Martha Slams, WWF Looks Nice in Day One Dave Marino-Nachison (TMF Braden)
October 19, 1999
Investors jumped at the chance to get their hands on two of the late 20th century's crossover media and merchandising titans, as shares of World Wrestling Federation Entertainment (Nasdaq: WWFE) and Martha Stewart Living Omnimedia (NYSE: MSO) leapt in their first day of trading today.
Although there are about as many brilliant, insightful, and humorous ways to compare the two companies for maximum editorial effect -- and trust us, we thought of them all -- as there are ways "Stone Cold" Steve Austin could subdue Martha Stewart, this column has limited space, so we'll distill them down to one: taste (the total lack of it on one hand, and a distinctive middle-American slice of it on the other).
Put another way, we've got two companies who have their ears pressed closely to the chests of their customers (literally on one hand, and figuratively on the other), paying close mind to the beat of the consumer pulse.
If not for that, could founder, Chairman, and CEO Martha Stewart have been able to parlay her whitebread domestic act into two monthly magazines with an estimated 10 million monthly readers; a top domestic arts television program; a book publishing empire with more than 8.5 million copies sold; a syndicated radio program and newspaper column; and a retail sales operation that plies the Internet, catalogs, department and specialty stores and Kmart (NYSE: KM) to the tune of more than $763 million in 1998 branded merchandise sales?
Or could creative honcho and Chairman Vince McMahon have taken what once seemed a shameful 1980s fad that OBVIOUSLY wasn't a real sport and turned it into a multimedia powerhouse with hundreds of live stadium events worldwide, hour upon hour of television programming -- Raw is War, according to the company, was the top-rated regularly scheduled cable television program for 19 straight weeks through June 30 -- copious pay-per-view productions, two monthly magazines, and a retail and licensing machine that has literally thousands of products on sale worldwide bearing the WWF moniker?
Those, folks, were rhetorical questions.
Now McMahon sits in regal fashion at the head of a company that in three years has boosted revenues 45% on a compounded basis, demonstrating increasing profitability. It lost money in 1997 but had operating margins of 23% for the fiscal year ended April 30. At the same time, the company was looking at a balance sheet with $48 million in cash and cash equivalents pitted against $13 million in long-term debt. The company held the same amount of stadium events as it did in 1997, but attendance, Raw is War average weekly ratings, and pay-per-view ratings all more than doubled over that period.
As for Martha Stewart, she presides over a sprawling business empire with credibility and authority that constantly seeks out new lines of business and new ways to widen its web. Over the past three calendar years, the company has grown revenues 34%, operating profits 42% (despite outsized gains in production, general, and administrative costs as growth into new media outlets has accelerated), net margins 36%, and earnings before interest, taxes, depreciation, and amortization (EBITDA) 45%.
These weren't just businesses Wall Street wanted to see go public, they were franchises people wanted to see go public. For proof, just click on Fool Brian Bauer's June contribution to our "Companies Fools Wish Were Public" feature.
With that, strong recent performance and the continued vision and insight of their respective leaders, more success seems likely for these two companies. Given their impressive reach into the American consciousness, it may be impossible not to stay tuned.
WWF.com Web Page
Martha Stewart Web Page
Fool News, 8/3/99: World Wrestling Federation to Give Shareholders a Piece of the Action
Companies Fools Wish Were Public, 6/23/99: Titan Sports Inc.