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If Netflix was a pro wrestling character, it would be cast in the role of heel.

The dominant video streamer announced on Tuesday that it had secured the broadcast rights for WWE’s flagship programme, Raw. It is set to pay TKO, WWE’s parent, $5bn over a decade. The Netflix deal will in effect make the streamer a landing page of various WWE content. The price is a steep increase over Raw’s current deal with Comcast’s USA Network.

More importantly, this marks Netflix’s plunge into pricey live programming, an area it had long eschewed. News and sports had been the only content that kept traditional “linear” television afloat as a business model. Of the 100 top-rated programmes in the US, National Football League games account for 90 per cent, for example.

Vince McMahon’s WWE is going to get its money. But the question is if Raw’s audience will comprehensively migrate to a pay-platform that charges at least $7 per month. After all, even as cord-cutting has chipped away at the pay TV audience, there are still some 50mn households paying for cable or satellite television.

There has long been a tipping point expected where streaming will in effect kill off traditional consumption. Netflix is betting that moment has arrived.

Netflix has struck the Raw deal from a position of relative strength. Its shares are well below the all-time high prices hit in 2021 but have more than doubled from its trough. Subscriber growth has returned as it has cracked down on password sharing. Its operating margin is now at 20 per cent on the back of its new value tier which includes advertising. 

Depending on the year, Netflix spends around $15bn on acquiring programming. It has avoided live sports both because of the high cost but also the technical and cultural challenges of combining streaming and sports. Buffering can ruin the viewer experience; streaming is still predominately thought of as an on-demand, not by appointment, service.

The taboo is fading fast. The NFL put a recent playoff game on NBC’s Peacock service that costs $6 per month. Fans grumbled but more than 20mn watched the game, a large number albeit smaller than a pure linear broadcast. Amazon Prime has also invested in Major League Baseball rights. 

Shares in TKO jumped by 15 per cent on Tuesday, implying a market value gain of $2bn. The National Basketball Association is the next major sports league looking to sign a new media contract. The hoops league will need to figure out the right mix of linear and streaming to keep viewers on board. But the WWE deal suggests the NBA could be set for a big win.

Lex is the FT’s flagship daily investment column. If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button “Add to myFT”, which appears at the top of this page above the headline

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