By Chuck Carroll
(CBS New York/CBS Local) -- WWE has a problem. Actually, the sports entertainment giant has a number of them. Fans are tuning out in droves, as both Monday Night RAW and SmackDown Live have shed hundreds of thousands of viewers over the past year. Ratings for the flagship show on Monday night are down 14 percent, nearly matched by a 13 percent dip on Tuesday nights. That drop is also being reflected in attendance at live events, which has declined by 11 percent, and merchandise sales which are down 11 percent. The company partly blames the latter on its attendance woes.
It doesn't take a business degree to figure that fewer fans watching on TV and even fewer paying to go to the shows and buy merchandise means less money for the company. Revenue is down three percent, and the company posted an operating income loss of nearly $7 million for the first quarter of the year, compared to a gain of $22 million during the same time last year.
Wall Street wasn't smelling what WWE was cooking, as investors laid the smack down on share prices, which plummeted more than 13 percent by the close of trading.
In terms of slumping television ratings, the company feels that it's current predicament can largely be chalked up to a bevy of talent absences due to injuries and other factors.
"We had a very unusual situation in terms of top talents as well as mid-card talents being out," Vince McMahon, WWE Chairman and CEO, said on a conference call with investors. "Some 15 talents were out during the course of that period. When you don't have talent, you don't have storylines. When you don't have storylines, you're not going to do that well in terms of live events and television ratings. It was like a cascade of things that happened."
Among those who stepped aside were top stars like Roman Reigns as he battled a recurrence of leukemia. John Cena, meanwhile, continues to make only sporadic appearances for the company.
McMahon is confident that things will begin to rebound for WWE as those talents return. He also is also hopeful that the new talent that was created during their absences will help correct the ship.
Additionally, the company is taking steps to better improve its overall product and win back fans. WWE has openly acknowledged for months lackluster storylines and publicly declared that the scripts will mirror what the audience wants. However, many critics say that since the proclamation earlier in the year the company has already fallen back into the old way of booking that is turning fans off.
Nonetheless, the company says it continues to work to improve its on-screen product.
"We've hired new people on our writing team," McMahon said. "They are really going to help us out in terms of television, television ratings and digital and social. We've got a new team in terms of live events that has just started now. So we'll see live events continue on an upward trend."
While McMahon is confident that things will soon begin to smooth out for WWE, there is some concern that additional absences of the biggest stars will continue to pour salt in the company's wounds. Daniel Bryan remains sidelined with an unspecified injury, the status of Brock Lesnar remains unclear, and Ronda Rousey has departed the company and says she's uncertain whether or not she will return after having children. None of have been on WWE programming since WrestleMania.
>>READ: Is Ronda Rousey Leaving WWE?
George Barrios, Co-President of WWE, says WWE has a strong 35-year history of creating talent and has done a superb job of transitioning from one Superstar to the next.
"We feel confident that we've developed the muscle in attracting and developing the muscle as well as crafting the storylines that make them shine," he said.
Barrios says the effects of a similar talent drought almost a decade ago took as much as nine months to sort itself out. In short, give it time, and the ship will essentially right itself.
Aside from absences, there is also concern that the ratings and revenue declines can be partly blamed on aging talent or Superstars that fans have simply burned out on. It's fair then to ask the question, how long does it take to create the next John Cena or Roman Reigns?
"There's no exact timing on how long it takes," Paul Levesque, WWE Superstar and Executive VP of Talent Relations, said. "We don't bring in Superstars, we create them. Some it's immediate, some it takes longer… When we have absences, new talents step in. For example, Kofi Kingston stepping into a role and becoming WWE Champion. As those things happen, those performers rise to another level."
The feeder system through WWE's NXT developmental brand has also proven to be a significant pipeline of future Superstars. Levesque points out that 80 percent of the RAW and SmackDown rosters are comprised of former developmental talents. Fifteen NXT Superstars were brought up to the main roster in 2018, and 10 have already done so in this year.
"It's working very well," Levesque said.
As for Rousey, McMahon says WWE had been planning on her departure for some time and put plans in place to be able to continue capitalizing on her star power in her absence.
"Ronda did an extraordinary job for us. Her challenge was to bring the entire women's division up," he said, alluding to the main even of this year's WrestleMania. "Ronda's task is to build that whole division and have more visibility on that division and make stars you make stories with even after Ronda leaves. So when you look at what happens at WrestleMania, with Becky Lynch and Charlotte [Flair] and others, the entire division and focal point and stories, Ronda did an awesome job."
The news isn't all bad for WWE, however. Digital video views are up an impressive 15 percent across all platforms, and paid subscriptions to the WWE Network are up by a two percent, while total subscriptions, including free trials, surpassed 2 million on the day after WrestleMania.
On the flip side, the company also expects to post a five percent year-over-year decline of paid subscriptions next quarter. The drop is also being blamed on the lingering effects of talent absences.
A revamped version of the network, likely with tiered subscription plans, is scheduled for release later this year. The company has been designing the platform for over a year and will include many of the features that fans have been asking for, according to Barrios. It will also include increased functionality in other languages, as the company continues targeting international growth.
An exact date for the launch was not announced.
McMahon says that "the tide is rising" for WWE as a lucrative television contract kick in later this year. But it is clear that no matter what network the shows are on or how many potential homes they can reach, neither can afford to continue shedding viewership at the current rate. If it does, it is only a matter of time before total viewers dip into the sub two-million level.
And as has already been proven, viewership declines trigger a domino effect that will also bring down live event attendance, merchandise sales, and network subscriptions. And that negatively impacts the bottom line (not just because Stone Cold said so).
Nonetheless, the company remains positive that they are well positioned for such a turnaround. And who knows? With new significant well-funded competition launching later this year in the form of All Elite Wrestling, the sun may shine again brighter than ever on WWE. Competition is good, after all.
NEWS & NOTES
Daniel Bryan continues to be absent from WWE events following WrestleMania. The nature of his injury remains unclear as it is largely being kept a secret within a small circle of people.
Sheamus remains sidelined with what is believed to be a concussion. No timetable has been given for his return.
The Superstar shakeup lingered into another week as WWE moved Andrade and Zelina Vega back to SmackDown after initially shifting them to RAW. The move was made due to the real-life romance of Andrade and Charlotte Flair, according to multiple reports. The move also resulted in a breakup, although of a tag team and not a couple. Aleister Black was bumped to SmackDown to join Vega, whom he recently married. Thus, it's splitsville for he and tag-team partner Ricochet.
ROH will return to New York City for the first time after the G1 Supercard on July 20th with a show at the Hammerstein Ballroom. They also announced a show the following night in Lowell, Massachusetts.
Chuck Carroll is former pro wrestling announcer and referee turned sports media personality. He once appeared on Monday Night RAW when he presented Robert Griffin III with a WWE title belt in the Redskins locker room.
Follow him on Twitter @ChuckCarrollWLC.
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