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The Ratings Game: WWE streaming on Netflix or Amazon? One analyst says it’s possible

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World Wrestling Entertainment Inc.’s search for a buyer or some other business arrangement has “a reasonable probability of success” that could draw the interest of streaming giants like Netflix Inc.
NFLX,
-1.98%

and Amazon.com Inc.
AMZN,
-2.11%
,
Wells Fargo analysts said Tuesday.

Those analysts upgraded WWE
WWE,
+0.29%

shares to their version of hold from sell. They increased their price target to $100 from $52, saying interest from buyers and the value of TV rights could give the company a value of as much as $8 billion.

Shares were down 0.9% to $88.59 during the day. The company has a market value of around $6.6 billion.

The analysts upgraded the stock after Vince McMahon returned to WWE this month — reportedly with plans to put the pro-wrestling empire up for sale. WWE has said it is reviewing “strategic alternatives” intended to “maximize value for all WWE shareholders.” McMahon had retired from the company last year amid a sexual-misconduct investigation. Upon McMahon’s return, his daughter, Stephanie, said she would resign from her role as co-CEO.

The Wells Fargo analysts said that unlike a “financial” buyer — or someone who views an acquisition more as an investment — a so-called “strategic” buyer would air WWE content through their own networks. They would also likely pay less than a financial buyer.

“While no potential strategics have commented, we think there will be reasonable interest from the likes of NFLX, AMZN and CMCSA since WWE provides lots of hours of content and has a dedicated audience,” they said.

However, they said, that interest might not necessarily turn into an all-out acquisition.

“Ultimately, we think NFLX would rather pick up a night of WWE rights vs. the whole company,” the analysts said. “We view CMCSA as less likely than many investors, though we note prior (arguably defensive) deals for DreamWorks and Sky.”

WWE streams on Peacock, the streaming platform run by NBCUniversal, which is owned by Comcast Corp.
CMCSA,
+0.03%
.
Any move by WWE would come after the company has thinned its roster of wrestlers and struggled with what some have said was a lack of compelling story lines.

WWE last week said it retained advisers to handle legal, financial and communications matters as it goes through its review of strategic alternatives. Vince McMahon, in a statement, said WWE’s “upcoming media rights cycle will take place amid a rapidly evolving media and entertainment landscape.”

Still, as McMahon returns to the company, the Wells Fargo analysts suggested there were risks in testing investors’ patience.

“In our experience, investors own a stock on a takeout thesis for about 6 months,” they said. “If a deal doesn’t materialize in that period (or there aren’t press reports about activity), patience tends to wears thin.”

WWE stock is up roughly 69% over the past 12 months. By comparison, the S&P 500 index
SPX,
-0.20%

has fallen 13% over that time.

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