The Hamilton Ave Journal 12.24.09: Volume 2 – Issue 117

Posted by JP Prag on 12.24.2009

Is TNA iMPACT one of the most available programs in television history? Have the WWE, THQ, and JAKKS Pacific finally ended their long running feud? What is the only wrestling show with rising ratings? Would you buy a $100 WWE spinner belt for the holidays? 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 117

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 making waves

TNA President Dixie Carter has made it very clear that TNA is ready to go in a "make or break" mode. All the stops have been pulled out and TNA is going ahead full force to try to give the company the rapid growth they have wanted for so long.

One of the main issues that has plagued TNA is awareness. While they have a roster that includes well known-talent, a two hour weekly TV show, a touring circuit, and monthly PPVs, most people are completely unaware of their existence. The paying audience has grown by 30% over the past three years, but that has not amounted to the level that Ms. Carter wants the company to be at. So measures have been taken from hiring Hulk Hogan, having a Monday night special, getting a billboard in time square, and plenty of others to make TNA a well known brand.

This week, the new movement continued as TNA once again aired commercials during RAW in several local markets, including Boston. They also sent out a press release to let people know that Hulk Hogan would be returning to PPV in January along with his television return on the fourth.

TNA is also using new television to increase their presence domestically. Not only is TNA Epics set for a debut in January, but another show appears to be set for a January 11, 2010 on DirecTV station 101. The series will be titled "Before the Bell", though no official description of the show has been given. TNA had previously aired the "Bound for Glory Countdown" show on the same station, so the company looks to be capitalizing on that relationship and channel to expand awareness of the product. As was part of their new agreement with SpikeTV, Spike has the first right of refusal on any new TNA show before TNA can shop it around. Since apparently Spike passed on this deal, TNA was free to sell the programming to DirecTV.

Elsewhere in the world, TNA also got clearance in nearly four dozen new countries. From the press release:

Starting January 1, 2010, Total Nonstop Action (TNA) Wrestling will bring the fastest growing professional wrestling promotion in the world to Sub-Saharan Africa on Setanta Sports Africa. TNA's flagship program, "TNA iMPACT!" will air on Setanta Sports Africa Fridays at 19:00. African TNA fans will also be able to watch every TNA pay-per-view event, including "TNA Lockdown" and "Bound For Glory" live on Setanta. TNA will also bring its "TNA Epics" and "TNA Xplosion!" to Africa, with airdates to be announced soon.

TNA Wrestling programming on Setanta will be available in the following areas of Africa: Angola, Benin, Botswana, Burundi, Burkina Faso, Cameroon, Congo Democratic Republic, Congo Republic, Cape Verde, Chad, Central African Republic, Comoros Islands, Eritrea, Ethiopia, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Ivory Coast, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mayotte, Mozambique, Namibia, Niger, Nigeria, Reunion, Rwanda, Sao Tome & Principe, Senegal, Seychelles, Sierra Leone, St Helena, Somalia, Sudan, Swaziland, Tanzania, Togo, Uganda, Zambia, Zimbabwe.

By adding the Sub-Saharan Africa area to their broadcast zone, TNA now has clearance in nearly 85 countries. Very few shows in all history have had this type of availability, so TNA has put themselves in a unique class in this respect.

But all is not perfectly well in TNA. After hosting three fairly successful tours of Europe, TNA thought they would expand even further and do a tour of Australia in February 2010. That tour has now been cancelled (or rather, rescheduled to a later undetermined date) due to what TNA is describing as "changes in the U.S. TV production schedule". Says Andy Barton, Executive Vice President of TNA:

"Regrettably, we need to postpone our first tour of Australia due to changes in our television production schedule. We apologize to our Australian fans and hope to reschedule the dates as soon as possible."

Most suppose this cancellation really comes from slower than expected ticket sales. The trip to Australia takes a significant amount of time and costs a lot of money, so TNA has to be sure to recoup that cost.

This is a similar situation to when TNA scheduled their first non-US shows in Israel for November 2007. A month before those shows TNA cancelled without giving a reason and said they would be rescheduled for the future. Since it has been two years and TNA has not gone back, it may be longer than expected for TNA to try Australia again. Said the Journal after the shows is Israel were cancelled in 2007:

Cancelling both events is a hard move for TNA. They undoubtedly lost money on promotion, hiring local people to handle logistics, cancelling airfare and hotels, and an untold amount of goodwill.

This is also amidst a cancelled press conference and tickets not going on sale for expected international events. TNA has had trouble creating a solid domestic base, so some international events outside North America may have been ill advised anyway. Still, there appears to more happening in TNA than meets the eye. Although the company is not in any danger of going under, it seems like there is a lot of turmoil revolving around company operations.

Like the tour of Israel, this one is indicative of the other main issue TNA has had besides awareness: acting bigger than they are. While Ms. Carter has made it clear she wants to be the top wrestling promotion in the world, she and the company have shown little patience in wanting to get there. Most of the moves they make are giant ones and not small steady ones. So when a giant step does not work out, they end up exactly where they were before.

Given the similar story from two years ago, has anything really been learned in two years? More so, will the make or break attitude of TNA in 2010 amount to true growth? Can TNA really handle the rapid growth they so desperately want? Or would a slower organic growth have worked better for the company's long term health?


WWE, THQ, and JAKKS Pacific end one feud

After months of litigation, WWE, THQ, and JAKKS Pacific finally came to an agreement concerning the WWE video game license. Ahead of schedule, THQ initiated their option to renew the WWE video game license in a unilateral manner that would force JAKKs Pacific to also go along for the ride. JAKKs did not want to go through with the option as written, and so a new set of cases between the parties began. In a hope to appease the situation, the WWE gave the two companies an extension for when the option had to be answered, but that did not appear to be enough.

Now, though, the parties have come to a three-way agreement that seems to be agreeable to all. From the press release:

As part of the resolution of these matters, THQ will pay WWE $13.2 million. In addition, THQ has entered into a new eight-year video game license directly with WWE commencing January 1, 2010, which is three years longer than the renewal term under the previous arrangement between WWE and the THQ/JAKKS Pacific LLC joint venture…

In addition to its preferred return payment to JAKKS for the period ending December 31, 2009, THQ will pay JAKKS Pacific $20 million over the next four years, with payments of $6 million due June 2010 and June 2011, and payments of $4 million due June 2012 and June 2013, and the THQ/JAKKS Pacific LLC joint venture will terminate effective December 31, 2009.

In the end, THQ ends up in exclusive relationship with the WWE for eight years instead of five, the WWE gets a refund on the agreement, and JAKKs gets paid to get out of the mix. Says Brian Farrell, President and CEO of THQ:

"This agreement ensures that WWE games will continue to be an important cornerstone of THQ's annual release schedule for the long term… We look forward to working directly with WWE to expand their brand in the video game space through continued game play innovation and increased online delivery of WWE content."

During their time together, the WWE franchise has generated over $1.4 billion in revenue, so THQ was remiss to let them go. JAKKs and the WWE, on the other hand, have had a strenuous relationship over the years with several lawsuits between them. Given that WWE is no longer using JAKKs for their toy line starting in 2010 and TNA will be, it looks like the two companies are quite glad to be done with one another.


Newsbites

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

BloggingStocks.com's Steven Mallas recommended that investors watch out for the rumored Bret Hart storyline to increase the WWE's fortunes. You can read his entire thoughts here.

In the continuing glut of online surveys, the WWE has sent out another one. This one asks the regular demographic questions of age, gender, and race (including a separate question about Hispanic origin) before going into questions about what type products people buy and collect (note the distinction between "buying" and "collecting"). This is followed up with a question at the end about children living in the house as well. Obviously, the WWE is trying to catalogue by demographic how their products are selling to know how to better promote to one group or another with Hispanics and households with children getting special attention.

Mexico continues to be a strong market for the WWE as RAW scored a 10.2 rating last week while SmackDown scored a 9.0. This may be one of the indicators of why they are going after more people of Hispanic origin in the USA as well.

NECW was forced to cancel their first set of TV tapings for the show on Comcast SportsNet set to debut January 8, 2010 due to the inclement weather in the northeast. Tapings have been rescheduled for January 23, 2009 so the first few shows will include matches from recent events and profiles on various wrestlers instead or "new" content.





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 23, 2009, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.2
Open (Last Week's Rating): 3.3
Percentage Change: ▼ 3.6%
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): UNAV
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): UNAV
Open (Last Week's Rating): 1.0
Percentage Change: N/A
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): 1.0
Percentage Change: UNCH
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: 0.7

*** 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:

Although the syndicated list once again excluded SmackDown since the top shows ended up with a minimum 2.7 rating, SmackDown's rating actually came in at a MyNetworkTV high of a 2.2. This was the highest rating since October 2, 2009 rating—that being the SmackDown Tenth Anniversary show. This was also a sold jump over the prior week's 1.8, which was the first week below a 2.0 since October 16, 2009's 1.9.

Despite the one-week drop, SmackDown is still the only show with a positive trend line on ratings, however slight that trend line may be. SuperStars and iMPACT have been flat for a while now while RAW and especially ECW have suffered. RAW now has a 4-week running average of a 3.2 which they have not had since December 22, 2008. In other words, RAW is exactly back to where they were at the end of last year on the same comparable day, showing no overall gain since the bump began on June 22, 2009 with the three-hour commercial free show (4.5 rating).

ECW, on the other hand, had a four week rolling average of 1.3 last year. This year they are looking at a 0.9 rolling average. With their contract on SyFy coming to an end in two weeks, the WWE better be ready to pull some magic to keep programming on the station on the air. Despite the ratings, the WWE still makes many millions of dollars from programming fees for ECW all over the world and they would not want to lose the show state-side.




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. D Generation X Worlds Biggest Member T-Shirt ($25.00)
2. John Cena Never Give Up Baseball Cap ($20.00)
3. John Cena Never Give Up T-Shirt ($25.00)
4. D Generation X Basics YOUTH T-Shirt ($9.99)
5. John Cena Attitude Adjustment T-Shirt ($25.00)
6. Hardys Green Pendant ($10.00)
7. E-mail Gift Card ($10.00)
8. D Generation X Army Strong T-Shirt ($25.00)
9. John Cena Attitude Adjustment Basics T-Shirt ($14.99)
10. Superstars Collectible Cup ($1.99)
11. WWE Championship Spinner Commemorative Title Belt ($100.00)
12. WWE Red Gift Bag ($3.00)
13. WWE 2009 Topps Trading Cards ($3.00)
14. Gift Wrap Pack ($6, on sale $3.99)
15. John Cena Attitude Adjustment YOUTH T-Shirt ($22.00)
16. Triple H Fear No Man T-Shirt ($25.00)
17. John Cena Attitude Adjustment Pendant ($10.00)
18. Jeff Hardy Black/White Armbands ($15.00)
19. WWE 2009 Year in Photos Magazine ($9.99)
20. WWE Shot Glass Set ($20, on sale $7.98)

While John Cena, DX, and Jeff Hardy (to a lesser extent than usual) dominated this list once again, there were a few items that broke up the list. The most impactful of these was the number eleven WWE Championship Spinner Commemorative Title Belt. This high ticket $100 item sold a high enough volume to almost break into the top ten, a tough job for any high-cost item. Although the WWE thrives on high margin items like t-shirts and arm bands for the biggest profit numbers, a big ticket item can help bolster weakening merchandise revenue numbers.

Also this week, there were only a couple of items that had been discounted. The WWE has had a lot of issues with just clearing out inventory at cost instead of selling new merchandise, but this list shows some strong numbers moving in to the end of the year.


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. 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. TAZ Beat-down Hoodie ($39.99, on sale $29.99)
8. No Surrender – 2009 DVD ($19.99, on sale $14.99)

Looks like TNA has decided to finish the year without a single update. Hard to believe the numbers are not changing during the Christmas month. Will this list change after January 4, 2010?




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
27 (Dec) RAW Live (Buffalo, NY) SmackDown / ECW Live (Raleigh, NC)	28 RAW (Hartford, CT) SmackDown / ECW Live (Charlotte, NC)	29 SmackDown / ECW (East Rutherford, NJ) RAW Live (Manchester, NH)	30 WWE SuperShow (Syracuse, NY)	31	1 (Jan)	2
3	4 RAW (Dayton, OH) TNA iMPACT (Orlando, FL)	5 SmackDown / ECW (Louisville, KY) TNA iMPACT (Orlando, FL)	6	7	8 RAW Live (Boston, MA) TNA Live (Westbury, NY) ROH on HDNet (Philadelphia, PA)	9 RAW Live (Lincoln, NE) SmackDown / ECW Live (Fargo, ND) TNA Live (Poughkeepsie, NY) ROH on HDNet (Philadelphia, PA)

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, True wanted to confirm Vince McMahon's place in the cable media pantheon:

Vince McMahon is a powerful figure on cable, whether we like it or not. Big time numbers over a consistent basis, and brings in the demos.

That is the part that cannot be denied. And the WWE is seeing their highest levels of profitability ever, so as a company they continue to run efficiently and hold a strong place in all programming.

Of course, some people do not understand what the numbers mean, like Quimby:

"But what is more of a distinction than sales?"

Ratings? PPV buys? Adoration of people with the vote?

People with the vote, Quimby? That is exactly the point the Journal was making. Whatever you may think of the WWE's quality of product, the only vote that counts is the wallet. In that category, the WWE hold the greatest distinction. Ratings and PPV buyrs are lagging indicators and only amount to one thing: other money. Higher ratings mean the WWE can charge higher programming fees. Greater PPV buys mean the WWE gets more revenue from that stream.

Despite lower ratings on their flagship shows in the United States, the WWE produces more television in this country and ever other country then they have at any other point in their history. The money they make in programming rights fees far surpasses what they did in the late 1990's, despite the higher domestic ratings (also at a point when they were selling their own advertising). As far as PPV goes, the company has taken a hit there on the revenue side but they have decreased the costs to produce them so much that PPVs are more profitable now than any other time in the past decade.

Still, at the end of the day PPV is but one revenue stream and not one the WWE is dependent on. At 13% of revenue and 16% of profit, PPV does not hold as much weight in the WWE revenue model as it did even four years ago. The Journal will continue to attack the WWE for lower ratings and PPV buys, but the bottom line is what counts in the end. And when it comes to the bottom line, the WWE has the distinction that was glossed over above.

Leaving behind the WWE and the USA, we jump across the pond and companies with BL7:

Just a quick note on TNA in the UK- Virgin only ever planned to show Impact for 5 or so weeks. The company owns both Virgin and Bravo UK (Impact's normal channel), and showed it on both channels every week. The difference being Virign is a free to air channel, whilst Bravo is a cable/sky upgrade channel.

Believe the idea was to hook people on Impact for free, then move it back to being solely on the pay only channel in the hope that people would upgrade their subscriptions. Can't say I'm overly confident many people would pay out £63.10 extra per month just for TNA though...

Were other pay channel shows also being shown at the same time? Perhaps the idea was to give a "free sample" to get people to order, similar to how in the States they have previews of HBO.

It would appear that the free version of iMPACT was not truly cancelled, nor was Epics. From Jack The Reaper:

"That would be two TNA programs in the UK that have not quite panned out, although with Epics premiering in the USA it may be back in the UK in short order."

Already is, sir - an early versions of TNA Epics was on Bravo last year, and the new (Foley hosted?) version now airs weekly.

Good work to TNA, then! More programming fees can only help their financial situation.

Moving into the fight between WWE and TNA, Mike asks:

I would be interested to hear the author's opinion on how WWE being in Orlando on Sunday will affect attendance at TNA's Pay-Per-View on Sunday. Essentially, they are making local fans choose between a free PPV, featuring wrestlers they can see every two weeks, and a nationally touring brand that doesn't come to town very often. Would it be fair to say that comparing attendance of the two shows could be seen as an indicator of what will happen when Impact goes up against RAW?

Since it happened in the past, there is not much to say about the audience. TNA had their average size audience in attendance (the iMPACT Zone does have a limited capacity) and the WWE had several thousand people on hand. Marky Mark also shared his smart marky mark thoughts:

Absolutely zero. The few hundred teens/middle aged men that go for FREE hyped up on Mountain Dew and scream "This is Wrestling" before a match even starts will still go to TNA's PPV.

The thousands that purchased tickets for WWE will go there, as will more 'walk up' ticket sales from a different breed of fans, ie PG crowd.

While crude, the point is there. TNA has a built-in base of people who come to the park and wait in line to go to the shows. The WWE has the younger and casual audience and benefits from walk-up sales. A couple of weeks ago, Executive Vice President of Marketing Michelle Wilson confirmed that walk-ups accounted for a growing number of their ticket sales, so there is some truth to that thought.

Sticking to the competition, Kevin Edwards wants to talk about the UFC:

UFC Fight Nights haven't been proven to be powerhouses in the ratings. They usually run about a 1.0 to a 1.5 rating, and that's on nights where they are, for the most part, free of competition. Furthermore, the UFC hasn't exactly made the Fight Night on Jan 11 a "must-see" card, and WWE will no doubt be wanting to prove to the UFC that while UFC may be leading in pay-per-view, cable is WWE's world.

Cable is the WWE's world, but the Journal is looking at this more from Spike's perspective. Spike wants to see what they can run on Monday nights against RAW, so they are testing the waters by putting their key properties against the shows. Spike is not looking for tremendous ratings; they just want to see what can hold up against RAW and build from there. Guest#3567 also has another thought on this:

The thing about TNA doing occasional specials on mondays is that they get WWE to expend their bullets without even moving. WWE isn't moving RAW to Thursdays to crush them and TNA seemingly has their network's backing, so they are fine.

Meanwhile, WWE is floating rumors of a Brett Hart return. Sure that pops ratings one time, but that trick can only be used so many times. There is only a limited amount to stuff that is sure to spike ratings. Smart move is to get WWE to use as many of them as possible before making more direct challenges.

We have already seen the trick of 3-hour shows being used too many times and leading to lower ratings, as well as the guest-host programming returning ratings to exactly where they were last year at this time. No trick can keep ratings afloat for long, and Spike may be looking at this as the bigger picture of taking on cable's #1 channel USA. Remember: Spike's goal isn't just to have iMPACT or UFC as top rated shows—they want Spike to be the number one channel in all of cable.

Speaking of competition, for those wondering why ROH was listed as "potential competition" for the WWE, any form of entertainment is really competition for RAW, but ROH is trying to gain the WWE's specific market share. Are they anywhere near the WWE's pantheon yet? Absolutely not. Could they get there? There's always a possibility. Thirty years ago people said it would be impossible for a wrestling company to be taken nationally, especially some cartoon show from the northeast. And yet here and now the WWE is as one of the largest media companies in the world, period.

Of course, ROH could just fold one day as they have had major cash flow issues for two years. At the same time, NECW now has clearance in more homes in America than ROH does, so perhaps they stand a better chance of growing. Seven years ago TNA did not even exist and yet today they have revenues in excess of $45 million. TNA has made it clear that that is not enough for them, but ROH and NECW have made no such statements. Each may be happy aiming to be number three for now and just have a national recognition.

Not every company has the goal of being the only force in their market. The WWE wants that and perhaps TNA wants that, but others do not necessarily work that way. Being in business is not about winning and losing; it is simply about making a profit and doing what you enjoy. The existence of another company does not mean you have "won" or "lost"—all you can be judged against is your own number every year. Do TNA, ROH, NECW, WWE, and all others see growth at the bottom line? If yes, then all is well. If not, then there is trouble.


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

Till then!