Hatch Weekly: Yes, you can be a pro-wrestler investor

Wanna wrestle?

Ok, you don’t have to wrestle us, but if you like investing in companies that have revenue, and even earn profits, then you might want to throw your money in the ring - the wrestling ring that is. Over the last three years, World Wrestling Entertainment (WWE) has grown EPS (earnings per share) by 46% per year, making investors, well, Moonsault with joy. Yes, that’s a pro wrestling move, and there will be many more peppered through this newsletter.

WWE, a Powerbomb investment?

World Wrestling Entertainment reported a Facebuster revenue of $930 million last year, and some analysts believe that the company's profits could double by 2025. Where are these earnings coming from you ask? Wrestling is still big business. WWE broadcasts to more than 180 countries in 28 languages, is watched in 800 million television households all over the world, and it's streaming service, WWE Network, is sitting pretty with 1.68 million paid subscribers. Surprised to hear the WWE is doing well, even though you haven’t heard much about it since you were like 15? Well, it might be because adults aren’t necessarily the target audience anymore. In 2008, WWE decided to go PG - no more “wardrobe malfunctions,” barbed wire or blood.

Success comes with an Attitude Adjustment

While frustrating to many longtime fans, the switch to PG has paid off bigtime. A younger audience means more revenue from merchandise sales (only so many adults want action figures), and live shows are chocka with kids sporting WWE-branded t-shirts and championship belts. In another progressive move, the WWE also ditched it’s misogynist “Diva’s Champion” title in 2016 for the more tasteful title of “Women’s Champion”.

WWE execs are keeping their thumb on the pulse of trends and are adapting quickly to stay relevant, including allowing their fans to watch Monday Night Raw at their leisure by streaming. WWE’s success has others frothing for a chance to make their big splash on the markets, and we’re eager to see how they adapt to having their first head-to-head competitor in decades launch operations this month.

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Who (DIS)? Disney throws shade at Netflix

Well, the gloves are off. Walt Disney Company (DIS) is sending a strong message to Netflix (NFLX) by banning Netflix advertising on its entertainment television networks like ABC and Freeform. Why the mean girls attitude? Disney is ramping up the hype before it launches its own Netflix-twin streaming service, Disney Plus.

Not all rivals are created equal

The Netflix ban is apparently just part and parcel of Disney’s updated policy on accepting ads from rival streaming services. Interesting that these new advertising restrictions don’t apply to HBO Max or Peacock, streaming services from rivals AT&T and Comcast expected to hit screens next year. Disney will allow Netflix ads on its ESPN channels, which might seem like a nice thing to do, but it’s largely because Netflix just doesn’t compete with Disney in sports. If this all sounds a bit below the belt, it’s not: television networks have never been into helping their direct competitors by letting them advertise on their platforms. So, you won’t see any HBO shows on FX, and vice versa. Pettiness or bad business? Savvy broadcast networks like ABC, CBS (CBS), Fox (FOX), and NBC (CMCSA) have embraced competitors’ ads which has boosted their advertising sales by billions of dollars.

Disney to Netflix: it’s not personal but we don’t need ya

Disney isn’t the only media company getting sassy when it comes to streaming. Heaps of media companies are gearing up for a very real streaming war. And besides, you can advertise anywhere these days, especially if you’ve got FAANG money. Netflix is keeping quiet about their feelings towards the ban, but last year they spent roughly $1.8 billion on advertising. We’re talking close to $100 million used for ads on television networks, and 13% of those millions going to Disney-owned entertainment networks. Disney Plus, which will set viewers back $7 a month, arrives on Nov. 12 and, Disney has been moving its content off Netflix to snafu it for Disney Plus.Netflix has also lost content from WarnerMedia (T), which is launching their streaming service HBO Max in 2020. Let the games begin!

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