Shares In Endeavor-Controlled TKO Group Jump On Netflix-WWE ‘Raw’ News

Shares in Endeavor-controlled TKO Group Holdings shot up at the opening bell and were up 15% at mid-day on the news of Netflix acquiring rights to the Raw franchise and other WWE programming.

The stock initially posted a 22% gain before the euphoria eased a bit, to plus-13%. Still, the stock’s trip north of $88 came as a relief to shareholders gutting out a 12% decline over the prior 12 months.

The 10-year rights deal is worth north of $5 billion, TKO confirmed in an SEC filing. It is a major strategic call by Netflix to grab a piece of weekly live-event real estate with a fervent, sports-adjacent fan base whose loyalty has been demonstrated over decades. TKO, formed last year from the merger of WWE and UFC, is getting credit on Wall Street for ushering in the next milestone in the migration of key programming from linear TV to streaming. In the past month alone, Prime Video posted a 24% year-over-year gain in viewership of its exclusive Thursday Night Football streams, and NBCUniversal’s Peacock hosted the most streamed live event in history with an exclusive NFL playoff game.

In a note to clients, Michael Morris of Guggenheim called the Netflix-WWE agreement “value enhancing for both parties.” Netflix gains attractive properties for advertisers (whose brands will leave impressions even on subscribers on ad-free tiers) at a “meaningful but measured” level of spending. WWE, meanwhile, gets a stable revenue stream and affiliation with the top streamer in return for its willingness to make the leap from the traditional bundle.

“For WWE, this flagship property is now aligned with the streaming industry leader,” Morris wrote, “providing growing global reach as opposed to the contracting reach provided by linear television. While Raw audience has stabilized in recent years, the property has underperformed broadcast-based SmackDown since 2019.” Fox has controlled SmackDown rights since 2019, but decided not to renew them and the franchise will move to USA this fall, helping fill the wrestling void on the schedule.

Netflix shares, already in positive territory thus far in 2024, gained a fraction to about $486. That’s a sign of approval given it was the one shelling out billions for the rights. Steven Cahall of Wells Fargo called the acquisition a “landmark move” for Netflix and sees it boosting ad impressions on Netflix’s emerging $7-a-month subscription tier getting a boost of potentially double digits. In airings on Monday nights on USA Network (thought it could possibly shift to another day when it gets to Netflix in January 2025), Raw has averaged 17.5 million viewers a year on linear TV.