CNBC Thinks That WWE Could Potentially Be Sued By Stockholders

[Oldschool 0]

FIRST ARTICLE

 

 

http://www.cnbc.com/id/19307528

 

 

When the XFL blimp crashed into an Oakland waterfront restaurant in Jan. 2001, I had written it off as some foreboding accident. In the end, it might have been the best $2.5 million (the cost of the damage) World Wrestling Entertainment--and perhaps its partner, NBC–-spent. (NBC's parent company is GE which also owns CNBC)

 

But when you look a little bit deeper, it's pretty easy to understand. One, there was somehow a student pilot up there. I've heard of student drivers in cars, but not in planes and blimps. Secondly, it was the WWE for god sakes.

 

Well, just days after announcing they were overhauling their marketing strategy, WWE somehow came up with another idea to get attention in their battle with the likes of mixed martial arts. Fake their chairman's death.

 

Last Monday, after "Vince McMahon Appreciation Night," he stepped into a limo, which promptly exploded. WWE.com then announced that he was presumed dead since no body was recovered. The organization then went to YouTube and pulled the video, most likely to prevent some sort of video splicing analysis.

 

I have to admit, I thought it would never work. Maybe you could have done this 15 years ago when the Internet wasn't around, I reasoned, when you couldn't confirm that one major newspaper was reporting his death. But now you can do that. Now you can go to the local paper where the event happened--the Wilkes-Barre Times Leader--and see that despite the limo explosion no emergency vehicles were called, that the blowing up was actually filmed by a pyrotechnics company two days before in the middle of the night and they had permits to conduct the act. And despite the fact that the WWE said the FBI is investigating the accident, the paper also reported that the FBI was never involved.

 

But I was "dead" wrong. The total page views for June 12, the day after McMahon's "death" were 36.8 million with two million daily unique visitors. Now compare that to the WWE.com three month average of 14.3 million page views and one million unique visitors. Over the past week, there has been so much written about whether McMahon is dead or alive on wrestling message boards, that if you go to Google, you get 27,700 hits when you type in "Vince McMahon Dead." That prevents most people from finding out the real story.

 

Of course, the WWE is continuing with the plot. Last night at RAW, they carried on the mourning for Vince McMahon for the seventh straight day. His daughter Stephanie spoke. "While it was sometimes surprising, you have no idea how much it meant to me and my family," Stephanie said, according to WWE.com. "My dad wanted to leave this world the same way he lived in it, in the biggest way possible." McMahon then said that next week would be a celebration of her father's death and she vowed to find out who blew up her father's limo.

 

Now, let's go a little deeper. Is it a crime for the WWE to fake McMahon's death? I don't believe so. Because a police report wasn't filed and McMahon isn't creating any sort of phony documentation or cashing in on a life insurance policy, it doesn't seem like there's any exposure here.

 

But I still think there's a possibility the organization could be sued by a shareholder. By announcing that he is "presumed dead" on their official Web site, they could be charged with misleading stockholders. There's no evidence that a slew of people bought the McMahon news on Wall Street. As of Monday's close, WWE stock is down only 1.8 percent since the "accident." You'd think if McMahon really died, the thing would plummet. That being said, I think there could still be a claim.

 

SECOND ARTICLE

 

 

http://www.cnbc.com/id/19330600

 

 

Well folks, I’ve never thought I’d utter this phrase: I am a murder suspect. But, truth be told, I apparently am. This according to World Wrestling Entertainment, who gave me this statement when I called them yesterday to answer whether they were irresponsible in issuing a news release that “Mr. McMahon” was “presumed dead” after his limo was blown up last Monday.

 

Here’s what they sent me:

To date, World Wrestling Entertainment, Inc. has not received a single inquiry from a shareholder regarding the alleged demise of “Mr. McMahon.”

 

It is well known to our shareholders and our viewers that “Mr. McMahon” is a character portrayed by Vincent Kennedy McMahon, the founder and Chairman of World Wrestling Entertainment, Inc.

 

As far as speculation as to who may have committed this heinous act against “Mr. McMahon,” the WWE has not ruled out any suspects, including CNBC sports business reporter Darren Rovell. The WWE would like to thank CNBC for its concern over the “Mr. McMahon” mystery and we would like to remind your viewers to continue to tune into WWE’s Monday Night RAW, cable’s top rated program on USA Network (a division of NBCU), to keep abreast of the latest developments in this ongoing situation.

 

Now let’s go through this thing. As you can see, WWE is clearly differentiating between Vince McMahon, the chairman and the character. I’m not a hard core wrestling fan, but do all the shareholders and fans really know the difference between the two? I would bet not.

 

For help on whether the WWE would be exposed to a shareholder lawsuit, I turned to Michael McCann of the Mississippi College of Law and the great Sports Law Blog and Ira Lee Sorkin, who is a former SEC regional director.

 

Q: Was the WWE irresponsible in the way they communicated that “Mr. McMahon was presumed dead?

McCann: The basic rules that are at play here related to rule 10B5 of the Securities Exchange Act. It’s a rule that regulates the nature of information disclosed by a company and that regulates whether or not information provided to shareholders is conveyed in a way that’s honest, truthful and valid. Whether or not that rule is violated in this case would depend on the intent of the WWE and even if there wasn’t intent whether or not the behavior was reckless. Certainly the WWE has to be responsible in any communication it makes to the general public and particularly one that may affect the decision-making of its shareholders. And when the company makes a statement that is untrue, even one that’s a joke, it can affect the behavior of its shareholders in ways that may be disadvantageous to those shareholders and potentially in a way that could violate the law.

 

Sorkin: You have to ask yourself when does entertainment end and when does full and fair disclosure begin? At what point is it no longer entertainment? People invest their money in companies some companies make movies, some companies make jet engines, some companies are in the entertainment business. And Vince McMahon and the WWE have said for years since I guess the congressional hearings that they’re in the entertainment business. This is not a sport. It’s entertainment. Nevertheless, the loss of the driving force behind the company is not something to be laughed at or to be looked at lightly. It would have an impact.

 

Q: The fact that the WWE is the WWE -- does that buy them any leniency?

Sorkin: The SEC doesn’t look at the company and say, “This is entertainment and this company makes jet engines.” They’ve got an obligation under the securities laws to make accurate and fair and full disclosure of all material events. And if Vince McMahon is and has been for as long as I can remember the key to the WWE -- and before that the WWF -- then the loss of the chairman CEO and founder, someone who is the driving force behind the company, is certainly a material event which would have an impact on the shareholders.

 

McCann: Wrestling may be fake, but business and dealings are not fake. And investors are certainly not fake and money is certainly not fake. And while the product can be artificial and one that’s based on entertainment when people are dealing with their investments, they usually want certainty. They usually want some type of protection that the information that they are receiving from the company is valid and honest.

 

Q: The stock is only down 3.3 percent since “Mr. McMahon” was presumed dead. If Vince McMahon passed away, the stock likely would have been down double digits. What’s the chance that someone got confused and could allege that they suffered actual damages from trading on the information that they thought Vince McMahon, the person, was dead?

McCann: It’s a difficult claim. That even though we can look at the WWE and argue that there behavior wasn’t up to snuff in terms of what we would expect a company to do in this post-Enron, post Martha Stewart era, it’s still a hard claim to make because either intent needs to be shown or a lower threshold of recklessness that’s acknowledged in many courts.

 

Q: The WWE could say that a shareholder could have easily gone on the Internet and confirmed that Vince McMahon was still Chairman, that there wasn’t an 8-K filed. What’s wrong with that?

Sorkin: It’s not the responsibility of a shareholder to do research to determine whether there’s accuracy in reporting events of this magnitude. The burden is on the company in this instance to make the appropriate disclosure. Now you can make the argument that the WWE is more than entertainment, it’s a farce. It’s a comic book. But nevertheless, it’s a comic book that is required to abide by the federal securities laws to make the appropriate disclosure and where do you draw the line between saying the shareholders should know that this is just one big laugh, it’s one big joke - we’ve been like this for years - if a shareholder has invested their own money? It’s no joke to lose money.

[Vern Gagne 0]

Who would own WWE stock in the first place?

 

 

[Jingus 0]

Thousands and thousands of people. (Whom the WWE doesn't give a shit about.)

 

Technically, they did break the law by issuing all these false press reports. In practice? It's just rassling. Almost any judge who gets a suit over this is likely to immediately throw it out.

[The Tino Standard 0]

If WWE actually does get sued over this, knowing their *STELLAR* legal dept., they're f'd.

[Darth Vader 0]

Seems the biggest issue is reporting the death of Vince McMahon on WWE.com when it's clearly untrue. All they need to explain is that WWE.com is strictly for entertainment only. If you go to WWE's business website is mentions nothing at all about Vince being "dead" or anything regaurding his character. It's all really stupid, if we are going to force Vince to really say that he's alive and well why don't we make him say Steve Austin's a really good guy and he never had anything against him, or he has no problem with crippled one legged kids either.

[humanoid92 0]

This was one of my first thoughts when they did this angle. Not that they could be sued, but how are they going to have Vince make public appearances for anything after this (or at least while the angle is going on)? I know kayfabe is dead but it would still be strange to do a death angle and then have him show up to speak at a stockholders meeting three weeks later. I don't think they thought this one all the way through.

[Jingus 0]

Seems the biggest issue is reporting the death of Vince McMahon on WWE.com when it's clearly untrue. All they need to explain is that WWE.com is strictly for entertainment only. If you go to WWE's business website is mentions nothing at all about Vince being "dead" or anything regaurding his character. It's all really stupid, if we are going to force Vince to really say that he's alive and well why don't we make him say Steve Austin's a really good guy and he never had anything against him, or he has no problem with crippled one legged kids either.

It doesn't work that way, though, on Wall Street.

Sorkin: It’s not the responsibility of a shareholder to do research to determine whether there’s accuracy in reporting events of this magnitude. The burden is on the company in this instance to make the appropriate disclosure.

Like I said, according to the law, the WWE fucked up. Now we just gotta wait and find out if anyone important was pissed off.

[bob_barron 0]

If WWE actually does get sued over this, knowing their *STELLAR* legal dept., they're f'd.

 

Vince McMahon would be in jail if they didn't have a stellar legal department

[Prophet of Mike Zagurski 0]

Yeah, he isn't jail but the WWF stands for something else now.

[Hunter's Torn Quad 0]

Yeah, he isn't jail but the WWF stands for something else now.

That was Vince's fault, not his legal department. Vince was the one who decided to ignore the legally binding deal he made with the World Wildlife Fund.

[Mecca 0]

Seems the biggest issue is reporting the death of Vince McMahon on WWE.com when it's clearly untrue. All they need to explain is that WWE.com is strictly for entertainment only. If you go to WWE's business website is mentions nothing at all about Vince being "dead" or anything regaurding his character. It's all really stupid, if we are going to force Vince to really say that he's alive and well why don't we make him say Steve Austin's a really good guy and he never had anything against him, or he has no problem with crippled one legged kids either.

It doesn't work that way, though, on Wall Street.

Sorkin: It’s not the responsibility of a shareholder to do research to determine whether there’s accuracy in reporting events of this magnitude. The burden is on the company in this instance to make the appropriate disclosure.

Like I said, according to the law, the WWE fucked up. Now we just gotta wait and find out if anyone important was pissed off.

 

You're licking your chops eh?

[2GOLD 0]

So they basically could be in trouble because they didn't send a separate release to all their stockholders that Vince was really alive and well?

 

I think the company needs to realize they cannot hide behind the "we're entertainment" curtain when they make themselves a publicly trading company. They opened themselves up to new windows of greedy people who will want a cut of the pie if they get "swindled".

 

Odds are the drop was from people who didn't like the angle and became offended by it. I doubt it was from a group of people who really believed Vince was dead. But people see a chance to make a buck and can claim that the failure to alert them cost them money if the stock price begins to rise above where it was. Right now though, it's down so they made a profit from jumping ship. The only way I can see them getting hurt by this is if they run into a judge who plays it by the letter of the law and the WWE did not alert their stockholders about the truth of the situation. I cannot see them running into this problem though.

[Vern Gagne 0]

Seems the biggest issue is reporting the death of Vince McMahon on WWE.com when it's clearly untrue. All they need to explain is that WWE.com is strictly for entertainment only. If you go to WWE's business website is mentions nothing at all about Vince being "dead" or anything regaurding his character. It's all really stupid, if we are going to force Vince to really say that he's alive and well why don't we make him say Steve Austin's a really good guy and he never had anything against him, or he has no problem with crippled one legged kids either.

It doesn't work that way, though, on Wall Street.

Sorkin: It’s not the responsibility of a shareholder to do research to determine whether there’s accuracy in reporting events of this magnitude. The burden is on the company in this instance to make the appropriate disclosure.

Like I said, according to the law, the WWE fucked up. Now we just gotta wait and find out if anyone important was pissed off.

 

You're licking your chops eh?

 

No, Jingus is poor.

[MarvinisaLunatic 0]

There should be a stockholder out there somewhere thats a mark (IE believed it at first at least til they found out otherwise) and pissed off by this so much that they'd sue. I mean come on..this America..whoever it is would get a lot of media attention and become famous for 15 minutes.

[Prophet of Mike Zagurski 0]

I was talking to my dad, who is a shareholder.

 

He said only an idiot would sue. First of all, the corporate website doesn't mention his death. Neither has any of the press releases the company has put out. Go to finance.google.com and look up WWE. Second, the stock is doing fine. If a lawsuit were to occur , it would hurt the stock a lot.

[Hunter's Torn Quad 0]

I was talking to my dad, who is a shareholder.

 

He said only an idiot would sue. First of all, the corporate website doesn't mention his death. Neither has any of the press releases the company has put out. Go to finance.google.com and look up WWE. Second, the stock is doing fine. If a lawsuit were to occur , it would hurt the stock a lot.

Wall Street is not very fond of the Dead Mr. McMahon angle. The stock closed yesterday at $16.43. On June 11, before the angle, it opened at $17.85. In two weeks, the stock is down $1.42, 8%. That isn't good.

 

-PWInsider

[USC Wuz Robbed! 0]

It's not good but it's not a crippling blow. They do need to end it sooner than later though, before they do cross that line where it IS a crippling blow.

[Jingus 0]

You're licking your chops eh?

Hell no I don't own any stock in WWE. Firstly, like Vern said, I'm poor. And more importantly, who the fuck wants stock that's pretty much always been less than or equal to its value when it was originally issued? That's the definition of not serving your shareholders' interests.

[haVoc 0]

As a long time wrestling fan, I'm relieved to know that Wall Street is still happy with the product.

[Prophet of Mike Zagurski 0]

Most stocks (at least the ones I have) are down. The CNBC article said that it Vince was dead, the price would plummet further.

[Jingus 0]

Um, hello? "LESS THAN or equal to its original value"? As in, if you ever bought WWE stock, chances are that you paid more for it than it's worth now and made absolutely no money? In Wall Street terms, that's failure.

[EVIL~! alkeiper 0]

Like I said at another board, these people are not so much genuinely concerned stockholders as much as they are being obstructionists because they don't like a wrestling angle. They need to grow up.

[Prophet of Mike Zagurski 0]

When the WWF made it's IPO, it was originally sold at 17 dollars a share. It rose to 24 that day and then dropped. Even though the stock hasn't hit $24 per share in a long time, they give out good dividends.

[Jingus 0]

If it's so good, why's it at $16 now? Their highest value was their first day. It's steadily decreased ever since then.

 

Like I said at another board, these people are not so much genuinely concerned stockholders as much as they are being obstructionists because they don't like a wrestling angle. They need to grow up.

It's their company, literally. They definitely have the right to bitch about stuff they don't like.

[Prophet of Mike Zagurski 0]

A lot of people don't get into stocks for the dividends. Microsoft didn't give out dividends for twenty years. Google isn't giving out dividends and the stock is more than $400 per share. The stock isn't doing so well because of the overall market condition plus the fact that wrestling isn't booming as much as it was during the late 90's.

[Karc 0]

Suing WWE for this angle now would only prolong the angle.

 

The WWE.com thing, though, does interest me. There was a time when they put legitmate news on that site, but if the site is going to continue propagating worked stories, then it needs to put in its TOS that it is an entertainment site only and a work of fiction.

 

36 million hits on that website and a declining stock tell me that people are into the storyline, and not in a good way. Either they think it's real and believe WWE is doomed, or they know it's fake and are pissed. And a stockholder should be very concerned about that.