WWE Being Investigated For Possibly Violating Securities Laws

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WWE is being investigated by former Attorney General of Louisiana, Charles C. Foti, Jr., Esq., a partner at the law firm of Kahn Swick & Foti, LLC, as to whether the company or its officers and directors violated state or federal securities laws by overstating the value of their new domestic TV licensing agreement.

Daniel Moore, an analyst with CJS Securities, said in a research note that, “Given management’s more optimistic tone and the fact that other major sports franchises have garnered much higher increases, this outcome is likely to be viewed as disappointing by many investors.”

A complete press release on the investigation is available at this link.

A similar investigation claim was reported back in April. WWE stated that claim had no substance or merit.

Friday was a horrible day for WWE as the company experienced fallout from their underwhelming new TV agreement with NBCUniversal. The company's stock went into free fall, Vince McMahon lost nearly one third of his net worth and an investment firm called for WWE to fire management or explore selling the business.

  • CMwut

    Is it just me or does the wwe seem cursed right now?

  • Chris

    I don’t get this!!! Isn’t there new TV deal worth more than the old one? If so how can that result in the company losing value?

    • John

      They told Investors they were expecting a major TV deal that would more than double their revenue… It didn’t even come close to that hence the major drop in value. Similar thing happened with the WWE Network.. WWE projected big things and stock went up. Once the actual numbers came out for the Network and they weren’t close to WWE’s projections, the stock dropped.

      • Vic Jose

        The timeline for their network projections hasn’t even ended so not sure why they are pissing all over the network.

        • LeftyTosser

          Vic, the problem with the network has nothing to do with whether is works or not, or even if consumers like it. The problem with the network is that it will be a never ending loss for the corporation. It will be virtually impossible for the WWE Network to sign up enough viewers under $20 per month to overcome the losses from cable / satellite providers on regular programming. Add in the amount of losses on the PPV front from cable / satellite providers dropping the PPVs and the Network is costing the corporation tons. The only way the Network becomes a money maker for the company is by becoming a separate channel that can be provided by cable / satellite providers.

        • John

          WrestleMania was the big sell of the Network and they were way off the 1 million target that they sold to investors, that’s why they bailed. Everyone who subscribed at or near launch are locked into the Network for the next few months, but what happens when it’s time for renewal and there is no WrestleMania to keep people locked in to the Network for another 6 months? Not everyone is going to stick around year-round for B level PPV’s because alot of people didn’t watch them anyway when they were only on PPV.

      • Snap

        But still, it doesn’t make sense that an “expectation” of a new deal was an “overstatement” of a deal which hadn’t even been made at the time of the statement. As with anything, we don’t know what was going on behind closed doors and negotiations at the time may have been promising towards those expectations. I don’t see that as WWE misleading investors, but what WOULD have been an overstatement is if they inflated the value of the deal after it had been made, which I have not seen any word that such has happened.

        It would be like saying WWE stock was worth x-amount and then it suffered a significant drop the next day. Were you then “overstating” the value of the WWE stock, despite the statement being accurate at the time it was made?

        On WWE’s part, I just cannot understand how they would have expected to have networks just lined up to throw significant amounts of cash their way when they can’t even keep non-RAW or SmackDown shows on TV, relying on Hulu and/or the WWE Network to keep the content in circulation. I think, in this instance, they see what legitimate sport and competition can demand for their TV rights and essentially overvalue their own content and expect to receive similar or better deals.

  • Steve pritchard

    Never understood all this investment crap. They’re new tv deal is worth more than the old one

    • Vic Jose

      I don’t understand it either.

    • J Vomkrieg

      Welcome to knee-jerk capitalism. Where investors are like startled rabbits who bail as soon as someone sneezes, or invest everything in something immediately based on rumour/hype. For the most part, they are a jittery bunch interested only in current stock price and the next dividend. The idea that the WWE network might be a winner long term (especially once it goes global) is irrelevant, as thats not happening RIGHT NOW!

  • Nathen

    The TV deal is worth more. yes. But it is much less than expected. Basically, WWE missed their goal. Had WWE not hyped the potential of increasing their TV fees by double or triple, they wouldn’t be in this situation now.

    It makes Vince and Co. look out of touch with reality and so investors worry. And this investigation will look into claims that WWE purposely mislead investors about doubling of tripling their fees, as opposed to just mismanaged the situation. Both are bad, but the former visited law while the latter only upsets investors.