TNA finds itself at a crossroads with its television contract with Spike TV set to expire in two months and not only is no deal in place, but at a meeting over the past two weeks, Dixie Carter was told that they are not interested in renewing the deal. The story was related by multiple sources, in a story reported in numerous places this past week, most notably TMZ.
One person with knowledge of the situation said Spike wanted to make things as amenable as possible. The tact is the opposite of what happened when Spike did the same thing with WWE in 2005, which left bitter feelings on the WWE side because it left them with no negotiating leverage and they had to take a much weaker deal with USA. It should be noted that Spike expected WWE to end up with USA in those 2005 talks, but they publicly canceled Raw and all the satellite shows, before the USA deal was completed. This left WWE with no negotiating leverage. WWE had to take a deal that gave them no satellite shows and took away the company’s advertising revenue from its programming, or thus being worth significantly less than the deal they had with Spike.
Spike will not publicly talk about the deal nor make statements that would hurt TNA’s leverage. The public story is that Viacom has a policy of not taking about ongoing negotiations. But if TNA can get a new television deal, it was said Spike was willing to work the transition as smoothly as possible. There is not a specific date where Spike would pull the programming even though the actual contract expires in two months.
Some are speculating that telling Carter they aren’t renewing the deal is simply a hardball negotiating ploy, as was not making any deal this late in the game. With the contract expiring in two months and most major stations having already filled up their fall prime time programming schedules, TNA is down to very little negotiating leverage unless UTA, who was handling the negotiations, has a backup deal in place. Those in the television industry do not believe that to be the case.
The idea is that Spike is still willing to keep the show, but wants to cut down on the licensing fee number, or even the speculation that Spike wants to own its own wrestling promotion, is at this point nothing more than optimistic speculation, but neither is impossible.
Spike does own its MMA property, Bellator. The positive is that it eliminates these types of negotiations in the future. It guarantees Spike that if the promotion got hot that it would either risk losing them to a rival station or having to pay far more money to keep them. Spike is of the belief that they built UFC into a significant sports franchise and then lost what they built when networks with more money became interested, and thus doesn’t want to go through that again. Owning allows Spike to avoid any issues if new content providers emerge either in or out of television, and guards against programming cost increases.
While there have been rumors of the latter within TNA for some time, the idea of Spike interested in controlling interest, there is nothing even to the extent of smoke that we can find in that direction past rumors within TNA. We have no knowledge of anyone in wrestling who would have been contacted by Spike if they were talking in that direction.
Right after the TMZ story came out, Dixie Carter contacted us in an e-mail saying that no deal was in place but negotiations were continuing. After the story came out, TNA sent out an e-mail to talent stating that no deal was in place but stating they hope to have good news announced shortly. Talent in TNA were given the impression that news would be announced at the New York tapings in early August, even before the story had come out, and were again told not to believe the story. A number of sources connected to both TNA and Spike were talking about this for days before the TMZ story.
In television, there is a lack of interest in wrestling due to the inability to get substantial revenue for advertising, no matter what ratings it delivers.
Talent and those in the TNA office had been constantly assured negotiations with Spike were going strongly due to the obvious nervousness of many due to no announcement being made.
Of course, TNA did a similar e-mail to talent when the stories of its sale negotiations last year broke, with Janice Carter stating that there were no talks and the stories weren’t true. Those with knowledge of the talks called the e-mail an outright lie. It was well known representatives of Toby Keith were at the TNA offices talking with personnel about working with them, and talks got serious enough that Bob Carter flew to Keith’s home in Norman, OK, to close the deal. The deal fell apart as the sides didn’t come to a money agreement, although the figures were said to be very close and that wasn’t the obstacle, but also because Carter insisted that Dixie Carter would have to be able to save face and be guaranteed a public position that would appear she was still in some form of control of the new company. That killed the deal. This led to Jeff Jarrett, who was to be one of the key people running the new group, starting Global Force Wrestling. Jarrett resigned from TNA late last year after the deal fell through, but has still not been able to sign a TV deal, and has publicly confirmed he and Keith were in talks to buy TNA and when they fell through, it led to his leaving and starting his own group.
In April, TNA inked a deal with UTA to represent them in television negotiations. That was the first sign that they were nervous about a new deal, because in the past they’ve been able to sign new deals without having to make a deal to give an outside company a significant cut as its negotiator.
According to various sources, there were two key reasons for Spike saying they wouldn’t renew. The obvious one was that they didn’t believe the product was cost effective for what they were paying for it, in that they could make more money in ad sales for programming that would be less expensive, even if it wouldn’t draw as many viewers. People surprised that a station would drop a higher than its average rated prime time show miss the point that in both of the key methods of garnering revenue for a station, ads and carriage fees, wrestling programming at the TNA level is not all that valuable.
If this was the prime reason, it would keep the door open to a deal for less money. The value of programming is actually threefold, a combination of value in selling ads, carriage fees and boosting the network profile and average numbers. Wrestling has traditionally had a problem when it comes to selling ads, always having to sell as a far lower cost per viewer as most programming. If Spike were to cancel Impact, it would not make a difference in cable carriage fees. Impact did 1.42 million viewers on 7/24. Spike’s prime time average for this past week was 822,000 viewers. That average would have dropped to 759,000 viewers without Impact, but either number would rank it No. 19 among cable stations. But it does have value in that regard.
The second was Spike was outright lied to about Vince Russo not working for the company. That’s why TNA was in such a panic when Russo’s e-mail accidentally was sent to Mike Johnson, because they had denied Russo was working there after Spike had made it clear a long time ago they didn’t want him involved. TNA had evidently figured if they didn’t tell anyone, that nobody would know. Even though people did know, there was no tangible proof until Russo’s accident put TNA in a position where they couldn’t deny it any longer. With negotiations already tenuous, this was a disaster. Why TNA continued to use Russo in creative when Spike made it clear they wanted no involvement with him is a question that nobody has come close to being able to answer.
On 7/30, Russo on Twitter claimed he was no longer with TNA.
“Officially done with TNA,” he wrote. “Today they `suggested’ a break. I declined. Finality was better for me.”
Hours earlier, Taz had written, “I unfollowed Russo earlier. He’s annoying and all about his brand. #Go Away.”
Those in the company thought that Bobby Lashley fighting in Bellator, a property owned by Spike, represented a positive in negotiations, since TNA would promote the Bellator show. But the fight is on 9/5, several weeks before the deal expires. Nothing has been said how that is impacted by the negotiations.
But even if they were to stay at a greatly reduced rate, that would be a major financial issue. Spike money was the company’s biggest revenue stream, and the company has had serious financial issues including periods where people were paid months late, although everyone did eventually get paid. But costs have been cut greatly. If TNA accepted an offer at a reduced rate they would have to cut a lot of people on their roster, which they also wouldn't be able to afford as many of the roster are signed to multi-year deals so to release them they'd have to be compensated. It's a lose-lose situation.
Recently, many of the production people, who were months behind in being paid, threatened to walk en masse on the first day of a multiple day taping, forcing Dixie Carter to write checks catching them all up. TNA has also been forced to either greatly cut back on new deals, or outright not sign talent, losing Hulk Hogan, Sting, A.J. Styles, Chris Sabin, Christopher Daniels and Frankie Kazarian in recent months.
Within TNA, it was noted to us that while many bought the e-mail, others, given he outright distrust on the Russo situation and those who were aware of the sale situation and how it was handled, didn’t buy it at all. It was noted that the company should have told talent, whether true or not, that even if the TV deal doesn’t get renewed, because at this late a date, that’s obviously a possibility, that the company would continue because of international commitments. They said the lack of saying that was a red flag. In addition, the e-mail and statements, by not saying that, have only bought the company two weeks of reprieve before panic will set in. The assurances were made that something positive would be announced to everyone at the next set of tapings, so it’s a time frame they need to have news by.
The Hogan loss, while not seeming as big at the time, is now significant.
One source with significant TV ties checked around with stations and said he found no real interest in the product among other stations. He stated that losing Hogan hurt a lot because he was the one guy that executives at stations who are in charge of negotiating these deals would have heard of. Having Hogan would at least get you in the door to make a pitch, and a video of Hogan or Hogan at a meeting could impress people. Hogan is not a deal maker himself, as shown by the lack of major outside licensing deals the company was able to make in Hogan’s four years, but Hogan is a door opener.
Another bad sign for making an outside deal, particularly one that pays anything of note, is the plight of WWE over the past year.
During that period, WWE had two shows, Saturday Morning Slam and Main Event, canceled by CW and Ion respectively.
In both cases, ratings were above what the stations were doing in those time slots. Main Event was doing numbers slightly better on average than TNA. The two shows were generally both in the same range, but most weeks Main Event was viewed by more, although that’s because Ion is in more homes than Spike. Main Event drew numbers above Ion’s prime time average for a Wednesday night airing, particularly in the 18-49 demo. Slam, in an early Saturday Morning slot, was doing viewer numbers slightly lower than Impact. In both cases, when the shows were canceled, WWE, the No. 1 promotion in the world, was unable to get a new distributor.
In addition, WWE had planned to sell NXT in the U.S. market, but found no interest in the marketplace. And WWE was believed to have been getting less for Main Event, even factoring in that it’s one hour vs. two hours, than TNA was getting for Impact. And given that Main Event (and Saturday Morning Slam) are far cheaper to produce, because the crew is already there to tape Smackdown, they could afford significantly less in licensing than TNA could to make it cost effective, and still couldn’t make a deal. Similarly, WWE was already taping NXT to begin with for both international distribution and for talent experience, so any television deal would be added money since the costs of production are being spent either way, and they still couldn’t get a deal.
Today, the only way a promotion can survive at anything past the grassroots level is to have significant television money coming in. ROH has a great advantage in the fact they are owned by a syndicated television network. Sinclair knows how the business works and can manipulate ROH around their advertising deals so that they make the most profit possible. But for TNA, even if they were drawing 1,000 people to each house show they run it would still be barely breaking even for the majority of the arenas they run. But running these arenas are how they want their image viewed as a national wrestling promotion, it's vanity and its been costing them for years.
The key here is not if TNA can maintain television. They can always buy their way onto a station, like they did years back with Fox Sports Network. But history has shown that’s a money-losing proposition, because in this day and age, a promotion, whether it be pro wrestling or MMA, can only make it on a national basis with significant television revenue. House shows are not going to draw enough, there are no significant licensing deals unless you are WWE, and PPV is dead for everyone but the top-tier boxers and UFC. TNA killed its PPV business and WWE undercut the value of the pro wrestling shows on PPV by moving to the network model. ROH's running costs aren't high so they can run PPV adequately and as shown from Best in the World can even break even or come close to doing it, something TNA hasn't done with a PPV in years.
TNA had pulled out of its paid programming deal with Fox Sports Network in 2005 because money losses were too high. At the time, the company had lost television except for a sports channel in Florida, and would not have survived, but timing was everything. When Spike and WWE had a falling out, Spike was interested in giving them a try, and TNA did strong enough numbers in the late Saturday night time slot that Spike was bullish on its potential for growth. But in recent years, after bringing in a number of the biggest stars, from the old stars of WCW, to Angle and Sting, to Hogan, Ric Flair and Jeff Hardy, failed to move numbers significantly, the feelings of growth potential changed. Spike cut the replay airing of Impact, and also gave up on a third hour show that Eric Bischoff and Jason Hervey produced.
The problem is, you take a company struggling and remove its leading revenue stream, and they will either have to cut back significantly, or they are going to have to give up. Even a best case scenario looks to be losses of jobs in the industry. TNA had cut back greatly on talent, both numbers and cutting back to using lower paid talent, even before these negotiations started.
TNA had already stripped themselves of those stars, in particular Hulk Hogan, Sting, and the face of their brand A.J. Styles. At press time, only two members of the current roster fit into that category of major names, Kurt Angle, whose contracts expires within weeks of the TNA deal expiring, making him a free agent at that point and he’s made it clear he’s looking elsewhere, and Jeff Hardy. A few others are believed to still have solid money contracts based on signing multi-year deals before the company started heavily cutting back on costs.
The loss, or even the survival with great cutbacks, of TNA, would be devastating to the industry. New Japan is already having trouble keeping the foreign crew it has working steadily. ROH has no significant openings for talent without cutting back themselves or seeking out further investment from Sinclair. Samoe Joe and Eddie Edwards would be brought on, in Edwards case Davey Richards will definitely not be allowed back in ROH and so their tag team could come to an end on a large stage. Joe makes a lot more money now then when he began working for TNA years ago. Joe is a good negotiator and has sold himself multiple times to the company for more money then they were initially offering them. His return would probably do good business for ROH, but the idea of ROH having their top paid stars such as A.J. Styles, Adam Cole, Michael Elgin, reDRagon, Daniels & Kazarian, Jay Lethal, the undercard talent and then Samoa Joe would be a guaranteed loss unless they could run a larger arena and make a success from it. But those in ROH say they already have more talent than they can adequately use and for the most part, there are no openings without making cutbacks. ROH tries to show loyalty to its roster and cutting guys so that others with more name recognition can come in would work against what the company is built on. Joe and Edwards may be let slide but if anyone else were to be brought in at the expenses of a few rookies, the locker room would probably turn, which in a place like ROH where the locker rooms optimism and willingness to work as hard as they do is so important just can't happen.
Few guys in TNA mean much on the independent scene. There will be a vacancy for a No. 2 group if TNA loses Spike and can’t get a paying outlet, or even if they stay on with a greatly reduced budget. ROH would take that spot automatically but their television deal isn't large enough. It would become a case of fans who are seeking something different watching ROH every time a PPV airs but then dropping off during the periods where its loyal fanbase are keeping up with the progression in angles and events.
It’s clear Sinclair Broadcasting has little interest as of this writing in ramping up ROH to Spike TV or any networks higher-ups. That would be a reason for higher spending. The only way ROH will enter talks with a network is if they approach them, much like how iNDemand approached them for PPV discussions earlier this year. So for the industry to not take a hit, it comes down to Global Force Wrestling getting off the ground with significant financing and a strong television deal, which nothing has materialized as of yet, or the El Rey Network, with AAA scheduled to start as a weekly series in the fall, becoming a viable channel on the U.S. scene.
