WWE hard to pin down on its cable-channel plan

By Joe Flint

Los Angeles Times

LOS ANGELES

Are there enough John Cena and Triple H fans to justify the launch of a WWE pay cable channel?

More than three years ago, World Wrestling Entertainment Inc. Chairman Vince McMahon unveiled plans to create a WWE cable channel that would capitalize on the company’s vast library as well as feature new programming.

But since then, there have been lots of fits and starts and delays but no channel.

Wall Street is eager to see movement because WWE has been telling investors that having its own distribution platform could be a game changer for the company.

“You guys need to say more than you have,” an exasperated Brad Safalow, an analyst with PAA Research, said on the WWE’s second-quarter earnings call last month.

McMahon promised more clarity on the company’s next earnings call. So far, WWE has spent about $40 million developing a programming service, according to its financial filings.

WWE is still not sure what kind of channel it will launch. Originally, WWE wanted to build a broadly distributed commercial channel with hopes of getting a subscription fee of about 20 cents a month per subscriber.

But space is tight on most cable and satellite systems, and there were concerns about the amount of WWE content already available — limiting the growth potential of a stand-alone commercial network. WWE has shows on the USA and Syfy cable channels and a new program for the Ion broadcast network. It is also producing a children’s show for the CW Network.

“Clearly the cable operators didn’t view what they brought to market as compelling enough,” Safalow said in an interview.

Now WWE is switching gears and focusing its efforts on creating a commercial-free, HBO-like pay cable channel that consumers would order on an individual basis, people familiar with the company’s thinking said.

On paper, WWE certainly has a base to support such a venture. It produces a dozen pay-per-view events each year. Through eight events this year, WWE is averaging 250,000 buys in the United States. WrestleMania, its biggest event, had 850,000 buys. It also notches several hundred thousand international purchases. The price tag for each WWE pay-per-view program is $44.95, except for WrestleMania, which goes for $54.95.

If WWE goes forward with a premium channel, it would probably entice customers by placing some or most of its pay-per-view events on the network. That does not mean WWE would get out of its lucrative pay-per-view business; it would continue to offer its events on pay-per-view for nonsubscribers.