Top Fox executive Murdoch talks about why Fox chose not to renew WWE Smackdown

Fox chose not to renew WWE Smackdown because it wasn’t hitting the advertising numbers, according to Fox CEO Lachland Murdoch in yesterday’s Fox Corporation earnings conference call.

“We look at all of our sports portfolio the same way and new rights the same way. Based on the analysis, on both an advertising point of view, we were not hitting the advertising numbers due to the audience of WWE … for our return on investment to be above the levels that we would accept,” he said. “But also, we didn’t attribute enough significant retransmission revenue to the WWE either. So it made sense for us to move on from them. … Quite simply, we’re very disciplined and the R.O.I. didn’t meet our disciplined parameters so, we wish them luck and we’ve moved on from them.”

He went on to compliment WWE for being “a great partner for many years.”

A key part of Murdoch’s comment is that they didn’t hit advertising dollars “due to the audience of WWE.” Does that mean the demographics weren’t attractive to advertisers in terms of how pro wrestling fans are perceived as potential customers or was it simply a comment about the size of the audience?

Fox initially anticipated Smackdown viewership would be substantially above 3 million viewers. The first episode drew an average of 3.880 million viewers. It dropped to 2.877 million the next week and only one other time topped 3 million (Nov. 27, 2020).

WWE spent time and effort in the early 2000s pushing hard to get major brand name advertisers to sign on as sponsors of WWE and then touting them when they did in an attempt to overcome the perception that pro wrestling fans had significantly lower disposable income as non-wrestling fans (although studies showed the perception had merit at the time). Part of why Vince McMahon coining the term “sports entertainment” was to redefine WWE as something other than “pro wrestling” which had a stigma of drawing viewers less desirable to advertisers.

WWE’s new deal for Smackdown to return to USA Network next fall is estimated to be a 40 percent jump from what Fox was paying to around $287 million per year on average. So essentially NBC Universal was willing to pay substantially more than Fox felt Smackdown was worth.

While WWE would have loved to have Fox putting in a competitive bid, since there’s an advantage to reaching a larger audience on the Fox broadcast network compared to basic cable and an intangible prestige to being on Fox, they got a significant increase in TV rights fees to soften the blow of leaving Fox. The new deal with NBC Universal does include four prime time specials on the NBC broadcast network, so WWE will be able to reach non-cable subscribing fans with this new deal, albeit only four times per year rather than 52.

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