Endeavor Group Holdings Inc. is joining forces with WWE and Ultimate Fighting Championship to create a merged sports entertainment company, with an enterprise value of $21.4 billion. WWE shareholders will own 49% of the new venture, while Endeavor will have the majority stake at 51%. Valuations of the two companies come to $9.3 billion for WWE and $12.1 billion for UFC.
Ari Emanuel, the CEO of Endeavor, will be at the helm of the unnamed new business. Vince McMahon, the executive chairman of WWE, will take up the same position and Dana White will maintain his role as president of UFC while Nick Khan will be the president of WWE.
In a statement released Monday, McMahon commented, “This collaboration will result in an immense live sports and entertainment giant with a combined fanbase of more than one billion people, and immense growth potential worth more than $21 billion.”
He indicated that the emphasis of the new firm would be on maximizing the worth of joined media rights, augmenting sponsorship monetization, creating novel kinds of content, and leveraging other strategic mergers and acquisitions to bolster their brands.
There is already an established connection between WWE and UFC, thanks to the crossover of wrestlers like Brock Lesnar and Ronda Rousey. With Endeavor’s alliance with WWE, the time-honored, family-run business is shifting into a new domain. Vince McMahon acquired Capitol Wrestling from his father in 1982, and propelled it to a country-wide corporation through stars like Andre the Giant, Hulk Hogan, and Dwayne “The Rock” Johnson. The wrestling organization rebranded to World Wrestling Federation and then World Wrestling Entertainment, and held the very first WrestleMania in 1985.
In an interview with CNBC, McMahon addressed doubts some WWE fans and industry experts had about whether he’d ever make a deal for the business. He stated that now is the right time to do what is best for the company’s future and that it is “the next evolution of WWE.” This decision comes after McMahon, who is the majority shareholder, announced in January that the company could be up for sale.
Speculation abounded as to who might have an interest in purchasing the WWE, with Endeavor, Disney, Fox, Comcast, Amazon, and Saudi Arabia’s Public Investment Fund all being mentioned. Mr. McMahon remarked to CNBC that there were numerous potential buyers for WWE, but that uniting with Endeavor was the optimal decision.
“It would be beneficial for both parties to make use of the numerous synergies to gain the maximum value from the deal,” he stated.
Media experts viewed WWE as an attractive acquisition target due to its wide reach and devoted fans, ranging from children to seniors and all income levels. Last year, the company achieved $1.3 billion in revenue. Additionally, WWE is a social media giant, surpassing 16 billion views in the fourth quarter of 2020. On YouTube, it has almost 94 million subscribers and 20 million followers on TikTok. Five of the top 15 most followed female athletes on Facebook, Twitter and Instagram are from WWE, Ronda Rousey being the leader with 36.1 million followers.
In January and February of this year, WWE saw a 15% increase in its digital and social media views compared to the same two-month period in the previous year – totaling more than 7.5 billion viewings. TKO, which will be trading on the New York Stock Exchange with the “TKO” ticker symbol, will have an eleven-member board, where six are appointed by Endeavor and five by WWE.
According to Jeffries analyst Randal Konik in a note to clients, the assets of UFC and WWE are popular in an environment where conventional TV is losing market share to streaming services, thus causing an increased need for live sport content. The boards of Endeavor and WWE have both approved the deal, which is planned to close in the second half of the year, though it needs regulatory approval. World Wrestling Entertainment Inc. stocks rose 33% this year, but dropped 5% at the opening of Monday’s trading, while Endeavor shares decreased slightly less than one percent.