WWE Could Be A Netflix Game Changer, Capitalizing On 'Opportunities To Maximize Fan Growth And Engagement'
Sports entertainment company TKO Group Holdings Inc (NYSE:TKO) — owner of the UFC and WWE brands — is gaining exposure due to heightened demand for sports rights.
The TKO Analyst: Goldman Sachs analyst Stephen Laszczyk has a Buy rating and price target of $102 on TKO Group Holdings.
The Analyst Takeaways: Key media rights, sponsorships and revenue from live entertainment could provide a boost to TKO Group Holdings, according to Laszczyk.
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The analyst met with TKO management in Philadelphia ahead of the two-day WrestleMania XL event, held on April 6 and April 7.
"We came away from the weekend with takeaways that we believe support many of the key elements of our Buy thesis, initially outlined in our March 2024 initiation report," Laszczyk said.
The analyst said WWE had several high-profile events around the WrestleMania event, which included several events and fan experiences.
Laszczyk highlighted that WrestleMania featured the first ever on-the-mat advertiser for WWE with a Prime Hydration partnership. The analyst also cited how the first night reported over 72,000 attendees for night one on Saturday.
Another key item for WWE going forward could be its partnership with streaming giant Netflix Inc (NASDAQ:NFLX) for its flagship show, WWE Raw.
"Having one consistent scaled distributor for RAW globally opens up opportunities to efficiently maximize fan growth & engagement,” Laszczyk said.
The partnership with Netflix could be a game changer thanks to new advertising and sponsorship opportunities, he added, citing cross-selling traditional telecast and inventory with in-arena and ring advertising.
“It will offer potential ways to collaborate to monetize the super fan through merchandising and selling premium experiences,” Laszcczyk said.
TKO's management team also sees the partnership with Netflix adding credibility to the WWE, similar to Disney helping bring credibility to the UFC through a media deal with ESPN.
The WWE is also heading into a media rights negotiation window for premium live events (i.e. WrestleMania, Royal Rumble and SummerSlam) that may also interest potential partners.
Similarly, the UFC is considered a strong contender for a global media rights deal given its global fan base.
The company was spun off from Endeavor Group Holdings (NYSE:EDR) in September.
TKO Price Action: TKO Group Holdings shares are up 2% to $93.98 on Monday versus a 52-week trading range of $72.34 to $102.25.
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