It was supposed to be a marketing match made in heaven. In March 2000, NBC and the World Wrestling Federation pledged $100 million to launch the XFL, a new "smashmouth" football league. With the WWF's Vince McMahon and his golden raunchy touch at the helm, the XFL promised to lure young male viewers back to the network on Saturday nights with an outlandish mix of jackhammer hits on the field and bodacious cheerleaders off it.
Three weeks into the season, though, the XFL's television ratings have collapsed, and now NBC is stuck in a prime-time hell. Instead of pondering which of the eight teams will be playing in the XFL championship game come April, the better question may be, Will NBC even televise the game? (It could be punted over to TNN or UPN, networks that also carry XFL games.)
NBC had promised advertisers a modest 4.5 rating for its broadcasts of XFL games, which is actually less than what the network had been getting with its "Saturday Night Movie" earlier this year. (A ratings point represents roughly a million households.)
Yet based on preliminary data from Nielsen, last weekend's game drew just a 3.8 rating, pinning NBC in the ratings cellar for the night again. (When the final national numbers are released later in the week, that rating is likely to shrink to 3.5.)
Not only is the beleaguered league underdelivering an audience, it's not even delivering the right audience. Advertisers would likely cut the WWF and NBC some slack if the XFL were actually attracting hard-to-reach men in the 12-to-24 age bracket, which the league promised to do.
But those viewers, who as a rule don't stay home to watch TV on Saturday nights, abandoned the XFL after the first week, leaving men age 49 and up as one of the XFL's biggest demographic groups. Reaching middle-aged men was not exactly what U.S. Army recruiters had in mind when the Army signed on as the XFL's biggest advertiser.
Meanwhile, the notion that savvy cross-promotion between the testosterone-drenched XFL and NBC would provide a boost to the network's ratings-challenged NBA games has proved to be inaccurate. After two weeks of XFL games, the network aired the annual NBA All-Star Game on Feb. 11, and it went down as the lowest-rated All-Star Game in NBA history.
But NBC isn't the only one nursing its wounds. After successfully expanding its sports entertainment brand into bestselling books, platinum CDs and No. 1 video games, the usually sure-footed WWF suddenly has a rare flop on its hands. And the company is paying the price.
Since the league's Feb. 4 debut on NBC, WWF's stock has lost nearly 40 percent of its value, plummeting from $22 to $14 a share. "Part of that pull-down is related to the football ratings," says analyst Breck Wheeler, who follows the WWF for Legg Mason Wood Walker.
Last week the WWF released its quarterly earnings. Revenues were off 25 percent as a result of XFL start-up costs. And while WWF president and CEO Linda McMahon (wife of Vince) spun the numbers for analysts listening in on the conference call, a close reading revealed some troubling signs for the wrestling empire: TV ratings are off, attendance has declined, toy sales are sluggish and home-video revenue declined 25 percent.
The obvious question is, Did the WWF take its eye off its core business last year to launch the ill-conceived XFL? "Vince McMahon is the company's creative genius and if he's spending his energy on the XFL, that could be a drain. There are just so many hours in the day," notes Wheeler.
The WWF's moneymaking empire is built around its weekly TV shows on cable channels like TNN and UPN (which, in turn, fuel the all-important pay-per-view business). The bombastic shows rely on masterful showmanship, sharp scriptwriting and inventive plotlines to keep fans hooked. McMahon and his team of writers have always been central in keeping those twists and turns coming.
Now, says Wheeler, "there is a general feeling the programming was at its most compelling one year ago and that today the core wrestling audience is bored."
Two weeks after the XFL's debut, WWF's signature Monday night show "Raw Is War" drew a 4.8 rating. That's down 20 percent from 1999 and the first half of 2000, when the show consistently drew a 6-plus rating. Part of the drop-off can be explained by the show's recent jump from the USA Network to TNN. Part, but not all.
"There are a lot of complaints with the WWF that the product is getting stale," notes Dave Meltzer, publisher of the Wrestling Observer, the pro wrestling bible. "I don't think anybody would argue it's as good as it was four month ago."
The culprit for the malaise? Most likely football, says Meltzer. "The XFL is taking away man-hours from key executives in the company, like Vince, Linda and [TV announcer] Jim Ross. So it's going to hurt." (Interestingly, WWF's TV ratings dip coincides with the much-hyped return of "Stone Cold" Steve Austin.)
Linda McMahon told analysts the company will support the league "as long as it makes sense to." If the XFL is eventually abandoned, the damage is likely to be more psychological than financial for the WWF, says Meltzer.
"The people who watch the WWF think Vince McMahon is a God and the WWF could do no wrong. So this is going to be a tough loss to explain. If the XFL does fail they need to find a scapegoat because it's going to flatten the WWF mystique," says Metlzer.