World Wrestling Federation Entertainment, Inc. Business Information, Profile, and History

Company Perspectives:

Our objectives are to broaden our leadership position in the creation, production and promotion of our form of televised and live entertainment events and to leverage our technical and operating skills to pursue complementary entertainment-based business opportunities. Some of the key elements of our strategy are to: continue to produce high quality branded programming, live events and consumer products for worldwide distribution; expand our existing television and pay-per-view distribution relationships and develop broader distribution arrangements for our branded programming worldwide; increase the licensing and direct sale of our branded products through our distribution channels; grow our Internet operations to further promote our brand and to develop additional sources of revenue; form strategic relationships with other media and entertainment companies to further promote our brand and our products; create new forms of entertainment and brands that complement our existing businesses, including the development of new television programming that will extend beyond our current programming, all of which will appeal to our targeted demographic market; and develop branded location-based entertainment businesses directly or through licensing agreements, joint ventures or other arrangements.

History of World Wrestling Federation Entertainment, Inc.

World Wrestling Federation Entertainment, Inc., known to millions of fans worldwide as the WWF, promotes and produces the unique spectacle of professional wrestling. The company's activities spread far and wide, touching on all aspects of an industry that generates well in excess of $1 billion annually. WWF produces roughly 200 live events a year, 12 pay-per-view programs a year, and two cable television programs. The company licenses its wrestling personalities for an enormous array of merchandise, publishes two magazines, RAW and WWF, and sells home videos and compact discs. WWF events are broadcast to 120 countries and translated into 11 languages.

1960s Origins

Vincent K. McMahon, Jr., represented the third generation of McMahons to earn its living by promoting professional wrestling. His grandfather, Jesse McMahon, established the trend, foregoing his career as a boxing promoter during the 1940s to try his hand at performing the same function for professional wrestling. Jesse McMahon's son, Vincent McMahon, joined his father in the business during the 1950s, when the popularity of professional wrestling was on the rise. Vincent McMahon formed his own promotion company in 1963, naming the enterprise the World Wide Wrestling Federation. The global implication of the company's name belied the realities of the professional wrestling business, which was composed of a patchwork of promoters who were geographically segregated. Far from worldwide, the World Wide Wrestling Federation operated within well-defined boundaries, promoting professional wrestling matches in northeastern cities of the United States.

Although the company's territory was restricted, it embraced heavily populated metropolitan areas, including New York City and Philadelphia. Popular wrestlers such as Gorgeous George had helped professional wrestling gain a loyal following among television viewers during the early years of television. However, not long after McMahon formed the World Wide Wrestling Federation, the half-sport, half-entertainment attraction began to lose its appeal. It was during the business downturn in the late 1960s and early 1970s that the third generation of McMahons entered the professional wrestling promotion business. Vincent K. McMahon, Jr., a pioneer in a decades-old business, entirely transformed the world of professional wrestling.

In a business that was a hybrid of sports and entertainment, McMahon excelled by being half-innovator, half-renegade. His unquestionable marketing skills may have surprised some, considering his less-than-exemplary past, but his iconoclasm probably struck longtime acquaintances as the natural progression of a troubled childhood. As a child, McMahon was exceedingly disruptive in school. Eventually, authorities were forced to present him with one of two alternatives: enroll in a state reform school or in a military academy. McMahon opted for the latter, becoming the first cadet in the history of the Waynesboro, Virginia, Fishburne Military School to be court-martialed. McMahon's academic career only moderately improved after his truncated stay at Fishburne. He spent five years attending college, all the while petitioning professors to raise his grades while attending summer school each of the five years. After college, McMahon tried to make his mark in sales, hawking paper cups and adding machines before deciding to join his father in the promotion of professional wrestling. From his undistinguished background, McMahon emerged to create one of the most successful marketing organizations in the country.

In 1971, McMahon began working for his father's organization, shuttling throughout the Northeast promoting local shows and serving as an announcer at the matches. A 6'3' amateur bodybuilder, McMahon fit the mold of a wrestler, but it was never his inclination to blend into the world of professional wrestling. As he had during his years as a schoolboy, McMahon wanted to be a disruptive force. He worked for the company (which dropped the word 'Wide' from its title in 1979) for nearly a decade, before acquiring WWF in 1982 from his ailing father.

Taking Charge, 1982

With full control over the organization, McMahon was able to express his renegade side and shape the company into a formidable force, the likes of which had never been seen in the business. The difference between McMahon and other promoters was his disregard for the traditions of professional wrestling. He ignored the geographical boundaries that divided the industry and began buying out regional promoters, emerging as a consolidator bent on amalgamating the smaller tours into a national company. Along with the territory he gained from other promoters, McMahon also took other promoters' top wrestling personalities, including a fellow amateur bodybuilder named Terry Bollea. Bollea, whom McMahon lured away from a Minneapolis promoter in 1983, wrestled under the name Hulk Hogan, the most popular professional wrestling star of the 1980s. To provide greater exposure to his motley collection of wrestlers, McMahon purchased time on local television stations to air WWF's matches, hoping to stimulate interest in a spectacle whose popularity had been on the wane for nearly 15 years. Nothing contributed more to WWF's startling success, however, than an industry-shaking announcement McMahon made during the early 1980s. He acknowledged that the winners of professional wrestling matches were predetermined, sparking furor among other promoters and some fans. Aside from freeing WWF from state regulations, which was particularly important in light of the company's aggressive geographic expansion, McMahon's concession pushed professional wrestling headlong into the realm of show business. No longer forced to masquerade as a legitimate sport, professional wrestling could embrace the concept of entertainment wholeheartedly and throw away the trappings of bleak gymnasiums for something more akin to Las Vegas.

Presenting wrestling as pure entertainment unleashed McMahon's marketing talents, transforming WWF's live events into bawdy extravaganzas that titillated crowds. In the scripts that governed the live events, McMahon developed and accentuated rivalries between his wrestlers, creating story lines that carried the actions of one event to their denouement in later events. Marketing, brash and glitzy in its tone, was suffusive and highly effective, transforming the image of such wrestlers as André the Giant, the Iron Sheik, and Hulk Hogan into superheroes or detestable villains. In essence, McMahon amplified the intensity of everything under his control, making Titan Sports, Inc., the company he created in 1982, and WWF, the wholly-owned subsidiary of Titan Sports, a rousing success a few short years after leadership was passed from father to son.

By 1987, McMahon no longer had to pay television stations to broadcast WWF's matches; advertisers were more than willing to sponsor his version of professional wrestling. WWF sold $80 million worth of tickets to live shows in 1987, including the proceeds from the more than 93,000 fans who attended Wrestlemania III in Pontiac, Michigan's Silverdome, which set the attendance record for an indoor event in the United States. Beyond ticket sales, there were a handful of other revenue sources, including merchandise sold at the live shows, television advertising sales, programs, videos, albums, and the three percent licensing fee awarded to WWF for the $170 million in sales racked up by retailers selling items such as professional wrestling lunch boxes and caricature action figures. Accounting for all revenue, Forbes magazine, which, tellingly, had taken interest in McMahon's sprawling enterprise, estimated Titan Sports was grossing $145 million in sales annually. WWF, and with it professional wrestling, had become a business phenomenon. WWF distributed four of the top-selling sports videos on the market, besting Jane Fonda's workout video, and produced five television shows internally, three of which were syndicated nationally. Further, pay-per-view cable television had emerged as a potentially lucrative source of revenue. Wrestlemania IV was held at a much smaller venue than the Silverdome, yet grossed a record $30 million thanks to the one million pay-per-view customers who paid $15 per household to watch the event. McMahon, who oversaw all aspects of the WWF marketing machine, was worth in excess of $100 million, having catapulted into the country's business elite in roughly five years.

As the popularity of professional wrestling exploded, it developed into much more than an arena show. National television syndication, pay-per-view television events, and licensing deals for everything from action figures to wrestling-themed air fresheners were indicative of a booming business whose boundaries were stretching beyond precedent. WWF's core audience of children and teens expanded to embrace more and more adults, blue-collar and white-collar alike. Celebrities such as Sylvester Stallone, Madonna, and Cyndi Lauper began making appearances, performing as referees and timekeepers and, more importantly, helping professional wrestling become a mainstream phenomenon. With a fan base increasing by the droves and steady streams of revenue filling its coffers, WWF basked in the glow of the popularity it had created. However, the company did not stand by itself for long.

Attracted by the enormous financial potential of professional wrestling, media mogul Ted Turner decided he wanted a stake in the business. In 1988, he created World Championship Wrestling (WCW), forming a formidable rival to WWF. Backed by Turner's sizeable fortune and TNT and TBS, the two cable television networks owned by Turner, WCW enjoyed an easy and swift entry into the business, securing a sizeable market presence almost overnight. Wrestlers were easy to come by in the frenzy sweeping the country, as WWF and WCW hired 'almost anyone off the street,' according to John Wendt, director of the MBA sports and entertainment program at the University of St. Thomas. 'If you're big, mean, and ugly,' Wendt continued in his May 12, 1997 interview with Marketing News, 'you're a world wrestler.' The emergence of too many unknown wrestlers in the ring, however, delivered a crippling blow to the popularity of professional wrestling. By the end of the 1980s, the flamboyant world created by McMahon had begun to turn stale.

WWF Struggles Through the Early 1990s

The overabundance of unknown wrestlers was just part of the problem affecting WWF. Licensing had proliferated out of control and marketing had grown too pervasive, saturating the appeal of Hulk Hogan and his cohorts to a detrimental extent. Ironically, the same overblown aggrandizement of professional wrestling that fueled its meteoric rise led to its downfall by the beginning of the 1990s, as the hype surrounding the entertainment spectacle eventually suffocated its popularity. By the early 1990s, the celebrities that had once circled the wrestling ring of WWF events were nowhere to be found, fleeing the scene of what was rapidly becoming perceived as a joke. A substantial portion of the fans went with them, causing attendance at live events to fall and television ratings to slip as well.

To make matters worse for McMahon, Titan Sports was the object of scandal during the early 1990s. Federal charges were lodged against McMahon and WWF's parent company for homosexual harassment and illegal steroid use, further deteriorating professional wrestling's image. McMahon and Titan Sports were acquitted of both charges, but damage had already been done, damage that made WWF vulnerable in Turner's mind. In another ironic twist that drew WWF downward, Turner took the opportunity presented to him to do what McMahon had done to regional promoters during the early 1980s. The WCW chief began luring WWF star wrestlers into his organization, including Randy Savage, Rowdy Roddy Piper, and, to complete the circle of events, Hulk Hogan.

Lawsuits and counter-lawsuits between WWF and WCW ensued, providing a litigious backdrop to professional wrestling's waning market appeal. Hobbled by the highly publicized scandals and the departure of some its most popular personalities, WWF lost ground to WCW, but McMahon was ready for another fight. He and his management team made pervasive changes to all facets of the company's operation. Methods governing staffing, licensing, touring, and marketing were altered, and marketing representatives were sent into the field. 'We wanted to get back to grassroots efforts,' explained WWF's senior vice-president of event booking and operations to Amusement Business in a May 13, 1996 interview. Licensing was approached more methodically, with the company choosing its licensees after careful examination. Outside the United States, where WWF had registered considerable success in England and Germany in particular, the company was mindful of oversaturating markets. Company officials emphasized cultivating followings in new markets instead, leading to WWF tours in India, Kuwait, and South Africa during the mid-1990s.

As the company tightened its control over operations, pursuing a general strategy of reigning in corporate functions that had careened during the late 1980s, McMahon amplified the scripted performances of WWF live events. To differentiate WWF from WCW, McMahon stepped up the violence and sexual innuendo contained in WWF shows, casting WWF as the edgier alternative to the tamer WCW. Matches between wrestling personalities were presented as parts within larger plots, following story lines that grew darker and more elaborate in style and content. The live events became chapters in a never-ending saga pitting factions of wrestlers against one another, each victimized by betrayals that spawned endless subplots. In WWF's two-hour television program, 36 minutes of airtime was devoted to wrestling, with the remainder focusing on soap-opera-style feuds and 'behind-the-scenes' intrigue. The response from the public left little doubt as to the effectiveness of McMahon's changes. Attendance figures rose, highlighted by the highest gross ever for a WWF event at Madison Square Garden in 1996, and television ratings climbed upwards, with WWF eclipsing the figures reported by WCW in each category.

Late 1990s: WWF's Comeback Complete

By the mid-1990s professional wrestling had proven the problems of the early 1990s were only temporary. By the end of the decade, professional wrestling exuded more strength than it had at its peak in the late 1980s. Personalities such as Stone Cold Steve Austin and the Undertaker performed in front of capacity crowds, while WWF programming, which aired in 120 countries in 11 languages, earned record ratings and attracted a different ilk of sponsors. During the 1980s, professional wrestling drew sponsorship deals generally from snack food companies and automotive products makers; however, by the late 1990s the broadening of WWF's fan base attracted more distinguished sponsors, such as Warner Bros., Hasbro, Proctor & Gamble Co., Western Union, and the U.S. Army. The celebrities had returned as well, no longer fearing the stigma that had prompted their departure earlier in the decade. In 1998, two of the National Basketball Association's most popular players, Karl Malone and Dennis Rodman, battled against one another in the ring, the same year a former WWF wrestler, Jesse 'the Body' Ventura, was elected governor of Minnesota. In terms of revenue-generating capability, professional wrestling demonstrated remarkable prowess. The cornucopia of merchandise, ranging from toys and temporary tattoos to hot sauces, constituted a business valued in excess of $1 billion annually.

As McMahon prepared to lead WWF into the 21st century, his objectives were not limited to beating back the advances of rival WCW. Considering the popular appeal of the more than 200 live events staged by WWF annually and the company's consistent ranking as the highest-rated program on cable television, McMahon could entertain the prospect of mounting an assault against the purveyors of legitimate sport: the National Basketball Association, the National Football League, and Major League Baseball. In one of the last developments of the 1990s, McMahon renamed Titan Sports 'World Wrestling Federation Entertainment, Inc.' and took the company public. The debut of the 'WWFE' ticker symbol on the NASDAQ exchange in October 1999 marked the beginning of a new era in the company's history, one that promised to stir the emotions of professional wrestling fans in the years ahead.

Principal Subsidiaries: World Wrestling Federation; World Wrestling Productions.

Principal Competitors: World Championship Wrestling; National Football League; National Basketball Association; National Hockey League.

Chronology

• Key Dates:

• 1963: World Wide Wrestling Federation is formed.
• 1982: Vincent K. McMahon acquires his father's company.
• 1983: Hulk Hogan, wrestling for a Minneapolis promoter, is signed by WWF.
• 1987: More than 93,000 fans attend Wrestlemania III; annual ticket sales reach $80 million.
• 1988: Ted Turner forms rival WCW.
• 1991: Popular appeal of professional wrestling begins to wane; WWF is rocked by scandals.
• 1996: WWF stages a comeback; attendance and television ratings soar.
• 1999: Initial public offering of stock is completed.