In Focus

Wrestling With The WWF

This week I was graced by the presence of my childhood friend and her two sons, ages 14 and 13. It is always refreshing to be in the company of two energetic, well-mannered males, especially since my house is commandeered by females right down to the family pet. How funny it is to see the innate differences between the sexes. My girls want to color and play with Barbies (although they do enjoy soccer and hockey), and her boys want to play video games or wrestle. Ultimately, the boys ended up with crayons and Barbie Coloring Books, but only after some serious wrestling with my girls who collapsed in hysterical laughter with every playful body slam. None of which I minded; I grew up with two brothers and did my own share of wrestling. There is one part of the whole wrestling experience that I don't think I'd like to get used to (but that my girlfriend has been forced to deal with). That is the WWF (NYSE:WWF), or the World Wrestling Federation.

The World Wrestling Federation is a huge conglomerate composed of various media outlets, from publishing to merchandising. I have a hard time describing it in a nice way. Basically, its main event is huge, hulk-like, sweating men and women with ridiculous names, pretending to beat the living daylights out of each other. Often they are introduced by barely-clad, surgically enhanced females. If it weren't for my houseguests, the program would have never been watched in my house.

There. I said it. And after wrestling with being honest about my feelings for fear of being shunned by the general public, I can tell you there is one aspect of the WWF I'd like to keep a close eye on. Their stock. Because with the unbelievable domination they have in the media-world, this company is going places. Big places.

Founded more than 20 years ago by husband and wife team, Vince and Linda McMahon, no one would have guessed the then WWWF (World Wide Wrestling Federation) would have evolved into the huge success story it is today. Mr. McMahon has been described as flamboyant and controversial; Mrs. McMahon is known as the brains behind the scenes, the one with the business mind. The McMahons started in the Northeast region of the country and eventually began shipping tapes of the "shows" to all the major cities. It immediately took off. In 1999, the WWF became an IPO (Initial Public Offering) and did well.

Today, WWF is based in Stamford, Connecticut and has sales offices in New York City, Chicago and Toronto. Revenues are generated through television programming, pay-per-view events, live shows, licensing (merchandise), video, Internet, and publishing. Fans reach from the United States to Canada to Europe. This is by far one of most marketed media conglomerates ever, competing with the likes of Disney and Turner Broadcasting. Let's take a closer look at how the various media outlets affect the WWF, shall we?

Television: The WWF shows nine hours of original television each week, reaching 22 million viewers. Their show "Raw is War" is rated number one in its time slot and "SmackDown!" is rated number one on the UPN network. Their agreement with Viacom/CBS gives them an even bigger reach, with access to CBS, UPN, Nick at Nite (Nickelodeon), TNN, MTV, and VH1. In the International market, the WWF has lucrative contracts with several major broadcasters in England, France and Germany.

Pay-Per-View: WWF holds twelve events per year. In the year 2000, $150 million was generated from these specials. This was a 28% increase over 1999.

Internet: www.wwf.com boasts 4.4 million unique visitors and 1.1 million registered users. That is a 3900% increase over the previous year on a monthly basis. Yes, that's thirty-nine hundred percent!

Magazines: WWF Magazine and RAW Magazine have a 7.5 million circulation, up 24.2% from the previous year.

Home Video: Listed as one of the top among Billboard Magazine's "Sports" category.

Merchandising: WWF projects around a billion dollars in worldwide sales this year, with revenues up 40% over the previous year. Relationships with Target, Walmart, K-Mart, and Toys 'R Us have increased revenues 800% over 4 years.

There's nothing "fake" about those numbers, folks. And as if they felt this kind of growth wasn't enough, the company has just launched the new football league, the XFL, in February 2001. Tagged as "The league that's returning passion to football," it has gained the support of such well-known celebrities as Governor Jesse "The Body" Ventura (a former professional wrestler himself) and Dick Butkus, a former Chicago Bear of the National Football League. What's next, the XHL, Extreme Hockey League.hockey without helmets? And in an even bigger move, the WWF has bought out its only true competitor on the mat, the WCW, or World Championship Wrestling.

Although I've painted you a pretty picture so far (okay, so it's not "pretty" per se), there is a darker side to the WWF that makes it the controversial sport that it is. Lawsuits galore. From the wrongful death suit in the terrible, live-on-the-air death of wrestler Owen Hart, to a multitude of lawsuits (including sexual harassment) by former employees and performers, the WWF is in litigation overdrive. Whether or not this could affect WWF shareholders remains to be seen.

Despite the ugliness behind the scenes (and to me, right up front on our very own television sets -- have you seen some of these guys??) the WWF is virtually unaffected by the negative press. Net revenues are up 24% to $324.9 million. Net income fell 25%, but that was due to the XFL start-up costs. It will be interesting to see what transpires in the next fiscal year for this company. Currently trading at $13.83, this stock could be another real bargain. More than likely I'll just continue to watch.

The stock, that is.