This streaming stock could make a powerful move in sports entertainment

Sports entertainment and media company World Wrestling Entertainment (wwe) (WWE -1.23%) has an exclusive streaming relationship with Peacock — part of Comcast‘c (CMCSA -1.01%) NBCUniversal segment– from spring 2020. This deal gave Peacock premium subscribers access to WWE’s extensive back catalog of classic wrestling matches and the ability to watch live events such as Royal Rumble, Wrestling maniaand SummerSlam. However, WWE’s weekly live programming, Raw and smashing, still debuts on linear TV and arrives on Peacock only a day later.

During WWE’s second-quarter investor call, co-CEO Nick Hahn suggested that the company is open to the idea of ​​transferring the live broadcast rights to Raw and Smashing to streaming. That’s why building an even closer relationship could be a smart move for both WWE and Peacock.

The linear TV landscape is changing

WWE recently settled theirs Raw and Smashing deals in 2018 Raw airs on USA Network — also owned by NBCUniversal — in a deal reportedly worth $1.3 billion over five years. Fox Corporation Airs on the FOX network Smashing in a deal worth about $1 billion, also over five years.

Raw draws approximately 2 million live viewers per week for its three-hour running time, while Smashing draws about 2 million during its two-hour weekly broadcasts. For comparison, those numbers are in the range of the average viewership per game of the National Basketball Association. However, with cable disruption on the rise and some experts expecting a decline in live TV ad spending in the coming years, this could be a good time for WWE to move its flagship weekly shows to the Peacock.

WWE is not new to the streaming space

WWE first entered the US streaming market with WWE Network, which launched in February 2014. Within a year, WWE Network had over 1 million subscribers. But despite this promising start, it struggled to grow. Its US subscriber base peaked at around 1.9 million in 2017.

At the time WWE signed its deal with Peacock in early 2020, the WWE Network had just 1.1 million subscribers. An estimated 1 million of them subsequently moved to Peacock. However, a year after the deal went into effect, Khan revealed that more than a third of Peacock’s premium subscribers watched WWE content.

Streaming services include live content

As Khan noted on WWE’s investor call, streaming companies are “hungry” for premium live content. Quote An appleA $2.5 billion contract with Major League Soccer and Amazon$11 billion deal with the National Football League. As a provider of live programming, Khan said WWE is in a unique position because it attracts mass audiences and operates year-round.

For NBCUniversal, its ongoing relationship as a partner of WWE Networks and Raw certainly puts it in a strong position should WWE decide the time is right to move fully to streaming. As Khan said on the earnings call, “We always talk to [NBCUniversal] first for everything that happens.”

Peacock operates on a relatively small budget

Comcast reported that Peacock had 13 million premium customers at the end of the second quarter of 2022 – the same number it had three months earlier. The potential to bring in millions of additional viewers with weekly live WWE programming is certainly an attractive prospect for Comcast — depending on how much such a deal would cost.

NBCUniversal reportedly spent more than $1 billion to secure the rights to the WWE Network for the Peacock through 2025. Considering WWE earned more than $2.3 billion the last time it sold the TV rights broadcast for Raw and SmackDown, it’s reasonable to wonder if NBCUniversal has the appetite to spend heavily to make both shows exclusive to the Peacock. But as Khan noted, Peacock’s main streaming competitors already spend billions of dollars a year on premium live content.

If WWE decides to switch Raw and Smashing solely for streaming, Peacock would do well to secure the rights. By its very nature, pro wrestling is scripted, meaning viewers are presented with feuds and storylines that often span months, if not years. In a world where subscribers can and do cancel and add streaming services every month, WWE’s live content could bolster the Peacock’s clout — and its growth.

John Mackie, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Tom Wilton has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Amazon and Apple. The Motley Fool recommends Comcast and World Wrestling Entertainment and recommends the following options: long March 2023 $120 Apple calls and short March 2023 $130 Apple calls. The Motley Fool has a disclosure policy.

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