The Hamilton Ave Journal 01.21.10: Volume 2 – Issue 121

Posted by JP Prag on 01.21.2010

Can Vince McMahon make his own movies? Was going to MyNetworkTV a big mistake for SmackDown? Could TNA keep their audience from iMPACT to Epics? Why is Jeff Hardy still outselling 95% of the WWE roster? 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 121

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: WWE takes over their own Studio

WWE Studios is once again going through a major revamp. After changing Presidents, key partners, and methodologies, the division is once again modifying they way they do business. From the press release:

WWE Studios today announced that it will self-distribute and market its upcoming slate of nine films beginning with the summer release of the drama "Brother's Keeper" (working title) starring Patricia Clarkson, Danny Glover and WWE Superstar John Cena®. Samuel Goldwyn Films will be WWE Studios' theatrical distribution partner in the U.S. Vivendi Entertainment will be WWE Studios' domestic DVD distribution partner.

This comes on the heels of the WWE dumping Lionsgate and 20th Century Fox, which have distributed WWE films for the past decade. The idea is that the WWE can do everything themselves cheaper then with these other companies, assuming they have the talent, skills, and connections to pull them off. Says WWE Chairman and CEO Vince McMahon:

"This is an opportunity for us to completely control everything from the production all the way through to release. We're putting our money where our mouth is."

Each film will have a budget of $5 million, a number not new to the division in recent films. But they are also gaining incentives by taking advantage of lower cost methods and areas. From Variety:

It's saving considerable production coin from tax incentives and startup costs by lensing each pic nearly back-to-back in New Orleans, with crews moving from one film to the next once production wraps.

In other words, the WWE is just continually filming one movie after another with the same crew, so they never fully break set. At the same time, they are looking to use more established actors and less wrestlers in their films so that wrestlers will not have take time off from the road. Like the wrestling product, though, Mr. McMahon wants to take the movies PG as well so that it can be expanded to a wider audience.

Much like many of the other projects the WWE has done in the past, Mr. McMahon is hoping to catch the audience the WWE does not have. Says the Chairman:

"That's a large number but there's a much larger number that we're not reaching… We have the resources, we just need to leverage all of it. There are so many different things that we can do."

That has been the motto of the many different expansion models of the WWE in the past. Mr. McMahon and those in the WWE's inner circle believe they can replicate the WWE's process of marketing, sales, cross-promotion, etc… into many other forms of entertainment.

While it has not worked out with football, body building, restaurants, or theme parks, Mr. McMahon seems quite hopeful. But they are also using this opportunity to build up the vast WWE library. In the coming years, the WWE will be looking to start their own television station and they want a variety of programs to put on it, including movies. This would seem, then, that they are not looking to start the "wrestling" station, but the "entertainment" station that is focused on their pool on contracted talents.


MyNetworkTV becomes a good home

When the WWE went to MyNetworkTV, the station was a failure. Started in January 2006 when the WB and UPN merged into the CW, MyNetworkTV was created by NewsCorp to backfill a need of the mostly former UPN affiliates. The network did not have an identity, so it tried to go with prime-time soap operas—a move that quickly led to failure.

NewsCorp (owners of FOX, FX, FSN, and many others) decided to stand behind the idea of a smaller network and stuck with them. They rebranded the network starting the Fall of 2008 with a set of inexpensive unscripted programs. But cornerstone at that time was WWE SmackDown, which quickly outpaced everything else on the network.

Over the next year and half, the unscripted shows proved not to be worth it at all, so MyNetworkTV tried again. This time, they went with syndicated versions of known shows, and it finally looks to be paying off. Viewership on certain nights is up considerably, including:

Monday: +64%

Tuesday: +40%

Wedneday: +110%

Thursday: -6%

Friday: Push

Suddenly, MyNetworkTV is looking less like a joke and more of a viable contender. According to Broadcasting & Cable Magazine:

The News Corp.-owned network's audiences remain small; season-to-date, it's averaging 2.3 million total viewers, but that's up substantially over last year's 1.8 million. MyTV executives are renewing affiliate contracts with stations, which seem happy with the new model. "We are pleased with MyNetworkTV's new program lineup-the schedule and the performance," says WAWS Jacksonville General Manager Jeff Whitson, who airs MyTV on the Newport station's digital tier.

All those people who felt the WWE should never have gone to the network or should just leave should take note of those numbers. SmackDown itself averages around 3 million viewers, so it is still the top program on the station. That said, other programming is catching up and the WWE could find themselves in a tougher position the next time their contract is up for renewal.

SmackDown has been a pivotal building block for MyNetworkTV and no doubt the company appreciates that. But with a network growing, it actually diminishes the WWE's bargaining power. On the other hand, should the network grow it may help SmackDown gain viewers as well, in which case the WWE could be better off overall.


Newsbites

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

The premier of TNA Epics on Spike TV scored a 0.7 rating. TNA and Spike would seem to be happy with this program's late night number, but it does mean they show lost 45% of its audience from the lead in.

SmackDown will be pre-empted this week in several markets for fundraisers for Haiti, including New York City. Expect this to make the SmackDown rating drop considerably, whenever the rating actually becomes available.

TNA is also facing schedule changes due to fundraisers for Haiti. The company had a show planned for Paris, France on January 24, 2010, but the government took control of the facility on that day to hold the fundraisers. The local promoter stepped up, though, and got the show rescheduled for the next day. No word yet on how this will affect TNA's travel plans and other events in Europe, but they are being quite understanding given the circumstances.

Contrary to all logical belief, Wrestlelicious has actually signed a TV deal in the US, Canada, and the Caribbean. In the USA, the show will air on MAV TV, which is available in 33 million homes. For some markets without MAV TV, Wrestlelicious has signed deals with local stations in a syndication deal, meaning that MAV TV does not have exclusive rights like HDNet has with ROH. The show will premier March 1, 2010 and will be broadcast for at least the year of their contract. International and syndicated markets will start seeing episodes in February 2010.

While Wrestlelicious may have gotten their TV deal, it would appear that PWU did not. While the promotion claimed just a month ago that they had a TV deal with Versus, the company is now shut down as the principle owners have signed on to work with JCW.

The Arizona Republic has an excellent article up on the effect the WWE has had on the local wrestling market in Mexico. The Journal has nothing to add to this well researched piece, so you can check it out here.

The WWE will release their FY09 Q4 and year-end numbers on February 11, 2010. Since this is a Thursday (once again), the Journal will provide a full analysis the following week.




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 January 20, 2010, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.6
Open (Last Week's Rating): 3.7
Percentage Change: ▼ 2.7%
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): 2.6
Open (Last Week's Rating): UNAV
Percentage Change: N/A
52-Week High: 2.6
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): 1.3
Open (Last Week's Rating): 1.5
Percentage Change: ▼ 16.0%
52-Week High: 1.5
52-Week Low: 0.7
All Time High: 1.5
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): 0.8
Open (Last Week's Rating): 0.8
Percentage Change: UNCH
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:

After scoring their highest rating ever a week ago, TNA settled back into their Thursday night timeslot and a 1.26 rating. While not the highest rating the show has received on a Thursday, it is the first time since October 29, 2009 that the show received a 1.3 rating. Prior to that it was July 23 and 30, 2009 that shared the rating. If ratings can remain in this range or—as TNA hopes—actually begin to rise remains to be seen and should be the story of 2010.

Meanwhile, in a surprise announcement it would appear that last Friday's edition of SmackDown scored a 2.6 rating. This would be the highest rating SmackDown has received on MyNetworkTV by a large margin and the show's highest rating since April 4, 2008. That alone makes this number suspect, but since SmackDown is on a station that is considered as a part of the syndicated numbers only, the ratings are usually delayed by at least seven days. Given this, the 2.6 number would have to be the metered overnight numbers, which invariably end up being far above the final number. But then again, as a syndicated show there should be no metered overnight numbers. The source of this rating figure is highly suspect to begin with, so the Journal will watch for the real rating when it becomes available.




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. Bret Hart Emblem T-Shirt ($25.00)
2. John Cena Never Give Up T-Shirt ($25.00)
3. John Cena Never Give Up YOUTH T-Shirt ($22.00)
4. Hardys Purple Logo Pendant ($10.00)
5. John Cena Never Give Up Sweatband Set ($12.00)
6. D Generation X Worlds Biggest Member T-Shirt ($25.00)
7. John Cena Attitude Adjustment Basics YOUTH T-Shirt ($9.99)
8. John Cena Illustrated YOUTH T-Shirt ($9.99)
9. John Cena Never Give Up Baseball Cap ($20.00)
10. Eddie Guerrero Tribute Youth T-Shirt ($15, on sale $4.98)
11. Eddie Guerrero Commemorative Brown YOUTH T-shirt ($15, on sale $4.98)
12. D Generation X Army Sweatband Set ($12.00)
13. D Generation X Basics YOUTH T-Shirt ($9.99)
14. D Generation X Army Strong T-Shirt ($25.00)
15. Jeff Hardy My Life My Rules DVD ($34.95, on sale $23.58)
16. Jeff Hardy Black/White Armbands ($15, on sale $9.98)
17. Shane McMahon PPV #21 Action Figure ($14.99, on sale $8.99)
18. Hardys Green Pendant ($10.00)
19. WWE Superstars Party Pack ($27.99)
20. Jeff Hardy My Life My Rules Ultimate DVD Package ($34.99)

While a list dominated by John Cena, DX, and Bret Hart is good news in the eyes of the WWE, the plethora of Jeff Hardy merchandise pushing everyone else out cannot what they are looking for. After weeks of onl one or two items, Mr. Hardy ended up with five items in this list, or 25% of the total. Also taking up another three spots were former WWE workers Shane McMahon and Eddie Guerrero. These two are most like an aberration from the deep discounts on their items, but Jeff Hardy sold purely on his name and not on any type of advertising by the WWE.


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

1. Hulk Hogan – Change T-shirt ($19.99)
2. Don's Insane Brown Bag Special ($20)
3 HOGAN JOINS TNA - Limited Edition Plaque and Card ($39.99)
4. "Hulkamania" T-shirt ($19.99)
5. Beer Money T-shirt ($19.99)
6. Emergence CD ($14.99, on sale $9.99)
7. Bound For Glory 2009 DVD ($19.99, on sale $17.99)
8. AJ Styles "Phenomenal Brand" T-shirt ($19.99)
9. Hard Justice 2009 DVD ($19.99, on sale $9.99)
10. Sting "Discharge" T-shirt ($19.99)

It would appear that the Hogan/Bischoff regime does not care about updating this list, either.




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
24 (Jan) RAW Live (Champaign, IL) TNA Live (Paris, France) SmackDown / ECW Live (Cleveland, OH)	25 RAW (Columbus, OH)	26 SmackDown / ECW (Cincinnati, OH) TNA Live (Bournemouth, UK)	27 TNA Live (Cardiff, UK)	28 TNA Live (Coventry, UK)	29 TNA Live (Manchester, UK)	30 WWE SuperShow (Macon, GA) TNA Live (London, UK)
31 WWE Royal Rumble (Atlanta, GA)	1 (Feb) RAW (Nashville, TN)	2 SmackDown / ECW (Memphis, TN)	3	4 TNA Live (Topeka, KS)	5 RAW Live (Philadelphia, PA) TNA Live (Wichita, KS) ROH on HDNet (Philadelphia, PA)	6 RAW Live (Alexandria, LA) SmackDown / ECW Live (Waco, TX) TNA Live (Joplin, MO) 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, The Weesel expressed his thoughts on the WWE officially going against "wrestling":

"When the leader of the industry cannot accept what they are, then they demoralize their own product."

Well said brotha man, and if wrestling period is going to have another mainstream resurgence we have to embrace the business we know and love. It is what it is.

Loki was quick to agree with this thought:

I don't get why Vince wants to have a 4th rate entertainment show when he could have a first class gold standard wrestling show.

If you made and sold shoes, and were capable of making excellent, world class shoes, would you call your shop a 'Shoe Shop', or sell socks as well and call yourself a 'Clothes Shop'

DSW Shoes sells socks and other clothing items but still calls themselves a "Shoe Shop". This shows that you can still be a "Shoe Shop" but offer other things from time to time!

Of course, someone has to agree. First up is the nameless Guest#3443:

Because it distinguishes him from the competition. Right now he has a large majority of the wrestling audience. Now the size of that audience may change, but he has the lion's share of it.

A portion of them are always going to watch somebody else, no matter what his or their quality. Just the way people are. So the remaining growth path, besides the overseas market, is non-traditional viewers. Given that wrestling has been around forever, that means drawing them in through new approaches.

Back to my first point, in wrestling somebody else can always assemble a better roster. There are no 40 year old spot monkeys and people do love those big spots. Big impacts too and regularly doing those is a young man's game. This takes away the value of long established names and brand building, because it ages wrestlers faster and the older ones just can't do those things as often.

So the business move is to de-emphasize the wrestling and to add things that others can't. Nobody else has the air time for "sports-entertainment". Nobody else has the production values.

Is it a winning strategy? Hard to say. January 4th showed that there is a larger potential pool of viewers, but it is questionable whether they would be regular viewers. So is it better to have most of a medium sized pie or a smaller percentage of a much bigger pie?

Regardless, WWE is very profitable and is the name most of the public thinks of when they think wrestling. So they have little reason to change.

You seemed to miss the point of the conversation, Guest. This isn't about the WWE's content. We accept that the WWE is going to present whatever they are going to present, whether it is full of skits or in-ring products or not. The question on the table is why are they ashamed of calling it "wrestling"? "Wrestling" is what the product is, where "wrestling" can include the stories, backstage vignettes, and whatnot. But instead of embracing the term "wrestling" they shun it. When the premier company shuns their own terminology, it makes other people also shun it, especially those not interested in the product. The point is that "wrestling" should not be an embarrassing word. Instead of trying to rebrand the word "wrestling" into something viable, they have gone the other route and said, "We are not ‘wrestling', but are actually just ‘entertainment'." This is incongruent to the type of "entertainment" that the WWE provides.

Still, your last point is correct even though your other comments are off the mark. The WWE is highly profitable (as we will see in two weeks) so they have little reason to believe they are doing anything wrong.

Speaking of things the WWE does to earn money, m says:

I remember back in the day getting free toys and shirts for ordering PPVs from WWF, so I like doing it.....

Of course, Mr. m is referring to the WWE offering gifts and giveaways for ordering multiple PPVs. So perhaps, as m says, this will lead to some higher buyrates.

Leaving the WWE we go on to someone else who did the same. Fatt Hardy asks:

What do you think the odds are of Shane McMahon ending up as some sort of executive for Spike itself, not just UFC or TNA/another wrestling promotion? Based on what he's done w/ WWE, does he have the appropriate qualifications/experience? I think something like that would be bigger than buying in to UFC and could still explain that mystery meeting w/ Dana White.

Guest#2199 gave his thoughts on this one:

Spike is intent on being king of the cable hill, not in beating WWE. WWE just happens to win its time slot, but in the bigger scheme of things that is only a two hour time slot out of the entire week.

The subterfuge of meeting with Dana White wouldn't be necessary either. Spike is not really interested in helping TNA or UFC increase its distribution or product sales. The companies are business partners, in other words allies of convenience. The profitability of TNA and UFC are not items of interest for Spike.

They could help these companies set up overseas sales, distributions, and shows for a cut but why would TNA and UFC want to go through a middle man? They could just hire Shane on their own then. Not like Vince wouldn't see through it and be just as understanding or not.

Spike's own product is not readily packaged for foreign distribution either, unless they have self produced product that is highly in demand. Here they buy US broadcast rights to shows and package them as content for the guys with the broadcast medium (Comcast, Time-Warner, etc). They have no overseas rights, so they have nothing to distribute overseas.

Shane may have the skills to help Spike, but his specific duties at WWE are not what Spike needs.

Verbose, but true, Shane McMahon really doesn't have the experience Spike is looking for. Besides, if he wanted to just go to a network NBC/Universal's Bonnie Hammer would have just hired him if he wanted it. Why would he leave the NBC/Universal family to go to Viacom? bemused brit explains why it makes more sense for Mr. McMahon go to the UFC:

I think the odds of Shane working with Dana on expanding the UFC overseas have got to be decent.

It may not have come up in the US press, but the wrestling and MMA magazines in Europe have been full of lengthy articles about how the UFC plans to expand abroad. They've got to really as they will be close to saturating the US market soon, especially as they can't run house-shows.

Shane's value is not what he knows about the WWE (and you had better believe Vince would tie him up in court for years if he tried to use it), but what knows about doing media deals in Europe, Latin America and Asia. Shane is the man who knows who to call to get UFC TV deals.

Absolutely, this is Shane's real value. The WWE had a lot of issues following the departures of Shane McMahon and Carl DeMarco, so he would have a lot to offer any company looking to expand abroad.

To finish us off, as promised from last week, via e-mail Leon Couturier wants to know:

I was wondering if perhaps you could go over, in depth, the workings of WWE's On
Demand service. Not the actual content and price of said content, but the cost of
upkeep for the on demand channel, How many subscribers they have to the channel, and
how much revenue they generate from the channel (both from subscribers and
advertising).

With the WWE's Q4 and year-end numbers coming out next week, this ill be a great preview on how to read them.

According to the WWE's FY09 Q3 results, Classics on Demand accounted for $1.2 million in revenue for the quarter, down from $1.4 million from the prior year despite the greater availability. Since the service costs roughly $10 per month and there are three months in a quarter, that would mean there are roughly 40,000 subscribers. The WWE does not break out the cost or profit contribution specific to this revenue stream, so we cannot know how much it cost to operate. Given that the WWE is looking into starting their own station, it must be low enough to at least have this venture profitable. If it wasn't, you know the WWE would have ended the experiment some time ago.

The problem with tracking costs is that most of them are intangible and prior to the content coming to the station. How much time is spent producing the shows, putting the schedule together, and doing the interviews? Do you bake those cost in, give the division an allocation, or do you just write them off somewhere else? This is a much deeper question for the WWE's finance department then these fine pages. That is, unless the WWE wants to release all of their financial databases to the Journal, in which case we will be glad to do the analysis.


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

Till then!