The Hamilton Ave Journal 12.10.09: Volume 2 – Issue 115

Posted by JP Prag on 12.10.2009

Will Dixie Carter, Hulk Hogan, and Eric Bischoff take TNA to the next level? Is Tajiri ready to mix wrestling with MMA? How much is the WWE making in their foreign markets? What is ECW’s future with their worst rating to date? 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 115

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 surges ahead

TNA could rarely be accused of playing it safe. The company started off by launching a weekly PPV program with only the hope of word of mouth for growth. Shortly thereafter, they lost their major backer and ended up selling the majority of the company to a Texas energy conglomerate. From there, they decided to leave PPV behind for an odd spot on Fox Sports Net. When that deal came to an end, the company decided to not play the safe route of renewing the lopsided agreement and instead spent months with no television until they got a much better contract on Spike.

During that time, they have hired several named talents and put much of their future on a crew of other relative unknowns. They took people in with known drug and behavioral issues, sponsored contractors from other countries, and put on dangerous matches in front of small crowds. After that, they began to tour the world, going anywhere that it seemed like the audience could support them.

During that time, the growth has been significant. While some scoff at a 1.1 average rating, TNA went from an audience of zero to 2 million domestic and millions more around the world. The company is now profitable and has seen stabilization in a number of their key areas. Even today they are making deals such as starting "Xplosion" on ONE in Australia as of yesterday and launching TNA Epics in the USA in 2010.

Despite this, TNA is hungry for more. With the signing of Hulk Hogan, TNA President Dixie Carter has made it abundantly clear that it is time for the company to see explosive growth or to fall flat on their face. So now TNA will air a live three hour version of iMPACT on Monday January 4, 2010 to take their first "shot" against the WWE.

While some are speculating that good rating could mean that iMPACT would permanently move to Mondays, Ms. Carter has said in recent interviews that is not in their plans right now. Still, it is a no-lose move. If the show does well, even doing a better rating then a normal iMPACT, then TNA can celebrate. If the show does not do well, they still have years left on their new contract with Spike and they are profitable enough to continue going.

Mr. Carter has stated that Hulk Hogan is give TNA the one thing they lack: awareness. Given that, next year seems all about increasing awareness to the maximum. Already the TNA President has sent this out via Twitter:

TNA's 1st Times Square billboard goes up tomorrow in NYC. TNA package of goodies to the 1st person who tweets me a pic!

What hasn't been made clear with this deal with Hulk Hogan is the apparent relationship with Eric Bischoff and possibly Bischoff-Hervey Productions. Mr. Bischoff's organization seems to be involved in the promotion side as he too is on board and sending out messages via Twitter:

"Was anxious to make the announcement about the Jan 4 debut. Been in the works for more than a month and a tough one to keep quiet..s*its on!"

And of course, it would appear Spike TV is fully on board with this too. They helped Ms. Carter and Mr. Hogan appear on the season finale of The Ultimate Fighter to promote the three hour Monday iMPACT. The cross promotion with the UFC audience may or may not pay off, but it at least shows a synergy between the Spike properties and gives hope that TNA may become involved in other Viacom properties as the WWE has with NBC-Universal.

TNA has everything in place they could possibly need to succeed at the top level. If they can capitalize on all of those tools will be the story of 2010.


Newsbites

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

The Brain Injury Research Institute and Christopher Nowinski's Sports Legacy Institute have both issued statements regarding the death of Andrew "Test" Martin in relation CTE level at the time of his death. Both compared Mr. Martin's brain to that of Chris Benoit's, which caused a quick response from the WWE:

While this is a new emerging science, the WWE is unaware of the veracity of any of these tests, be it for Chris Benoit or Andrew Martin. Dr. Omalu claims that Mr. Benoit had a brain that resembled an 85-year-old with Alzheimer's, which would lead one to ponder how Mr. Benoit would have found his way to an airport, let alone been able to remember all the moves and information that is required to perform in the ring. WWE has been asking to see the research and tests results in the case of Mr. Benoit for years and has not been supplied with them.

Over in Japan, Yoshohiro Tajiri is involved in a startup wrestling promotion called "Japan SMASH". The organization will apparently mix MMA and wrestling matches on the same shows. To see the first event, just be in Japan on March 26, 2010.

After years of trying to get it set up, rumors are the WWE is once again set to tour China at some point in 2010.

CNBC recently sat down with WWE President of International Andrew Whitaker. Mr. Whitaker revealed much of domestic vs. non-domestic data that the WWE is not quick to reveal:

In the third quarter, North American revenue slipped 2.3 percent year over year to $81.3 million. Revenue from Europe, Middle East and Africa (EMEA) fell 15.8 percent to $14.4 million.

The Asia Pacific region surged with an 83.8 percent revenue jump to $12.5 million and the Latin American region showed similar growth of 82.4 percent to $3.1 million.

During the same interview, Mr. Whitaker went into other markets the WWE is looking to break in to:

Brazil and Russia and top of WWE's list of key new markets, but it won't be an easy win, he added.

The key to breaking into new markets like Brazil and Russia is tapping into the local culture and getting some of the country's home-grown talent in the ring, Pachter said.

The storylines that work in a US soap opera wouldn't work in Brazil or elsewhere, so the writers have to reflect their audience and that's true for the WWE, he said.

Brazil will be a tough market to break because of its long history with wrestling, but it also already has a strong batch of wrestlers who could take up the challenge, according to Pachter.




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 December 9, 2009, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.2
Open (Last Week's Rating): 3.2
Percentage Change: UNCH
52-Week High: 4.5
52-Week Low: 3.1
All Time High: 8.1
All Time Low: 1.8

SmackDown*
Close (This Week's Rating): UNAV
Open (Last Week's Rating): 2.1
Percentage Change: N/A
52-Week High: 2.3
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): 0.8
Open (Last Week's Rating): 1.0
Percentage Change: ▼ 20.0%
52-Week High: 1.4
52-Week Low: 0.7
All Time High: 2.3
All Time Low: 0.6

TNA iMPACT**
Close (This Week's Rating): 1.0
Open (Last Week's Rating): 0.9
Percentage Change: ▲ 11.1%
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): 0.8
Percentage Change: ▲ 20.0%
52-Week High: 1.0
52-Week Low: 0.7
All Time High: 1.0
All Time Low: 0.7

*** 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:

SmackDown finally started to get their ratings in, posting a 2.1 for the two prior weeks. SmackDown has been on a roll lately, but they are they ones. RAW again came in with a 3.2, but this time could not blame it on the low first hour rating like the prior week. iMPACT managed to retread some ground up to a 1.0, but that is obviously not where they are looking to be heading in to their biggest free show ever. But as troubling as that may be, ECW absolutely take the cake with their 0.8 rating.

This was ECW's lowest regular night rating since the show premiered on SyFy. The last time they got close to this rating was on July 9, 2009 at a 7pm timeslot (a Thursday night) with a 0.7. Before that was December 6, 2007 when they went head-to-head with TNA iMPACT and scored a 0.6 rating. Taking into consideration ECW is up for renewal right now and the idea of making the show into something else, the WWE will need to move quickly. With SuperStars not getting a better rating than ECW, SyFy may be interested in a different format for the show like that.

Also of note, before the ratings listed, the only rating available that were worse were the original ECW on TNN ratings. That show had its last outing on October 6, 2000 with a 0.6 rating.




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 selling items for the WWE? WWEShopZone.com releases a list of varying numbers to show what is selling for them:

1. Superstars Collectible Cup ($1.99)
2. John Cena Never Give Up T-Shirt ($25.00)
3. John Cena Never Give Up YOUTH T-Shirt ($22.00)
4. John Cena Never Give Up Sweatband Set ($12.00)
5. Jeff Hardy My Life My Rules Ultimate DVD Package ($34.99)
6. D Generation X YOUTH Slippers ($14.99)
7. Jeff Hardy My Life My Rules DVD/T-Shirt Package ($28.99)
8. John Cena Attitude Adjustment Basics YOUTH T-Shirt ($50,95, on sale $9.99)
9. DX Holiday 2009 Youth T-Shirt Package ($52, on sale $26.99)
10. Are You Ready: The Unauthorized History of D Generation X Paperback Book/DVD Package ($19.99)
11. Jeff Hardy My Life My Rules DVD ($34.95, on sale $23.58)
12. WWE Red Gift Bag ($3.00)
13. D Generation X Worlds Biggest Member T-Shirt ($25.00)
14. Jeff Hardy Match Figure with Spring Ring ($24.99)
15. DX Holiday 2009 T-Shirt Package ($55, on sale $29.99)
16. Jeff Hardy Black/White Armbands ($15.00)
17. D Generation X MEN'S Slippers ($14.99)
18. D Generation X Army Dog Tags ($10.00)
19. Gift Wrap Pack ($6, on sale $3.99)
20. D Generation X Army Sweatband Set ($12.00)

John Cena's plethora of new items continue to keep WWE.com's sales afloat, with a health mix of DX and Jeff Hardy merchandise in the mix. Outside of these three, the list is severely lacking representation from anyone or anywhere else. With the holiday season here, the WWE would generally be seeing higher merchandise sales, but the diversity of list leaves much to be desired. These are basically the same items and people that have been selling all year, showing a real lack of growth in the other component areas of the WWE merchandise machine.


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

1. Don's Insane Brown Bag Special ($19.99, on sale $18)
2. Don West's Vintage Celebration ($59.97, on sale $10.99)
2. Beer Money (Take A Fall) ($0.99, on sale $0.89)
3. Sting Plastic Mask ($4.99, on sale $3.99)
4. Complete 2008 PPV DVD Set & Autographed Sting Card ($240, on sale $71.99)
5. Sting "Discharge" T-shirt ($19.99, on sale $14.99)
6. Beer Money - Daily Buzz Shirt ($19.99, on sale $14.99)
7. TNA Logo T-Shirt Special ($24.99, on sale $22.49 to $24.99)
8. TAZ Beat-down Hoodie ($39.99, on sale $29.99)
9. No Surrender – 2009 DVD ($19.99, on sale $14.99)

It's the same list as the last three weeks except one item was removed.




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
13 (Dec) WWE TLC (San Antonio, TX)	14 RAW (Corpus Christi, TX)	15 SmackDown / ECW (Laredo, TX)	16	17	18 RAW Live (Mobile, AL) SmackDown / ECW Live (Miami, FL) ROH Live (Manassas, VA)	19 RAW Live (Albany, GA) SmackDown / ECW Live (West Palm Beach, FL) ROH Live (New York City, NY)
20 TNA Final Resolution (Orlando, FL) RAW Live (Tallahassee, FL) SmackDown / ECW Live (Orlando, FL)	21 RAW (Tampa, FL) SmackDown / ECW Live (Fort Myers, FL) TNA iMPACT (Orlando, FL)	22	23	24	25	26 RAW Live (Greensboro, NC) SmackDown / ECW Live (Albany, NY)

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, changes in the WWE universe of shows were up for debate. First JackieChanny says:

Getting rid of ECW is not a big deal. All that will change is the ECW title will likely go away, and the show will be turned into a SuperStars show. The initials is all that will go. Instead on SyFy, it will be WWE:Full Force or something with a few matches and clips.

Given the ratings for ECW this week, SyFy and the WWE might prefer a Superstars type show. Since the WWE seems quite happy to tell their audience that ECW is not important and constantly move anyone with momentum off of the roster, the rating results should be no surprise. Still, this weeks showed that even the audience has given up.

Aside from ECW, the future of RAW is in question. The IWC shares some West Coast thoughts:

"One would assume that USA would be on delay in the West Coast, which would help with their national alignment and scheduling. Right now, it is a wait and see game, especially considering where the Comcast buyout may lead."

Actually Dish Network doesn't carry the west coast feed of USA network, and I don't know about other satellite providers, but that could be a problem if they do a three hour RAW with a 4PM start time for the west coast.

It gets worse than that, as jeff lets us know:

For standard definition on cable, yes. USA only has one HD feed, so west coast gets Raw at 6pm (same with syfyHD/ecw and WGNSD/superstars, SpikeHD/impact) whereas since mynetworktv is (was) a network with local affiliates, smackdown airs at the regular time, 8pm.

The Journal was unaware that the stations were not doing a separate west coast HD feed. That is a lot of trouble on all fronts. It could be assumed that west coast feeds are coming, but that could be years away.

Aside from the TV shows, PPV changes were of great portent. What he said says what he has to say:

I know the popular thing to do is to bash WWE and praise UFC on every level, but with WWE reducing their PPV shows, it seems to me UFC is adding PPV shows lately.

Guest#1580 has the response for this one:

The companies are in different situations, however. Until UFC sees a decrease in PPV buys, they have no reason to cut the number of PPV. In fact, as long as their operating profits keep going up they have every incentive to add more shows.

This is the flip side of what Michelle Wilson was saying, but WWE is working on the side of decreasing buys.

Of course, UFC runs the risk of over saturating the market. Certainly there is the school of thought that you should leave your audience wanting more, rather than having too much product. That way you can milk the cow longer. The downside of that philosophy is that somebody else may step in and fill the extra demand. Life is full of contradicting wisdom, which is why degrees and experience aren't everything.

It is nice to see that WWE has added somebody why is more methodical and intellectually grounded.

Nothing to add to that one! Although Slappy may have something:

On PPV buying, Ms. Wilson says, "There may be one person ordering and three families coming over to watch it." This is a point I've been trying to make for a while - PPVs are too expensive. At $40+, you HAVE to pool together 4 families to make it worth it. Otherwise you don't order. If WWE had the guts to try a $9.95 PPV, they'd get 5-6 times the buys (because more people would stay at home and watch in groups of 1-4)and WWE would actually make MORE MONEY. Greed kills logic...

The IWC came back for his thoughts on this:

Actually, when you factor in PPV right's fees and other costs factored in producing a PPV, $9.95 might not cover all the bills. The increase would not be as large as one would expect. However, if you lower the PPV prices to say $24.95 for all the "non big-4 PPVs" and $34.95 for the big 4s, then that might be a better money making model.

Couple that with UFC easily reaching 500K-1M PPV buys at $60 a pop, the price of PPVs doesn't seem to matter. It depends on what is on the card that screams to a potential buyer "I want to see that".

And Guest$0703 added even more depth to that:

In addition to what The IWC said, there is also the factor of habits. Once people get used to watching with a bunch of friends, they may not go back to watching alone just because the prices of PPVs go down. Take the Super Bowl for instance. Ever been to a Super Bowl party? Ever been to a big one? That is on free broadcast. There is no monetary incentive to get together with others to watch it, but people make an event of it anyways.

What seems logical isn't always true. Until Galileo, people thought that denser object fall faster than less dense objects. He showed that a pound of lead falls just as fast as a pound of feathers.

This is why in business school, they teach people to prove things out with numbers. This is also one of the more annoying things about MBAs - they always ask for numbers and refer to statistics.

There is a point where you maximize profits because of buying habits. Lower the price too much and you start losing money because you aren't covering costs. Raise the price and you lose buyers, but up to a certain point you are bringing in money faster than you are losing buyers. The art is in finding that ideal point.

The WWE isn't trying to get their product into the most individual buyers. They are trying to maximize their short term and long term profits. Sometimes these are contradicting goals (Cena/Orton again v developing new stars), which leads to internet bitchfests.

This is absolutely the point the Journal has been trying to make. The WWE is not in the business of maximizing buyrates or even revenue—they want to maximize profits. As readers of the Journal have noted through the year, the WWE has actually decreased the costs to produce PPVs so they are much more profitable this year then last, despite the lower buyrates. Getting four to five times the buyrates is a ridiculously hard goal to achieve. It costs a lot more to gain a new customer then to keep an existing one and get them to buy something else. So if the WWE raises prices, they will lose some customers but may made up the difference and then some with existing ones.

How people get together to watch PPVs seems to be translating into free television, at least according to Burnout:

Thanksgiving is the most expensive meal of the year. Since the economy is a lot worse off than prior years, odds are more families ate together to cut costs. Personally I don't have Spike TV and get stuck watching Impact online. They got an extra rating from me since I got to watch it at moms. Thank god Rick Rude isn't around anymore so I didn't have to see her drool.

Sadly, unless your mom was a Nielsen family, there was no change in ratings from you. That said, if more people are watching shows together then perhaps that is why all shows are seeing ratings go down. It would be an interesting study.

And finally, Guest#9650 wants to know:

What are your thoughts on the NBC-Comcast deal? Could this open outlets for more WWE on TV?

This has been talked about the past few weeks. From Issue #112:

Right now, NBC Universal's parent company GE and major shareholder Vivendi are negotiating amongst themselves to find a dollar amount to sell controlling interest in the media giant to Comcast. By locking up key properties at an earlier date, GE-Vivendi can drive up the price of their deal.

How the Comcast potential purchase could affect the WWE in the future remains to be seen, but Comcast could be an important partner in the WWE starting up their own network in the years to come.

The other item of note is that WWE SmackDown on MyNetworkTV comes up for renewal at the end of next year. A Comcast backed NBC Universal could want SmackDown to be in their family with RAW and ECW. Since Comcast also owns stations like Comcast SportsNet, Versus, and G4, there are plenty of potential homes that they may want to put a ratings powerhouse like SmackDown. While SmackDown's ratings are not impressive on networks, compared to other syndicated shows and cable television, the show is an extremely attractive brand.

Where another media merger does limit options for consumers, it may actually open up doors for the WWE. For now, it is a wait and see game, but this will be a story to watch in about September of next year.


Plenty more was written, so be sure to take a look. And 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 #115 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!