Quote:
Originally Posted by BigCrippyZ
I'm not talking about currently. I'm talking about the impact of declining ratings next time WWE's contract is up.
Regardless of whether or not ratings across the board are down in the future, if WWE's ratings are consistently down compared to where they were when they negotiated the current deal last year, even if they're attracting the same "quality" advertisers in the future that they are today, WWE's rights fees are more likely to decline as well. Sure everyone's rights fees might be down too because the lack of viewers over all and WWE may still be getting top dollar.
When WWE makes 40% of their revenues from television rights though, and those rights fees are due to audience size and ratings, any drop or potential drop in that revenue or audience/ratings size is a huge risk. Not only to their financial bottom line but also to their ability market their other products, i.e., Network subs, merch, live events, etc. For example, according to WWE, RAW DVR viewership has stayed stagnant at only an additional 10-12% of the live audience size.
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You're missing the aspect that ad rates are not directly tied to the actual rating year over year. Large audiences are harder to come by now. Used to be you had 4 channels, and everyone with a TV watched whatever wad on one of those channels. Now you have hundreds plus other forms of media. An advertiser may have paid say $100k for 1 million viewers. But if 100 shows used to get 1 million, and now only 20 do, you've made the 1 million person audience more scarce. Therefore even if viewership dips to say 750k, tv rights fees could go up because so few shows draw that number of people, but the same number of advertisers want to reach a large audience. That's why I harp on the number of shows that draw a larger audience than RAW on Mondays. Aside from football, nothing beats it consistently in its timeslot.
On top of that WWE is better positioned in terms of presenting a clean product which gives them a larger base of interested advertisers which will mean USA can be more profitable. On top of that, even since the last TV deal that was struck, cable viewers are declining across the board. So having a property that draws 3 million viewers a week is even harder to come by. Lots of cable outlets would love to have 5 hours of programming per week at anywhere close to 3 million viewers. Again, that means more interest, which will drive up rights fees through a bidding war.
No doubt WWE wants their product exposed to as many eyeballs as possible to sell The Network, merch, and tickets to live events. But more and more those eyeballs are not all on cable.