HONG KONG (Reuters Breakingviews) - Can Sino-American trade disputes be settled on the mat? Don’t expect Xi Jinping and Donald Trump to don tights for a Presidential SmackDown. But don’t be surprised to see Tencent, China’s $370 billion technology champion, tag up with World Wrestling Entertainment to bring more American professional brawlers like Triple H and The Undertaker to the People’s Republic, and build a Chinese league.
A deal with WWE would give Tencent boss Pony Ma some publicity, indirect access to the administration of U.S. President Donald Trump and the opportunity to teach millions of Chinese fans the science of the slingshot suplex. WWE finally gets a partner burly enough to pry open China’s market. It’s a trade-war cage match made in heaven.
WWE was founded by cabinet official Linda McMahon and her husband Vince, now its chief executive. He was famously tackled to the floor and shaved bald by Trump during the “Battle of the Billionaires” in 2007. Ridiculous, perhaps, but such scripted brawls between muscle-bound actor-thugs in spandex generated $657 million in revenue for WWE in the first nine months of 2018. Its shares were up nearly 150 percent for the year in early December, changing hands at around 60 times forward earnings. Ridiculous has won respect.
Dominant at home, WWE needs to grow abroad. It has been attacking the China market for years, bringing occasional “SmackDown” exhibitions through Shanghai and Shenzhen — Tencent’s hometown — and posting matches online. Despite cultural differences, WWE’s recipe of braggadocio and beatings could be copied straight out of a Chinese Qing dynasty Kung Fu television show, and has proven popular.
WWE’s streaming contract with local partner PPTV comes up in 2019. Tencent would make a better match for the next round. Its WeChat app alone boasts 1 billion monthly users. It’s China’s largest video-game company, an important money-making channel. Tencent Video broadcasts National Football League and National Basketball Association games; its sports division is moving into events management. It can help WWE build a local league, key to winning real market traction.
One obvious way to jackhammer the deal would be for Tencent to buy a stake in the $5 billion entertainment company. It won’t come cheaply. But good-humoured headlines about China acquiring dual-use smackdown technology will help Tencent’s international profile — even if a Xi-Trump cage match is out of the question.
- This is a Breakingviews prediction for 2019. To see more of our predictions, click reut.rs/2R6H5pG
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