With Raw on Memorial Day doing the second lowest rating in the history of the show, and that includes holidays and shows during football season, on a week when all signs were that there should logically have been a strong bounce back, it asks a ton of questions.
Before people start making excuses about cord cutting, cord cutting cant effect ratings more than one or two percent. The rating is derived by the percentage of homes that get the station, in this case the USA Network. If people no longer get USA Network, they arent figured into the percentage. You can argue that wrestling fans are cutting the cord, a term that is almost a joke the way its overused, greater than the public at large, but even then thats a joke.
One year ago, USA Network was in 92.7 million homes. This past week USA Network was in 91.8 million homes. Yes, it is down and cord cutting probably is fair to account for maybe a one percent decline in audience and a zero percent decline in ratings, since those 900,000 homes arent figured in to begin with on the ratings. One would also think, with the wrestling audience being more hardcore than ever before, and fewer fans who are more loyal, that if anything, they would be the ones most likely to keep cable since they are willing to spend more money per capita on the product than any audience of wrestling ever. There are just fewer of them than ever before, probably even dating back to the dark ages of 1992 to 1995 when nobody was making money running wrestling companies in the U.S.
Now, to be fair, the business of pro wrestling is doing well with those hardcore fans. WWE attendance is mixed, but it was strong in March, although fell in April and May. WWE ratings were actually not that bad in April. The combination of WrestleMania and the Superstar shakeup saw Smackdown way ahead of last year, and Raw behind last year, but not by a lot.
Ever since the second week after the Superstar shakeup, both shows having fallen to a significant level. Some of that is the NBA Playoffs, but the NBA Playoffs take place every year at the same time.
There is also the argument that there are more ways of consumption of the product. You can subscribe to Hulu and watch the next day. And it is true the need for immediacy is way down. More people by percentage, are DVRing Raw than in the past, although thats also misleading. If Raw was doing 10 percent increases from DVR viewership at 3.2 million last year, thats 320,000 more viewers. If they are doing 12.5 percent now at 2.6 million, that 325,000 more viewers. So essentially its the same. People do watch YouTube clips, but looking at those numbers is misleading because most of that comes from India and 80 percent is outside the U.S., and in markets the company derives little revenue from.
Is this trouble? Its not good. But generally, television ratings are down. Raw and Total Divas are both down well more than the decline of television on average. Smackdown is up, but Smackdown is an unfair comparison given its move to Tuesday live and having an exclusive roster. Perhaps you can argue that the increase in Smackdown is part of the reason for the decline in Raw, and that the combination is relatively even. Come July, when Smackdown is the same as it was a year earlier, as would be Raw, measuring the decline or lack thereof will be notable. My gut says that Raw will continue to decline, and Smackdowns numbers will be well below the previous year.
Still, aside from cable news shows and major sports, both Raw and Smackdown do better than almost anything on cable most weeks. And the cable news shows that were beating it, on Fox for the most part, have taken a major hit with the loss of Bill OReilly. No, pro wrestling isnt near the force it once was, but its still good.
The problem is that its also not cost-effective. At 22 cents per viewer per show, if Raw does 3 million viewers per week and Smackdown does 2.5 million, numbers that both shows are unlikely to be reaching on a consistent regular basis unless there is a turnaround, thats $1.21 million per week or $63 million per year. Wrestling costs USA in the range of $160 million.
Still, there is other value. USA gets money per home from the cable companies. Would the cable companies want to cut back on USA without wrestling? USAs big claim is that they are consistently top five in prime time ratings, and have been No. 1 most recent years. Take away the five hours of WWE, they would not be top ten.
But benefits of other programming is it can be replayed over-and-over, and USA can also sell original programs overseas. They can sell the rights many ways and have digital distribution as well down the line. With Raw and Smackdown, they dont have those revenue streams since WWE owns the shows and derives the revenue for any of those type of usages.
From a cost-effective standpoint, a show that does one-third the audience will do more advertising revenue than WWE.
As far as 2019 goes, when the USA contract is up, are these ratings going to pose a problem?
There is no way of knowing. Most stations wont drop their top rated show, and with USAs other programming falling badly and the station unable to make new hits like they used to do regularly, wrestling is farm more valuable than ever before, at least for total ratings. There is the argument that USA can also advertise its new shows before more eyeballs if they keep WWE. Plus, generally, programming rights have been going up even with audiences declining.
UFC is counting on a huge increase in rights fees at the end of 2018, and if they do or dont get it may be a barometer for WWE. UFC was, and still is hoping for a bidding war, and perhaps winding up like the NBA, NASCAR, the NFL or Baseball, where they make deals with multiple networks. But the problems with ESPN, a station counted on to bid for UFC programming, if they arent interested given their declining number of homes due to cable bundling (far more than cord cutting which is still only four percent from the peak of U.S. cable, and cable homes right now are 24 percent ahead of where they were during wrestlings popularity peak) and thus loss of revenue, the UFC leverage is gone.
Similarly, if multiple parties see WWEs numbers as a way to put their networks on the map, because WWE does give you a consistent solid audience very Monday and Tuesday, WWE could get much bigger numbers even with the steep decline in audience.
If nobody else wants it, and there is a change at the top (Bonnie Hammer, who runs USA and several other NBCU cable networks is a major fan of Vince McMahon) like what happened with TBS and TNT in 2001, and they think bottom line rather than fighting for No. 1, WWE could be in major trouble. With the WWE Network, they will survive in that situation, although will have to make major cuts, and it will be much harder to create new fans. Still, the Internet is a strong way to reach and maintain hardcore fans. This also may explain the attempt to reach out and try and create local stars in foreign markets. In the dark ages, when the U.S. wrestling scene was struggling badly, WWE did lose money, but they still did well in Europe and Canada.
The reality is that most revenue streams are strong. Attendance, which is in many ways a far better barometer to judge real interest than TV ratings, especially today, is only down a little, and with price raises, is more profitable than before.
But people who make the argument that ratings dont matter are as shortsighted as they come. Ratings matter far more today than in the days of the Monday Night Wars. In those days, for whatever reason, both companies got sucked into a battle of hotshotting. Wrestling in 1998 was on fire, and WWF was on fire for a few years after that as WCW collapsed. Did the hotshotting long-term lead to another decline after 2001? Or was it the lack of competition? But the key was, in 2000, no matter what the ratings were, WWE made its money by presentation of live shows, licensing and PPVs. They only grossed $5.5 million in the U.S. from television in 1999 which grew to $28 million because of the bidding war between USA and Spike in 2000, because the attitude of television was that wrestling needs us so we dont have to pay for it. Today, WWEs television rights are closer to $160 million, a huge percentage of overall revenue. While there are many other factors in play, ratings are the No. 1 factor besides multiple bidders wanting the product when it comes to the No. 1 profit producing revenue stream.
Now, are ratings not as big a deal when measuring actual popularity than before? No doubt, but they were always misleading. There were companies like Mid South and Memphis that did ridiculously high ratings while they struggled at the gate. Even with WCW in 2000, while overall business collapsed, ratings did fall, but not to the extent of PPV and house shows. People would watch the train wrecks out of fascination or loyalty or habit, but they were dont paying money for them. With WWE, thats not the case. People just arent watching the TV, perhaps because of too much product, sameness, or lack of stakes, but still will pay for the network and go to the live shows. And another point is that WWE live shows are good. The talent is very good at what they do, and they are better athletes and have a far better work ethic. The mentality of conning people into the seats and doing as little as possible past conning them back, and it being an excuse to stay in high school, do copious amounts of drinking and drugs and have access to far more women as television stars has been completely overhauled by a performer base that is there because they love performing. If they can be criticized, its for working too hard for their own good and taking risks that lead to more injuries. They are paid well enough, although not nearly what they deserve, so the always hustle for every buck mentality isnt there. It also creates less individualism, which makes it difficult to create real stars.
PPVs have mostly been good, although of late WWE big shows in quality have fallen well behind the competition and many have been average or even below average. But at $9.99 value, nobody is going to feel ripped off like the would at a higher price point. From a fan perspective, because the TV revenue, the No. 1 stream, is guaranteed, and the PPV revenue isn negligible and the network revenue is seasonal and barely at all affected by quality of shows, the incentive is just there to churn out product. The money is rolling in whether good or bad. Technology changes may hurt them, or may help them. No matter what anyone says, nobody knows what the landscape of media will be in 2019, and until then, WWE doesnt have a thing to worry about. But in 2019, its the media landscape, not quality of product, that will be the difference maker.
Ratings will decline as long as there is too much product. Theres a long history of overexposure when it comes to television, but now, because the expectations are lower, and wrestling in theory will always have a competitive sized audience, plus the increase of money spending by hardcore fans, this current product is doing well with the overexposure. A key is the lack of appearances in markets. I believe if this product was to run monthly as opposed to being an annual or two or three times a year special event in most cities (and New York is the exception to this as they run often, and while they dont sellout unless its TV or PPV, they do well), the situation would be different. But it doesnt have to be and its not.