Ari Emanuel On M&A: Endeavor Won’t Use Its Stock To Buy Anything, UFC Parent Still In Debt-Reduction Mode

Endeavor CEO Ari Emanuel ruled out any stock deal right how and indicated reluctance to increase debt, both at a time when the UFC’s main rival, WWE, is up for sale.

“Here’s what I would say to you, I don’t talk about M&A,” he told a Morgan Stanley investor conference when asked about a potential acquisition of Word Wrestling Entertainment. Owner Vince McMahon is currently overseeing a strategic restructuring of WWE including a potential sale.

“We have taken the company from eight times levered to below four,” he said of Endeavor. “I am sleeping, because of that, four hours to eight hours. I’d sleep a lot more if I got it lower… We are going to take it a lot lower this year.” Deleveraging “is very high on the list” of priorities.

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Leverage is a ratio of debt to assets.

Emanuel also said definitively that, “Right now, we’re not going to use our equity for a transaction.”

“As relates to the WWE, I think it’s an incredible asset. We’ve been in business with Vince for over two decades. He’s as good as it gets. He created one of the great assets of all times,” he said.

Endeavor has been working its way out of a debt hole that came to a head in 2020 during Covid. It went public in April of 2021.

Most media stocks including Endeavor have seen a runup this year after a dismal 2022. Endeavor last week reported a solid fourth quarter and 2023 outlook. But the idea is that the company faces a so-called “complexity discount” with four divisions that investors may have trouble understanding as a whole. They are Owned Sports (UFC), Events, Experiences & Rights, and Representation. Betting will now be broken out as well. “We have been around a very short time. People are just trying to unpack the segments,” said Emanuel.

Comcast is seen as perhaps the likeliest buyer for WWE.

Addressing the drumbeat over media companies and studios scaling back on content spending, he shrugged off the impact on Endeavor’s representation business. “When they say they’re going to cut back, they’re going to do 25-day shoots instead of 30-day shoots,” he said. And “They’re not not paying Keanu Reeves or Mark Wahlberg or Matt Damon or Ben Affleck or Marty Scorsese. They’re paying those people. They have to figure out their cost-savings someplace else.”

Also, he noted, the biggest SVOD platforms are 2% of WME’s revenue and the movie and television business as a whole is less than 50% “of the economics inside WME,” which includes touring, theater, the lecture circuit, models, comedy, broadcasters and sports. “A lot of people have movies and television in their mind,” but, “It’s a very big business.”

“We monitor things every day,” he said.

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