Stone Cold Steve Austin was the Hulk Hogan for the late '90s and early millennium. Eventually his popularity yielded itself to the Rock, but that's OK; the guy made his mark. Anyone who remembers his famous feud with the evil Mr. McMahon cannot help but look back upon the program with delightful nostalgia -- after all, I never laughed so hard as when those two got in the ring to perform shenanigans that had all the comedic underpinnings of a Monkees romp (make no mistake, that's a compliment).

Well, Stone Cold's heat may have peaked a long time ago, but one thing's for certain: He'll never go away. He's got show business in his blood, and he aims to entertain with everything he's got. I read a press release from World Wrestling Entertainment (NYSE:WWE) announcing that the company's film unit has struck a deal with the man who helped to make "What?" such an annoying audience call. Looks like he'll be doing three movies for WWE Films, the first of which is an action project called The Condemned.

Anyone who's read some of my past articles on WWE will find that I have been bullish on this film division (as an example, see my Take about WWE and BSkyB); in fact, some might feel that I have been acting like a broken record on the subject (or, to update the metaphor, a skipping CD). Yet I would proffer that this is an aspect of the company that has been undervalued, and I actually have to wonder whether it will remain so until the first few movies have been released.

To be certain, the current challenges in revenue growth that the WWE has been facing is a significant issue -- I'm not about to sugarcoat that, and I tip my hat to the bears who want to make a case of it. This is where the film division comes in; there's absolutely no doubt in my mind that a low-budget sleeper hit will be lurking within the slate. I can't say that the first couple features -- one will showcase John Cena, with the other starring Glen Jacobs, the man who plays the Kane character -- will be hits right out of the gate, but when those hits come, watch out, and take a look at the effect on the stock.

Hit features are what propel Pixar (NASDAQ:PIXR) and Lions Gate Entertainment (NYSE:LGF); in the case of the latter, an extensive library asset also does a lot of the heavy lifting. WWE certainly has a deep vault as well, with thousands upon thousands of hours of archived wrestling shows at its disposal, which it is currently monetizing via its subscription video-on-demand (SVOD) platform. If the company can quicken the pace of its output from the stated two-to-four-films-per-year pace (which it says is in addition to the Austin deal) and, at some point, make a few small acquisitions of product, it could diversify the all-wrestling SVOD delivery system with teen-targeted horror/sci-fi/comedy flicks that will serve as an adequate hedge against the cyclicality of interest in the grappling plays. It's difficult to believe that WWE will eventually become a multimedia conglomerate on par with Viacom (NYSE:VIA) or Time Warner (NYSE:TWX), but as a famous character from the Metro-Goldwyn-Mayer (NYSE:MGM) portfolio might say, never say never.

So, as we get closer to the inaugural WWE movie, I'd suggest investors take a close look at this element of the company's business model. There's certainly a lot of risk here, since audiences are fickle, but when one considers how much synergistic cross-promotion will occur between WWE Films and the wrestling TV shows/pay-per-views, a compelling picture is drawn. Just don't make every film a vehicle for a wrestler, Vince -- remember, that will get old quick.

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Fool contributor Steven Mallas owns none of the companies mentioned.