Is Vince McMahon in talks to sell WWE? Probably not, but takeover speculation still grips market

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Is Vince McMahon in talks to sell WWE? Probably not, but takeover speculation still grips market

Posted on: March 19th, 2014 by tommyj

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With WWE’s stock reaching a record high last Friday of $30.94 a share, thanks mainly to investor optimism about the future profitability of the WWE Network and a potential bidding war for WWE programming, this would be the perfect time for the 68 year old Vince McMahon to cash out by selling his company to an even bigger entertainment or media conglomerate, turning his on paper wealth to real riches, and ride off into the sunset to live the carefree life of a multi-billion dollar playboy.

According to an article entitled "" at by Tara Lachapelle, this isn’t a pie in the sky fantasy scenario, but a very realistic prospect that people are talking about today in the business world:

"To spark a bidding contest for , all Vince McMahon needs to do is wave a “for sale” sign.

McMahon, 68, controls the voting power of the $2.3 billion company that’s been entertaining spectators with staged fights for decades. The is at a record after WWE launched its own subscription streaming network and became the subject of takeover speculation. Should McMahon ever decide he’s ready to sell, companies from to may line up with offers, Albert Fried & Co. and National Alliance Capital Markets said."

From a wrestling perspective, at first glance, it’s hard to believe this takeover talk, given that everyone expects Vince will run WWE until the day he dies and has already handpicked his successors, daughter Stephanie and son-in-law Paul "Triple H" Levesque, who are gradually being passed the torch and shouldering more and more executive responsibilities. Indeed, the official word on the matter, from WWE CEO George Barrios whilst interviewed earlier this month, is that the company is not in merger talks with anyone.

However, what if a deal could be struck whereby WWE was allowed to operate independently and was still ran by the McMahons, but was owned by a much larger financial giant, like Pixar‘s present relationship with Disney? Maybe a sale wouldn’t be so out of the question then.

Given that WWE’s business involves highly rated television programming, international live events touring and merchandising, Lachapelle argues that Comcast, DisneyLive Nation and Madison Square Garden would all be parties interested in buying out Vince McMahon:

Comcast is a “natural acquirer” for WWE because it already airs the wrestling shows and Chief Executive Officer Brian Roberts isn’t afraid to manage more than one type of media asset, said Richard Tullo, New York-based director of research at Albert Fried. Comcast owns cable and broadcast TV networks, the Xfinity cable service, the Universal Pictures movie studio and theme parks. A representative for Comcast said the $132 billion company doesn’t comment on speculation….

Sports and live events are Madison Square Garden’s specialty, which makes it a logical suitor, Tullo said in a phone interview.

MSG owns the New York Knicks basketball team and the New York Rangers hockey team, as well as the Manhattan arena they play in. The company is looking to sell its Fuse music TV channel, which people with knowledge of the situation said has so far drawn bids from both Jennifer Lopez and her former beau Sean “Diddy” Combs.

“MSG can manage WWE because they know the ropes,” Tullo said. “MSG owns sports teams, they own arenas, they have the WWE in their venues. It would just need a couple of chips to fall into place first, such as selling Fuse.”

Closely held Anschutz Entertainment Group, the owner of the Staples Center in Los Angeles, and Live Nation Entertainment Inc. (LYV), the world’s largest concert promoter, also have the ability to operate WWE’s assets, Tullo said.

Representatives for MSG, Live Nation and Anschutz declined to comment on the companies’ interest in acquiring WWE.

Disney, with its expertise in managing and marketing characters across platforms from the big screen to consumer products, is another possible suitor, Routh of National Alliance said. The backing of Disney, a $140 billion entertainment conglomerate, would increase WWE’s value, he said.

“You can’t look at what WWE is worth today,” Routh said. “It’s about what it’s worth in the hands of Disney, with all of their muscle behind it.”

A representative for Burbank, California-based Disney didn’t return messages seeking comment.

Disney’s cash and equivalents of $4.4 billion is almost double the size of WWE’s market value, data compiled by Bloomberg show. Comcast’s cash stockpile is even larger at $5.3 billion, the data show.

“If you were Disney or Comcast looking at the numbers and what you could do with WWE, you could probably justify paying a decent price and it’s still petty cash to you,” Routh said. “The question is, what’s the asking price, if there even is one. Only Vince McMahon knows.”

However, it’s hard to see those companies stumping up the magic figure that would make Vince McMahon give up his life’s work when they take a good look at WWE’s books. The company is only worth it’s current $2.32bn market cap if they keep their promises to double or treble their TV rights fees and get over 1 million subscribers for the WWE Network this year, which are two very big ifs. Otherwise, WWE is vastly overvalued. Indeed, some analysts already think that they’re shares are probably overpriced by a whopping 275%!

Moreover, the Bloomberg story doesn’t offer any concrete evidence that there is any substance to this takeover speculation. Thus, it probably should be taken with a bigger pinch of salt than our popular Rumor Round-Up feature.

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