Endeavor President Says UFC-WWE Merger Will Bolster Its Representation Business

The $21 billion merger of the WWE and UFC will create a sports and entertainment powerhouse, but the companies do not expect to rest on their laurels, Endeavor president and COO Mark Shapiro says.

Speaking to The Hollywood Reporter on Monday after the deal was formally unveiled, Shapiro (who will serve as president and COO for both Endeavor and the combined UFC-WWE), says that the opportunity for expansion is significant.

Combining the UFC and WWE into one company will turbocharge the number of fights and events the firms produce, while also expanding the original content based on the fighters, personalities or live events (like Wrestlemania, which just wrapped from SoFi Stadium in Los Angeles this weekend, and which was also where the deal was hashed out).

The WWE has “Raw on USA, which is the highest rated show on cable television, so let’s start there. SmackDown is on broadcast, free to air, which is a big score for them. And then they smartly sold the WWE Network and over-the-top platform to Peacock for a billion dollars. And they do over 300 fights a year. So there’s a ton of volume that they profit from,” Shapiro says. “On the UFC side, we only do 42 fights a year, and the entire deal is locked up with The Walt Disney Co., so there’s an opportunity to expand the number of fights we do. And just as importantly, Fight Pass [a replay and library-focused UFC streaming offering] which is currently a DTC offering that we own, control and operate, there’s an opportunity to sell that as part of an overall media deal into a linear or streamer that’s looking not just to aggregate content, but aggregate networks.”

And beyond the fights, “from an original programming standpoint, we can launch entirely new franchises that puts the power of WME and the Endeavor flywheel behind all this,” Shapiro adds. “Ultimate Fighter [an ESPN+ reality competition series] has become a winner for us, the Contender series has become a winner for us, but we expect in this new combination to launch non-scripted shows, docs and films, more fights, more events and and a mess of social media.”

But the deal will also transform Endeavor, which had leaned on UFC to tell a growth story even as the talent agency WME served as the revenue backbone of the company. (Endeavor CEO Ari Emanuel will be CEO of both companies.)

Shapiro says that he and Emanuel have “extraordinary bandwidth” and will be “significantly involved in those areas we believe have the most opportunity to generate significant profit and profit potential” once the deal closes, even as Dana White continues to run the UFC and Nick Khan and Vince McMahon continue to run the WWE.

As for the logic in the combination, on CNBC on Monday morning, Emanuel said that he believed that neither the UFC nor the legacy Endeavor business was being fairly valued by Wall Street (the company values the UFC at $12 billion in the WWE deal, higher than Endeavor’s total market cap of $11 billion at market close on Friday), and expressed hope that by spinning it out both properties would benefit.

Shapiro tells THR that he thinks deal is “very exciting” for a current Endeavor shareholder.

“First of all, what Endeavor specializes in is the content, experiences and events driven by WME, IMG and On Location, a very attractive portfolio with very helpful margins, and most importantly, secular tailwinds behind each of those businesses,” Shapiro says. “On top of that, our debt will be lower. So Endeavor’s net leverage was 3.8 times, which I know everybody likes to write about. By the time this deal closes, we’ll be closer to two times. So a very healthy balance sheet to grow opportunistically or do dividends, share buyback, you name it. And then let’s not forget, Endeavor also benefits from having 51 percent ownership of newco.”

He adds that the talent agency will help take talent from the new company and get them new opportunities.

“WME incubates stars. Look at what we’ve done with John Cena, Ronda Rousey, The Rock,” Shapiro says. “I mean, these are tremendous names, tremendous talent, and we look to enhance their profiles every chance we get, and I think that that’s gonna be a wide open door for both of these properties.”

As it relates to rights negotiations, Shapiro says he believes Endeavor will be positioned to help the WWE in those talks.

“The WWE has their current deals with Comcast and Fox expiring at the end of ’24. And UFC of course, has our deal with The Walt Disney Company, expiring at the end of ’25. Now remember, nothing would preclude us from going early with those incumbents if we wanted to,” Shapiro says. “And at the same time, we retain optionality to go with the best buyer, best platform, biggest price somewhere, you know, over the next couple of years.”

“I think there’s there’s strong opportunity on the domestic front, and then I’ll remind you, which I don’t want to get lost in the shuffle: IMG Media plays a significant role here and that’s the benefit WWE gets coming into the Endeavor flywheel,” Shapiro adds. “IMG Media negotiates and distributes 150 Sports properties, everything from Wimbledon to the NFL, into 160 different countries around the world. So that kind of scale, leverage and the personal relationships we have on the ground country by country is a significant differentiator. So I think internationally, we have significant upside for WWE as they come into the fold here.”

And while the new company will be just WWE and UFC when the spinoff is expected to be completed later this year, when asked Shapiro leaves the door open to further M&A.

“We will absolutely — especially given our healthy balance sheet, cash flow generation and low debt multiple — be very opportunistic, so you can look at bolt-on [acquisitions] but you could also look at transformative [deals],” Shapiro says. “We’re gonna do what’s best for the shareholder. That could be dividends, share buybacks, but at the same time, if there’s another WWE that we come across on the market that fits into our flywheel, you can bet we’ll explore it.”