The Hamilton Ave Journal 10.18.08: Volume 1 – Issue 56

Posted by JP Prag on 10.18.2008

The WWE secures a place in Forbes history but still gets sued for sexual harassment, everyone is making significant moves involving HD, SmackDown makes ratings history for the second week in a row, and John Cena returns to the WWE’s Top Ten while Jeff Jarrett has a $200 guitar topping the list of TNA’s best sellers.

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 1 – Issue 56

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 makes Forbes 200

Despite turbulent economic conditions and rising G&A costs, the WWE was rewarded with some good news this week when Forbes named them one of the Top 200 Best Small Companies. Forbes based the criteria on stock performance, dividend yields (which the WWE is one of the highest on Wall Street), and financial performance. No criteria was made around working conditions, pay and benefits, or anything of the like.

Also of interest was what Forbes considers a "small company". In order to qualify, a company had to have sales of up to $750 million annually, be publicly traded, and have a stock price of at least $5 as of September 29, 2008. While this may be a far reaching definition of "small", it also means the WWE was in for some stiff competition. To make the list given the possible contenders shows just how well regarded the WWE has become in the financial world.

Now the question remains: how does this help the WWE? More than anything, key business personnel that read Forbes will be more willing to do business with the WWE and people in marketing will be more willing to sponsor WWE events. Although the WWE may be losing market share in the ratings (and perhaps buyrate), they are gaining ground in their positioning with people who control money.

This is a similar position to radio show host Imus who routinely has ratings of 1.0 or less. Despite this, he routinely has high advertising rates because people are convinced that his audience is more affluent (despite market research showing otherwise). The WWE may be breaching a similar ground where no matter what market research says about their audience, they may be able to convince advertisers, sponsors, and business partners of an intrinsic value without fact.


More employees sue WWE

A new lawsuit was launched against the WWE this week. This time, former employee Fara D'Angelo (Global Licensing Coordinator) is suing the WWE for sexual harassment. Ms. D'Angelo worked for the WWE from April 2004 to May 2006 before allegedly being advised to change companies when she brought the allegations forward. According to Ms. D'Angelo, WWE Senior Director of International Consumer Products Alex Romer allegedly started harassing her as soon as she was hired, despite the fact that the was married and rebuffed the advances.

Feeling that her new job would be in jeopardy if she continued push her case, she chose to remain quite for the past two years. She has now resigned from that job as well and decided to pursue the case for her own reasons.

WWE has made no comment on the suit yet, but may be expected to do so in short order. The WWE has been sued for sexual harassment before, particularly with the case involving Nichole Bass. Just before it went to trial, the parties settled out of court for an undisclosed sum, but not before the pre-trial court rules that the contracted talent was an "employee" of the WWE.


Newsbites

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

In association with the switch to HD, TNA has said that they are making upgrades to the iMPACT Zone. This will include removing several seats, closing down one of the entrance ramps, and working out many of the small details that will now be visible. The changes are expected by the time TNA returns to Orlando in two weeks.

Also on the HD front, MyNetworkTV (home of WWE SmackDown) has announced that they will be the first network to cease broadcasting in the analog spectrum and focus solely on the new spectrum that is set to go live in February 2009. Since over 90% of Americans have cable or satellite television, this will not affect most viewers. But for those people still using antennas, they will loose their MyNetworkTV affiliate in December 2008.

When the WWE went to HD, one of the tenements to the wrestlers was that they needed to tighten up their style in the ring. It now appears that Vince McMahon is pushing forward with this and looking for a more realistic style in the ring. Former WCW, TNA, and British star Norman Smiley was specifically hired to teach the students in FCW how to wrestle more realistically.

MLB has followed the path WWE set earlier this year in the selection of a new uplink partner for broadcasts. Says broadcastbuyer:

Fairlight's Crystal Core technology has received a massive endorsement from two US sports broadcasters, both of whom have moved over to the new CC-1 platform to improve their speed of workflow and networking capabilities.

Following up on the thought was WWE's Vice President of Post Production Chris Argento:

"In January 2008 we moved to HD and that fuelled our decision to invest in Xynergi and the CC-1 engine. Previously, we had four Fairlight systems, all with QDC engines, as well as Pyxis in each of our mix rooms and a Medialink server to tie them all together. Fairlight's reliability and speed have been the biggest factors in staying with the company for our post needs. These attributes, coupled with the onboard HD video track on the CC-1, made the transition a no brainer. We are now able to drag and drop MXF wrapped files from our Grass Valley K-2 server right to the timeline with full HD video and audio."

Although technical of an explanation, the WWE has benefited enough that MLB noticed and decided to follow the same path. TNA would be served to keep this in mind with their switch to HD next week.


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.

For the week ending Thursday October 16, 2008, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.1
Open (Last Week's Rating): 3.0
Percentage Change: ▲ 3.3%
52-Week High: 4.1
52-Week Low: 2.5
All Time High: 8.1
All Time Low: 1.8

SmackDown*
Close (This Week's Rating): 2.1
Open (Last Week's Rating): 1.9
Percentage Change: ▲ 10.5%
52-Week High: 2.9
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): 1.1
Open (Last Week's Rating): 1.2
Percentage Change: ▼ 8.3%
52-Week High: 1.6
52-Week Low: 0.6
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: ▼ 5.0%
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:

It would seem this was the week of "small wins" or "take ‘em where you can get ‘em". SmackDown saw a nice 10.5% bump up this week to a 2.1, shattering their own and MyNetworkTV's ratings record. It would seem that a number of people had trouble finding SmackDown during their premier week and viewers are working their way back. SmackDown is still down 10-15% from where they were at the end of their CW run, but that does not affect the WWE's bottom line; only MyNetworkTV's.

At the same time, RAW bumped up a little bit to a 3.1, but that is hardly good news. At the same time, both ECW and TNA sunk a little bit as well. While neither have started any trends yet, the overall drop in ratings for wrestling programs is a trend worth noting.


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 2008 YOUTH Halloween Package ($84.49, on sale $36.99)
2. Jeff Hardy 2008 Halloween Package ($87.49, on sale $39.99)
3. WWE Black Gift Bag ($3)
4. Hardys Purple Logo Pendant ($10)
5. WWE: Hell in a Cell DVD/T-Shirt Package ($59.95, on sale $26.99)
6. John Cena 2008 Halloween Package ($84.99, on sale $43.99)
7. Randy Orton Age of Orton T-Shirt ($25)
8. Triple H Grey Skull Sweatshirt ($40, on sale $12.98)
9. John Cena Beware of Dog Football Jersey ($49, on sale $19.98)
10. Triple H Hammer T-Shirt ($25)

Not totally unexpected, Jeff Hardy continued his dominance of the Top Ten. Despite SmackDown being seen by less people the past couple of weeks, Jeff Hardy has continued to dominate the list with his Halloween packages and the odd other items. Interestingly enough, though, is that John Cena got two items in the Top Ten. Although out, his appearances in video packages appears to be enough to stimulate some sales, even if they are both discounted items. Randy Orton—still officially on injured reserve—also made the list with a full priced product. Along with Triple H, this is a pretty diverse list that quickly shows who are the absolute top sellers in the WWE.

TNA releases a weekly Top Seven list on ShopTNA.com. According to the site the top selling items were:

1. Jeff Jarrett Autographed Laser Engraved Guitar ($299, on sale $199)
2. Autographed Sting Baseball Bat ($149)
3. TNA iMPACT Video Game ($39.99 to $59.99)
4. Knocked Out DVD ($14.99)
5. TNA Global iMPACT DVD ($19.99)
6. Post Yard Sale DVD Special ($29.99)
7. Post Yard Sale T-Shirt Special ($39.99)

TNA's list this week defines the term "running the spectrum". At the top of the list are two of the highest priced items to ever make the Top Ten in any organization: a custom Jeff Jarrett Guitar and a customized Sting baseball bat. TNA has often proved in the past that they are excellent at creating a diversified product selection and this would certainly fall into that category. On the same end, having such big ticket items must be quite beneficial to TNA's top line. On the other end, the margin on these items cannot be as good as t-shirts which are greatly missing from this list. They only show up in the bottom where TNA is still doing a massive inventory clearance. So TNA goes from the highest price items to the lowest per capital priced items in all of seven spaces.


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
19 (Oct) SmackDown / ECW Live (Mexico City, Mexico)	20 RAW (Corpus Christi, TX) SmackDown / ECW Live (Hidalgo, TX)	21 SmackDown / ECW (Laredo, TX)	22	23 TNA iMPACT (Las Vegas, NV)	24 ROH Live (Danbury, CT)	25 TNA Live (St. Charles, MO) ROH Live (Edison, NJ)
26 WWE Cyber Sunday (Phoenix, AZ) TNA Live (Cape Girardeau, MO)	27 RAW (Tucson, AZ) TNA iMPACT (Orlando, FL)	28 TNA iMPACT (Orlando, FL) SmackDown / ECW (San Diego, CA)	29	30	31 TNA Live (Ontario, CA)	1 (Nov) TNA Live (Anaheim, CA)

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, Guest#9526 was not done talking about Mike Tyson. Either way, this will be the last week the Journal will be talking about him (unless he happens to make a wrestling comeback).

Tyson was a financial risk but at least an affordable one. To actually kill the company, he would have to drive away people who were already watching. Since he was only around for about 4 in-ring appearances between January and March 1998, and people were couldn't get enough of Steve Austin, the chances of the Tyson deal backfiring so badly as to kill WWE seems pretty small.

No one is claiming that Tyson's appearance would have killed the WWE. What was said is that in a short-term perspective Tyson may not have made his money back in buyrates and in a long-term perspective could have driven away fans. Tyson's involvement with the WWE was a major factor in them overtaking WCW and becoming a major part of pop culture for a while. The WWE had turned a corner, but had not become huge. With or without Tyson, the WWE could have lost viewship but still remained profitable. Despite that, they would not have become as hugely profitable as they did and still have a large amount of debt to pay down. Tyson was a key factor in turning them into a much larger organization then they were, but it could have easily gone the other way. True, he was not the only factor, but he was a significant one.

Back in modern days, Matt P wants to talk about what's on sale:

Pretty sure [Jeff Hardy] was selling more than Cena when he was healthy.

We can go over this subject a thousand times as well, but it keeps coming up. Jeff Hardy had more diversity of products, but John Cena was selling more volume of fewer items. More important that that, though, is that John Cena's items have traditionally had much higher margins than Jeff Hardy. Where John Cena was selling $25 T-shits that cost the WWE $5 to produce, Jeff Hardy was selling pendants for $10 that cost the WWE $4 to produce. So overall, John Cena was not only physically selling more of one item than several of Jeff Hardy's combines, but the items that he was selling were making the company a lot more bottom line.

Outside of these subjects, most everyone else wanted to talk ratings, starting with Steve307:

Some of the ratings downturn may be attributed (financially) to the large amount of expensive PPV's both companies put on each year. Especially now, when it seems like nothing major (and certainly no title changes) happens on Raw/SD/ECW/Impact. Why watch programming that you can't see the conclusion to?

That is absolutely a contributing factor. A stale product, a large amount of PPVs, a gluttony of free product on almost every day of the week, and lack of focus and direction all make the product less likely to be viewed. The Journal, though, was hypothesizing whether there is a correlation between economic conditions and ratings. Of course what you have listed has an impact, but it would be interesting to study how the economy and ratings connect outside of such factors. Of course, it would take a decade to make such a study.

On the same thought as Steve307 is Iron Knee:

Maybe the drop in ratings and the live event gate comes from the fact that pro wrestling current paradigm has become stale. For the last decade or so, the "in-you-face" paradigm has reigned supreme. Gimmick matches, scantily clad women, tweeners, et cetera have become old hat at this point. Thus, viewers are tuning out in ever larger numbers.

This' where Vince might be ahead of everyone else. His new plan to take the WWE back to family-friendly programming could change the paradigm and take wrestling back into the mainstream.

Crazy-schemer concurred:

Iron Knee is right, family marketing might be a very safe investment.

I also think that WWE should start a small marketing effort towards young girls, not to the exclusion of their core fanbase, but marketing faces like Michelle McCool, Mickie James and Maria as role models for little girls and selling some dolls based after them could probably reign in big money and help with positive publicity.

While the Journal does not believe the entire product should be family friendly, the idea of selective marketing is highly endorsed. Obviously, football, baseball, and basketball have done tremendously well with advertising to women so the segue is possible. Plenty of other products out there also currently drive the entertainment industry that fit the bill Crazy-schemer described, particularly Hanna Montana and High School Musical. There is a large market out there waiting to be tapped, but the WWE and TNA have thus far proven unable to do selective marketing. This has led to a homogenized market that is shrinking because it is so specialized.

This is the generation of personalized entertainment, not mass marketing. If the wrestling companies do not adapt they will continue to loose share to everyone from YouTube to Wii to DVDs to everything that is to come.


Plenty more was written, so be sure to take a look. And of course, a week would not be complete without a good dose of JP Prag's own HIDDEN HIGHLIGHTS!!


CLOSING BELL

This concludes Issue #56 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!