WWE has undergone one of the most tumultuous weeks of its history from a corporate standpoint. It included six outgoing board members – two of which left the board over their disagreement regarding Vince McMahon’s return.
The roll call of existing members includes recently elected Executive Chairman Vince McMahon along with CEO Nick Khan, Chief Content Officer Paul Levesque, former co-presidents George Barrios and Michelle Wilson, Steve Koonin, Michelle McKenna, and Steve Pamon.
The interesting dynamic includes members Khan, Levesque, Koonin, McKenna, and Pamon, who were part of the unanimous decision to not allow McMahon’s return to the board, but who weeks later, voted unanimously for his new post after threats of McMahon holding up a media rights deal and/or sale of the company. Added to the story is a report from Axios that both Levesque and his wife Stephanie opposed a sale of the company (further reporting from Fightful and the Wrestling Observer stated the two were willing to work towards a sale).
Stephanie McMahon’s resignation came with her exit from the board, something her leave of absence last May did not include. McMahon does possess approximately 2.5 percent of Class B shares and therefore, has not divested from the company entirely. This differs from her brother Shane, who did divest his stock upon leaving the company in 2009. The older McMahon sibling returned to the company seven years ago strictly as a performer with an 8-K filing this past week revealing that the 52-year-old was paid $828,000 as a performer in 2022 for his lone appearance at last year’s Royal Rumble.
The only other Class B shareholders are Vince and Linda McMahon, with Vince controlling the lion’s share of the voting power among all shareholders and allowing this powerplay to be executed while backed by the stock increase.
After premature reports of a completed sale with the Saudi Arabia Public Investment Fund (PIF) with intentions to take the company private, multiple outlets denied the sale was final on Wednesday morning. Those included reports from TMZ, CNBC, and multiple wrestling reporters. That said, it doesn’t eliminate the possibility of a sale, and one that could involve the PIF in Saudi Arabia but opens many cans of worms regarding business dealings on the domestic and worldwide front for WWE under that ownership umbrella. The Saudi Arabian-controlled fund first emerged as a possible bidder after a report by Front Office Sports last Friday.
WWE has been engrained with the country for several years, having run shows in Saudi Arabia prior to the announcement of a ten-year deal with the General Sports Authority in 2018. The deal was modified the following year to include two events per year, which yield approximately $100 million annually for WWE. It has not come without great criticism due to the human rights record in Saudi Arabia and the worldwide horror of dissident journalist Jamal Khashoggi being murdered at a Saudi Arabian consulate in Istanbul, Turkey in October 2018 – exactly one month before WWE staged a card in Riyadh. The murder of Khashoggi has been linked to the same government that WWE is in business with. Sami Zayn has never wrestled on a card in Saudi Arabia while Kevin Owens and John Cena participated in the Greatest Royal Rumble in April 2018 but have never returned.
Speculation among the business community has pegged Comcast, Endeavor, Netflix, and Amazon among other potential suitors for the company with a wild card added to the mix on Thursday night.
Comcast has the most to lose but also a lot to offer if they were serious about purchasing the company. A Variety and Nielsen study revealed that in 2022, the USA Network fell 25 percent in 18-49 viewers with an average of 224,000. It tells you how valuable a property WWE Raw is given that this past Monday’s episode did nearly triple that figure in the key demo. When coupled with Peacock’s desperate attempt to carve its place in the streaming war, WWE is a sizable part of the makeup. Comcast also comes with significant market capital to pull off a sale whereas others will need strategic alternatives to pull off the rising expectation of a sale price.
Barron’s– a sister publication to the Wall Street Journal – and CNBC both reported interest on behalf of Shahid and Tony Khan towards a purchase of WWE, which would require a strategic partner to reach the escalating purchase price of the company.
Alex Sherman of CNBC reported on the interest of a merger but called it a “longshot” and in a response on Twitter added that “my guess is other complications make this a non-starter” beyond the question of any regulatory inquiries regarding a potential monopolistic situation if the Khan family had control of both major wrestling promotions.
Sherman noted that no talks have taken place between the Khan family and WWE with the one caveat mentioned that a potential role for Vince McMahon could be carved into a Khan acquisition of the company.
It would open a pandora’s box of questions regarding the Khans as realistic buyers but feels awfully premature given no talks have even taken place nor does it sound like the Khans have a strategic partner in place yet to even make a bid.
As WWE’s stock hovers at $88, it is the ultimate protection for Vince McMahon’s powerplay that has worked to near perfection as a man with a tarnished image has reinstalled himself into power where the palace intrigue and speculation of a sale has dominated headlines with minimal oxygen given to the deplorable and heinous actions that McMahon has been alleged to have perpetrated. If McMahon’s lesson from last summer was that he took poor advice stepping down and could have waited out the controversy, this past week is only solidifying that position given the “Succession” style story that is far more entertaining for the public and media to engage in rather than the moral implications of such a problematic figure punting on any consequences and returning to power.
The sale process will include financial advisors The Raine Group, who were also involved in the sale of the UFC to Endeavor in 2016, and was represented in a 2018 meeting between WWE and the Saudi Arabian government.
Beyond all the speculation, bidders, strategies, and reaction, is the largest factor, Vince McMahon.
It is not a far cry to say he has near unchecked power after the previous seven days of activity. With a surging stock price, it will forego the moral implications of this figure being reinstalled to power and will likely offset bumps in the road such as a class action suit filed this past week by shareholder Scott Fellows.
McMahon can approve or kill any deal, participating in the largest one of his career while also under investigation by the SEC and the veiled warning of non-public information, the board has uncovered on McMahon during its investigation.
The motives for McMahon can be speculated on but not confirmed. McMahon stands to profit more than any party with a sale, but is his driving force a financial one or a power move? His return to the head of the table after months of inactivity suggests the latter. His ability to be insulated with a position of power will vary across the candidates of possible buyers and as seen in many M&A examples, vital parts of a company can easily become redundant overnight, and where a cash-out may be the only option McMahon can ensure.
This is a game and series of negotiations among some of the heaviest hitters in the media industry with WWE finding itself at the center of attention. It will easily be the largest story to cover in 2023 with the potential outcome having a ripple effect for years to come.