WWE stockholder Curtis Swanson has filed a class action lawsuit against the company, alleging they violated the Securities Exchange Act of 1934.
Swanson's suit, filed on August 25, 2014 in the U.S. District Court for the District of Connecticut, is on behalf of people who purchased or acquired the securities of WWE between October 31 and May 15. Swanson alleges that Vince McMahon and George Barrios violated the Securities Exchange Act and caused him and class members damages.
According to Swason's complaint, the defendants made false and misleading statements about WWE's domestic television licensing deal with NBCUniversal. Below is an excerpt courtesy of Legal Newsline:
“This new television deal was supposed to be the ‘primary driver’ of WWE’s transformation,” the complaint states. “In particular, defendants caused WWE to issue false and misleading statements in WWE’s public filings, press releases and conference calls that touted the company’s ability to command a fee in its upcoming negotiations to renew its U.S. television license agreement worth double the value of the existing agreement.”
Swanson claims WWE downplayed that advertisers pay less to reach WWE's viewers than traditional sports shows and any other program on the USA Network, in addition to the launch of the WWE Network negatively impacting TV licensing negotiations.
“Defendants, however, could not maintain their ruse concerning the company’s business prospects indefinitely,” the complaint states. “WWE was not able to negotiate the lucrative television rights deal that defendants led investors to expect.”
WWE's new TV licensing deal with NBCUniversal ended up increasing their rights fees by approximately 50 percent, contrary to previous statements made by the company they would be able to double the value of their domestic television licensing agreement.