Motley Fool Money: Episode Summary – "The WWE's Premiere on Netflix"
Release Date: January 7, 2025

Introduction

In this episode of Motley Fool Money, hosts Ricky Mulvey and guest Nick Seipold delve into the groundbreaking premiere of WWE's Monday Night Raw on Netflix. The discussion extends into the broader implications for WWE's viewership, Netflix's strategic moves in live sports streaming, and the potential investment opportunities arising from these developments. Additionally, the episode features insightful segments on investment strategies for the new year, presented by Robert Brokamp and Alison Southwick.

WWE's Transition to Netflix

Ricky Mulvey (00:05):
Ricky opens the conversation with palpable excitement about WWE's historic move, stating, "Monday Night Raw moved to Netflix. We've known about this for about a year now, but last night was the first broadcast."

Nick Seipold (00:50):
Nick elaborates on the significance of the premiere, noting, "It was a massive TV event... really felt like a big WrestleMania event." He highlights the star-studded audience, including celebrities like Macaulay Culkin and Vanessa Hudgens, alongside wrestling legends such as John Cena and The Rock. Nick emphasizes the monumental shift in media consumption, stating, "This is going to happen every week now. So in a way, this is just another episode of Monday Night Raw, but I think it represents a transition of how we consume media."

Impact on Viewership:
Ricky points out the decline in traditional viewership numbers, mentioning, "Raw on the USAID Network saw about 2 ish million average viewers in late 2019. That was down to about 1 1/2 million viewers in late 2024." He questions whether the platform change will rejuvenate WWE's long-term viewership.

Nick's Insight (03:02):
Nick provides a balanced perspective, saying, "I would say yes and no." He acknowledges the potential for increased global viewership through Netflix’s expansive reach, especially in regions like India and the Middle East where wrestling has a strong following but limited access. However, he also notes the fragmentation of audiences in the streaming era: "There's more options in the Netflix era. You can click on any potential program anywhere."

Advertising and Monetization on Netflix

Ricky Mulvey (05:28):
Ricky discusses the introduction of advertisements within the WWE broadcast on Netflix, observing, "There are now ads in the ring, which is new for wrestling fans."

Nick Seipold (07:37):
Nick analyzes the nature of these ads, connecting them to Netflix's broader advertising strategy. He remarks, "The character of the ads, I think that just reflects who Netflix is selling to and the type of advertiser maybe they're coming after." Nick points out the increase in in-ring sponsors, such as Fortnite and Snickers, and anticipates more international ads as Netflix expands WWE's global footprint.

Long-Term Business Implications and Investment Opportunities

Ricky Mulvey (09:00):
Ricky shifts the conversation to the financial aspects, highlighting WWE's 10-year deal with Netflix reportedly exceeding $5 billion. He connects this to TKO Holdings, the parent company of WWE and UFC, and discusses the upcoming negotiations for UFC's broadcasting rights post-ESPN deal.

Nick Seipold (10:11):
Nick speculates on UFC's future, suggesting, "I think likely that UFC sticks with ESPN because Dana White has said that he likes that relationship legitimacy they get from ESPN." However, he also entertains the possibility of splitting broadcasting rights to maximize revenue, similar to strategies employed by other major sports leagues. "TKO is in a position to split up those UFC rights to be able to get the top dollar," Nick explains.

Saudi Arabia's Increasing Role in Combat Sports

Ricky Mulvey (11:27):
Ricky introduces the topic of Saudi Arabia's growing investment in combat sports, noting the announcement of the Royal Rumble event in Riyadh. He probes into what this means for TKO Holdings.

Nick Seipold (12:13):
Nick underscores the financial significance, stating, "the short answer is money." He outlines the lucrative nature of events in Saudi Arabia for WWE and UFC, pointing out record-breaking gate fees and sponsorship revenues. "The international ability to hold these events, receive rights fees... all this is 100% margin revenue for TKO," he concludes.

Investment Perspective: TKO Holdings

Ricky Mulvey (13:33):
Ricky shares his personal investment in TKO Holdings and inquires about the bull case for the stock, given its high forward earnings multiple.

Nick Seipold (14:16):
Nick presents a robust bull case, highlighting several growth catalysts:

• Renegotiation of UFC Rights Fees: Anticipated significant increases with a new 10-year deal.
• Premium Live Events: Potential Netflix acquisition of premium live event rights outside the US.
• Increased Sponsorship Revenue: More in-ring advertising and international sponsorships.
• Cost Consolidation: Merging of UFC and WWE administrative teams leading to cost savings.
• Revenue Growth: Third-quarter 2024 revenue up 50% year-over-year.

Nick asserts, "I really like TKO going forward. I think it's in a great spot in media."

Investment Strategies for the New Year

Note: This section includes content from Robert Brokamp and Alison Southwick, focusing on investment strategies and asset allocation.

Robert Brokamp (19:07):
Robert emphasizes the importance of reviewing and rebalancing investment portfolios at the start of the year, suggesting it as an opportunity for both performance evaluation and personal reflection on investment goals.

Alison Southwick (19:23):
Alison outlines key decisions investors need to make regarding asset allocation, investment types (individual securities vs. mutual/index funds), and whether to seek professional financial advice.

Key Recommendations:

• Emergency Fund and Cash Reserves:
  Alison advises maintaining an emergency fund and ensuring cash holdings yield competitive returns. "One place to search is Motley Fool Money... make sure you're getting a competitive yield on it."

• Asset Allocation Strategies:
  For diversified investment, Alison recommends target date funds as a starting point, with allocations adjusting based on retirement timelines (e.g., 2025, 2035, 2045 funds). She also mentions robo-advisors and fee-only financial advisors for more personalized strategies.

• Bonds vs. Stocks:
  Alison discusses the current unfavorable environment for bonds but suggests considering target maturity bond ETFs for more predictability. She notes, "when rates rise, bond prices fall," but the outlook may improve with rising yields.

• Stock Investments:
  Highlighting the potential and risks of individual stocks, Alison contrasts them with index funds. She emphasizes diversification and setting benchmarks to evaluate investment performance.

Conclusion by Alison (31:47):
Alison encourages investors to diversify their approaches, combining index funds, actively managed funds, and individual stocks based on personal interests and performance outcomes. "Try a few avenues that seem compelling to you... let your interest, your available time, and most importantly, the results dictate how your investment strategy will evolve."

Final Thoughts

The episode culminates with Ricky acknowledging the depth of the conversation on TKO Holdings and expressing appreciation for Nick's insights, reinforcing the value of informed investment strategies in the evolving media landscape.

Notable Quotes

• Nick Seipold (00:50): "This is going to happen every week now. So in a way, this is just another episode of Monday Night Raw, but I think it represents a transition of how we consume media."
• Ricky Mulvey (05:28): "There's now ads in the ring, which is new for wrestling fans."
• Nick Seipold (14:16): "I really like TKO going forward. I think it's in a great spot in media."
• Alison Southwick (19:23): "Everyone needs cash. You need to pay your bills. You need it to cover expenses that you'll have in the next few years."

Conclusion

This episode of Motley Fool Money provides a comprehensive analysis of WWE's strategic move to Netflix, its implications for global viewership, monetization through advertising, and the broader investment prospects within TKO Holdings. The additional investment strategies offered by Robert Brokamp and Alison Southwick serve as valuable guidance for listeners aiming to optimize their portfolios in the new year.