Shares of TKO Group (NYSE: TKO) are up 12.8% this week as of Thursday's close, according to data provided by S&P Global Market Intelligence. The parent company of World Wrestling Entertainment (WWE) and Ultimate Fighting Championship (UFC) announced a lucrative new long-term deal with Netflix(NASDAQ: NFLX) for its WWE Monday Night Raw program.
WWE scores a huge victory with Netflix
In a press release on Tuesday, TKO Group announced that starting in 2025, Netflix will become the exclusive new home of its flagship WWE Raw program in the U.S., Canada, U.K., and Latin America. Additional countries and regions will be added over time. Netflix will also house all WWE shows and specials outside the U.S., including SmackDown and NXT, as well as its premium live events such as WrestleMania, SummerSlam, and Royal Rumble.
The news was particularly exciting for investors, however, because Netflix has agreed to pay WWE around $500 million annually for the next decade. That's good for a total of over $5 billion. By contrast, WWE's current five-year contract with Comcast's NBCUniversal is reportedly worth between $250 million and $260 million per year.
Netflix also has the option to extend the deal for another 10 years or opt out after five years. The deal marks Netflix's single largest agreement in sports programming to date.
What's next for TKO Group investors?
If that wasn't enough, TKO Group also announced this week that former WWE wrestler Dwayne "The Rock" Johnson has joined its board of directors. Johnson will receive $30 million in stock-based compensation to promote the brand, with portions vesting between 2024 and 2025.
Investors won't see the fruits of TKO Group's more lucrative Netflix partnership materialize until it begins in 2025. But with Netflix's obvious vote of confidence in the company's future, the entertainment stock is understandably rallying in response.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool recommends Comcast and TKO Group Holdings. The Motley Fool has a disclosure policy.
