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   October 24, 2014



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Mat Matters: Is it time for a new WWE CEO?
By MATTHEW BYER - SLAM! Wrestling


Vince McMahon speaks at the press conference announcing WrestleMania 29 in New Jersey. Photo by Mike Mastrandrea

With this past week's announcement of World Wrestling Entertainment releasing 11 people from its roster added to the already horrendous drop in the WWE's stock price by almost 50%; reports that Vince McMahon personally lost over $750 million dollars over the last few months; the market's disappointment in WWE's new U.S. television deal; and the number of WWE Network subscribers being stuck at 667,287 which is quite far off the reported 1.5 million subscribers needed for it to break even; questions are being asked about the company's direction.

As is inevitable when a company has this kind of downfall in such a short amount of time, reports have been circulating that many investors are calling for Vince McMahon to resign as Chief Executive Officer (CEO) of the company. However, the obvious query is whether or not that should happen and if so who would replace him?

Before devolving further into this issue, though, it has to be noted that Vince McMahon owns roughly 57% of WWE’s Class A common stock - 39.9 million shares - which gives him controlling interest in the company. So if he doesn’t wish to be removed as CEO of the company it would be almost impossible to force him to do so. Additionally, it also means that any successive CEO would need his stamp of approval.

Regardless, this does not mean that it hasn’t come time for someone else to guide the WWE as the CEO. The current state of the WWE did not come about by accident and has roots going back about a decade and a half. As has been written about here at SLAM! Wrestling numerous times the WWE has had enormous difficulty establishing new main event stars since John Cena and Randy Orton were young up-and-coming wrestlers trying to make the roster.

There have been recent reports that Vince McMahon has fired head writer Jay Gibson, but by and large, there has been very little recent turnover within the WWE creative and writing team and instead talent after talent has been released from the roster with the blame always being placed on the wrestler for not getting over no matter how stupid the storyline or character assigned to them. This speaks to a long-term rot having set in within the creative ranks with the delegation of blame always been pushed away from them instead of taking responsibility for their role in what has happened. As has been established numerous times, Vince McMahon still heavily participates in the creative process of what ends up on television screens across the world and the fact that it is the wrestlers on the roster that pay the price when things don’t work out instead of the creative management and writers speaks to his failure quite loudly as CEO.


Furthermore the events of the past few months with regards to the WWE Network speak to Vince McMahon’s failure as a businessman and continue to do so. Recently, it has been stated that for the WWE Network to break even 1.5 million subscribers are necessary especially in light of the obvious underestimation of how much pay-per-view revenue would in turn decline. At the moment most of the messaging coming out of the company since the stock decline in May is a belief that increasing the monthly subscription amount will offset the fact that so far the number of subscribers is only 667,287 and that fans simply need to be educated about the WWE Network in order to convince more of them to sign up. However, this fails to address several significant issues as to why the WWE Network has so far failed to catch on in a big way.

When the WWE Network was initially proposed as an online service many rightfully described it as Netflix for professional wrestling. Yet, when that comparison was made it was obvious that many forgot one of the prime reasons Netflix has been so successful which is it is easy to access. Netflix is available on pretty much every Smart TV available for purchase and the WWE Network is quite simply not. It is readily apparent that WWE’s strategy was that most people would simply access the WWE Network using their tablet, phones, or computers, and felt that the television would be the option that would be the least used. However, considering that one of the major selling features of the WWE Network is the fact that a subscription gives access to all the yearly PPVs, and that when customers would buy a PPV they would mostly watch it on a television screen, this failure in strategy has been a colossal miscalculation which has negatively affected the company’s revenues.

Simply put the WWE needed to partner with one of the television manufacturers to have the WWE Network loaded onto every Smart TV possible or they needed to partner with an existing company such as Netflix that was already available on Smart TVs so that it could access the distribution network. The irony is that it is not too late to create this sort of partnership, but as stated previously the messaging coming out of the company does not inspire confidence that this will ever happen.


Are Triple H and Stephanie McMahon the proper choice to lead WWE forward? Photo by Mike Mastrandrea
Another obvious flaw with the launch of the WWE Network is that so far it has only been made available in the United States. If prior to the launch the management in WWE knew that the PPV revenue could sharply decline and that the magic break-even number for the WWE Network was 1.5 million subscribers, then to allow the company the best chance at achieving those numbers the online service needed to be made available internationally from the start. The WWE has long spoken about how it is an international company; however, the approach for the WWE Network has so far failed to account for how much revenue comes from international sources. There has been talk of the WWE Network launching in other countries later in 2014, but presently those launch dates do not seem to be all that solid.

Additionally, the WWE Network monthly subscription price, based on the cost associated with the service and number of subscribers they currently have is too low. There have been rumours that the monthly subscription price will soon be raised, but now that the biggest PPV of the year, Wrestlemania XXX has happened, many subscribers may choose not to renew if the cost increase is too much. The failure to properly estimate what the equilibrium price and quantity (number of subscribers) should and would be has to be laid at the feet of the financial and economic management of the company. However, so far no word has been forthcoming from Vince McMahon as the CEO that there will be any changes made in those areas.

Consequently, a very firm argument can be made that the WWE does need new leadership at the top to steer the company to the next level. What Vince McMahon has achieved with World Wrestling Entertainment during his tenure is remarkable, but it does not mean he is the best positioned to take the company into the future. All of the aforementioned calls for a new CEO who has fresh eyes and who will not feel an overwhelming sense of obligation towards existing management and personnel in the financial and creative ends of the company. As such, it means that despite Stephanie McMahon and Triple H being positioned in recent years as Vince McMahon’s obvious successors, they are not the best choice since a great deal of the company’s current direction and problems have happened during their management tenure.

Yet, with Vince McMahon holding the controlling interest in WWE who else would he deem as acceptable to replace him and who would also be able to make the changes necessary for the company to move into the future? There really is only one candidate that would fit those criteria and that is Shane McMahon.

WHAT YOU THINK
When do you think we'll see a new CEO of WWE?
Really soon - 16%
Next six months - 12%
In a year or two - 19%
Not for a number of years - 53%
As many know Shane McMahon resigned from the WWE on October 16, 2009 and in August 2010 signed a deal to become the new CEO of China Broadband Inc. which is a provider of cable broadband services in the Shandong province of China. He later became the CEO of You On Demand, a video-on-demand company until July 2013, when he resigned and chose his successor. However, he is still the company’s principal executive officer and Chairman of the Board. This experience that Shane McMahon has obtained has all been in areas that would ideally situate him to become the new CEO of WWE and to fix the problems with the launch of the WWE Network.

Still, the big question is whether he would be interested in doing so and whether or not it might lead to a struggle for control of the company with his sister Stephanie McMahon and his brother-in-law Triple H. Time as they say will tell all and for those of us who are fans of WWE we can only hope for the best.

Editor's Note: Prior to publication of this article, multiple sources have been reporting that to absorb the losses associated with the launch of the WWE Network, the WWE has been cutting services, such as transporting by bus television production staff, using local wrestlers as Adam Rose's Rosebuds entourage instead of NXT talent, eliminating more expensive elements associated with Fandango and Bad News Barrett's entrances to the ring, and plan to make further cuts to the tune of $20 million overall once everything is said and done.

RELATED LINKS

  • Previous Mat Matters Editorial columns

    Matthew did not think the 2013-14 NHL Season was the best ever as NHL Commissioner Gary Bettman claimed it was because it is the 21st year that no Canadian NHL club won the Stanley Cup and there is no end in sight for the Canadian championship drought. Be sure to check out Matthew's fictional novel Finding My Way Through Life's Follies along with a free preview here and also Matthew's collection of poetry Mustard Marinade Poetry along with a free preview here.