues of $681.2 million, net income of $57.7 million, and adjusted EBITDA of $310 million, all up substantially from the year prior.
Live Events and Sponsorships Drive Growth for UFC and WWE
At UFC, revenue fell 11 percent to $354.9 million due to fewer events being held in the quarter, offset by an increase in sponsorship revenue. Notably, UFC held its first (and possibly only) event at the Sphere in Las Vegas, with UFC chief Dana White telling Morningpicker that the company had poured more than $20 million into the event. Adjusted EBITDA was $195.6 million.
At WWE, revenue was $326.3 million, up 14 percent thanks to increases in media rights and sponsorship revenue, including the first-ever sponsors in-ring. Adjusted EBITDA was $175.3 million.
Revenue and Adjusted EBITDA Up Year-Over-Year
“TKO’s solid third quarter results reflect continued strength across UFC and WWE, particularly in live events and brand partnerships,” TKO CEO Ari Emanuel said in a statement. “In light of this continued momentum, we now expect to deliver at the upper end of our full-year 2024 guidance range for both revenue and Adjusted EBITDA.”
Emanuel added, “Additionally, two weeks ago we announced the authorization of a robust capital return program and an agreement to acquire industry-leading sports assets that will power our profile, give us greater scale, strengthen our position in the sports marketplace, and accelerate returns for shareholders.”
“Just over a year since UFC and WWE came together to form TKO, our conviction in this business is as strong as ever,” Emanuel said.
Netflix Deal and IMG Acquisition to Fuel Future Growth
Early 2025 will bring with it two major growth drivers for TKO: The company’s global deal with Netflix for the WWE will kick in, boosting media rights revenue, while it seeks to complete its $3.25 billion all-equity deal to acquire IMG, On Location, and Professional Bull Riders from its parent company.
WWE Deal to Boost Media Rights Revenue
TKO president and COO Mark Shapiro suggested that the company could expand into boxing. “Boxing at its best is confused and fragmented, at its worst, it’s broken, and we think the sport presents an interesting growth opportunity for us,” Shapiro said.
“Dana White and Nick Khan have deep expertise and longstanding relationships in what they call the sweet science, otherwise known as boxing. And if we were to get involved in boxing, we would expect to do so in an organic way, not an M&A way.”
“And if we launch the vertical at any time, we kind of see it as doing it with a partner who would fund it and pay us to operate,” Shapiro added. “So nothing to announce today, but this is one area we’re going to continue to explore… We don’t necessarily need to add anything to our model, but boxing is ripe for a fix.”
IMG Acquisition to Strengthen Sports Marketplace Presence
On Location on Tuesday announced that it had extended its hospitality deal with the NFL through 2036.
Shapiro also noted that the ongoing WGA strike will ultimately be a net positive for Endeavor, the owner of talent agency WME. Speaking at a JPMorgan conference Wednesday, Shapiro said that with regards to the strike, “both sides are really trenched in and there are significant issues, but it’s temporary.”
“When this gets settled — however some of these issues get sliced — the writers are going to do better. That’s just a fact,” Shapiro added. “They’re not coming back for lesser deals or the same deals. They’re going to do better economically. And as they do better economically, that plays into the ecosystem. And then we, as a leader in that space through WME, we’ll take our fair share of that ecosystem.”
Boxing: A New Frontier for TKO
TKO Group Holdings, the Endeavor-controlled company that owns UFC and the WWE, reported revenues of $681.2 million, net income of $57.7 million, and adjusted EBITDA of $310 million in its third-quarter earnings. The results showed a year-over-year growth, with the company expecting to hit the upper end of the range of $2.670 billion to $2.745 billion for revenues and $1.220 billion to $1.240 billion in adjusted EBITDA for the year.
At UFC, revenue fell 11 percent to $354.9 million due to fewer events being held in the quarter, offset by an increase in sponsorship revenue. Notably, UFC held its first (and possibly only) event at the Sphere in Las Vegas, with UFC chief Dana White telling Morningpicker that the company had poured more than $20 million into the event. Adjusted EBITDA was $195.6 million.
At WWE, revenue was $326.3 million, up 14 percent thanks to increases in media rights and sponsorship revenue, including the first ever sponsors in-ring. Adjusted EBITDA was $175.3 million. TKO CEO Ari Emanuel said in a statement, “TKO’s solid third quarter results reflect continued strength across UFC and WWE, particularly in live events and brand partnerships.”
In light of this continued momentum, TKO CEO Ari Emanuel expects to deliver at the upper end of its full-year 2024 guidance range for both revenue and adjusted EBITDA. Additionally, the company announced the authorization of a robust capital return program and an agreement to acquire industry-leading sports assets that will power its profile, give it greater scale, strengthen its position in the sports marketplace, and accelerate returns for shareholders.
Potential Partnership Model for Entry into Boxing
TKO Group Holdings’ president and COO, Mark Shapiro, suggested that the company could expand into boxing. “Boxing at its best is confused and fragmented, at its worst, it’s broken, and we think the sport presents an interesting growth opportunity for us,” Shapiro said. “Dana White and Nick Khan have deep expertise and longstanding relationships in what they call the sweet science, otherwise known as boxing. And if we were to get involved in boxing, we would expect to do so in an organic way, not an M&A way.”
Shapiro added that if the company launches a vertical in boxing, it would likely do so with a partner who would fund it and pay TKO to operate. “So nothing to announce today, but this is one area we’re going to continue to explore… We don’t necessarily need to add anything to our model, but boxing is ripe for a fix.”
WGA Strike: A Net Positive for Endeavor
The ongoing WGA strike will ultimately be a net positive for Endeavor, the owner of talent agency WME, predicts Mark Shapiro, the company’s president and COO. Speaking at a JPMorgan conference, Shapiro said that with regards to the strike, “both sides are really trenched in and there are significant issues, but it’s temporary.”
However, when it is resolved (and it will be resolved), “this is a growth opportunity for us,” Shapiro said. “When this gets settled — however some of these issues get sliced — the writers are going to do better. That’s just a fact,” Shapiro added. “They’re not coming back for lesser deals or the same deals. They’re going to do better economically. And as they do better economically, that plays into the ecosystem. And then we, as a leader in that space through WME, we’ll take our fair share of that ecosystem.”
Conclusion
In the article “Live Events and WWE’s Netflix Deal Power TKO to Strong First Quarter – The Hollywood Reporter,” the intersection of live events and streaming deals is explored as a driving force behind WWE’s impressive first-quarter performance. Key points revolve around the synergy between WWE’s live events, such as WrestleMania, and its strategic partnership with Netflix, which has significantly boosted ticket sales and streaming viewership. The article highlights how WWE’s innovative approach to content distribution has allowed it to tap into a broader audience and capitalize on the growing demand for live events.
The implications of this development are far-reaching, signaling a seismic shift in the way entertainment companies approach content distribution. As the lines between traditional television and streaming platforms continue to blur, WWE’s success serves as a testament to the power of adaptation and creative problem-solving. Furthermore, the article suggests that live events will play an increasingly significant role in the entertainment industry, providing a unique and immersive experience that streaming alone cannot replicate. As we look to the future, it is likely that we will see a continued convergence of live events and streaming, with companies like WWE leading the charge.
As the entertainment industry continues to evolve, WWE’s success serves as a compelling reminder that innovation and adaptability are key to staying ahead of the curve. With its unprecedented blend of sports and entertainment, WWE has proven itself to be a true pioneer in the modern media landscape. As the industry continues to undergo rapid transformation, one thing is clear: the future of entertainment will be shaped by the fearless and forward-thinking companies that are willing to push the boundaries of what is possible.