World Wrestling Entertainment, Inc. (NYSE: WWE)‘s cornerstone television program, WWE Raw, recently drew its lowest non-holiday rating in nearly 20 years. The Nov. 23 episode of Raw averaged 2.95 million viewers, more than 200,000 fewer viewers than the show has drawn on any non-holiday since 1997.
And yet, onlookers may seem puzzled by the divergence between TV ratings and stock price, as WWE’s stock has surged 56.8% over the past year. If WWE’s popularity is falling off, why isn’t its share price dropping right along with it?
Raw isn’t alone
First, let’s take a look at just how bad Raw’s ratings have suffered in recent years. This first chart shows Raw’s average rating going all the way back to 1996.
As you can see, ratings peaked during the height of WWE’s “Attitude Era” in 2000 at over 6.0. Since that peak, ratings have consistently been on the decline all the way down below 3.0. The Nov. 23 episode did a 2.16 rating. Obviously, this trend is not heading in the right direction.
Many WWE fans have taken to social media and message boards to complain that the quality of the writing for Raw is the reason for the ratings decline. The very passionate and vocal online WWE community talks about how the current WWE creative team is running the business into the ground, and the plummeting ratings are their go-to evidence to support their opinions.
However, whether you love the product or hate the product, the reality is there is likely nothing that WWE could have done to prevent this decline.
Take a look at this graph of broadcast network prime-time TV ratings for viewers 18-49 since 2002.
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It’s not Raw that’s losing viewers – it’s TV in general.
From 2002 to 2011, prime time network ratings declined by more than 50 percent. The second graph of Nielson TV ratings shows that this trend has continued, and even picked up steam, since 2011.
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The Internet and on-demand TV, particularly Netflix Inc. (NASDAQ: NFLX), has been destroying the TV business and making traditional Nielson TV ratings less and less relevant for years now.
Yes, Raw’s ratings fell by 49% from 2002 to the recent 20-year low. But average prime-time network TV ratings have fallen much more than that during the same time period, indicating that Raw’s ratings have actually been relatively resilient compared to other prime-time programming.
The numbers that matter
If WWE doesn’t care about TV ratings, what does it care…
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