Fool.com: WWF Smacked by Coca-Cola (Fool Plate Special) November 26, 1999

FOOL PLATE SPECIAL
An Investment Opinion

WWF Smacked by Coca-Cola

By Dave Marino-Nachison (TMF Braden)
November 26, 1999


It reads like a corporate version of a "Smackdown" storyboard, the head of World Wrestling Federation Entertainment Inc. (Nasdaq: WWFE) this week taking aim at both a conservative critic and a wayward advertiser in classic cage-match fashion.

After the market's close on Wednesday, World Wrestling Federation (WWF) said in a press release that soda pop Rule Maker Coca-Cola (NYSE: KO) decided to stop advertising with the company, apparently because -- the WWF said -- its programming "is not the proper environment for its ads." A Coca-Cola spokesman said his company ended a two-year advertising relationship with WWF because its new "Smackdown" program "crossed the line," although he didn't rule out an eventual reconciliation. For more, click here. WWF couldn't be reached in time for publication.

WWF went to great lengths to martyr the company and its Chairman Vince McMahon, incorporating in its release a statement McMahon apparently sent to advertisers in response to Coca-Cola's action in which he blamed the Parents' Television Council (PTC), an entertainment watchdog organization, for Coke's apparent about-face.

In what appears a hastily written missive that takes up sides with Bryant Gumbel and spells "Mandela" with two Ls, McMahon accuses PTC Chairman L. Brent Bozell, a prolific conservative commentator and outspoken WWF opponent, of using "McCarthy smear tactics" among other things.

I won't get into a discussion of taste, right and wrong, or even Socially Responsible Investing here. Those are individual matters and deciding how to factor one's personal politics and preferences into investment decisions can be as important as divining one's tolerance for risk. What goes on between McMahon and Bozell, though, is really just a sideshow with the WWF/Coke goings-on the real attraction -- particularly where investors are concerned.

McMahon follows up by saying: "We at the World Wrestling Federation find Coca-Cola's decision to be discriminatory, hypocritical, and an affront to free speech," citing Coke's "continued advertising support... of the TV-14 rated-World Championship Wrestling, The Man Show, MTV's Real World, Ally McBeal, Baywatch," and others. He then points to his company's sway with its cola-crazed fan base and suggests "this decision runs counter to Coke's stated marketing goal of increasing sales volume and could be the worst marketing decision since the fiasco introduction of New Coke."

Can you hear the bridges burning in the background? McMahon's righteous indignation aside, though, investors should keep in mind that WWF will always be a target for various sorts of social and media activism -- it's an entertainment company, after all, and a controversial one at that. The game, so to speak, goes with the name. By the same token, though, WWF is a powerful entity and shouldn't have trouble finding advertisers; the company has already said it immediately filled Coke's empty slots "at premium rates given high demand for ads in WWF programming."

So why the uproar? Beyond the fact that the loss of a big, prestigious advertiser has to sting, it's hard to say. What stands out, though, is McMahon's apparent willingness to fire off salvos not only at critics -- and there are many -- but at revenue sources. Though American teenagers might love a musclebound maverick, it's a safe bet that the act won't go over as well with potential partners fearing vengeful publicity campaigns. At this point, I'm left hoping this is a silly publicity stunt on one hand and wondering about McMahon's judgment on the other.

The news is also ill-timed, coming as it does just days before the Monday wedding of Stephanie McMahon, the apple of the chairman's eye, and Andrew Martin (known to millions as "Stephanie & Test.") Is nothing sacred anymore?