The $21 billion merger of WWE and UFC will create a sports and entertainment powerhouse, but the companies don’t expect to rest on their laurels, says Endeavor president and COO Mark Shapiro.
Speak against The Hollywood Reporter on Monday after the deal was formally revealed, Shapiro (who will serve as president and COO for both Endeavor and the combined UFC-WWE) said the opportunity for expansion is significant.
Combining the UFC and WWE into one company will boost the number of fights and events the companies produce, while also expanding the original content based on the fighters, personalities or live events (such as Wrestlemania, which just started this weekend). wrapped up from SoFi Stadium in Los Angeles , and where the deal was also made).
The WWE has “Raw on USA, the highest rated program on cable TV, so let’s start there. SmackDown airs for free, which is a big score for them. And then they cleverly sold the WWE network and over-the-top platform to Peacock for a billion dollars. And they do over 300 fights a year. So there’s a lot of volume that they’re taking advantage of,” says Shapiro. “On the UFC side, we only do 42 fights a year, and the whole deal is with The Walt Disney Co., so there is an opportunity to expand the number of fights we do. And just as importantly, Fight Pass [a replay and library-focused UFC streaming offering] what is currently a DTC offering that we own, control and operate, there’s an opportunity to sell that as part of a general media deal in a linear or streamer that’s looking not just for aggregated content, but for aggregated networks.
And aside from the combat, “from an original programming standpoint, we can launch brand new franchises that put the power of WME and the Endeavor flywheel behind it all,” adds Shapiro. “Ultimate fighter [an ESPN+ reality competition series] has become a winner for us, the Contender series has become a winner for us, but we expect to launch unscripted shows, docs and movies, more fights, more events and a social media mess in this new combination.
But the deal will also transform Endeavor, which leaned on UFC to tell a growth story even as talent agency WME served as the company’s revenue backbone. (CEO Ari Emanuel of Endeavor will become CEO of both companies.)
Shapiro says he and Emanuel have “extraordinary bandwidth” and will be “significantly involved in those areas that we believe are most likely to generate significant profit and earning potential” once the deal closes, even if Dana White leaves the UFC and Nick continues to lead. Khan and Vince McMahon continue to run the WWE.
As for the logic in the combination, on CNBC Monday morning, Emanuel said he believed neither the UFC nor the legacy Endeavor business was fairly valued by Wall Street (the company values the UFC at $12 billion in the WWE deal, higher than Endeavor’s total market cap of $11 billion at the close of the market on Friday), and expressed hope that both properties would benefit by spinning it off.
Shapiro tells THR that he thinks the deal is “very exciting” for a current Endeavor shareholder.
“First and foremost, Endeavor specializes in the content, experiences and events driven by WME, IMG and On Location, a very attractive portfolio with very useful margins, and especially secular tailwinds behind each of these companies,” says Shapiro. “Moreover, our debt is getting lower. So Endeavor’s net leverage was 3.8 times, which I know everyone likes to write about. By the time this deal closes, we’ll be two times closer. So a very healthy balance to grow opportunistically or pay dividends, buy back shares, you name it. And let’s not forget that Endeavor also benefits from newco’s 51 percent ownership.”
He adds that the talent agency will help acquire talent from the new company and provide them with new opportunities.
“WME hatches stars. Look what we’ve done with John Cena, Ronda Rousey, The Rock,” said Shapiro. “I mean, these are great names, huge talent, and we’re trying to elevate their profiles every chance we get, and I think that’s going to be a wide open door for both properties.”
As for the rights negotiations, Shapiro says he believes Endeavor will be in a position to assist the WWE in those talks.
“WWE’s current deals with Comcast and Fox expire at the end of ’24. And, of course, UFC has our deal with The Walt Disney Company, which expires at the end of ’25. Now remember, nothing is stopping us from going early with those incumbents if we wanted to,” says Shapiro. “And at the same time, we retain the ability to go somewhere with the best buyer, the best platform, the highest price for years to come, you know.”
“I think there’s a big opportunity on the domestic front, and then I’ll remind you, I don’t want to get lost in the shuffle: IMG Media plays a major role here and that’s the advantage WWE is getting in the Endeavor flywheel ,” adds Shapiro. “IMG Media negotiates and distributes 150 sports properties, everything from Wimbledon to the NFL, in 160 different countries around the world. So that kind of scale, leverage and the person-to-person relationships that we have country by country is a key differentiator. So I think internationally we have a significant advantage for WWE if they come around here.
And while the new company will be just WWE and UFC when the spinoff is expected to complete later this year, Shapiro leaves the door open for further M&A.
“We will definitely — especially given our healthy balance sheet, cash flow generation and low debt — be very opportunistic, so you can look at bolt-on [acquisitions] but you could also look at transformative [deals]Shapiro says. We will do what is best for the shareholder. That could be dividends, stock buybacks, but at the same time, if there’s another WWE in the market that fits our flywheel, rest assured we’ll investigate it.