The Hamilton Ave Journal 03.22.08: Volume 1 – Issue 26

Posted by JP Prag on 03.22.2008

WWE gets a new CFO and its stock hits a 52 week high, TNA expands into the card business and gets sued by Konnan, ratings remain flat across the board, and Eddie Guerrero makes an appearance in the Top Ten despite being buried by Triple H’s.

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 1 – Issue 26

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.




WHAT'S NEWS

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 names new CFO

This past week, the WWE replaced long-time employee and current CFO Frank Serpe (age 63) after Mr. Serpe decided to retire. Mr. Serpe has been with the WWE since 1986, becoming CFO in March 2007 after being promoted from Senior Vice President of Finance and Chief Accounting Officer, a position he held from 1998. During his twenty years with the WWE, he has been a part of its most profitable periods during Rock & Wrestling, the Attitude Era, and now as well as some of the low points such as when the company was almost shut down by competition with WCW in the mid-90's. Under Mr. Serpe's guidance, the WWE has become a cash cow with a nearly 8% dividend yield. The company most likely survived the financial crunch of the early to mid-90's due to Mr. Serpe's cash reserve and growth programs. His impact on the WWE and wrestling as a whole will have lasting impacts for decades to come.

Replacing him will be George Barrios (age 42). Mr. Barrios joins the WWE from the New York Times Company where he serves as Vice President, Treasurer from January 2007. Prior to this and back to 2002, Mr. Barrios served as CFO for New York Times' New England Media Group—which includes such properties as the Boston Globe, Boston.com, BostonWorks.com, and the Worcester Telegram and Gazette. It should be noted that during these periods, these newspaper and online news divisions faced tremendous cash and sales setbacks due to declining revenue from advertising and less distribution of traditional newspapers.

WWE CEO Linda McMahon released a statement saying she is happy to welcome Mr. Barrios to the WWE family and is looking to him and his experience to help in their continued international and production line expansions.


WWE stock named good buy, hits 52-week high

This past week, the WWE has been highlighted as a strong stock among many week ones, especially in the fallout of the Bear Stearns liquidation. While the market has been shedding and gaining large volumes over the week, the WWE stock has remained strong.

As already noted, Jim Cramer has highly recommended the WWE stock. On his trail, CNN Money, Investor's Business Daily, and BloggingStocks have also highlighted the WWE as a solidly performing company with large cash reserves and good dividends. Senior Analyst for B. Riley & Co. Ali Mogharabi had given the then $15/share stock a buy rating on August 27, 2007. Since then, the stock has appreciated nearly 24%. Now nearing its actual valuation, Mogharabi lowered his rating to neutral, but only because he feels there is a limit to the stock's growth.

The WWE stock reached a peak of over $24 in November 1999, but struggled in the post-crash environment falling as low as $7.10 in October 2002. Given that range, the WWE would appear not to have a lot of room to grow.

Despite that, with all of the good press, the WWE hit a 52-week record high of $19.19 on Wednesday March 19, 2008 before closing at $18.81. On Thursday, the stocked closed down $0.17 at $18.61. Markets were closed on Friday for the Good Friday holiday.

For the average wrestling viewer and for the WWE company as a whole, what does this mean? In the short: nothing. The stock price just reflects the market's overall impression of the company and does nothing to affect the earnings and growth of the WWE itself. It can help with negotiations of debt and the WWE could earn some quick cash with a high stock value if they chose to release shares, but there is no need. On paper, it makes a lot of people within the WWE, notably the McMahon family, look a lot wealthier, but it does impact the actual company performance.

So at the end of the day, the rise in reputation and stock price is only helping with the overall WWE public image, and not much to do with the company as a whole. Still, the company is doing quite well, and it is a positive sign to see the stock price reflect that.


TNA expanding product line

TNA announced this week that they have partnered with the privately and independently owned Tristar Productions, Inc. to produce sets of TNA trading cards. The Houston, TX based company was formed in 1987 in order to "specialize in the production of quality sports collectable shows". The company has expanded lines since then, Tristar even "acted as the exclusive local sponsorships/exhibit sales and advertising/promotions team for World Wrestling Entertainment's WrestleMania X-SEVEN and AXXESS: The Fan Festival in Houston in 2001."

No stranger to wrestling the President and CEO Jeffrey Rosenberg is a self-described life long wrestling fan and is looking forward to this relationship. Through Tristar, he will have the rights to produce TNA trading cards and memorabilia.

The first release will be in 2008 with a release of the "TNA iMPACT" trading card line. A second set is tentatively scheduled for the Fall called "Cross the Line". And just before the December holidays, the "TNA Knockouts" line should be released.

Along with the TNA video coming out in the coming months, TNA continues to expand their product lines in attempts to grow brand recognition.


Newsbites

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

Former WCW and TNA star Konnan has filed a lawsuit against TNA for the company's alleged treatment of him while he was undergoing health issues. At the time, TNA gave Konnan money for his hip replacement surgery, but while under the knife it was found that he needed a kidney replacement as well. TNA allegedly refused to pay for the surgery and Konnan was forced to ask for donations of money and the organ for transplant. Any case like this will take three to five years in the court system, so any results will be a long time away.

On the heals of Jeff Hardy's suspension, WWE development talent Afa Anoai (son of Afa the Wild Samoan) was suspended for 30 days for violation of the WWE's substance abuse policy. Afa is far from the first developmental talent to be suspended under the policy, but this reinforces a stronger recent crackdown on talent in the past few months.

Despite ongoing issues with the Georgia State Athletic Commission, the WWE has scheduled an event in Savannah on July 12, 2008. This may be an attempt by the WWE to show the economic impact of a single event that Georgia will no longer receive if the planned rules and regulations for wrestling are passed. The other end might be if Georgia passes the rules before the show the WWE may cancel and let their fans (and registered Georgia voters) protest on their behalf.

Internally, TNA is hoping for a 1.3 rating for the live iMPACT. Meanwhile, no additional advertising is planned nor special matches announced yet, so it is not known how TNA is planning to pop the rating aside from saying the show is live.

In order to alleviate traffic issues, LYNX in Orlando, FL will be operating 40 shuttle busses to and from the Citrus Bowl on WrestleMania day. This reporter will be there live and intends to walk the short distance from the hotel to the arena.


MARKETPLACE

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. Please note that gaps in the chart below are due to data not being released/available.

For the week ending Thursday March 20, 2008, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.6
Open (Last Week's Rating): 3.6
Percentage Change: UNCH
52-Week High: 4.3
52-Week Low: 2.5
All Time High: 8.1
All Time Low: 1.8

SmackDown!*
Close (This Week's Rating): 2.6
Open (Last Week's Rating): 2.6
Percentage Change: UNCH
52-Week High: 2.9
52-Week Low: 2.2
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): 1.3
Open (Last Week's Rating): 1.2
Percentage Change: ▲ 8.3%
52-Week High: 1.8
52-Week Low: 0.6
All Time High: 2.3
All Time Low: 0.6

TNA iMPACT**
Close (This Week's Rating): 1.1
Open (Last Week's Rating): 1.2
Percentage Change: ▼ 6.7%
52-Week High: 1.2
52-Week Low: 0.9
All Time High: 1.2
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

Analysis:

This would have to be the most steady-state week in the wrestling world in a long time. RAW and SmackDown! remained unchanged whole ECW and TNA changed around 0.1 in either direction. All-and-all, it was a relatively unremarkable week in the ratings. The only caveat to this is that RAW scored a 4.0 in its normal timeslot last week (the show was three hours), meaning there was a natural drop of 0.4. That said, the pattern is consistently the same where RAW can attract and pop viewers with build-up and advertising, but fails to maintain these viewers the next week. The "pop the rating" method is counterproductive to the WWE's long term growth and only serves to make USA and advertisers happy.


MONEY AND INVESTING

We all know that wrestling is a business, but we don't often pay attention to what sells and makes money. Money and Investing looks into the top selling items in the world of wrestling and any interesting figures that may have come out this week.

What are the top ten selling items for the WWE? From WWEShopZone.com:

1. Jeff Hardy Armbands
2. John Cena 8-Bit T-Shirt
3. WWE Black Gift Bag
4. Triple H Hammer T-Shirt
5. Triple H King of Kings: There is Only One DVD/Retro T-Shirt Package
6. WrestleMania 24 White T-Shirt
7. Eddie Guerrero Arm Band 2006
8. Triple H Grey Skulls T-Shirt
9. No Way Out 2008 DVD/T-Shirt Package
10. Triple H: King of Kings-There is Only One DVD

Despite not appearing on TV (nor being mentioned), Jeff Hardy still manages to have the number one item. As seen with John Cena, sometimes it takes weeks before the items begin to fade. Unlike John Cena, the WWE will not be promoting Hardy items while Jeff is away, unless it is the dual items that will be used with Matt when he returns. The oddity of the week goes to the Eddie Guerrero Arm Barnds from 2006. the item is marked down to $3, but comments on the site are from as recently as this week. The item description still states that proceeds go to the family of Eddie Guerrero, but that has to be questioned with Vickie Guerrero on the payroll. Don't expect this item to stick around in the Top Ten, much like Sabu's autographed picture from a few weeks back.

The big winner this week it Triple H with an unprecedented four times in the Top Ten. When you see numbers like this, it is hard to argue with Triple H being in the main event of WrestleMania—at least from a corporate earnings perspective.

TNA releases a list of Top Ten selling items, but in no order. Using the function to sort by most popular, they came up as:

1. Against All Odds 2007 DVD
2. Christian Cage "Instant Classic"
3. Sacrifice 2007 DVD
4. Motor City Machineguns T-Shirt
5. TNA Global Impact DVD
6. TNA Meltdown Vol. 2
7. TNA Anthology – The Epic DVD Set
8. James Storm "Sorry About Your Damn Luck" T-shirt
9. Turning Point 2007 DVD
10. Shark Boy 24:7 T-Shirt

In a repeat of last week: not much movement on the TNA list this week with just a few items swapping positions with each other (2 and 3, 5 and 6). It looks like TNA has finally got their Top Ten list under control so it gives a more reasonable and logical result. The question remains: did everything stay the same because sales were equal or did everything remain the same simply because there were not that many sales?


PERSONAL JOURNAL

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
23 (Mar)	24 RAW Columbia, SC	25 SmackDown!/ECW Fayetteville, NC	26	27 TNA iMPACT Orlando, FL	28 TNA iMPACT Orlando, FL ROH Live Orlando, FL	29 TNA iMPACT Orlando, FL ROH Live Orlando, FL
30 WWE WrestleMania Orlando, FL	31 RAW Orlando, FL	1 (Apr) SmackDown!/ECW Miami, FL	2	3	4 TNA Live Spencer, IA	5 TNA Live Lincoln, NE

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.

EDITORIALS

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, Guest9337 says:

It's now being reported that last week's Impact (3/6) did a 1.13, not a 1.2, and this week's (3/13) did a 1.12.

The report of the ratings change is coming from a few different services, with both ratings still being available. The 1.2 is still the dominant number being reported. The Journal contacted Nielson Media, but Nielson was not available for comment.

A conversation began about geography starting with WTF:

"TNA sells well in England"
You mean the UK right, not just England? There are 3 other countries too, we get enough of the English using England when they mean the whole of the UK, please don't do it too!

To which db responded:

It's not wrong, though - all the TNA shows ARE in England. Liverpool, Coventry and Brentwood (Essex).

And this is the logic that the Journal used as well. All of the shows are taking place in England proper and not in Northern Ireland, Scotland, or Wales. Although some other contend that this does not matter, such as It's England:

Everyone knows England + Wales + Scotland + Northern Ireland = England.

The English conquered your asses and therefore own you.

With a little more learned history, BringTheNoise responded with:

while England conquered Scotland on a few occasions, it was later driven out every time and the current situation is the result of the combination of James VI of Scotland becoming heir to the throne of England (and thus becoming James I of Britain) in 1603 and the passing of the Acts of Union by the Parliaments of England and Scotland in 1606 and 1607 respectively.

Conquering has nothing to do with it. So, it's the UK. Learn some history.

(Although in this particular case, db is right - TNA are only running events in
England, and there's nothing wrong with stating that.)

Well, it seems as if the people of the British Isles cannot decide among themselves where they stand and what to be called, so the debate will continue, but not in these pages. The Journal stands by using England because, as stated, the shows are in England proper. Although surprisingly no one asked for the area to be called Britain.

There was also some confusion on ratings as JO asked:

If ECW and Impact should get the exact same rating, which show would have the
most viewers?

Guest#6233 chided in with:

THEY WOULD HAVE THE SAME AMOUNT U DUMB BASTARD... LIKE U MUST BE FROM
AMERICA>>>>STUPID AMERICAN

Guest#6233 is wrong, though, making him look like the dumb one, although capitalizing every letter, replacing the three-letter world "you" with "U", and calling people names had done a find job of that. Others tried to explain, first through Spike:

When Impact got 1.05 two weeks ago they got 1.6 million viewers. This week when Impact got 1.12 they got 1.4 million viewers. Viewers and ratings can be different.

And BringTheNoise came in with:

Except that ratings are based on the percentage of people watching, and since Impact and ECW run on different days, different numbers of people watch TV on those days, and thus equal ratings can mean different numbers of viewers.

These responses are close, but not entirely true.

There are several factors to consider. First, a ratings point is equal to a number of households, and that number is static, not flexible. What BringTheNoise is describing is known as the "Share", or what percentage of all TVs that are turned on at that moment were tuned into the program. So if TNA has a 1.1 ratings with a 6 share, that would mean there were about 1.2 million people watching at any given point on average (an important point to get to) and 6% of all possible people watching at that moment.

Now, the fixed value of what a ratings point means can change with time. The definition is changed over time by Nielson because more televisions and viewers come into existence in America. At the same time, a ratings point on network TV has a different value that a ratings point on cable/satellite TV because over-the-air is available in more homes than cable (although at a much smaller margin today than 20 years ago).

The questions remains, then, why would a lower rating have more viewers? That is because the ratings for a single show represent a composite average over time. So on one week, the first hour of iMPACT may have less viewers and a lower rating, the second hour could have had a spike that created a higher rating and more viewers. But even the hours are averages of quarter hours, and quarter hours averages of minutes. From millisecond to millisecond the actual number of viewers is changing, but the ratings represent the average number of households watching all together while the number of viewers says the unique number of households that tuned in at any time.

Then there is the other issue of how ratings are derived. Nielson has 10,000 homes which are monitored though boxes and surveys to figure out what was watched (it was 5,000 less than a year ago), and that number is used to extrapolate the number of viewers for the rest of the country. That means that ratings are, at best, a good guess at the number of viewers and households tuned in and not an actual number. Other companies are designing technology to be more accurate and measure digital boxes, but there are privacy concerns. Still, if only 25% of people agree to have these boxes collect information about their viewing habits and send it back to providers, it could be a far more accurate number than Nielson provides now (if the population of viewers is diverse enough).

The other issue to contend when it comes to ratings is regional preferences. While SmackDown! may get excellent ratings in the local Boston market, it gets comparatively bad ratings in the San Francisco market (this is just an example, not a true statement). The same can be said for NASCAR racing, which does excellent in Southern and Midwest states, but not as well in Northeast and far West states. So if the Nielson families are gathered in certain areas where a type of programming is popular, then they may represent millions of people in markets that do not watch the program. In other words, a regional preference can make something look like a national phenomenon, even when it is not.

Ratings are a tricky and risky business and should not be accepted at face value. Unfortunately, they are the only gauge we have—for the moment.

Plenty more was written, so be sure to take a look. Also worth your read this week is:

JT makes yet another appearance on Fact or Fiction, and completely agrees with Andrew Critchell. Now I know why people say they miss me and JT arguing.

Some people really don't like WrestleMania IX, especially Michael Weyer.

On the other end of the spectrum is Jerome Cusson's love WrestleMania 14. Now, being a WCW fan I did not enjoy this show at all because it was all crash-TV style with short matches and DQ endings. Yet, this was one of the defining moments that turned the WWE around, proving I have no taste.

If only WWE 24/7 did not lose a copy of Nitro from 1997 so Larry could have reviewed it.

And, of course, a week would not be complete without a good dose of my very own HIDDEN HIGHLIGHTS!!


CLOSING BELL

This concludes Issue #26 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!