Marginalizing the Ratings issue, He's right to an extent, but the networks still care about ratings. If Vince doesn't, they'll keep slipping and the Network isn't self sustainable yet.
The Ratings are plunging because the show isn't as interesting as it used to be.
Vince can't say it's a big deal, WWE Stock has already been dropping, Hell it dropped from 16.50 to 14.20 today, Imagine if Vince didn't damage control the Roman Reigns Era.
The WWE stock is not impacted by ratings. Besides the fact that the entire market has been slipping since August, the overall problem with the WWE stock right now is the same that it has always been - 25% of it is owned by short sellers. Basically, a quarter of the WWE stock is owned/borrowed by people w/ the sole intention of selling off the stock in massive quantities, causing the price to drop, with the intention of buying it back at the lower price. This makes the stock extremely volatile.
There are exceptions where the stock price drastically fell independent of short sellers. The most recent came in May 2014 when the WWE announced their new TV deal with Universal. The reason the stock fell so hard that day was because Vince McMahon guaranteed a minimum 100% increase on the prior TV deal, causing the stock to soar based on speculation When the new deal came in at a 50% increase, people bailed.
I can see how you'd think the ratings impacted the TV negotiations, but that's not necessarily true. ESPN pays MLS 15 times the amount that Universal pays WWE. MLS broadcasts average about 249,000 viewers on ESPN. Roughly 3.7 million people watched Monday Night Raw this week alone. So it isn't ratings that matter... it's the people that comprise the ratings that matter.
Networks pay big money for TV rights because it makes their advertising space more valuable. The issue with WWE is that 65.6% of its audience has a high school degree or less -- 70.4% of its audience has a household income of less than $35,000 per year. Those are the numbers the network cares about because those are the number that advertisers want to see. The unfortunate truth for the WWE is that the overwhelming majority of its fan base has almost zero buying power. This greatly reduces the value of the advertising space - which, in turn, greatly reduces the amount of money a network is willing to pay for the TV rights.
That's just one reason why ratings don't matter - and why they, in turn, have almost zero impact on the WWE stock.
Was this the case in 1998? Not so much. Sure, the buying power of the average fan was roughly equivalent to what it is now... but the TV ratings did a lot more back in the days of the Monday Night Wars. The most obvious effect had to do with the fact that the two companies were chasing the same advertisers. So if Nitro was destroying Raw in the ratings (which they were), then the advertisers were more likely to give their money to TNT than to USA -- which in turn would devalue the WWE in future negotiations with Universal. Additionally, the WWE was still relying more on a live events business model, wherein the majority of their money came from being on the road. Aside from the TV money, MNR essentially served as a 2-hour commercial for the live events they ran the rest of the week. If fewer people watched MNR, then it typically translated to fewer people attending the live events. So it hurt business all around.
In the past decade, the WWE shifted its business model. The majority of its live events profit comes in the 1st or 2nd quarter (depending on when WrestleMania is being held - March or April). The rest of the fiscal year is based more on a TV production business model. And while it does sound a bit contradictory to say that the WWE doesn't care about ratings despite operating the majority of its year under a TV production business model, there's a big reason that's the case.
OTT content is taking over cable TV. McMahon is right on so many levels when he says that people are changing the way they watch TV. Millennials are the first generation to grow up with DVRs. They're the first generation to grow up with the internet. And they represent the biggest demographic in the country. The viewing habits they grew up with - being able to watch whatever they wanted, whenever they wanted to watch it - coupled with their frugal spending habits (a proven result of carrying too much student debt) and being accustomed to instant gratification have caused millennials to abandoned cable for streaming services that are less costly and more accessible and convenient.
It's entirely possible, and reasonable, that the WWE foresees the trends of OTT vs Cable and is merely positioning itself to shift all programming to the network following the conclusion of this current TV deal. The break-even figure between putting Raw on the network vs putting it on USA is less than half the current audience. At the very least, the WWE is going to have some strong leverage in their next negotiation with Universal - regardless of the ratings.
