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Old 10-08-2012, 05:16 PM   #11 (permalink)
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Default Re: PG Era and Linda McMahon?

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Originally Posted by JamesCurtis24 View Post
So with everything you've said, do you think changing back to TV-14 with a three hour Raw would damage revenue, or increase it?
It would take a lot more than just making it TV-14. It's a lot more complex than that.

If they were to change to TV-14 they would have to change their entire business model in almost every department. They would likely increase revenue on live show attendance and PPV buys as they would be then targeting a more broader demographic, they would likely take a short term hit in merchandise sales as John Cena is by far their largest draw for merchandising. There are arguments to say they'd lose a lot of revenue in advertising as a lot of advertisers wouldn't touch them.

People sometimes forget that Raw only went to TV-14 in late 1999. During the boom in late 97, al of 1998 and most of 1999 it was still PG. But good PG as JR refers to it. Smackdown changed to PG after it's first 4 months of broadcast and remained that way until today.

In summary it's not about the PG or TV-14. I believe they have to make the product a lot more relevant than it is, it simply isn't relevant at the moment. They have to drastically improve their creative processes and output. It doesn't connect with today's culture. It isn't must see TV any longer. The problem however is they are intelligent enough to still make a lot of money out of the product as it is, this and also factoring in they are a cash rich company with over $160 million in cash at the bank as per their last annual report.

To change they must be faced with 2 things, the prospect of financial ruin (like 1997), and some decent competition for Vince to fight (again like 1997). Neither of these are likely to happen soon.

Therefore, what's the motivation for a change? There isn't one.
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Old 10-08-2012, 05:32 PM   #12 (permalink)
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Default Re: PG Era and Linda McMahon?

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My own personal belief, aside from the PG thing is they have in the last year began giving a lot more air time to newer talent and younger stars. They are literally in a building for the future stage at the moment for the majority of the talent. It's my belief that's why they agreed to USA's requests about moving to 3 hours. They knew they would get lower ratings whilst showcasing new and younger talent however the 3rd hour makes up for any losses in revenue from a drop in ratings on a standard 2 hour show.

Although the ratings have gone down in the last 10 weeks, they still have 3-4 million people watching an extra hour of Raw they wouldn't usually be there for.

The following breaks down how they make more money now (or did do in 2009-2010) compared to the attitude era.

Between 1998 and 2001, WWF ran 835 shows. Between 2006 and 2009, WWE ran 1,269 shows which is a 52% increase.

I was surprised to see that 1995 had 347 events, especially knowing that wasn't a financially great year for them. They were small shows compared to the boom period or even this modern era.

The average attendance in 1995 was 3,352.
The average attendance in 2001 was 11,556.
The average attendance in 2005 was 4,975.
The average attendance in 2009 was 6,933.

An interesting fact is that the total attendance in 2009 for live events is approximately around what it was in 1999-2001 years (2.3 million people annually). However, since they're touring a lot more internationally (70+ events in the past three years), so it's clear that a much smaller portion of that live audience is domestic. (This is an improvement from mid-decade numbers. By 2005, the live attendance had dipped to about 1.61 million. 2005 was still an improvement from a decade prior to that by about half a million better than 1995's numbers.)

In terms of total pro-wrestling live attendance in North America, let's not forgot that during the 90's, there was WCW live attendance that was also drawing domestically. Today, we're down to one major company which is barely drawing on a worldwide basis the same number of people it had mostly domestically in 1999.

In total, they make about the same amount of money on live event & TV revenues - costs in 2009 as they did in 2001 (about $99k/event profit). However, that number was almost halfed in 2005 ($57k/event).

Observation Two: While PPV revenues are up on a per-buy basis, PPV costs have risen as well. International buys continue to rise.

2009: $80.0 million PPV revenue with $32.5 million in PPV costs. Total PPV buys (domestic+int'l) = 4,490,200 buys.
2005: $85.5 million PPV revenue with $36.3 million in PPV costs. Total PPV buys (domestic+int'l) = 5,280,800 buys.
2001: $128.2 million PPV revenue with $41.6 million in PPV costs. Total PPV buys (domestic+int'l) = 8,010,400 buys.

Revenue per PPV buy
2009: $17.82/buy
2005: $16.19/buy
2001: $16.00/buy

This would suggest that the price increases on the PPVs have offset the fact that a larger percentage of buys is coming from international sources. Remember that the average PPV in 2001 was only $29.95 (WM was $39.95). The average PPV in 2005 was $34.95 (WM was $49.95) and the average PPV in 2009 is $39.95 (WM was $54.95 plus more for HD). A little less than 50% of the average PPV price was received per buy in 2005 & 2009, and a little more than half was received per buy in 2001.

Cost per PPV buy
2009: $7.24/buy
2005: $6.87/buy
2001: $5.19/buy

Revenues - Cost per PPV buy:
2009: $10.58/buy x 4.49 million buys = $47.5 million
2005: $9.31/buy x 5.28 million buys = $49.2 million
2001: $10.81/buy x 8.01 million buys = $86.6 mililon

So, WWE is keeping their head above water on the PPV front on a per-PPV basis - but they've had to increase PPV prices by 33% since 2001 to do that. They're not even close to making as much money over-all on the PPV front as they were in the boom period, once you factor in increased costs.

Observation Three: Overall, the increase in TV rights fees and the loss of advertising money resulted in a slight gain.

2009: $72.8 domestic TV rights fees + $39.1 int'l TV rights fee + $7.7 advertising = $119.6 million net revenue (with $68.3 in cost)
2005: $52.3 domestic TV rights fees + $24.8 int'l TV rights fee + $43.7 advertising = $120.8 million net revenue (with $68.5 in cost)
2001: $20.9 domestic TV rights fees + $14.3 int'l TV rights fee + $90.3 advertising = $125.5 million net revenue (with $78.3 in cost)

2009: $51.3 million in profit
2005: $52.3 million in profit
2001: $47.2 million in profit

It's been an interesting trade-off. Obviously, they seem to be underpaid in TV rights fees at the turn of the century, but they were able to make a lot of money selling ads. Now, they get a lot more for the TV rights (especially in the int'l market) but they barely do more ads. Considering the lower ratings (though the same number of viewers, as was discussed in the newsletter this week), I think they're probably better off not trying to sell ads.

To recap points 1 through 3:
(a) Overall, Live Event Attendance is about the same. Even profit per event is about the same. But by running more events, 2009 has about $13MM more in profit in compared to 2001.
(b) PPV profits are $40MM lower in 2009 than the peak period (2001).
(c) They're been a shift in the allocation of profit from TV Rights + Advertising money, but overall things are about the same (+$4MM in 2009 vs 2001).

Live Events & Televised Profit: down about $22MM in 2009 compared in 2001

2009: $308 - $175 = +$133MM
2005: $285 - $165 = +$120MM
2001: $336 - $181 = +$155MM
1997: $63.9 - $54.6 = +$9.3MM

Branded Merchandise

Observation Four: Profit from Licensing Fees, Merchandise and Home video are up!

Licensing Fees: $44.7 - $11.0 = +$33.7MM (2009)
Licensing Fees: $20.9 - $6.4 = +$14.5MM (2005)
Licensing Fees: $35.6 - $13.8 = +$21.8MM (2001)

I believe this money is coming from better deals with the licensees - toys, video games, etc.

Merchandise: $35.8 - $22.7 = +$13.1MM (2009)
Merchandise: $17.3 - $12.1 = +$5.2MM (2005)
Merchandise: $28.9 - $23.9 = +$5.0MM (2001)

I'm putting WWEShop and Venue Merchandise into one bucket so I can compare the different years.

Home Video: $39.4 - $17.7 = $21.7MM (2009)
Home Video: $20.1 - $9.2 = $10.9MM (2005)
Home Video: $12.2 - $6.2 = $6.0MM (2001)

Licensing/Merchandise/Home Video combined: $33.7 + $13.1 + $21.7 = $68.5MM (2009)
Licensing/Merchandise/Home Video combined: $14.5 + $5.2 + $10.9 = $30.6MM (2005)
Licensing/Merchandise/Home Video combined: $21.8 + $5.0 + $6.0 = $32.8MM (2001)

The increase in these three categories from 2009 compared to 2001 (+$35.7MM) completely offsets the decrease in the Live & Televised Profit (-$22MM).

Observation Five: WWE makes more on publishing and WWE.com than they did previously.

It's not a big surprise that WWE understands how to effectively make money using the internet better today than they did a decade ago.

WWE.Com/Internet Advertising: $16.8 - $6.9 = $9.9MM (2009)
WWE.Com/Internet Advertising: $7.8 - $3.5 = $4.3MM (2005)
WWE.Com/Internet Advertising: $5.6 - $4.9 = $0.7MM (2001)

Publishing: $13.5 - $11.1 (2009) = +$2.4MM
Publishing: $12.2 - $8.4 (2005) = +$3.8MM
Publishing: $17 - $23.9 (2001) = -$6.9MM (I believe it was things like WWE magazine and WWE Music were not making money)

2009 vs 2001: +$18.6MM higher profits on these two categories.

To recap points 4 and 5:
(a) WWE made almost $36MM more in licensing/merchandise/home video in 2009 than they did in 2001.
(b) WWE made almost $19MM more through WWE.com/Publishing in 2090 than they did in 2001.
(c) The additional $54MM in Branded Merchandise profit offsets the -$22MM less from the Live & Televised Event category.

Revenues - Cost: 458 - 244 = $214 (2009)
Revenues - Cost: 363 - 203 = $160 (2005)
Revenues - Cost: 435 - 240 = $195 (2001)
Revenues - Cost: 81.8 - 68.9 = $13 (1997)

In short, how did WWE make more money in 2009 than they did in 2001? They ran more events at about the same profit/event as they did a decade earlier, they made a lot more money on their licensing fees and expanded their ability to use WWEShop to move merchandise, they became much more profitable at producing home video units, they figured out how to make more money using their website and they shuttered some of the unprofitable elements of their publishing business.

Now, this isn't taking into account inflation or other factors such as The World, WWE Films, XFL costs, IPO costs, etc, but it gives a good grounding on how things have changed over the past ten years.
Nice info. Good post, very interesting. I guess this also means that viewers are somewhat irrelevant if it only bring something like $7m
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Old 10-08-2012, 07:48 PM   #13 (permalink)
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Default Re: PG Era and Linda McMahon?

Quote:
Originally Posted by holt_hogan View Post
It would take a lot more than just making it TV-14. It's a lot more complex than that.

If they were to change to TV-14 they would have to change their entire business model in almost every department. They would likely increase revenue on live show attendance and PPV buys as they would be then targeting a more broader demographic, they would likely take a short term hit in merchandise sales as John Cena is by far their largest draw for merchandising. There are arguments to say they'd lose a lot of revenue in advertising as a lot of advertisers wouldn't touch them.

People sometimes forget that Raw only went to TV-14 in late 1999. During the boom in late 97, al of 1998 and most of 1999 it was still PG. But good PG as JR refers to it. Smackdown changed to PG after it's first 4 months of broadcast and remained that way until today.

In summary it's not about the PG or TV-14. I believe they have to make the product a lot more relevant than it is, it simply isn't relevant at the moment. They have to drastically improve their creative processes and output. It doesn't connect with today's culture. It isn't must see TV any longer. The problem however is they are intelligent enough to still make a lot of money out of the product as it is, this and also factoring in they are a cash rich company with over $160 million in cash at the bank as per their last annual report.

To change they must be faced with 2 things, the prospect of financial ruin (like 1997), and some decent competition for Vince to fight (again like 1997). Neither of these are likely to happen soon.

Therefore, what's the motivation for a change? There isn't one.
Yeah but I think a lot of people would agree, PG back in the late 90's was pretty much like TV-14 today.
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Old 10-08-2012, 08:13 PM   #14 (permalink)
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Default Re: PG Era and Linda McMahon?

To add what Holt said, you also need to factor in sponsorship deals and mentality shift in 2012 compare to 2001
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Old 10-08-2012, 08:17 PM   #15 (permalink)
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Default Re: PG Era and Linda McMahon?

You'll probably find its because there is no competition so no need to push the envelope to attract fans, the product now is pretty much back to the watered down family friendly level of the 80's again..
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Old 10-08-2012, 08:21 PM   #16 (permalink)
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Default Re: PG Era and Linda McMahon?

Family fare is what the WWE made its name on. The Attitude Era was a move made out of desperation, and only lasted as long as the market was willing to tolerate it.
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Old 10-08-2012, 08:28 PM   #17 (permalink)
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Default Re: PG Era and Linda McMahon?

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Family fare is what the WWE made its name on. The Attitude Era was a move made out of desperation, and only lasted as long as the market was willing to tolerate it.
Well how long can people tolerate the shit going on now?
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Old 10-08-2012, 08:34 PM   #18 (permalink)
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Default Re: PG Era and Linda McMahon?

surprisingly long

kids will watch anything

plus, TV14 has nothing to do with the quality. its all to do with the fact that Vince is making bank and has no reason to try further. the WWE is a machine that can run itself at this point. anything new just runs the risk of destablizing the balance he created

a blowup doll could be wwe champ and the company would still make a profit
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Old 10-09-2012, 12:47 AM   #19 (permalink)
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Default Re: PG Era and Linda McMahon?

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And there is a vocal contingent of people (myself included) who don't want to go back to the worst excesses of the Attitude Era. Women in dog collars and wrestling in gravy, grossness for its own sake, swearing because it's oh so "adult". . . pass.
Let's be honest here, most of the people who hate on the AE were either too young to remember it or they didn't start watching until 2002 - 2003. The AE wasn't all that great in the first 2 years but mid 2000 was the best part of the AE.

Anyways, on topic with op, wcw for most of it's run was pg but they were still able to provide great programimg. The problem with wwe isn't the rating, it's the way they book the show that makes it boring. If wwe was putting on a great product no one would care if it was pg.

Last edited by Superior Quality : 10-09-2012 at 02:12 PM.
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Old 10-09-2012, 04:27 AM   #20 (permalink)
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Default Re: PG Era and Linda McMahon?

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Originally Posted by Mystical View Post
Let's be honest here, most of the people who hate on the AE were either too young to remember it or they didn't start watching until 2002 - 2003. The AE wasn't all that great in the first 2 years but mid 2000 was the best part of the AE.

Anyways, on topic with op, wcw for most of it's run was pg but they were still able to.provide great programimg. The problem with wwe isn't the rating, it's the way they book the show thag males it borimg. If wwe was putting on a great product no one would care if it was pg.
98-99 had amazing storylines
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