The strong relationship between World Wrestling Entertainment, Inc. (WWE - Free Report) and Astro Malaysia Holdings Berhad (Astro) is set to continue in to the 17th year with both companies extending the partnership. Per the new deal, Astro will continue to air WWE programming like Raw and SmackDown.
Astro Vice President of Sports Business, Lee Choong Khay, said “The response from the passionate fanbase has been tremendous, with nearly five million viewers in 2017 alone and we hope to serve more fans in years to come.”
We believe extension of the agreement between both the companies will enable WWE to increase subscriber base. At the end of third-quarter 2017, the number of average paid subscribers increased 4% year over year in the quarter to 1.52 million. The company had earlier stated that it launched WWE Network in China with its PPTV partners. Further, WWE Network is already available in the Indian Subcontinent, Germany, Austria, Mexico, Switzerland and Japan.
Other Strategic Initiatives
We believe WWE will continue to report record revenue growth as it has not only extended previous deal with different companies but also signed agreement with new service provider for airing its flagship program Raw and SmackDown in different countries. The strong relationship between WWE and Groupe AB is set to continue into the 18th year with both companies extending the partnership.
In the long haul, the company will continue banking on WWE’s content distribution agreement. Recently, the company stated that distribution agreement, which generated a large chunk of television rights revenues, will expire in 2019 in some regions. Licensing of Raw and SmackDown in the United States will terminate in Sep 30, 2019, while in the UK and India it will expire on Dec 31, 2019. The company is looking to renew the distribution agreement in these regions somewhere between May 2018 and first-half 2019.
Further, in an effort to augment revenues WWE reached an agreement with sports marketing agency Lagardère Sports, which will facilitate it to acquire international sponsorship. Per the agreement, Lagardère Sports will help in building partnership portfolio through its sponsorship proficiency and global sales channel in all international regions, excluding China. We believe with increasing subscription based video streaming services WWE Network through its vast presence in over 180 countries will aid top-line growth. Revenues from international sponsorship increased 29% in the first nine months of 2017 due to joining of blue-chip advertisers such as KFC, Nestlé, AT&T and other gaming partners.
World Wrestling Entertainment’s focus on increasing original content production, localization, subscriber growth, rise in TV rights fees and strategic initiatives have helped the stock to outperform the industry in a year. The stock has surged 70%, outperforming the industry’s growth of 22.3%.
Stocks such as News Corporation (NWSA - Free Report) , Twenty-First Century Fox, Inc. (FOXA - Free Report) and Lions Gate Entertainment Corp. (LGF.A - Free Report) ) ,which belong to the same industry, have also witnessed upsides of 42.4%, 14.4% and 20.9%, respectively.
WWE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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