TKO Group Holdings — the merged company between the UFC and WWE — may have taken a hit in stock prices since first launching this past September, but the company could be poised for a massive rebound in 2024.
The company opened on the NYSE at $102, but as of closing on Tuesday, it currently sits at just over $80 per share. That dip may not look promising, but at least one Wall Street analyst is backing TKO for a huge year ahead, especially with a pair of lucrative television contracts in the works.
Eric Handler, an analyst at Roth MKM, touted TKO as his top pick for the entertainment industry heading into 2024.
“We continue to have a positive view toward sports/live events programming, especially those with a high level of revenue being contractually guaranteed,” Handler told The Hollywood Reporter. “The market for sports rights fees remains strong, aided by an increasing number of interested distributors.”
The changing landscape for television in the streaming era has dramatically affected the entertainment industry, triggering two historically long strikes involving actors via SAG-AFTRA and writers via the Writer’s Guild of America (disclosure: Vox Media Union is part of the Writer’s Guild of America East). Those strikes were largely centered around pay, especially as streaming services like Netflix continue to eat up an even larger share of the overall marketplace for television and film.
Meanwhile, live sports rights fees continue to balloon, with networks and streamers willing to pay a premium price for events that aren’t typically affected by work stoppages or production delays. Add to that, live sporting events also draw massive ratings as evidenced by the NFL’s continued domination, prompting Amazon to pay $11 billion for a single weekly game for the next 11 years.
At TKO Group Holdings, the WWE has already negotiated a new deal for Smackdown and NXT, two of the top programs at the professional wrestling outfit, with a third contract still to come for Monday Night Raw, the longest running episodic series in TV history. Handler has faith that those rights fees will offer a robust bottom line for TKO in 2024, which will only increase stock prices for investors.
Meanwhile, the UFC is eyeing a new broadcast rights deal in 2024 with the current ESPN deal expiring in 2025. Right now, ESPN maintains exclusive rights over all UFC programming, including the pay-per-view broadcasts that played a massive part in the continued growth of the ESPN+.
With the UFC continuing to earn record revenue year after year, including sellouts for numerous events throughout the past few years, Handler expects the new TV deal for the promotion to explode in value.
“A UFC TV deal could be announced by year-end with new contract terms upwards of two times the current value,” Handler teased.
To put that in context, the UFC signed a deal with ESPN in 2018 reportedly worth around $1.5 billion, and by Handler’s estimates that means the promotion could be looking at around $3 billion for a new multi-year deal in 2024.
That all adds up to TKO Group Holdings poised for a huge year ahead with Handler predicting “mid-teens growth” for the company by the end of the year.
