The Hamilton Ave Journal 05.27.10: Volume 2 – Issue 139

Posted by JP Prag on 05.27.2010

Why is there no worry of Spike TV canceling TNA iMPACT? Would you pay a premium to buy WWE books for the Kindle? Has SuperStars become WWE's fastest growing program? It’s all in this week’s edition of the Hamilton Ave Journal!

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 139

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: Busy week behind the scenes

While there has not been a lot of flashy news about the WWE in recent days, the company has been quietly been making moves on several fronts. Below are a list of some of the areas the WWE has been involved in, from settling lawsuits to creating new revenue streams to helping the stock price:

As reported in the Journal several weeks ago, a lawsuit was brought against the WWE for their book jackets by The Turtle Company, Inc. Turtle claimed that it owned the patent for "adjustable book jackets" and that WWE and their partner ABC Corps 1-10 had violated that right. The WWE has quickly come to terms with Turtle, though no information about the settlement is in public record. The judge overseeing the case has given the WWE 60 days to meet the terms of the settlement, otherwise the case can be reopened. At this time, there is no word if ABC Corps is part of the settlement or not.

The WWE is getting ready to branch out into another revenue stream as they are set to release some prior titles on the Kindle. On the Amazon page, older books like Lita's autobiography are going for $10.99 while like William Regal's book is listed at $12.99. Kindle books average a price of around $10, so there would appear to be a slight premium for WWE content.

Also in the unique content category, the WWE will be releasing a UK only DVD consisting of the RAW, NXT, and SmackDown televised shows there. The WWE has released similar programs in the past to varying degrees of success.

Former WWE CEO Linda McMahon is now the front runner for the Republican nomination for the Senate seat of Connecticut as the last of her competition in Rob Simmons has dropped out. Even though he is not running, Mr. Simmons has elected to keep his name on the primary ballot to show that he will not endorse Mrs. McMahon. Mrs. McMahon will now go on to face Democratic front-runner Richard Blumenthal. Also in the race are Independent Party candidate Warren Mosler, CFL candidate John Mertens, and an unknown Green Party candidate (even though the party achieved the 1% of the vote needed for "free ballot" status in 2008).

WWE spokesperson Robert Zimmerman said the record straight on former Executive Vice President and General Counsel Jamie Bartie:

"He was not fired from the job... We parted ways with Jared amiably."

Irvin Muchnick claimed that Mr. Bartie was dismissed due to a sexual harassment allegation, and continues to do so after Mr. Zimmerman's statement:

"I heard he wasn't happy with the suspension, so he left."

At this point, it is all alleged agendas written out by Mr. Muchnick without any additional evidence.

With the lower stock price, Mad Money host Jim Cramer once again was high on WWE stock. According to Monica Gerson, this past Tuesday:

Jim said that one look at the dividend and stock combination of World Wrestling Entertainment (NYSE: WWE) indicates that the stock is a winner. WWE lost 1.35% before closing at $16.13 yesterday.

WWE stock closed up on Wednesday night at $16.28




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 time we should be able to see patterns, trends, and anomalies.

For the week ending Wednesday May 26, 2010, here are the current standings of the shows:









Analysis:

After a slight rebound from the commercial free show, RAW again dropped right back to a 3.11 rating. RAW was not along in the ratings drop, as two weeks ago SmackDown scored a 1.6 rating, the lowest since July 4, 2009. In SmackDown's defense, the show is facing some stations dropping it in anticipation of their move to SyFy along with preemptions in major markets. RAW, on the other hand, is being soundly hurt by the network Monday night programming and have not been able to regain their audience.

TNA made another small lead up to a 0.96 rating. The show is still below the 1.2 average they have before the Monday move, but the baby steps appear to be pushing them ahead. Meanwhile SuperStars seems to have benefitted from the return of iMPACT as the show increased again to a 0.77 rating. Again, this is far below the 0.9 average they were seeing before iMPACT's move to Monday, but it is the only major growth in a WWE program.




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. Undertaker WrestleMania XXVI Plaque with Ring Rope ($99.00)
2. Randy Orton Lobotomy T-Shirt ($25.00)
3. John Cena Never Give Up T-Shirt ($25.00)
4. WWE Slam Attax Trading Cards ($3.00)
5. John Cena Never Give Up Baseball Cap ($20.00)
6. John Cena Never Give Up YOUTH T-Shirt ($22.00)
7. The Best Pay Per View Matches of the Year 2009-2010 DVD ($34.95, on sale $21.49)
8. Edge Throwback T-Shirt ($25.00)
9. John Cena Never Give Up Sweatband Set ($12.00)
10. Hornswoggle Basics YOUTH T-Shirt ($9.99, on sale $6.98)
11. John Morrison Revolution T-Shirt ($25, on sale $14.98)
12. Undertaker Deadman Forever T-Shirt ($25, on sale $14.98)
13. The Best Pay Per View Matches of the Year 2009-2010 DVD/T-Shirt Package ($26.99)
14. WWE Heroes Comic Book Series #1-Issue #3 ($3.99)
15. Rey Mysterio Big Face Basics YOUTH T-Shirt ($9.99, on sale $6.98)
16. WWE Championship Toy Spinner Belt ($19.99)
17. The Undertaker's Deadliest Matches DVD Package ($59.95, on sale $29.99)
18. Triple H Return to Fear T-Shirt ($28.00)
19. Miz I'm Awesome T-Shirt ($25.00)
20. CM Punk Salvation T-Shirt ($25.00)

For the past three weeks, a new plaque from WrestleMania has appeared in this list selling for $99. These high ticket items are a great offset to the rest of the list, which saw markdowns on everyone from Hornsoggle to John Morrison to the Undertaker to Rey Mysterio. While John Cena dominated the rest of the top selling items, Edge, Randy Orton, the Miz, and CM Punk also broke through, giving one of the most well rounded lists in a while.


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

1. Don West's Vintage Celebration ($59.97, on sale $6.99)
2. Don's Insane Brown Bag Special ($19.99, on sale $18)
3. Sacrifice - 2005 ($19.99, on sale $14.99)
4. Jeff Hardy Enigma T-Shirt (Glow In The Dark) ($19.99)
5. Bound For Glory 2005 ($11.99, on sale $4.99)
6. RVD - Video Wall T-shirt ($19.99)
7. Jeff Hardy Enigma Stainless Steel Pendant ($9.99)
8. Mr. Anderson.........People Are Fake T-Shirt ($19.99)
9. Cross The Line Triple Pack 3.0 (Triple Threat) ($24.99, on sale $19.99)
10. Slammin' Celebration ($199)

When you have a terrible looking list, you might as well have it for two weeks in a row.




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 upcoming weeks? The Personal Journal answers that question.





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, pro life (who got to be in the Lead Story) still didn't seen the difference between how a regular television show works versus the contract TNA has, as well as the type of ratings Spike gets versus NBC:

Sorry-still don't buy it and likely never will.

I saw it in a different thread, but Heroes was just canned, shortly after being the (one of?) top show on ALL of TV.

Ratings/stories began to suck balls and NBC said screw it!

Also, stealing another comment from the board, but didn't an anonymous caller break the story of Jarrett and Karen dating on Bubba's show too?

That was laughed off, and well-it was true. Where there is smoke, there is fire. TNA (and/or Hogan/Bischoff) is nearing the end.....

Guest#8488 brought it all back to earth:

You still aren't quoting relevant facts either. The facts and their consequences don't change because of what you refuse to understand.

Heroes was only ordered by the season. They, and other network shows, are bought by the season. TNA is not. This is not a comparable situation.

The length of the contract dictates how easy it is to get rid of a show. The NBC contract for Heroes has already run out, bringing no further expense to NBC for discontinuing the show.
Heroes WAS one of the top shows. They have not been for a couple of years. Heroes did not just begin to do poorly, as you stated. They did poorly for some time. Impact! has not underperformed for years. In fact, in comparison to Spike's other shows, they are performing very well.

This is part of what your argument hinges on, Impact! hurting Spike. But it has not.

So the real situation is that Impact! is performing very well, ensuring advertisers (the ones paying Spike) have interest. Spike is also legally committed to paying TNA for Impact!, so cutting the show would still cost them money. At the same time, there is no likely replacement to bring in higher ratings and revenue. Revenue that would have to pay for both the new show and Impact!.

This does not even take into account the foreign revenues that TNA receives. You have yet to name a reason why having Spike's contract is needed for TNA to continue operations.

TNA may have to cut the roster right now. In my opinion they should even if the company is completely healthy. However, cutting employees or independent contractors does not mean that the company is doomed. Look around and you will see literally tens of thousands of companies that survived the recession by doing just that.

Employees are an expense. TNA will not have the money they need to advertise or otherwise expand if they keep wrestlers they are not using and have no real plans for. Wrestling seems like an industry that can apply Just-in-Time delivery. If they are indeed private contractors, hire wrestlers as needed.

Just to add to this point, Spike came in with an average rating of 0.6 last week while TNA had a 0.96, or 60% better. In comparison to Spike, TNA is one of the best things going for them.

That caller who made the phone call into Bubba the Love Sponge said that TNA was one of Spike's worst rated programs, but that could not be further from the truth. Using that caller as evidence of "where there is smoke there is fire" is nonsense because that person made up a complete fabrication. Spike TV has literally sent out a press release stating that the person who called in was not from their office and that they are extremely happy with TNA's performance. And to top it all off, the item you have not addressed from three weeks back is that Spike just added a second TNA programming in ReAction. If Spike was not happy with TNA and was looking to get rid of iMPACT, why in the world would they sign on a second show?

This reporter has defended Bubba the Love Sponge many times in the past, but this time he is just using an outright lie for his own agenda. While his agenda may just be making an entertaining radio show and nothing as malicious as it sounds, he is still using a complete fabrication and presenting it as fact and for some reason people do not bother to see the simple numbers in front of them. Fried felt, though, that there is a bigger plan here:

Which is EXACTLY WHY Bubba set up the second call. So the people who remembered the first call (and they would being the wrestling fan portion of his audience) might think there was fire, as you put it. Reality is, he's pissed at Dixie, Hogan et al, and wants revenge, and has limited means to get that revenge.

It's unlikely he's that upset with his close friend Hulk Hogan, but he cannot be happy with being dismissed.

Getting rid of at least part of this, Mr. C. ends the Heroes analogy:

Heroes was never the top show on All of TV. It did some great numbers in its first season, but the numbers have decreased over time, as has the quality.

The contract with Heroes was up. NBC had the decision to renew or cancel. They didn't pull the show off in the middle of a contract.

The difference is that NBC is network TV and Spike is not. Heroes cost a lot more money to produce than iMpact, and the fact is that Heroes was cancelled because NBC wants to rebrand themselves and move away from any sort of Sci Fi shows. If you want to compare TNA to a network show, it would be like Fox cancelling American Idol, which is cheap to produce and is consistently it's top show.

Let us not forget that NBC's parent company also own SyFy, so getting away from Sci Fi seems to a corporate message as well.

And what would happen if Spike did not renew TNA in three years? Big Lou From the Bronx believes he has the answer:

IF...IF TNA were to get canceled by Spike...Idiots there are about 100 crappy cable networks that can use a wrestling program that will help bring in viewers:

The G4 Network
The Fight Network
Versus
ESPN 2
MTV
The Speed Network
MTVU
MTV 360

As long as TNA can find a TV home, they will be safe. But it is a NON-STORY because Spike TV loves them!!!

TNA does have some options, but there are many stations that would not make the list. Anything that is in the NBC-Universal family is immediately out because of the WWE's contract with the network. And with Comcast poised to buy the unit, G4 and Versus would be out as they are already owned by Comcast. Meanwhile Spike is a Viacom station and if they do not want TNA it is unlikely another Viacom station would. With that, you can forget all of the MTV's, Nickelodeons, or Comedy Centrals.

What TNA would need is another media partner and there are only three other choices: NewsCorp, Time Warner, or Disney. Disney owns ESPN and ABC, so one of the ESPNs or ABC Family could be an easy potential. While Time Warner owns TBS, TNT, and a slew of others, they have already shown they are not interested in wrestling. NewsCorp has some interesting potential as they still own MyNetworkTV. Should TNA go there and become a syndicated network program, they could easily be the highest rated show on the channel. With MyNetworkTV losing SmackDown and the brass still liking wrestling, there is a potential synergy.

Of course, this is all a moot point because TNA has a contract with Spike until at least December 2012. However, TNA is still trying to sell additional programming and if Spike passes, they could always go after one of those open stations.

Switching gears a bit, JudeLunk wants to talk about TNA's actual business side:

On the business front TNA House show attendance is up as are merchandise sales.
The one thing that I have never understood about wrestling is the fact that they keep way too many wrestlers on the roster.

TNA is a business, and it is absolutely pointless to keep people that they are not using nor plan to use in the future. If you have the chance to save money then do so.

Any corporation that wants to survive in lean economic times often has to cut and TNA should be no different. They do not want to go the route of WCW and keep people on the roster and fly them to every show and never use them a la Lanny Poffo.

WWE ratings are down, but from a business stand-point they are pretty savvy as they make millions on PPV, merchandise, and of course TV deals, so financially they are very secure.

Do remember that the source for house show attendance and merchandise figures is Jeff Jarrett. In an interview he said that these were the most profitable parts of the business, which cannot be true given the international TV contracts.

As to your other points, yes, TNA needs to watch their roster and plenty of other costs. The Journal was quick to criticize the WWE when costs were rising at a faster pace than revenue and TNA is no different. Right now, TNA is trying non-organic growth and it is costing them a lot of money on a weekly basis. Sometimes you do have to make tough decisions, but that is how you stay in business.

The WWE, as you said, had never been more profitable than now. Even with revenues flat or down in many segments, the WWE continues to outperform because they took the time to a business segment cost analysis and make decisions that made them a stronger company. TNA has not proactively done that (nor did the WWE initially) and will eventually be forced into the decision if they do not do something about it.

Just a note, though: Lanny Poffo was paid to stay home for years. He did not even have to fly in to not be used, which was an even bigger waste.

Enough TNA talk for one week; let's switch to the competition via Max:

Last year's Commercial-Free RAW also had massively hyped huge matches, with Donald Trump appearing live, so let's not compare apples to oranges here.

So whose fault is it then for the WWE getting a lower rating than a regular show from seven weeks ago? RAW's ratings have tumbled the past two months and if the WWE is not doing enough to increase ratings that is their problem. This is not an apples and oranges comparison: this is RAW versus itself only a few weeks ago, nonetheless a year ago. Do not brush off this latest ratings drop as nothing as it is indicative of the competition the WWE faces.

Now, do not misunderstand--the WWE is a strong business with a profitable model. However, ratings are a leading indicator towards PPV buys, merchandise sales, and house show attendance. The WWE will still be fine, but it is something to be concerned about. Michelle Wilson better be making advertising RAW and increasing viewership her next priority.


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

Till then!