An optimistic note was hit when TKO execs talked about the many big topics around the company on Wednesday afternoon following the release of their 2024 first-quarter report. Media rights, site fees, and even the nine-figure antitrust settlement that the company reached were discussed in a positive tone, with President Mark Shapiro saying that “a lot of things are cooking” with the company at the moment.
Investors converged for a call on Wednesday after TKO reported revenue of $629 million (adjusted EBITDA of $282 million) for the first quarter of 2024. This figure came alongside a net loss of $249 million, including the administrative expenses that emerged from the company’s recent pair of legal settlements for anti-trust lawsuits against the UFC.
TKO talks three-month NBCUniversal deal, positivity around UFC negotiations
TKO’s Mark Shapiro and Andrew Schleimer expressed enthusiasm about recently-cut media rights deals for WWE, including a newly announced $25 million agreement that will keep Monday night program Raw with NBCUniversal during the final quarter of 2024, before it heads to Netflix with a lengthy $1 billion deal next year.
With WWE’s initial partnership with NBCUniversal expiring three months before the program was scheduled to make the jump to the digital brand Netflix, many wondered where the show would go during that in-between period. The agreement announced Wednesday brings in a chunk of cash, although as Wrestlenomics’ Brandon Thurston pointed out, the deal will be $41 million less on a quarterly basis than the current agreement that puts Raw on NBCU platforms.
Shapiro and Schleimer also expressed enthusiasm about the upcoming media rights negotiations that UFC will enter. The leading MMA promotion has been under a deal with Disney since 2019, primarily placing its content on ESPN’s platforms. With all of WWE’s top deals figured out recently, media rights focus has gravitated towards UFC’s agreement, which is expected to expire in 2025. Whether an agreement is reached during UFC’s exclusive negotiating period with Disney or afterward, TKO is confident that they will land the deal that they want.
“We feel good about where we are,” said Shapiro. “We’re live, we’re urgent, we’re a shared experience, and we’re optimistic about the potential package that we’ll end up with.”
Shapiro described UFC as a “premium volume product,” claiming that a once-a-week basis of events keeps demand high with viewers.
“Sort of like the NFL used to be before Thursday Night Football. It was Sunday and Monday nights. It was driven by scarcity. Frankly, UFC is the same way.”
UFC earned $214 million in Media Rights & Content revenue in the first quarter of 2024. This was a little less than WWE, who pocketed $221 million after the end of March.
Site fees remain a priority for TKO
Wednesday’s call underscored the importance of site fees on both the WWE and UFC sides of TKO’s business. WWE had a 6 percent increase in live events revenue during the last quarter, with “ticket sales and site fees” attributed to the growth.
It was mentioned during the call that the location for Wrestlemania 41, Las Vegas, is an agreement that has cash and non-cash incentives attached to it.
“Frankly, they’re becoming the norm,” said Shapiro, on-site fees. “When we take the show on the road, we’re going to need subsidies and, or cash to bring our events to your city.”
With the call taking place less than a full day removed from Saudi Arabia’s extended partnership with UFC, discussions of work between TKO and the Kingdom came up during the call. The Middle Eastern country remains one of the biggest avenues for site fee money, paying large sums to host events from the MMA and wrestling brands that TKO represents.
Shapiro mentioned that a partnership between WWE and Saudi Arabia was a deal “highly tied” to Vince McMahon, although the company has kept that alliance strong since his departure from the board earlier this year.
“I would say proudly that Nick Khan has developed and sustained a very strong relationship in a handoff from Vince. They have a lot of trust in each other, they have a lot of faith, and potentially we could do more events.”
Earlier this week, Saudi Arabia’s Turki Alalshikh told ESPN that he hoped to bring the Royal Rumble or Wrestlemania to the country sometime in the future.
UFC’s relationship with Saudi Arabia has grown in recent months. They have a Fight Night card booked for the event later this year, and are expected to host another show during “Riyadh Season.”
Anti-trust: Settled and sorted
During the call, details were revealed about the recent pair of settlements for anti-trust lawsuits against the UFC.
The lawsuits, which argued that UFC “violated the antitrust laws to the detriment of all MMA fighters,” were settled for a total of $335 million. The total will be paid in three installments, the first of which being a $100 million payment that was made in the first quarter of this year. Another $100 million will be paid in the final quarter of this year, and the remaining $135 million will be paid in the second quarter of 2025.
It was noted on the call that the settlement came “without any further changes to the UFC’s business operations,” insinuating that the agreements were purely a financial exchange without any structural change to the promotion’s business model.
The after-hours trading of TKO stock has reacted positively to the recent quarterly report. Value in the company has gone up slightly since the market closed on Wednesday, getting as high as $100 per share at one point.
