The Hamilton Ave Journal 07.02.09: Volume 2 – Issue 93

Posted by JP Prag on 07.02.2009

Does Dixie Carter think TNA can compete with the WWE? And does the WWE even view them as potential competition? Or is the WWE too concerned with all of their new lawsuits to pay attention? All this and more is answered in this week’s edition of the Hamilton Ave Journal!

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 93

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.






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 looks for their place in history against WWE

Just after the seven year anniversary of the company, TNA President Dixie Carter sat down with Ross Forman to discuss the company's growth and future plans. Says Ms. Carter:

"Until we are the biggest wrestling company in the world, we won't be satisfied. And then with that comes another set of challenges, but I look forward to those challenges one day."

TNA is the second largest wrestling company in the world, but a great distance from their much larger competitor. In a rare instance, the WWE actually admitted to TNA as competition when WWE President, International Andrew Whitaker was talking Ashwin Pinto of IndianTelevision.com:

All forms of entertainment are competition for WWE as we compete for the public's attention and entertainment dollar. For any sports or entertainment company, whether you are Manchester United, U2 or WWE, the biggest concern is the enormous proliferation of content in the market.

However, WWE is a significant force within entertainment and pop culture. Within our specific entertainment genre, we clearly are the industry leader. While TNA is pro-wrestling, WWE is entertainment.

While that last statement is the company line, the rest of Mr. Whitaker's comments are significant. The WWE is in competition with everyone, but they are in the industry leaders in their own sub-genre. Even with slipping ratings and revenues across all major segments except television rights fees, the WWE is still the dominant player. Says Ms. Carter:

"We want everyone's ratings to go up. In order to succeed, we don't think we have to take ratings away from anyone else. As a wrestling industry, we all have to grow the fan-base worldwide."

Of course, the biggest growth for both TNA and WWE has been on the international scene. Mr. Whitaker elaborated on just how important that growth has been for the WWE:

"In 2008, international revenues represented 26% of total annual revenue for the WWE, equating to around $135 million. The top three markets in terms of size are currently the UK, Australia and France."

Later he continued:

"Internationally, revenues generated from TV licensing fees have grown by well over 30 per cent in the last five years."

What the WWE makes internationally is almost two and half times what the TNA makes globally in a year. Still, that has not deterred Ms. Carter's optimism and her explanation of their growth:

"I think we have accomplished more in the last six- to 12-months than we have in the last several years. I look at our ratings over the last year, and they are up more than 20 percent."

What Ms. Carter fails to mention is that last summer TNA was seeing lows not seen the year before. Still, the 1.3's seen recently are up 20% over the 1.1's they were getting, which puts them above ECW's current ratings. Ms. Carter says:

"We can't just say we're going to beat Raw (in the ratings). Right now, that's unrealistic. We had to start with a more obtainable goal to beat the ratings of our competitor's third-rated show, ECW – and we've done that.

"I have heard people say, ‘It's not a big deal to beat their lowest rated show,' but I disagree. It's a huge success for TNA, which five years ago had just 300,000 viewers in a Friday afternoon timeslot on Fox Sports. So now we're setting our sights on their second-rated show, Smackdown – and that gap has closed significantly over the past six months."

Now, Ms. Carter is quite correct to point out their success of going from 300,000 viewers to 2,000,000 weekly viewers. However, her statements here are in complete contradiction to what she said previously about not wanting to see WWE ratings drop. ECW's had Q2 average ratings of 1.6 in 2007, 1.2 in 2008, and 1.1 in 2009. So while TNA has gone from a 1.0 to a 1.2 average rating in the same time period, the only reason they have surpassed ECW is because ECW has dropped so much.

At the same time, the only reason SmackDown is in striking distance is for the same reasons. For the same Q2 period, SmackDown had an average rating of 2.6 in 2007, 2.4 in 2008, and 1.8 in 2009.The dropping of WWE ratings has been TNA's biggest gains, not the other way around.

Ms. Carter is also convinced that that TNA has not set a goal that they have not achieved. Obviously, she has not viewed going to large arenas they cannot sell out, cancelling shows in Israel, and not increasing PPV buyrates as failures of goals. While Ms. Carter seems like she has an understanding of some aspects of the business, others remain lost on her and TNA. Yet, there are some things she is coming to realize:

"The audience of 2009 is significantly different from the audience during the height of the WWF-WCW run. And we have to continue to change accordingly. Today's fans are smarter, more involved. They don't want their intelligence insulted, and we have been guilty of that at times in the past. Can we please everyone all the time? No, that's not realistic. But you have to strive to please them much more than not."

At least Ms. Carter is capable of seeing past mistakes, but the question remains if TNA can act on them. And will that be enough to truly bring competition to their much larger and experienced competitor. Mr. Whitaker finishes up:

One of WWE's greatest strengths is that it offers quintessential American content that translates well across cultural boundaries. Developed over the last 25 years, our broad portfolio of specialised business units ranges from live and televised entertainment through to consumer products, digital media and our studios division. These business units, all marketed and distributed under the WWE brand, have made WWE into the recognised global leader in sports entertainment. The content is easy for audiences to relate to. So regardless of our fans' culture or language, they can become enthralled in the drama, storylines and characters.


Newsbites

Some items of note in the rest of the wrestling business world:

WWE.com traffic is said to be down 30% compared to this time last year, which would be in line with decrease seen in WWE.com revenues last quarter. The WWE has been making strives to increase revenues from digital media, so a setback like this is not a great sign for their efforts.

As covered in the Journal, Time Warner has put in a big to buy a portion of Midway games assets, but did not include the TNA iMPACT franchise in their offer. Midway put the rest of the company out to auction, but there were no bids, so it appears that part of Midway will be sold off to settle creditors whiles parts of the company will struggle on without any support. There is a possibility of a sale in the future, but for now the studio working on the TNA iMPACT video game sequel still exists and will continue their build.

In the international markets, the WWE has launched their own classics show called "WWE Vintage Collection". The show premiers in Canada on The Score on Saturday July 4, 2009. Depending on how the show does, the WWE may look to expand the distribution to other countries around the world.

After a victory over the WWE in courts, Muscle Flex, Inc has been quick to take advantage of their "In the Raw" brand. According to company CEO Danny Alex:

"Now that the appeal process has concluded, Muscle Flex can begin to realize the many lucrative merchandising and future licensing opportunities of our 'In the Raw' brand. We also intend to vigorously enforce all of our rights to the Canadian 'In the Raw' trademark as well as seek damages and infringement on the unauthorized use of our brand in Canada."

What value Mr. Alex sees in the brand that has not been developed remains to be seen, however now Muscle Flex, Inc. will not have to worry about the WWE standing in their way.

Also on the lawsuit front, JAKKS Pacific (who recently won their appeal against the WWE accusing them of racketeering) decided to exercise a clause in their joint agreement with THQ for the WWE video game license. The problem is they made the decision unilaterally and THQ was not included in the decision. So THQ—who said they were still reviewing their options given that the current contract does not expire until December 31, 2009—has launched a case to get an injunction against the extension and have the courts say they have no obligation to JAKKS Pacific nor the WWE.

Last week's monumental RAW rating helped USA network set a record with the highest average rating for the second quarter in cable history. According to the press release:

The June 15th show was the most watched 3-Hour episode of WWE MONDAY NIGHT RAW ever for P25-54 (2.63 million), while the June 22nd installment (the first ever to run commercial-free) was the most watched episode since March 25, 2002 for total viewers (6.81 million) and households (4.48 million) and the most watched since July 28, 2003 among P18-49 (3.1 2 million).




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 Wednesday July 1, 2009, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.9
Open (Last Week's Rating): 4.5
Percentage Change: ▼ 13.3%
52-Week High: 4.5
52-Week Low: 2.6
All Time High: 8.1
All Time Low: 1.8

SmackDown*
Close (This Week's Rating): 1.7
Open (Last Week's Rating): 1.7
Percentage Change: UNCH
52-Week High: 2.5
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): UNAV
Open (Last Week's Rating): 1.1
Percentage Change: N/A
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): 1.1
Open (Last Week's Rating): 1.2
Percentage Change: ▼ 8.3%
52-Week High: 1.3
52-Week Low: 0.9
All Time High: 1.3
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

SuperStars***
Close (This Week's Rating): 0.9
Open (Last Week's Rating): 0.9
Percentage Change: UNCH
52-Week High: 1.0
52-Week Low: 0.8
All Time High: 1.0
All Time Low: 0.8

*** SuperStars ratings may include fast overnight if final ratings are not posted. Also, SuperStars ratings are for the prior week as overnights are not available before this article goes to print.

Analysis:

After a brief sojourn of a three year high, RAW again dropped 13.3% to rest at 3.9. Still, this is up over the previous 4-week average before the 4.5 rating, so the WWE was able to hold on to some of the audience. How long they can hold on to them remains the question. Meanwhile, SmackDown and SuperStars saw no ratings change last week despite the large jump from RAW, showing once again that there is not a lot of translation from show to show. At one point, it was possible to derive ECW's rating by 0.1 based on the RAW rating, but that is not the case anymore.




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. John Cena Attitude Adjustment T-Shirt ($25)
2. Hardys Green Pendant ($10)
3. Jeff Hardy 2 Armband Package ($40, on sale $14.99)
4. WWE Ultimate Rivals Trading Cards ($2)
5. Jeff Hardy PPV #20 Action Figure/Basics YOUTH T-Shirt Package ($23.99)
6. WWE White Gift Bag ($3)
7. Jeff Hardy PPV #20 Action Figure ($39.99, on sale $22.99)
8. WWE Superstars Party Pack ($27.99)
9. John Cena Cenation Baseball Cap ($20)
10. Triple H Eversoris T-Shirt ($28)

While John Cena could not keep all of his new products in the Top Ten, his new t-shirt continues to dominate with the number one spot. Also, his presence has spurned the sales of older products, including number nine's baseball hat. Making an appearance this week is the Superstar Party Pack at number eight, an item that shows up just in time for holiday jams. Rounding out the list were the usual suspects of Jeff Hardy and Triple H, while none of the moves and changes in the past few week of WWE television have spurned any significant movements in merchandise sales.


TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:

1. Beer Money T-Shirt ($19.99)
2. World X Cup 2008 DVD Set ($14.99)
3. Jeff Jarrett - King Of The Mountain DVD Set ($29.99)
4. The Midnight Express 25th Anniversary Scrapbook by Jim Cornette ($29.99)
5. Nevermore: The Best of Raven DVD ($7)
6. Second 2 None - World's Toughest Tag Teams DVD Set Signed by Team 3D ($19.99)
7. Kurt Angle - Champion DVD ($19.99, on sale $7)
8. TNA Guitar Picks ($4.99, on sale $3.99)
9. Knockouts Blaster Pack ($19.99)

Why would one expect an update from TNA on a holiday week?




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
5 (July0 RAW Live (Brisbane, Queensland, Australia) SmackDown / ECW Live (Honolulu, HI)	6 RAW Live (Adelaide, South Australia, Australia)	7 RAW Live (Melbourne, Victoria, Australia) SmackDown / ECW Live (Tokyo, Japan)	8 RAW Live (Perth, Western Australia, Australia) SmackDown / ECW Live (Tokyo, Japan)	9 TNA Live (Jamestown, NY)	10 SmackDown / ECW Live (Manila, Philippines) TNA Live (Hamilton, ON, Canada)	11 TNA Live (Hamburg, NY)
12 TNA Live (Syracuse, NY)	13 WWE RAW (Orlando, FL)	14 SmackDown / ECW (Miami, FL)	15	16	17 RAW Live (Macon, GA) TNA Live (Johnson City, TN)	18 RAW Live (Aiken, SC) SmackDown / ECW Live (North Charleston, SC) TNA Live (Winston-Salem, NC)

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.




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, the explanations around average ratings being used for advertising costs sparked some interest. First up was bravesmg:

Great article as always, the average rating deal makes a lot of sense for advertising dollars. I wasn't aware that they measured that data monthly, I thought it was still under the 'sweeps' period.

Sweeps is a key period for all stations, still, but it is much more important for network programming than it is for cable. Since cable stations tend not to follow traditional "seasons" like networks do, they have to constantly be proving the strength of their shows and selling spots. How far in advance that happens is the question that Lansdellicious brings up:

I understand that a lot of primetime advertising is sold with a THREE month lag, which makes even more sense since the September viewing numbers are typically higher than August.

And some are even longer! The example was mostly for demonstration purposes, but yes, depending on the show, station/network, and time of year the lag can be quite a bit.

Still, with the example brings up more questions. Guest says:

The problem with your USA article:

Assuming that USA brings in 1 million per week, and that there's 5 Raw's in August, each Raw would have to recoup roughly 200,000 in advertising to make the move a break even move. That would mean roughly an extra 5,500 in advertising for each commercial. There's no way USA will make that much off of commercials for a rating's point that will end up being roughly .2-.3 above it's usual average. Even assuming other ways of increasing costs (KFC/KGC, increased advertising in the show), breaking even will be a difficult thing to do, even with a rating that surprised, well, everyone with how high it was.

Well, USA probably does not make a million per week in advertising revenue; the margin is most likely a lot smaller. If they were able to get a million a week, there is no way the WWE would have given up the rights to sell their own advertising for $550,000 a week. The other thing to consider is that USA did not completely lose all of their ad revenue for the week. There was still quite a bit of product placement and specific call out of products before matches and during waiting segments. Overall, the loss for USA that week was not much. Besides, now they have been able to send out the press release that they had the highest rated second quarter in the history of cable.

One of the other big topics over the last few weeks is being able to view WWE PPVs in other venues. Ryan shares his soliloquy:

I would love to see WWE PPVs in a cinema, I think that talking/cheering and chanting would be totally allowed and the idea would be to recreate that "live" experience. I'm in the UK, so it would be even cooler as it would be a midnight screening.

Agreed, it is most likely that it would be understood that this is a show where you go to make noise, not one to be quiet.

And finally, Indianguy makes a request:

Another request is I want to be able to subscribe via RSS to your articles alone.
Currently the RSS feed-reader in Mozilla shows me the higher level options like gaming, wrestling etc.

I read the journal even at work because it's professionally written and makes for a good Thursday brunch read... I don't want others as many are often laden with videos and sometimes pictures which are bad in the work space ...

Another thought (I know I am pitching in a lot) a mobile web site for people who use smartphones to keep up to date with 411 while travelling.

The Journal will pass your request on to the 411mania.com technical team (that basically consists of sight owner Ashish Parabi and Head Editor Larry Csonka). As this reporter travels every week for work, a mobile version of the site would be quite useful.

You should know that it is actually 411mania policy now to have images and videos throughout articles. The Journal will continue to only provide those when necessary and applicable, so there is no need to worry in the near future!


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!!

If you enjoy the Journal, why not bookmark 411mania.com and make it your home page? You can do that by clicking here.




This concludes Issue #93 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!