June 23, 1999

Titan Sports, Inc.
1241 E. Main St.
Titan Towers
Stamford, CT 06905
Phone: 203-352-8600

by Brian Bauer (TMFHoops)

Ownership: Vince McMahon and Family
Competition: World Championship Wrestling (WCW)
A Future IPO? Rumor says yes
Titan Sports, the parent company of the World Wrestling Federation (WWF), has been choke slamming the competition with its rowdy brand of professional wrestling (or, as some folks call it, "rasslin'"). Described as "sports entertainment" by Titan chairman Vince McMahon, the WWF's blend of athletic entertainment, soap opera, over-the-top theatrics, and farcical humor is riding a wave of growing popularity and success.

WWF's prime-time Monday night program Raw Is War, shown on cable's USA Network (Nasdaq: USAI), is the highest rated program on cable television and the top-rated TV show for the 14-to-34-year-old male demographic, a hot market segment for advertisers. WWF's other weekly cable offerings also rank among the top-rated cable shows, and WWF programming is shown in 120 countries in 11 languages. Broadcast TV network UPN will air a new weekly two-hour WWF show -- WWF Smackdown! -- next season.

In addition to its TV shows, Titan produces around 200 live stadium events each year (which provide the programming for the TV shows), most of which are sold out. WWF also produces 12 pay-per-view events each year, which are heavily promoted and "built up" on the regular TV broadcasts. Then, of course, there is the licensing and merchandising -- video tapes; action figures, video games, and other toys; magazines and posters; T-shirts and hats; and even music CDs.

And that's not all -- the WWF website had over 1.3 million unique visitors in April (according to Media Metrix), and Titan, along with an investment group, recently purchased the Debbie Reynolds Hotel and Casino in Las Vegas and plans to remodel it as a WWF-themed casino.

Based in Stamford, Connecticut, Titan Sports is owned by Vince McMahon and the McMahon family. Vince McMahon is the chairman of the company, and his wife Linda is president and CEO. McMahon also regularly appears in WWF shows as a "heel" character -- the evil, scheming head of "the corporation," known as -- appropriately enough -- Mr. McMahon.

In the early '80s McMahon formed Titan and WWF after he purchased the regional wrestling business of his father. At that time, professional wrestling was primarily a regional niche business. A master promoter, McMahon used better quality production values, syndication, cable TV, and clever marketing to build a national brand that emphasized entertainment over athletics. WWF's main competition comes from the only other national wrestling promoter -- World Championship Wrestling (WCW) -- which is owned by Turner Broadcasting, a unit of entertainment giant Time Warner (NYSE: TWX).

Titan owns the trademarks on all of its WWF "characters," which include Stone Cold Steve Austin, The Undertaker, The Rock, and Mankind. The wrestlers work under exclusive contracts with the WWF, and it controls their merchandising and promotion. While professional sports franchises such as the National Basketball Association pay around 50% of revenues for its player costs, the WWF reportedly pays only 15% of its revenues for its talent, according to Forbes magazine.

While Titan does not disclose its financials, various sources put Titan's annual revenues somewhere between $230 million and $500 million. Variety reports that the company had around $50 million in cash flow, or EBITDA (earnings before interest, taxes, depreciation, and amortization), for the 12-month period ending April 30.

Titan is an interesting and successful company -- but it still faces several challenges. Some critics think the market for professional wrestling is already saturated -- so how will the WWF continue to grow without risking overexposure? The company also faces several lawsuits, including one recently filed by the family of the late wrestler Owen Hart, who died from injuries he sustained at a WWF pay-per-view event in Kansas City when he fell from a catwalk in the arena prior to performing a planned dramatic entrance stunt.

One of the WWF's strengths could also turn out to be its greatest weakness -- the anti-establishment nature of its product. Part of the appeal of WWF shows is that they revel in being politically incorrect. WWF shows are loud, profane, violent, and some say sexist and racist -- something to offend almost everyone. This no-holds-barred attitude that is so appealing to many wrestling fans has come under fire with the recent increase in political and social concerns about violence and "appropriate" entertainment, and some pressure could be brought on the WWF and its advertisers.

Recent reports indicate that Titan has approached Bear Stearns to assess the possibility of taking the company public, and press speculation puts the potential market cap of the company at $750 million to $1 billion. When asked about the possibility of an initial public offering, a company spokesman had no comment.

Whether a company like Titan, which has operated in a private and sometimes controversial manner, can succeed as a public company is a key question, but interested investors may soon get a chance to tag-team with Titan to try to body-slam the market.

Related Links:
-- Hoover's profile: Titan Sports Inc.
-- "Lords of the Ring," U.S. News Online, 5/17/99
-- WWF website

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