wrestling / Columns
The Hamilton Ave Journal 12.20.08: Volume 1 – Issue 65
THE HAMILTON AVE JOURNAL
By JP Prag
Volume 1 – Issue 65
*** SPECIAL JOURNAL NOTE ***
The Hamilton Ave Journal will be moving to Thursdays starting January 1, 2009.
ABOUT THE JOURNAL
The Hamilton Ave Journal is the only wrestling news report focused solely on the business of wrestling. Here in the Journal we not only look at the stories that are important to the investor and business-minded person, but also delve deeper into stories that most fans of wrestling would overlook. That is because the Journal is about getting the heart of the matters that affect the companies and outlooks of the wrestling world.
And where is Hamilton Ave? That is the location of the WWE Production Studio in Stamford, CT, and thus the most powerful place in the wrestling world. Besides, The East Main Street Journal just does not have the right ring to it.
Who am I? I am JP Prag: consultant, entrepreneur, businessman, journalist, and wrestling fan.
Now, ring the bell because the market is open.
WHAT’S NEWS
The Journal’s front page area known as What’s News isn’t just about telling you what has happened. The stories in this section are about what will have an effect on the wrestling industry, individual federations, and the wallets of the fans.
LEAD STORY: TNA expanding media lineup
Though the company appears to be going on vacation for a couple of weeks, TNA has been moving fast and announcing a number of new deals and media.
First up, TNA has announced the formation of a new one-hour show called “TNA Epix”. The show will contain material from TNA’s over six years of historical footage, matches not televised before, and special interviews. Although no officially network or time has been announced for the United States, TNA has previously announced a similar show for countries like Mexico and France. Considering they had to create the show for international consumption, it makes sense to also find a home for the show in the United States. Bill Banks will be will produce the show in the recently built television studio in Nashville, TN.
TNA already does some additional broadcast with their old footage using cable companies on-demand functions and through their own website. Also this past week, TNA expanded their website offerings to including “Webographies” of 20 TNA talents, with more expected in the future. Says TNAWrestling.com:
Each TNA Webography offers a look at the personalities of our amazing athletes, including their favorite movies, video games, likes/dislikes, interesting facts and so much more!
Even with the expanding media offerings, there was talk that TNA would not be spending the money to do another TNA Global iMPACT special, even though the DVD was one of the top selling of the year for TNA. After months of hearsay, TNA finally confirmed that they are indeed going to create a Global iMPACT 2 special:
Total Nonstop Action Wrestling is happy to announce “Global Impact 2” with TNA vs. New Japan, taking place at the big Tokyo Dome show on January 4.
TNA’s Television Production team will document the journey every step of the way – from the trip over, the Japanese culture, all the action from the matches and so much more.
A special broadcast dedicated to the event will air on SpikeTV at a later date (more details to come!)
Interestingly, TNA still seems against bringing the full production crew to the tour of the UK where they are expected to play in front of their largest audiences ever since Lockdown in Lowell, MA this past April. Jeremy Borash usually brings a hand held camera so some of that footage may make the air, but this seemed like a perfect opportunity to showcase TNA in a different environment.
Of course, the big problems for TNA actually came from outside the company in Midway Games. TNA iMPACT the video game is said to have sold over 425,000 units, which is actually more than projections. Still, Midway sunk three years of development and marketing costs into the game and has been on rough straights for quite some time. As it stands right now, Midway is supposed to pay off $150 million in debt in less than 50 days. Given their current situation, Midway has announced that they will lay off 25% of their workforce and shut down a studio in Austin, TX.
All of these issues coupled with Midway’s supposed sole focus on “Wheelman” and “This is Vegas” have made many people suspect that TNA iMPACT 2 will not be released in 2009 or will at least be rushed and unfinished. Midway has assured TNA that they do intend to continue to develop the new game. Showing their commitment, Midway sent out a notice to the press on Thursday to put over the current TNA iMPACT game:
Art often imitates life in the wrestling and video game world, but with the help of Midway’s TNA iMPACT!™, TNA Wrestling has reversed that trend by bringing a video-game character to real-life. Based on the main storyline character in the hit TNA iMPACT! video game, Suicide will enter TNA with one thing on his mind: revenge.
For months, wrestling fans have witnessed the “Who is Suicide?” messages flashing on the screen during TNA iMPACT! (Thursdays 9 p.m. ET/PT, Spike TV). shows and wondered if and when this mysterious masked man would enter the six-sided ring. Last Sunday at TNA’s Final Resolution pay-per-view in Orlando, the world was introduced to this demented soul as he took out his frustrations on Alex Shelley and Chris Sabin of the Motor City Machineguns. With the DOA on his side, Suicide is sure to be a force to be reckoned with for years to come.
Looking at this, it appears that TNA and Midway are still firmly behind each other and hope to continue to sell TNA iMPACT 1 and develop number 2.
But what the current executives want may not matter as majority shareholder Sumner Redstone (National Amusements, Viacom) recently sold his 87% controlling stake in the company to private investor Mark Thomas (who also agreed to absorb $70 million of the $90 million in debt that Mr. Redstone borrowed from National Amusements to help Midway). Mr. Thomas may have other plans or ideas for the company, but it remains to be seen if he is committed to Midway’s current projects and engagements.
Major analyst turns on WWE
Since February, renown CNBC analyst Jim Cramer (host of “Mad Money”) has been fully behind the WWE stock. Even when figures were coming in each quarter showing a challenges in rising costs and slowing revenue growth, Mr. Cramer maintained his buy ratings on the stock. Specifically, he felt the dividend yield of near 9% make it especially attractive as he has been pushing cash-flow positive stocks for investors in these down-market times.
On Thursday, though, Mr. Cramer finally changed his turn on the WWE stating:
“I’m troubled…this stock acts terribly and now it’s yielding 12… that’s a dividend too far… that dividend is a red flag.”
As covered in the Journal for the past several weeks, investors have been particularly concerned with the WWE’s ability to pay their dividend considering that operating cash is not meeting the needs of the payout. That means the WWE is actually using cash on hand to pay it out and they are not replacing that cash. While the WWE does sit on a tremendous mile of cash (near the toll of $180 million), that amount cannot last forever giving their spending habits.
With the stock price being depressed and the dividend not changing, the yield has reached 12%. While incredibly attractive for cash to investors, investors really want to see the stock price go up. Considering how much money the WWE is returning to investors and the fact that investors are only responding negatively to that, it means that they do not see the price jumping anytime soon.
Despite this negative rating, the WWE stock closed up $0.04 on Thursday to end at $11.78. Since the stock is already depressed, it would take some major news for it to drop anymore and another analyst turning against the dividend when so many other have (including the Journal) is not going to have much of an impact.
And how does this affect the operations of the WWE? In reality, it does nothing to change day-to-day business and does not hurt them in that way. On the other hand, many executives and employees have compensation tied to stock performance, so that bonus for 1,000 shares is only now worth $11,000 when it used to be worth $20,000. Considering today’s environment, though, most people will be happy with any type of additional compensation and won’t be fast to make any changes in their careers.
Newsbites
Some items of note in the rest of the wrestling business world:
MARKETPLACE
In the Marketplace we look at the trends in television ratings. This section is less for critical analysis by the Journal but more for the reader to see what is really going on and to draw their own conclusions.
As with stocks, here in the Journal we track the progress of television ratings. If ratings are the barometer by which we judge the product, then over the course of 52 weeks we should be able to see patterns, trends, and anomalies.
For the week ending Thursday December 18, 2008, here are the current standings of our shows:
RAW
Close (This Week’s Rating): 3.3
Open (Last Week’s Rating): 3.0
Percentage Change: ▲ 11.0%
52-Week High: 4.0
52-Week Low: 2.5
All Time High: 8.1
All Time Low: 1.8
SmackDown*
Close (This Week’s Rating): 2.0
Open (Last Week’s Rating): 2.1
Percentage Change: ▼ 4.8%
52-Week High: 2.9
52-Week Low: 1.6
All Time High: 5.8
All Time Low: 1.0
* SmackDown! ratings may include fast overnight if final ratings are not posted. Also, SmackDown! ratings are for the prior week as overnights are not available before this article goes to print.
ECW
Close (This Week’s Rating): 1.3
Open (Last Week’s Rating): 1.2
Percentage Change: ▲ 8.3%
52-Week High: 1.5
52-Week Low: 0.9
All Time High: 2.3
All Time Low: 0.6
TNA iMPACT**
Close (This Week’s Rating): 1.2
Open (Last Week’s Rating): 1.2
Percentage Change: UNCH
52-Week High: 1.2
52-Week Low: 0.9
All Time High: 1.2
All Time Low: 0.6
** TNA iMPACT’s are for the prior week as ratings may not be available at the time of the Journal’s posting
Analysis:
After the drop caused by the 3-hour RAW, the show was able to show a solid rebound this week back to the 3.3 level (a 3.33 to be exact). Coming in to the end of the year, RAW is still down to where it started but getting much closer. Is there a major rebound about to happen? Most likely not. But RAW is going through a transition of markets right now, and it looks like the bottom has happened during this year.
Meanwhile, TNA put in another (for them) impressive number scoring a 1.2 for the second week in a row. The last time iMPACT scored a 1.2 for two weeks in a row Was January 24 and 31, 2008. Yet this is hardly the earliest TNA has accomplished this goal as the same was done on June 21 and 28, 2007. Despite this being a major accomplishment for TNA, it also highlights the point that they have not been able to consistently score a 1.2 nor have they ever surpassed it since the first one was reached on May 25, 2006.
MONEY AND INVESTING
We all know that wrestling is a business, but we don’t often pay attention to what sells and makes money. Money and Investing looks into the top selling items in the world of wrestling and any interesting figures that may have come out this week.
What are the top ten selling items for the WWE? From WWEShopZone.com:
1. WWE Ultimate Rivals Trading Cards ($2)
2. WWE Black Gift Bag ($3)
3. Jeff Hardy Armbands ($20, on sale $10)
4. WWE Heritage IV Trading Cards ($2)
5. John Cena HLR Academy T-Shirt ($25)
6. Jeff Hardy Armband Package ($80, on sale $29.99)
7. WWE Red Gift Bag ($3)
8. Hardys Purple Logo Pendant ($10)
9. WWE Holiday Gift Wrap ($6)
10. Hardys Green Pendant ($10)
With the end of the holiday shopping season approaching, the WWE has continued this quarter’s tradition of selling a lot of the low priced items. Despite the gift bags and trading cards taking up a large chunk of the real estate, Jeff Hardy and John Cena continue to dominate the list. This is the first time in a long time that both World and WWE (and partially ECW) Champions have been represented in the Top Ten at the same time. This is quite a good sign for the choices in champions, as their merchandise now seems to be matching their positions.
TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:
1. Autographed Sting Baseball Bat ($149)
2. Cross The Line Triple Pack DVD Set ($24.99)
3. TNA Ultimate Matches DVD ($19.99)
4. Beer Money T-shirt ($19.99)
5. Mick Foley – Bang Bang T-Shirt ($19.99)
6. TNA Christmas Ornament ($9.99)
7. Autographed Mick Foley & Sting Poster Combo ($49.99)
8. Autographed Sting Poster ($29.99)
Given that all of TNA seems to be going on vacation, the likelihood of this list being updated is quite low.
PERSONAL JOURNAL
Wrestling isn’t just about watching and reading. The best way to be a wrestling fan is to experience it live. Where is wrestling coming to in the next 2 weeks? The Personal Journal answers that question.
| Sunday | Monday | Tuesday | Wednesday | Thursday | Friday | Saturday |
| 21 (Dec) | 22
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23 | 24 | 25 | 26
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27
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29
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30
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31 | 1 (Jan) | 2
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3
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Do you know a wrestling event coming up? Send one in to The Hamilton Ave Journal and we’ll be sure to add it to the list.
EDITORIALS
The Editorials section is designed for you, the readers, to respond to the views presented in the Journal, send an important news item, or talk about another overlooked business related item in wrestling. Just beware: the Journal reserves the right to respond back.
From the commentary section last week, quite a few people wrote in to mention the RAW / SmackDown / ECW SuperShow taking place in Toronto on Monday December 22, 2008. Guest#2666: provides some additional detail:
A correction on the WWE taping schedule.
The 12/16 ECW will be taped at the Baltimore taping. The 12/23 ECW will be taped in Toronto on Monday with the 12/22 Raw and the 12/26 Smackdown.
Guest#9655: provides a bit of contradiction and additional detail:
According to Jim Ross’s blog, Raw and Smackdown will air normal shows on 12/22 and 12/26 from Toronto. The 12/23 ECW show will be a “best of” program.
This is the first time since December 2000 that both Raw and Smackdown haven’t aired “best of” shows Christmas week.
The Journal apologizes for missing the Canadian shows. Normally, we at the Journal always check the international pages, but the WWE does not usually leave the country in December and did not expect them to do so. As for JR’s blog, there usually is nothing but cryptic messages with no real answers in there, so the Journal rarely uses it for a source.
Moving on, the news last week was WWE CEO Linda McMahon’s presentation at the UBS conference. TAT chimes in with:
“She (Lina McMahon) also mentioned the Marine 2 saying it would star an “up and coming” star, but neglected to mention who.”
It’s Ted DiBiase Jr., for the record.
Yes, that was implied by the article, but it is possible that some people did not know. The interesting thing was that Mrs. McMahon mentioned John Cena and the Great Khali by name, but did not mention Ted DiBiase.
ICTimer also had a few thoughts on Mrs. McMahon.
“She also went on to compare the WWE to the church, saying the company is looking for a way to bring you in young and find ways to keep you for the future.”
Now that is insane. When will Pope Vincent II make his way back to the RAW broadcast, in full regalia and the Popemobile to address his clamoring followers? I wonder if he’ll issue an encyclical on the matter.
It was more of a comparison of the “hook ‘em young and keep ‘em” mentality. If you have ever seen the movie Dogma, the idea is covered quite well.
There are a few things I’m somewhat torn on with Linda McMahon’s UBS speech.
For instance, I am glad she was honest when the question was asked if the WWE was scripted… however, I do worry that there are some fund managers who would hear that and think it was ridiculous, and thus turn away from WWE. They may think that the majority of the audience doesn’t realize that kayfabe was generally broken for most fans years ago, and this could cause them to think that when fans realize that things are scripted, they will turn from the product for things like the UFC. I think she should have pointed out in the question that it wasn’t a big secret anymore.
Judging by their questions and comments, you are justified in being worried. She did make several points that people do get hurt and the pain is real, but the people in the room obviously had not paid attention to the product in 20 years. As far as the UFC, until the become a public company than there is no worry that they will steal too many dollars from WWE investors.
“Although Mrs. McMahon believes that digital media has lots of room to grow, she also put over the upcoming DVD starring Mr. Kennedy saying that people who do not normally watch the program but would watch the DVD may become attracted to the main WWE products after seeing Mr. Kennedy in the film.”
She’s insane on this one. Kennedy could put in an Oscar-worthy performance and no one will see it or take it seriously.
There is a chance for cross product synergy. Rocky 3 helped Hulk Hogan capture an audience that followed him later on. Still, Mr. Kennedy is playing a character that may not have that huge of a presence to bring in new viewers.
“Despite this, she did say that she expects to see some softening, but that she expects to remain strong.”
And the Joe Morgan answer of the month goes to…Linda McMahon! Though the rest of the answer was fine.
The Journal believes the WWE is not being proactive enough in their approach and are too dependent on past successes. Since no one in the room knew enough about the WWE’s business processes, they were not able to challenge Mrs. McMahon.
“Another audience member then wanted to know how the board had agreed to the current dividend and what can put that dividend at risk in the future. To the latter point, Mrs. McMahon basically avoided the question saying that the company is committed to manage cash and that the 2009 budget is now finished and shows that they should be able to continue it”
Horrible, just horrible. Considering the audience, this is an extremely important question, and one that cannot be avoided. Giving ridiculously overblown answers like, “everyone stopped watching, attending, and purchasing the product” doesn’t help either. Yes, they still have cash. But they can’t be so over committed to the dividend that they end up sacrificing growth and having profit shrink. That is my main concern as far as the stock goes right now. They are going to face macro concerns that will probably affect all revenue streams (maybe save television) by the time they’re done in 2009 – they cannot be so incredibly concerned about the dividend that they sacrifice everything to make sure it’s still there. It’s nice, but staying solvent is far more important.
Absolutely! The WWE does not have enough operating cash to fund the dividend, so they are paying from reserves and non-cash charges. The WWE is too obsessed with maintaining the dividend considering how little of the company is owned by outside investors. While a dividend is nice to have, most investors was their stocks to increase in value. Shedding cash just to continue saying that you have a dividend is not a safe or smart way to run a business.
Plenty more was written, so be sure to take a look. And of course, a week would not be complete without a good dose of JP Prag’s own HIDDEN HIGHLIGHTS!!
CLOSING BELL
This concludes Issue #65 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.
Till then!
*** SPECIAL JOURNAL NOTE ***
The Hamilton Ave Journal will be moving to Thursdays starting January 1, 2009.
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