TKO Group Holdings, the merged company between the UFC and WWE, is expected to rebound in 2024 due to lucrative television contracts and a predicted increase in live sports rights fees, according to analyst Eric Handler.
TKO Group Holdings, the love child of UFC and WWE, took a bit of a tumble in the stock market since its debut last September. But hey, don’t write it off just yet. There’s a good chance it’s gonna bounce back big time in 2024.
The company made its grand entrance on the NYSE at a cool $102. But as of Tuesday’s close, it’s hovering just above $80 per share. Not exactly the stuff dreams are made of, right? But here’s the kicker: at least one Wall Street bigwig is betting on TKO to have a banner year. And with a couple of potentially big-bucks TV contracts on the horizon, who can blame him?
Enter Eric Handler, an analyst at Roth MKM. He’s got TKO pegged as his top dog in the entertainment industry for 2024. Bold move, Eric.
Handler’s reasoning? In his words to The Hollywood Reporter, “We continue to have a positive view toward sports/live events programming, especially those with a high level of revenue being contractually guaranteed.” He’s got a point. The market for sports rights fees is booming, thanks to a growing number of distributors ready to shell out the big bucks.
The TV landscape’s been shifting like crazy in the streaming era, and it’s had a major impact on the entertainment industry. We’ve seen two epic strikes from actors and writers (shoutout to SAG-AFTRA and the Writer’s Guild of America). The main issue? Pay, especially with streaming giants like Netflix gobbling up more and more of the TV and film market.
Meanwhile, live sports rights fees are skyrocketing. Networks and streamers are willing to pay top dollar for events that aren’t usually hit by work stoppages or production delays. Plus, live sports pull in huge ratings. Just look at the NFL’s continued success, which led Amazon to fork over $11 billion for a single weekly game for the next 11 years.
Over at TKO Group Holdings, WWE has already hammered out a new deal for Smackdown and NXT, two of its top shows. And there’s another contract in the works for Monday Night Raw, the longest running episodic series in TV history. Handler’s confident that these rights fees will give TKO’s bottom line a healthy boost in 2024, which should make investors very happy.
And let’s not forget about UFC. They’re looking to lock down a new broadcast rights deal in 2024, with their current ESPN deal set to expire in 2025. Right now, ESPN’s got exclusive rights to all UFC programming, including the pay-per-view broadcasts that have been a big factor in the growth of ESPN+.
UFC’s been raking in record revenue year after year, selling out events left and right. Handler thinks the new TV deal for the promotion could be a game changer.
“A UFC TV deal could be announced by year-end with new contract terms upwards of two times the current value,” Handler hinted. To put that in perspective, UFC signed a deal with ESPN in 2018 reportedly worth around $1.5 billion. So by Handler’s calculations, UFC could be looking at a whopping $3 billion for a new multi-year deal in 2024.
All of this adds up to TKO Group Holdings potentially having a monster year. Handler’s predicting “mid-teens growth” for the company by year’s end. So, buckle up, folks. It’s gonna be a wild ride.