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Vince McMahon's Return Boosts WWE Stock. Why Investors See Profit. -- Barrons.com

Barron's · 01/06/2023 10:05
TV last month agreed to pay an average price of roughly $2 billion a year over a seven-year term for rights to show NFL Sunday Ticket football games, WSJ reported. That's higher than the $1.5 billion per season DirecTV has been reportedly paying. Amazon has gone deeper into sports broadcasting as well, winning the rights to live stream European Champions League soccer matches last year.Karishma Vanjani

WWE shares jumped higher after former CEO Vince McMahon said he plans to return and conduct a full review of strategic alternatives. McMahon had stepped down last year after facing multiple sexual assault allegations. On Thursday, he submitted written consent to elect himself and two former co-presidents and directors, Michelle Wilson and George Barrios, to the board, calling the action necessary to "fully capitalize" on upcoming media rights negotiations as well as consider a potential sale.

The stock jumped almost 17% before being halted for news pending on Friday.

The review and possibility of a sale are "a clear positive for the stock in our opinion," J.P. Morgan's David Karnovsky wrote Friday. "The opportunity to own rather than rent sports rights would draw real interest from multiple media and streaming firms."

There's a growing demand for live sports right now. Alphabet 's YouTube

Analysts at Benchmark Research have speculated Netflix (NFLX), Amazon (AMZN), Apple (APPL), and Disney (DIS) to bid for WWE content in fiscal 2023 as it approaches a new rights cycle.

The sale of WWE (ticker: WWE) takes the stakes up a notch. On average, Guggenheim analyst Curry Baker's analysis says WWE could command somewhere in the $100 to $110 per share range. That's a 52.7% take-over premium on the upper end at Thursday's closing price of $72.04. Baker labeled WWE stock Guggenheim's best idea, rating it as Buy with a $94 price target.

Karnovsky threw out a possibility of Endeavor (EDR) acquiring the asset, given it owns similar businesses like the Ultimate Fighting Championship -- a mixed martial arts league it fully acquired in 2021.

The hiccup here lies with McMahon's direct involvement. A possible outcome here is that McMahon determines any offer to be insufficient, either for price or otherwise, and decides to stay on. "That scenario carries some risk in our view to the company, given the prior allegations of misconduct that preceded his leaving," Karnovsky said, rating the stock as Neutral.

McMahon, the majority owner of WWE, has also made it clear that unless he has direct involvement as executive chairman from the outset of a strategic review, he won't approve any deal, the WSJ reported.

Overall, though, 55% of analysts tracking the stock on FactSet give it a Buy rating.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com

(END) Dow Jones Newswires

January 06, 2023 10:05 ET (15:05 GMT)

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