TKO Group investors disappointed with no Raw deal, says Citi

Citi keeps a Buy rating on TKO Group with a $125 price target after Comcast and WWE announced they reached a five-year U.S. media rights agreement bringing Smackdown to USA Network in Q4 of 2024. Press reports suggest a deal value of $1.4B, which implies a 1.4-times step-up from Smackdown’s current deal with Fox, the analyst tells investors in a research note. However, the deal could suggest Comcast’s payment for WWE rights would remain relatively flattish versus the current linear Raw contract, says Citi. It thinks investors may have been disappointed that Comcast only struck a deal for Smackdown, rather than Raw and Smackdown. Citi believes investors have imputed a step-down in WWE’s domestic Raw TV rights, from $265M under the prior content to $230M under the prospective contract, given the stock selloff on Thursday.