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Spending Big on HD to Attract Audiences

Mar 16, 2008  •  Post A Comment

If you thought World Wrestling Entertainment’s hulking stars were big, you should check out the company’s production trucks.
WWE’s two 18-wheelers, painted black and red and emblazoned with pictures of star wrestlers such as Randy Orton and Triple H, are stuffed with the monitoring and signal-transmission equipment necessary to broadcast the 200 or so live North American events a year in high definition and to produce the shows inside the arena.
WWE, which started broadcasting its fights in HD on the USA Network and Sci Fi Channel this year, leases the trucks from NEP Supershooters, which spent $9 million to upgrade them.
“HD production equipment is expensive, and our trucks are equipped with state-of-the-art technology,” said Mike Grossman, senior VP of television operations at WWE.
It’s a price some sports outside of the mainstream are willing to pay to attract and retain a loyal audience. While professional football, basketball and baseball leagues and even college sports benefit from having the major networks pay for the upgrades necessary for a high-definition broadcast, WWE and new mixed martial arts network HDNet Fights are among the companies that had to foot the bill themselves to either upgrade existing studio and mobile facilities or build them from scratch.
“These sports don’t have a regular association with the big networks that are going to give them hi-def,” said Neil Pilson, president of Chappaqua, N.Y.-based consulting firm Pilson Communications and former president of CBS Sports. “They have to initiate the HD, which costs $25,000 to $40,000 more for shooting an event than standard definition.”
WWE spent about $20 million just to upgrade its studios in Stamford, Conn., no small sum for a company whose total revenue was $485.7 million last year. In addition to its five hours of programming a week, WWE will broadcast 16 three-hour pay-per-view events this year, all in HD.
Meanwhile, HDNet Fights, launched in October by Dallas Mavericks owner Mark Cuban, went a step further by basing its mixed martial arts network on the premise of everything being filmed in HD. Mr. Cuban, whose HDNet started on DirecTV in 2001, said the investment, which he didn’t disclose, is already paying off.
“HDNet is growing by leaps and bounds and we now are approaching 9 million subscribers,” Mr. Cuban said.
WWE and HDNet are banking on a high-definition market likely to surge as customers acquire the TVs and tuners required for HD viewing. North American consumers bought 10.3 million HDTVs in fourth quarter 2007, up 52% from a year earlier, according to NPD Group’s DisplaySearch unit.
That surge likely will be fueled by the same tech-savvy male audience targeted by the combat sports, Mr. Pilson said. “When you’re talking to a young male audience that’s much more technically demanding than the geezers, it makes sense to push hard for HD.”
WWE’s “Monday Night RAW,” along with detective dramedy “Monk,” has helped NBC Universal’s USA Network replace Time Warner-owned TNT as the top-rated basic-cable network. On Feb. 25, the most recent date data was available, “RAW” attracted about 5 million viewers, or about 30% more than the 3.8 million who watched the NBA’s Lakers-Mavericks game on ABC the following Sunday, according to Nielsen Media Research.
Still, ratings for “Monday Night RAW” have changed little since the show switched to HD from standard definition in January. With that in mind, WWE, formed by Vince McMahon after he acquired Capital Wrestling Corp. from his father in 1982, has turned more of its efforts toward repackaging content for films and other digital media. Those operations accounted for 10% of WWE’s revenue last year, up from 6.8% in 2006.
The company also is trying to use HD to boost its pay-per-view services, which B. Riley analyst Ali Mogharabi called “the weak part of the business” in a February note to clients.
“As a program provider, there’s really not an upside to HD on a revenue basis,” Mr. Grossman said. “But we thought archiving our assets in HD would be advantageous in the long run because we repurpose our programming so heavily.”
While WWE is hoping high-definition programming bolsters revenue beyond its live television broadcasts, HDNet Fights has embraced the medium in an effort to take on the more established Ultimate Fighting Championship.
HDNet Fights Chief Executive Officer Andrew Simon said he hoped the network’s events would help mixed martial arts avoid some of the issues that have shrunk professional boxing’s audience by helping to determine a common mixed martial arts champion instead of the multiple champions that exist now.
The network, which is working with partners such as the International Fight League and Strikeforce to move toward unifying the various MMA belts, will produce at least 24 live events this year while airing 40 news shows dedicated to mixed martial arts coverage.
“The unification of heavyweight and middleweight belts is the goal,” Mr. Simon said. “We just want to put the best fights on TV.”
Ultimate Fighting Championship bouts aren’t shown in HD, although its broadcast partner, Viacom-owned Spike TV, said in October that it would begin HD broadcasts this year.
While comparing the pure competition of mixed martial arts with the more theatrical aspects of WWE may strike fight fans as questionable, the benefits of being able to watch 300-pound men slam each other to the canvas or see combatants pummel each other into submission in clear HD are not, said both Mr. Simon and Mr. Grossman.
“We’re getting into it at just the right time,” Mr. Grossman said. “Viewer perception has now turned and people are expecting HD. I don’t think that was the case even a year ago.”

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