RE: For Only a Buck…

by , Jun 23, 2008 | 4:58 pm

As of the close of business today, you’ll get some change back. The price of WPT Enterprises stock has now dipped below the previous close of $1.00, and today it closed at $.98.

As the Bellagio Cup approaches for the start of Season VII, the one with no television broadcast deal, all eyes are on the World Poker Tour. Will Steve Lipscomb pull a rabbit out of his hat in the form of a TV contract? Or will the employees with resumes out in the field start leaving the company in mass-exodus fashion? The actions, or lack thereof, over the next few months will speak volumes.

One Comment to “RE: For Only a Buck…”

  1. olivert

    Both B-school and J-school students were taught to “follow the money”.

    Money is certainly one reason why GSN won’t be buying either WPT or HSP episodes for a while.


    I was asked on to do some research to basically answer the following question:

    How much EXTRA revenue can 1 hour of 1st-run poker programming air on GSN on Monday night prime time (during the 8-11pm window) produce compared to 1 hour of re-run poker programming on Monday night prime time?

    Based on my observation that only about 6 out of 20 30-second national advertising spots on GSN are filled with targeted scatter ads (priced at a premium rate) instead of “Run of Station” (ROS) ads (priced at a discount of nearly 50% compared to targeted ads) during 1st-run WPT Season 6 telecast on Monday nights,
    1 hour of 1st-run poker makes only about $7200 in extra revenue compared to 1 hour of re-run poker on GSN during Monday night prime time.

    $7200 (= 6 targets ads x $1200 in extra revenue per targeted ad in comparison to an ROS ad)

    High Stakes Poker commanded a rights fee on the order of $50,000 per hour.

    WPT charged GSN a whopping $150,000 per hour in rights fee for Season 6, or $6.9 million for 46 hours, before one accounts for the ratings bonus WPT is supposed to collect from GSN for exceeding 500,000 households per episode.

    You should now be able to understand why GSN can’t buy any more new poker shows for the time being.

    GSN makes more money (or more accurately, lose a lot less money in comparison to the red ink WPT Season 6 has produced for GSN) by re-running old poker shows that it had already paid for instead of paying for new shows.

    GSN is doing the same thing with Lingo: re-runs of Lingo make more money for GSN than 1st-run shows.

    (You will remember that ESPN Classic cancelled all original studio productions, and that ESPN2 got rid of both ESPN Hollywood and Quite Frankly with Stephen A. Smith in 2006 for basically the same reason: re-runs of other programming made more money or lost less money compared to 1st-run productions.)

    Even if GSN were to produce its own poker programming on the cheap, i.e. for $10,000 per episode, it would still make LESS money than to simply re-run HSP or WPT episodes until the re-run period on the rights fee contracts for both HSP and WPT Season 6 are over.

    By the time each WPT Season 6 episode has aired 3 times by the end of August 2008, GSN would be over $3 million in the red (if not closer to $4 million) on the WPT Season 6 deal.

    Even if GSN were to re-air WPT season 6 over and over again (i.e. on Saturday and Sunday evenings to fill “dead” air time), GSN won’t be able to dig out of that particular financial hole until the year 2010.