World Wrestling Entertainment Inc (WWE.N) lost almost half its market value on Friday as its new cable deal with Comcast Corp's (CMCSA.O) NBCUniversal failed to convince investors it had achieved its desired revenue increase from TV deals.
Shares of WWE, which produces "Monday Night Raw" and "Friday Night SmackDown," fell as much as 47 percent before trading 43 percent lower at $11.29 at mid-afternoon.
Asked about the selloff, Chief Strategy and Financial Officer George Barrios said in an interview that investors have a "different perspective on how they were thinking about the opportunity in WWE and we have to let that shake itself out."
WWE said on Thursday it had entered into a multi-year licensing partnership with NBCUniversal Cable Entertainment for its flagship shows for an undisclosed sum. All its TV deals, including renewals in the United States, United Kingdom and Thailand have increased TV revenue by $90 million to an average value of $200 million per year, it said in a statement.
Analysts said on Friday the company had been too upbeat about the opportunity to increase the rights fees it stood to gain from its U.S. TV deal.
"Given management's more optimistic tone and the fact that other major sports franchises have garnered much higher increases, this outcome is likely to be viewed as disappointing," said CJS Securities analyst Daniel Moor in a research note.
On December 10 at a UBS conference Barrios compared Nascar's $820 million annual deal with FOX (FOXA.O) and NBC, with the roughly $100 million WWE got at the time, citing a "massive opportunity" to close that gap.
Since those comments were made until Friday's selloff, WWE shares had gained 37 percent.
Barrios said he did not think his comments were too upbeat.
"We never said specifically what we thought we'd get. What we did say is, look, the market is really valuing live content and we think we should be worth more, and we were right. We were worth more," he said, pointing to how WWE secured an overall increase in revenue from all of its TV deals combined.
WWE also made a big bet this year on a TV streaming product which costs subscribers $9.99 a month. As of April 6, the company had 667,000 subscribers. Barrios said the company's research shows that 2 million to 2.5 million people could sign up.
PAA Research analyst Brad Safalow said WWE could spend $25 million to $60 million to support the streaming service in 2015 and that investors are questioning when it would become profitable.
WWE has forecast a net loss of $45 million to $52 million for 2014.
(Reporting by Liana B. Baker in New York and Lehar Maan in Bangalore; Editing by Simon Jennings and Richard Chang)