Vince McMahon fired the first shots Wednesday at the pay per view industry and it didn’t take long for one of their soldiers to fight back. Direct TV is not happy with $9.99 a month pay per views and are ready to do something about it.
[adinserter block=”1″]Not only did I expect this to happen as soon as it was official on Wednesday, I predicted major fallout with the pay per view industry when this was rumored a month ago. Once plans details leaked several weeks ago about the WWE Network and their intention to give away pay per views on the network, I questioned how this would be possible with pay per view contracts. Apparently it is not.
“Now this (free pay per views with the network) has been reported for awhile but the story changes a bit now that the network will be online-only. At this point I have to question why the WWE would even do the B-shows. Quite frankly I am not sure legally how they can still charge a fee on cable and air these on the network at the same time. I believe there are rules in the contracts with cable companies that prohibit them from doing this yet there is probably some loophole with the Internet here.”
Oh yes, there are rules. Direct TV confirmed this and is ready to re-evaluate their relationship with the WWE over this latest announcement.
“Clearly we need to quickly re-evaluate the economics and viability of their business with us, as it now appears the WWE feels they do not need their PPV distributors,” DirecTV said in a statement, adding that the audience for its events “has been steadily declining, and this new low-cost competitive offering will only accelerate this trend.”
To the surprise of nobody, Vince McMahon is not worried. Vince feels that the pay per view industry would be fools to dump the WWE.
“I think it’d be foolish for them not to want to carry the pay-per-view anymore,” McMahon said. “It’s found money for them.”
Maybe it was the network announcement or maybe it was this dig at the industry that WWE Chief Revenue and Marketing Officer Michelle Wilson took at them in the AP.
“I’m just not convinced the pay-per-view platform is in it for the long term,” Wilson said. “It’s not the best consumer experience.”
Well that probably wasn’t the smartest thing to say if you are planning to retain your relationship with the industry is it? Nobody ever accused the WWE of exceptional public relations.
I will tell you what the biggest story here is. The biggest story here is that the WWE moved forward with the announcement either a) without consulting with the pay per view providers, b) never officially informing them of their plans, or c) recklessly disregarding any potential threat from the industry. The fact that Direct TV came out so quickly tells me they were either surprised or angry at the industry digs. Quite honestly I wouldn’t be surprised if Vince was hoping this would happen.
Why would Vince want that to happen? Maybe Vince is hoping that this opens up the door to bring Mania to network television? The WWE television rights are up for bid this year. The package would be a lot sweeter if the networks are getting WrestleMania with the programming. I could envision a scenario in future years where Mania airs live on the network and on television. What I can’t envision is Mania airing only on the network and retaining its current production values.
What I don’t understand here is how the WWE could have proceeded with these plans without having some kind of arrangement from the program providers? There are obviously deals in place that prevent this from happening so either the WWE are blatantly ignoring those rules or feel that they have some kind of loophole around them.
What is the plan if these providers decide to drop WWE programming? Offering WrestleMania exclusively on the network could be devastating. The stakes would get much higher and the break even number would have to dramatically increase. This could have major ramifications on the company, at least in the short term if there is major fallout over this.
Once again I also have to mention the pay structure of the WWE. WWE talents make a lot of their money off of pay per view bonuses, especially WrestleMania. What if that source of revenue is gone? Is there a revolt? I think at that point the WWE may have to do the unthinkable and put sign their talent to deals eliminating the whole independent contractor loophole. At the same time what kind of leverage does anyone even have? Even without the bonuses they can’t come close to matching their salary in the wrestling industry elsewhere.
Before you feel sorry for Vince let’s remember that this is the same guy that threatened to pull all of his programming from the pay per view providers in 1987 when Jim Crockett went head-to-head. Vince may be the victim today but it isn’t as if he hasn’t played hardball in the past with these companies. Vince isn’t exactly some kind of martyr here paying the price for giving fans free pay per views on the network.
[adinserter block=”2″]This is a fascinating story, especially with WrestleMania only a few months away. It is certainly one to keep an eye on. The pay per view industry is in a real tough spot. Yes it is found money but what happens when the UFC decides they want to do the same thing on their network? These companies aren’t about to roll over and allow one man to change the game. They are scared and they should be. I predict a nasty fight here that results in the WWE being off of pay per view entirely. This isn’t just about the WWE. This is about the industry as a whole. Unfortunately for Vince as powerful as he is, he isn’t big enough to change it.
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