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Why World Wrestling Entertainment, Inc. Stock Popped Today

Steve Symington, The Motley Fool
Updated

What happened

Shares of World Wrestling Entertainment Inc. (NYSE: WWE) jumped 12.5% as of 3:30 p.m. EDT Monday after reports that Fox has struck a deal to air one of its most popular shows.

According to The Hollywood Reporter this morning, WWE has "agreed in principle" to a five-year deal worth over $1 billion to move its SmackDown Live program to Fox starting in October 2019.

Stock market prices and charts in red and green on an LED display
Stock market prices and charts in red and green on an LED display

IMAGE SOURCE: GETTY IMAGES.

So what

The news effectively confirms reports last week that WWE was shopping SmackDown -- which currently averages almost 2.6 million weekly viewers -- to various networks after Comcast's NBCUniversal declined to renew its deal. At least one Wall Street analyst predicted at the time that WWE would command a premium for its content given its high ratings and stable viewership.

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Sure enough, the new deal is said to be worth $205 million annually, or roughly three times the amount NBCUniversal was paying WWE to air SmackDown on its USA network.

Now what

Meanwhile, USA Network is expected to continue airing WWE Raw, which averages roughly three million weekly viewers. Hollywood Reporter also notes that WWE received an even higher offer from another bidder, but was swayed by Fox's promise to heavily promote SmackDown across its programming with the NFL and Major League Baseball.

In the end, with WWE shares trading at all-time highs, investors certainly aren't complaining today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.