Raw rating lowest since July 2012

[BigCrippyZ]

I think it's a common misconception that WWE makes any direct money from the advertisers on RAW and Smackdown. Not to be confused with WWE's direct sponsors, the advertisers pay NBC Universal/USA Network to run the commercials. In turn, WWE is paid a television rights fee based on a negotiated contract out of the advertising revenues that are paid to NBC Universal.

It is true that on a week to week or even quarter to quarter basis, WWE doesn’t get any more or any less money from advertisers on Raw when viewership goes up and down. It would be better for them if they did, because then they might be more responsive and open to change rather than stubborn and could potentially have incredibly successful weeks/quarters versus average weeks/quarters.

As of the last quarterly financials WWE released, TV rights fees equal 40 percent of WWE revenue, Network subs total 25 percent, and house show tickets sales and venue merchandise sales equals 18 percent of revenue. So low ratings means WWE is going to have to brace for a huge drop in TV rights fees next time they negotiate a contract, and in the mean time, fewer people are being reached as potential Network and house show customers.

WWE right now is like an athlete being lazy the year after they sign a big contract. However, eventually that contract ends, and if they only perform well in their the last year of their contract, people are going to notice that and pay less than they would otherwise, expecting that athlete to be lazy again once they sign the new deal and feel fat, happy and comfortable again.

[The CyNick]

Originally Posted by BigCrippyZ I think it's a common misconception that WWE makes any direct money from the advertisers on RAW and Smackdown. Not to be confused with WWE's direct sponsors, the advertisers pay NBC Universal/USA Network to run the commercials. In turn, WWE is paid a television rights fee based on a negotiated contract out of the advertising revenues that are paid to NBC Universal. It is true that on a week to week or even quarter to quarter basis, WWE doesn’t get any more or any less money from advertisers on Raw when viewership goes up and down. It would be better for them if they did, because then they might be more responsive and open to change rather than stubborn and could potentially have incredibly successful weeks/quarters versus average weeks/quarters. As of the last quarterly financials WWE released, TV rights fees equal 40 percent of WWE revenue, Network subs total 25 percent, and house show tickets sales and venue merchandise sales equals 18 percent of revenue. So low ratings means WWE is going to have to brace for a huge drop in TV rights fees next time they negotiate a contract, and in the mean time, fewer people are being reached as potential Network and house show customers. WWE right now is like an athlete being lazy the year after they sign a big contract. However, eventually that contract ends, and if they only perform well in their the last year of their contract, people are going to notice that and pay less than they would otherwise, expecting that athlete to be lazy again once they sign the new deal and feel fat, happy and comfortable again.

Nobody who understands the business things WWE makes money off ads ran during RAW.

You're so off base in your thinking that is not even funny. WWE had double or triple the ratings in the Attitude Era, but monetarily they didn't maximize TV rights fees because advertisers wanted no part of the show. Today, even though ratings are far lower, they are doing better financially in large part because WWE has reinvented itself as a respobsible corporate citizen. Now you have a lineup of advertisers looking to buy airtime from USA. That wasnt even happening 3 years ago. USA recently came out and responded to the declining ratings by touting how successful WWE is for them.

Further, as I've explained many many times, if ratings across the board on down, advertisers will still pay top dollar for the shows that draw the most of the right type of viewer. RAW week in week out is a top 3 viewed show on Monday. Therefore advertisers will still pay top dollar.

[BigCrippyZ]

Originally Posted by The CyNick Nobody who understands the business things WWE makes money off ads ran during RAW. You're so off base in your thinking that is not even funny. WWE had double or triple the ratings in the Attitude Era, but monetarily they didn't maximize TV rights fees because advertisers wanted no part of the show. Today, even though ratings are far lower, they are doing better financially in large part because WWE has reinvented itself as a respobsible corporate citizen. Now you have a lineup of advertisers looking to buy airtime from USA. That wasnt even happening 3 years ago. USA recently came out and responded to the declining ratings by touting how successful WWE is for them. Further, as I've explained many many times, if ratings across the board on down, advertisers will still pay top dollar for the shows that draw the most of the right type of viewer. RAW week in week out is a top 3 viewed show on Monday. Therefore advertisers will still pay top dollar.

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.

[The CyNick]

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.

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.