As noted before, WWE announced this past Thursday that co-presidents George Barrios and Michelle Wilson were removed from their positions and departing the company effective that day. The reaction from Wall Street to WWE’s sudden announcement was not good and the company’s stock suffered a major decline in value.
PWInsider’s Mike Johnson reported that the departures were the result of a rift in vision between Vince McMahon and the company’s co-presidents regarding the direction of the company for the future. One of Johnson’s sources stated that “It’s never going to be Vince who loses that argument.”
Johnson also reported that the company released an internal announcement to its employees shortly afterwards that also confirmed the departures were due to the two sides having irreconcilable differences in the company’s strategic plans for the future.
It was reported that the reaction within the company was one of complete shock and there had been no indications of a big shakeup happening prior to Thursday’s announcement. One of Johnson’s sources stated that Thursday’s announcement was comparable to “that horrible day in 2007” where WWE laid off around a tenth of its entire workforce.
In regards to the outlook for the company’s future, Johnson reported that the general feeling was mixed with some being worried about the status of the company’s major plans for 2020 and others feeling it would not have any real negative long-term impact.
Following Thursday’s announcement, Multichannel News released a report with Evercore ISI media analyst John Belton who stated:
“These developments will clearly cause weakness in WWE shares for a variety of reasons. 2020 adjusted OIBDA expectations must be further cut, particularly given updated 2019 guidance now targeting the low end of the prior range. Second, to the extent that the disagreements between McMahon and Barrios / Wilson centered on reinvestment and / or capital allocation policies, hopes for more shareholder-friendly initiatives moving forward could be diminished. Third, the abrupt nature of the release suggests a tumultuous situation at the company which makes it difficult to gain confidence in forecasting the near- and long- term financial outlook.”
A report from Market Watch with MKM Partners’ Eric Handler had a less negative view on the impact these departures would have on the company’s financial outlook and status for the near future.
“This change, in our view, was unexpected. Investors are now even more concerned about 2020 adjusted OIBDA guidance. However, given the known step-up in the domestic TV rights deal, we do not believe the company is in a ‘precarious’ financial position.”