Breaking Kayfabe: An Inside Look at WWE’s Unlikely Business Empire

WWE is one of the most unlikely entertainment empires in US history, but CEO Vince McMahon’s ambitions and management style have left many wondering if the company can continue to grow.

by Ian Frisch
12 December 2016, 12:08pm

Photo by Cooper Neill

This past February, Vince McMahon, the chairman and CEO of World Wrestling Entertainment, hosted a segment on his weekly televised program Monday Night Raw to present the Vincent James McMahon Legacy of Excellence Award (named after his father, a wrestling man in his own right) to his daughter, Stephanie McMahon.

Wearing his trademark pinstriped suit, Vince, rigid-shouldered and gravel-voiced, stood in the ring and introduced Stephanie, who has worked for her father at WWE for nearly two decades and is currently the company's chief brand officer, as the award recipient. She made her entrance clad in a form-fitting, long-sleeved black dress, hands patched over her heart, lips curled in a modest, endearing smile.

She ducked the ropes and entered the ring. But before she could speak, music boomed through the loudspeakers and out came Shane McMahon, Vince's estranged son and Stephanie's big brother. Shane jived and backpedaled in a suit and high-top Nikes as his sister stood, mouth agape, next to their father.

Shane was a WWE executive, too, before he left the family business under shadowy and uncertain circumstances in 2009. He has claimed that he left to pursue other business ventures—"to do it on my own," as he told BuzzFeed in 2014—but two senior-level sources say that his resignation was at least partially due to a real-life power struggle with his father and sister. "There was always tension between Shane and Stephanie," a former senior-level executive, who spoke on the condition of anonymity, told me. "That tension hasn't gone away." Regardless of the reasons behind his departure, Shane had not been part of a WWE product—on television or otherwise—in the seven years since. Until now.

As Shane joined his father and sister in the ring, Vince went in for a hug. Shane held him at an arm's distance, shaking his head. The crowd roared.

"You and your husband, Triple H," Shane said, referring to Stephanie's spouse, Paul Levesque, a WWE executive and longtime wrestling personality, by his ring name, "have been really running this company into the ground. Let's take a few indicators. Let's look at the stock, let's look at ratings, let's look at the plethora of talent injuries. All under your watch"—he now looked to his father—"under your auspices"—and back to his sister—"down into the ground. Great job!"

"You're saying this in front of this packed house in Detroit, right?" Stephanie rebutted. "Because you don't know what it means to be a success, Shane. How could you? You're nothing more than a quitter." Her face pinched into a menacing, disgusted grimace. "Now get the hell out of my ring!"

Shane wet his lips. "Number one: It's your father's ring," he went on. "But one thing is for sure, Stephanie. I never lost my place in line." The storyline was gold. The crowd was drooling. "The only reason you were able to climb as far as you have thus far is because I let it happen."

And then Shane, with one hand condescendingly resting on his father's shoulder, dropped the all-too-familiar mantra that has been the foundation of WWE and the mindset of the man who runs it: "It was best for business."

Shane made his proposition: He wanted to regain positioning in his father's company by having complete control of Raw, which premiered in 1993 and is one of two weekly prime-time wrestling shows that have been the backbone of WWE since the 1980s.

"I'll give you what you want as long as you have one match, one night, against an opponent of my choosing," Vince said. Shane would wrestle, he specified, at WrestleMania, WWE's largest event of the year, which was less than two months away. "Your opponent is going to be ... The Undertaker!" Vince boomed. "And the match will be"—he leaned toward his son, his voice like grinding stones—"in Hell in a Cell!" The crowd peeled open, swelling to eruption like a rapidly inflating balloon.

Members of the McMahon family are known largely by the fictionalized versions of themselves that populate WWE angles. (Linda McMahon, a former CEO and Vince's wife, has more recently been in the news as President-elect Donald Trump's pick to lead the Small Business Administration.) But with Shane's on-camera monologue, tendrils of fact had eerily woven themselves into the storyline. It's true that WWE has changed in dramatic ways, for better or worse, since his departure in 2009. Someone on the outside looking in—especially someone as familiar with the company as Shane—could view some of these changes as failures. What is indisputably true is that the company has undertaken an incredible push for expansion, morphing from a well-regarded (albeit slightly vulgar) television program into a multifaceted, billion-dollar entertainment juggernaut, anchored now by its largest shift on how content reaches spectators: WWE Network, an international, over-the-top streaming service.

At the wheel of it all is Vince McMahon, who has built one of the most powerful—and unlikely—empires in entertainment history; no other wrestling promotion comes anywhere close. Vince's ambition made WWE what it is today, but now, at a time of incredible industry upheaval, it's the thing that may threaten his company most.

"It would be great if this world takeover and grandiose expansion paralleled other great television ventures," said Brian Gewirtz, a former lead writer for Raw who worked at WWE from 1999 to 2015. "All that ambition is great, but it can't be the goal in and of itself."

In recent years, WWE has discovered that its position is rather vulnerable amid the tumultuous uncertainty of new media. It's no longer about a wrestling family putting out a product for wrestling fans. They may still be the only game in town, but the rules of the game have changed.

WWE's popularity—and pro wrestling's appeal in general—is easily explained. There's drama and storytelling, there's risk of bodily harm, there's the eternal battle between good and evil. "If we are doing our jobs right and we are telling a compelling story, you'll be enthralled, you'll be caught up in that story," Stephanie McMahon told me at WrestleMania 32 in Texas last April. And she's right. According to documents submitted to the Securities and Exchange Commission, WWE enthralled more than 2 million live-event spectators in 2015.

Wrestling had always been a spectator sport—the smell of sweat in a small-town gymnasium, the cheap popcorn, the voice in your head saying, Is that real?—but Vince McMahon had grander visions for WWE when he took the company over from his father in 1982. (The promotion was called the World Wrestling Federation, or the WWF, until 2002, when a lawsuit by the World Wildlife Fund forced the company to change its name.)

Under Vince, WWE, which was founded largely as a regional affair, with promoters having territorial boundaries, began its transformation from sideshow spectacle to mainstream juggernaut. By 1984, he had found his formula: By injecting glitzy, good-guy personas like Hulk Hogan in the ring, and aligning himself with pop-culture icons who could connect with a general audience (he had Muhammad Ali fight at the first WrestleMania, in 1985; Joan Rivers announce the second; and Aretha Franklin sing during the third), his programming quickly surpassed college basketball in ratings and garnered critical acclaim.

For much-hyped events like WrestleMania, Vince implemented the pay-per-view structure, using a yearlong lead-up of weekly performances on cable television to persuade at-home spectators to shell out $50 or more for one specialized extravaganza. This business model formed the foundation of how people interacted with wrestling, and also created a significant revenue stream for the company. McMahon was at the forefront of the pay-per-view craze, and what started out as two exclusive events per year quickly expanded to more than a dozen by the mid-90s.

By that time, wrestling had become ingrained in American culture, with rival factions rising up alongside WWE. World Championship Wrestling (WCW) had grown in popularity in the 1990s and, by 1995, had its own show, Monday Nitro, which competed against McMahon's Monday Night Raw. It didn't help WWE's cause that some of their talent, including Hulk Hogan, had made the switch over to WCW, bolstering the circuit's image, which was decidedly more bad-boy and aggressive than that of the WWE. If McMahon was going to continue to sit in the driver's seat, his family-friendly, babyface-based programming needed a makeover.

WWE was already borrowing ideas from WCW, including more surprising storylines and a focus on crowd reaction. McMahon quickly realized that in a live performance like wrestling, the people in the stands are a crucial component. They play, to some extent, an even greater role than what's going on in the ring. "You really have to be engaged with the audience at all times," John Cena told me at WrestleMania 32. "You can't go out there and just perform and not pay attention to them."

In 1997, WWE entered the Attitude Era, which today garners as much nostalgia as the sport's golden age. With outlandish characters like Stone Cold Steve Austin, Triple H, and The Rock—not to mention using women as catty, over-sexualized storyline props—WWE pulled ahead as the nation's archetype of wrestling entertainment and culture. "This is a conscious effort on our part to open the creative envelope, so to speak, in order to entertain you in a more contemporary manner," Vince McMahon said while introducing the era to Raw viewers that December. "We in [WWE] think that you, the audience, are quite frankly tired of having your intelligence insulted."

Personalities with mainstream appeal like Dwayne "The Rock" Johnson helped WWE reach new heights in popularity. Photo by Cooper Neill

But by 2002, with its anti-heroes aging, WWE struggled. Their stock was trading in the single digits, down from $24 per share in 1999, when the company first went public. They needed a change. As the aughts pushed on and new stars like John Cena became the face of the company, WWE shifted its expansion strategy, focusing on family-friendly content to corral a wider customer base.

Soon enough, business was hitting its stride. In 2010, AdAge named WWE a hot brand poised for continued growth. The article read, "The lighter touch has also caught the eye of Hollywood, with 'Raw' doubling as a talk-show-like vehicle. Celebrities including Donald Trump, Toby Keith, Jeremy Piven, Snoop Dogg and Ashton Kutcher have stepped into the ring to promote their projects."

"After the PG brand push, numerous sponsors then came on board," Rob Zimmerman, WWE's former senior vice-president of public affairs, told me, adding that big-name corporations like PepsiCo were now down to do business with WWE. "In [consumer] products, we expanded over 250 percent," said Donna Goldsmith, who was WWE's chief operating officer from 2008 to 2011 who got her start at the company in 2001 overseeing consumer products. "We cut a worldwide deal with Topps and Mattel, and book deals with Simon & Schuster and HarperCollins on the publishing front."

While Goldsmith said that overall she had a positive experience at the company, where she had worked since 2001, reporting directly to Vince as COO took its toll. "I had zero, nothing, no life at all," she told me. "I was having less of an impact on business initiatives. I started feeling more and more marginalized and feeling more stressed. And [Vince] wasn't happy with me anymore." After her departure in 2011, Vince removed the COO role at the company.

It was also during the upswing from the PG era that Shane McMahon left the company. "When Shane left it was a very sad day," said Sally Presutto, who oversaw live events for the company for over two decades. "I thought he was a very fair and honest person to work for." WWE declined to comment on the nature of his departure, and Shane did not respond to repeated requests for comment. After his exit, his sister Stephanie gained a more centralized, visible role as the public face of the brand.

In 2011, Stephanie was promoted to executive vice-president of creative, where she oversaw character and storylines—the backbone of WWE's core product. To other employees in that area of the company, her new title was a strange if not altogether inaccurate label. "We never ran scripts by Stephanie, we never went to her with an idea," a former employee in the creative department told me. "She never sat in on production meetings. She didn't go on the road unless it was a pay-per-view, [when she went] to glad-hand."

According to former lead writer Brian Gewirtz, who left WWE in 2015 to work as a senior vice-president at Dwayne "The Rock" Johnson's Seven Bucks Productions, Stephanie served as more of a buffer than anything else. "Stephanie's role in creative was always that of a management position," he told me. "She was the conduit between the writers and Vince."

In 2013, after two years in creative, Stephanie was given the title of chief brand officer, making her more explicitly a face of the company. Gewirtz insisted that the move was not because of infighting. "It's a great narrative to say that father and daughter were clashing, but it wasn't the case, because she wasn't writing anything," he told me. To other employees, the role seemed better suited to Stephanie. "Vince loves having her as a strong female presence, to put a face on the company," a former senior-level executive told me. "But he never really wanted her involved in the writing process."

The same year she was promoted to CBO, Stephanie celebrated her ten-year wedding anniversary to Paul Levesque, also known by his wrestling moniker Triple H (during the Attitude Era he was part of D Generation X, whose catchphrase "Suck it" and accompanying hand gesture became extremely popular). Levesque had cemented his place at the corporation in 2010 as the head of the talent department. He was tasked mainly with recruiting new wrestlers and devising ways to fold them into pre-existing storylines.

Shortly after Levesque became a figure behind the scenes, he devised a plan to reinvigorate the brand and its offerings. Ratings for Raw and SmackDown were slumping; the company's stock had fallen by more than half between 2010 and 2012, hitting a new low and costing the McMahons millions.

In 2012, Levesque helped launch NXT, which is basically the WWE's minor league feeder system—a more rough-around-the-edges extension of WWE that borrows its branding, production, and color from small-time indie wrestling circuits. It gives fans an opportunity to follow another set of performers and present an added element of their trajectory as wrestlers. "There is a long list of NXT performers that are carrying the brand and we are constantly recruiting athletes and entertainers from all around the world as current NXT Superstars move to Raw or SmackDown," Levesque told me by email.

"It was a faster and younger product that could operate differently," Bill Behrens, a wrestling agent, told me. Levesque allowed wrestlers signed to NXT to keep their personas from other circuits rather than re-branding them in WWE's image. "They used that to grow their audience. These guys already had a trademark in the scene," Behrens said.

These trademarks also allowed NXT wrestlers to negotiate better contracts, some reaching into the six figures. More popular wrestlers, like Finn Balor, make appearances on main-roster programming while simultaneously acting as a figurehead for the burgeoning WWE circuit, an endeavor that has proved a success for the corporation. "NXT has become WWE's third global brand alongside Raw and SmackDown," Levesque said, adding that NXT content is some of the highest-viewed on their digital outlets.

There was even a NXT championship event in Dallas as a precursor to WrestleMania 32. The fans at the event were vocal and passionate, with the arena packing nearly 10,000 spectators. "They are bringing indie wrestling fans into the WWE corporate world in a good way," a fan told me as we watched the show. Stephanie McMahon sat in the front row, cheering on the next generation of WWE talent.

NXT has become a wildly popular feeder league for WWE. Photo by Cooper Neill

The NXT event was associated with Axxess, a multi-day fan convention that leads up to WrestleMania every year. I saw fans from all walks of life there: streetwear-savvy youngsters with designer jeans and slick haircuts; frat bros in oversized button-up shirts and ball-caps from their alma mater; hipsters donning skinny jeans and mustaches; local dudes who work in Dallas's booming tech scene (the khakis, wire-rim glasses, and department-store shoes were a give-away); a Muslim couple, him with a bushy beard and her in a hijab; a Sikh family with three rambunctious kids; and many more. You saw men, women, Whites, Asians, Blacks, Hispanics, Europeans, children, elders, disabled fans, people from the coastal cities and others from middle America.

Children, who comprised a large chunk of those walking around, appeared drawn to the accessibility and relatability of the NXT roster. At the front of the line of fans waiting to enter Axxess, a young girl named Katie from Wausau, Wisconsin, stood patiently with her parents. The nine-year-old had gotten into wrestling a few years ago, and her parents had planned the trip to Dallas as a Christmas present. She dressed up as her favorite wrestler, Bayley, a former NXT staple (she was bumped up to the Raw main roster in July) known for her costume's frilly accents—purple streamers dangling from her wrists—and her good-girl attitude.

"I got to meet her last year," Katie told me, clutching her imitation Divas Championship belt. Recently, Bayley had a match scheduled outside of Green Bay, and Katie's parents brought her to watch. Before the event, Bayley mingled with fans. She saw Katie in full regalia, and crouched down next to her.

"If you're going to wear a shirt," Bayley told her, "you gotta have the new one, sister." She handed Katie the new shirt—which Katie was wearing at Axxess—and posed with her for a photograph. "I love her because she doesn't give up," Katie told me. Her mother reached into her purse and pulled out a print of the photograph. "I want her to sign it for me," Katie said, smiling. "I hope I get to meet her again."

NXT has always been Levesque's project, and, being wholly separated from the flagship programs Raw and SmackDown, it may also give him some autonomy within the company.

Being in charge of new talent gives Levesque an opportunity to implement his vision outside of the writer's room. "Paul can't control the main product the way he wants to. Vince wins in the end," a former senior-level executive told me. "NXT gave Paul his baby because Vince can't oversee everything."

"Differing points of view oftentimes help drive the best results," Levesque told me, referencing Vince. "While there are times people across the organization have different opinions on a topic, what we do well is collectively execute once a decision is made." He added, "Vince has been, and continues to be, very supportive of NXT. The fact the he continues to promote performers from NXT to Raw and SmackDown is a clear sign of his support."

But Levesque's vision of what a performer should be doesn't always correlate with what the corporation needs to keep ratings up and money coming in. "He's an old-school guy—a true wrestler," the same senior-level executive told me. "But look at the ratings. Where are the stars? Smart marks love these characters, but that's not the audience that drives a giant business."

Former head writer Brian Gewirtz echoes this sentiment. "If you don't have a compelling character, it doesn't matter how good the match is athletically," he said. "You'll just have people sitting on their hands, waiting until it's over."

Despite the criticism, much of what is seen on Raw and SmackDown these days, and what sells WWE as a brand, is due in part to NXT. "We look for people we can turn into stars but there is no set formula to follow. My job is to find individuals with athletic ability and charisma and then determine what pieces of the puzzle are missing to help turn them into stars that can succeed at the highest level," Levesque told me. "We have a good track record as more than half of our current WWE roster has come up through our developmental system."

WWE has always staked a lot on WrestleMania. It's the corporation's largest moneymaking event of the year, bringing in tens of millions of dollars over the course of a single weekend. It has also proved to be a pivotal point for setting the brand's trajectory for the year to come. It's the perfect platform for the corporation to latch onto the dedication of current fans, the nostalgia of lapsed followers, and the curiosity of new demographics.

But this year's WrestleMania was especially important. WWE Network, the company's over-the-top digital streaming service, was coming into its second year. After a rocky start in 2014 (which forced the company to take a $42.2 million operating loss for the year), it had become WWE's second most profitable venture, contributing $159.4 million of the record $658.8 million in revenue for 2015. WWE execs wanted to use WrestleMania 32 to boost subscribers, by offering a free trial period for the event and hoping viewers would stick around when the payments kicked in.

The event itself was going to be held at the Dallas Cowboys' massive AT&T Stadium on April 3, 2016. With Dwayne "The Rock" Johnson on the bill, Vince McMahon had been boasting that it would break not only the all-time WrestleMania attendance record (which had stood at 93,173 since WrestleMania III, in 1987) but the all-time attendance record for any indoor sporting event in the country's history. To him, there was no way they couldn't hit a number north of 100,000.

WrestleMania 32 came and went. ESPN, Forbes, Bleacher Report, the New York Times all reported that the attendance record had been set. Vince's showmanship during the lead-up to his flagship event—including thrusting his son back into the spotlight—seemed to have paid off. According to the official WWE press release, 101,763 people attended WrestleMania 32 at AT&T Stadium. More important than the number itself was the fact that every major news outlet was talking about it. WWE was, it seemed, unstoppable in its growth as a stadium-filling entertainment behemoth.

Shane McMahon launches himself off the top of a steel cage during his match against the Undertaker at WrestleMania 32. Photo by Cooper Neill

But, on July 28, three and a half months after WrestleMania 32, WWE released its quarterly report—a mandatory, all-encompassing document that lets the Security Exchange Commission, shareholders, and the public know how the company is functioning, both logistically and financially. An analysis of the report shows that WrestleMania 32 attendance was not, in fact, the 101,763 figure that WWE had been throwing around. It wasn't even in the six figures. According to the documents, the actual paid live attendance for the event was between 74,000 and 86,000. "As long as they don't lie about the financials, they aren't committing fraud," said Chris Harrington, an independent WWE business analyst.

WWE has been doing this for years. There is a discrepancy between attendance numbers submitted to the SEC and those touted in press releases for every single WrestleMania dating back to at least 2008, with an average inflation of about 15,000 spectators. And in 2001, respected wrestling journalist Dave Meltzer, writing for his publication Wrestling Observer Newsletter, reported that numbers for WrestleMania III, the event's previous longstanding record, were knowingly fudged. WWE boosted the numbers by more than 13,000 spectators. Meltzer claimed that Vince told him as much—that the numbers shown on television are for "entertainment purposes only."

Inflating attendance numbers exemplifies Vince's approach to the business, doing whatever it takes to maintain a certain image. Moreover, it continues to blur the line between WWE as a real-life, publicly traded corporation and the WWE that exists as it appears on television. Much like how Vince has created a fictionalized version of his family, he seems to have done the same with his company.

Vince McMahon exerts controls over just about every aspect of WWE. "It is an insular company run by Vince McMahon," a former executive told me. Multiple sources echoed this sentiment, saying that it was common for Vince to change his mind about show scripts and storylines on a dime, and to run the company with an unpredictable iron fist, using fear and intimidation to keep executives in line. "He takes great lip service to wanting new ideas, but he doesn't value or respect outside opinion," the source said. "It's his way or no way. Vince's philosophy, which is hysterical, is 'Every day is your first day on the job.' That's not a philosophy to run a company, but a rationalization for Vince to change his mind whenever he wants."

"You can't commit anything to paper there because with Vince it can change so fast," a former senior-level executive told me. "There's no overriding strategic vision—just put it in there and see what happens. It's frustrating for the writing staff."

A normal week for the writing team at WWE goes like this: The writers, let's say for Monday Night Raw, come up with ideas and lay out the upcoming week's show, which includes 16 segments over three hours. It's pitched to Vince on Thursday or Friday. He gives his feedback, adjustments are made over the weekend (writers are known to stay in the office until at least midnight), and then, during a meeting on Monday, he gives the final sign-off—or changes his mind. "Sometimes a script will change in production meetings the day of the show," said David Kreizman, a former head writer who resigned in 2013 after just four months at WWE. "Vince gets in there and reads the script aloud and sometimes will change his mind in that moment. Big-picture discussions don't really happen."

It's unwise to battle Vince about script changes. "It can get you in trouble if you take a fight to Vince," said Brian Gewirtz. "You need to be careful in how you speak your mind and not to get carried away. He urges people to say their opinions but ultimately he makes the decision."

In many respects, Vince still operates his billion-dollar company as if he were still promoting a regional wrestling circuit, which is certainly uncommon for an organization of WWE's size. "All Vince cares about is that night's show—not 15 weeks later, like how all other television shows work," a former senior-level executive said. "That's why you see astute followers pulling their hair out. There's no guiding principle other than that Vince is a carnival barker—a promoter of a live event product."

Paul Levesque told me that this is just the nature of the business. "The amount of variables that exist in producing live shows are endless and one change can impact the entire show or a story arc," he said. "Storylines change because it is live, 52 weeks a year. Hollywood studios can stop film production if an actor goes down. We adjust storylines as the show must go on."

A few years ago, as Levesque was gearing up to launch NXT, ratings were down and Vince was on edge. The writing room became a battlefield, and even people outside of the company took notice, including Shane McMahon. In March 2012, Vince, according to a source familiar with the exchange, called a surprise meeting at the WWE production office, a separate facility from the main headquarters in Stamford, Connecticut. Shane had returned with a friend: James Frey, the author of the critically acclaimed and, later, highly controversial A Million Little Pieces and by that time the CEO of Full Fathom Five, a content creation company he founded in 2010.

(A spokesperson for WWE originally denied that Shane had approached WWE in any capacity between 2009 and 2016, but later confirmed that this meeting took place when asked about this exchange specifically.)

"When Stephanie found out Shane was going to be there, she went white in the face," the source told me. "And Paul freaked out." Shane had set up the meeting through Kevin Dunn, WWE's executive vice-president of production and Vince's right-hand man for nearly three decades; he is the second-highest-paid employee at the company behind Vince (according to SEC documents, Dunn's 2016 base salary is $909,560). Shane had a simple proposal: that he take over all of creative, including the writer's room, with Frey and his team at Full Fathom Five as consultants.

"Kevin Dunn is very close to Shane," the source said. "And there's tremendous tension between Kevin, and Paul and Stephanie. They feel like the company is theirs, but they don't have power to control Kevin." Presumably, if Dunn could figure out a way to get Shane back in the company in a high-ranking position, he would have even more influence with Vince. And Shane, too, could regain control over at least a portion of his family's legacy. It was a win-win for the pair.

In the end, however, Vince declined his son's offer. It would be four more years before Shane found himself on the inside of the company again. In the meantime, WWE would go through major changes internally as it continued its transformation from a TV-only wrestling outfit to a digital-forward entertainment super-corporation.

During its formative years, WWE was run by wrestling people, for wrestling people. That's all it needed to succeed. But as Vince McMahon's vision for the company expanded—wanting WWE to be an all-encompassing entertainment outlet, a household name for the everyday watcher, a cavalcade of content fueled by an over-the-top network—he looked outside the wrestling world and sought to fill the senior levels of his organization with more traditional television experience.

In 2012, Vince hired Eric Pankowski, a former executive at Reveille and Warner Bros., to work with Paul Levesque and Stephanie McMahon as senior vice-president of creative and development, and Perkins Miller, former COO of Universal Sports, as executive vice-president of digital media. The following year saw the hirings of Emmy Award-winning television producer Eddie Feldmann, and Matthew Singerman, a former consultant for the NFL Network, was brought on as EVP of programming, a role created for the launch of WWE Network. David Kreizman, who previously wrote award-winning scripts for General Hospital, All My Children, and As the World Turns, joined the creative team, as did writer Adam Rudman, who previously worked on children's cartoons. In 2014, Lou Schwartz, a former technology entrepreneur, became the Chief Digital Officer.

None of these new hires lasted more than 18 months. (One exception to this trend was Will Staeger, a former executive at ESPN and Dick Clark Productions, who lasted nearly three years as WWE's EVP of TV production, where he worked with Kevin Dunn, from February 2012 to November 2014.)

"Outside people will get killed unless they totally conform to what Vince wants—it's impossible to do that," said one former senior-level executive. "Vince, Paul, and Stephanie will blame everyone else for their own missteps. That's why no creative executive can last there. You are treated like a commodity—just a barrel of corn. You are only a piece of talent, cultivated and developed, until they need to blame you and fire you and bring someone else in. They like the appearance of hiring people from outside the wrestling industry, but it in the end it's still Vince making all the decisions."

Even veteran WWE employees were shown no mercy during this tumultuous run. A lot was at stake. No one was safe. "I came into work one day and my services were no longer needed," Sally Presutto, the former senior director of events, told me. "Vince, Stephanie—they never spoke to me directly. I was very hurt. After 23 years, with no explanation—that's the end of that. People that have proven to be loyal and dedicated seem to be let go. That's how they do things around there sometimes."

Vince McMahon, Paul Levesque (Triple H), and Stephanie McMahon are the three public faces of the company. Photos via WikiMedia Commons (Vince), by Cooper Neill (Levesque and Stephanie)

The three-year run of high-level shakeups was capped by a curious if not shocking promotion. In January 2015, Lisa Fox Lee, who had held senior-level positions in sales, television programming, and content delivery, was named executive vice-president of content, a newly formed role overseeing the company's creative products across all platforms, including WWE Network. Lee would report directly to Vince.

Despite her lack of experience in the creative sphere, Vince touted her WWE bona fides in an internal, company-wide memo dated January 26, 2015, which was obtained by VICE Sports. "Lisa has more than 19 years experience with WWE," Vince wrote. "She is uniquely qualified for this important and impactful position, and Lisa's extensive knowledge of WWE and her experience across multiple departments will prove invaluable in this new role." The memo also stated that the creative writing team would move under Lee, with Vince and Levesque retaining creative oversight. But Levesque denied this when asked by VICE Sports. "As EVP, Content, Lisa oversaw the development and distribution of WWE content," he wrote in an email. "All Creative continued to run through Vince and me."

Only six months into her tenure as EVP of content, Lee was abruptly fired.

To many employees, it all simply comes down to Vince's leadership style. "First, you're the second coming of Christ and Vince loves you," a former senior-level executive with nearly a decade of experience at the company told me. "Then, over time, he decides you are a moron and he can't get wait to get rid of you. It's a slow, painful death. I don't know if he's so smart and savvy and he just enjoys the sport of doing that, or if that is unconscious, but it has happened so many times. It really damages people, what they experience there."

Outside of McMahon family members like Stephanie and Paul Levesque, only three high-ranking executives seemed to hold on to their jobs during this tumultuous period: Kevin Dunn, the executive vice-president of television production; Michelle Wilson, WWE's chief revenue officer; and George Barrios, the chief strategy and financial officer. Arguably the toughest of those years was 2014, with Wilson and Barrios, in particular, playing key roles as the company prepared to go live with WWE Network while also negotiating new deals for its prime-time cable programs.

WWE Network had its much-anticipated launch in the United States that February. By the time WrestleMania 30 rolled around in April, however, the company reported that the online network had only 667,287 subscribers—far short of the 1 million executives had said they would need to hit in order to break even monetarily.

"It shocked people—stunned the market," said analyst Chris Harrington. That August, WWE rolled out the network to a laundry list of 160 countries a full four months ahead of schedule. "It was all in English—no translation at all," Harrington said. "There was no country-by-country specialization, and everywhere had the same [market price of $9.99]. That move showed their desperation."

Meanwhile, WWE's domestic television contract with NBCUniversal was up for renewal just a few weeks after WrestleMania. Despite some concerns that a new online streaming network might eat into the company's other revenue streams, Vince had been promising shareholders that a new television-rights deal would at least double the fees commanded by Raw, SmackDown, and the female-wrestler-driven reality show Total Divas ("You can put me in a hammerlock if we don't," he said during one presentation in 2013). WWE compared its viability to that of NASCAR, which had just signed a ten-year, $8.2 billion deal with Fox and NBC.

On May 15, WWE announced that it had reached a new agreement with NBCUniversal: roughly $813 million over four years, with a total escalation of $105 million from 2015 to 2019—starting at $175 million in 2015 and going up from there. While the new deal represented an increase from the $115 million earned by Raw, SmackDown, and Total Divas in 2014, it wasn't the double that Vince had promised.

After the announcement, WWE's stock dropped a whopping 43 percent basically overnight (Vince himself lost a reported $357 million), and the company was forced to lay off seven percent of the workforce to save money. In a conference call, Vince admitted that the launch of WWE Network earlier that year "definitely had a negative impact" on its negotiations with cable networks. "That was part of a lighter number in terms of television rights. That's a fair thing to say."

The stock seemed to stabilize a bit in August of 2014, but has mostly fluctuated since.

Image via Google Finance

Despite his boss's admissions, Barrios told me that there "is very little competition among the content," referring to the various platforms—the online network, the three television shows, and other digital outlets such as YouTube. WWE Network subscribers cannot watch Raw or SmackDown live, as if their computer were a television, because NBCUniversal has exclusive rights to those show for 30 days after they originally air.

"The important thing is that different content lives on different platforms," Barrios explained, adding that the most popular content on WWE Network are pay-per-view events, which stream live and are subsequently archived. Wilson added, "They weren't bidding on anything that they didn't have access to already."

The bigger problem for outsiders, however, is trust. "In general, WWE investors remain highly skeptical of management," analyst Brad Safalow told the Los Angeles Times after the deal was announced, "Over the past 5-6 weeks the company's initial network subscriber numbers and the mark to market on the domestic TV rights both fell short of expectations." Safalow added, "Investors are left with a feeling that the company consistently over-promises and underdelivers."

"The leadership for the network has been a mess," Harrington said. "What has happened time and time again is that someone is put in charge of the network"—most recently, Lisa Fox Lee—"and then that person is quietly fired."

So who's in charge now? "I think some could argue that George [Barrios] and I co-lead the network," Michelle Wilson told me. "Ultimately George and I obviously report to Vince [McMahon]."

Two years later, WWE Network is making money. According to this year's second quarterly statement, WWE had 1.51 million paid network subscribers (up from 1.156 million at the end of 2015), and took in just over $92 million in revenue during the first half of this year—on track to surpass 2015's annual revenue of $159.4 million. With a cash stream of $54 per subscriber, the highest of the company's content platforms, WWE Network is being portrayed as the future of WWE—but this picture overlooks a push for digital expansion that is more complex and more uneven.

To see whether WWE Network is making a profit, you need to look at the company's OIBDA (for "operating income before depreciation and amortization"). And while the network's revenue has risen, its operating income actually went down by $5.6 million, from $15.8 million during the first six months of 2015 to $10.1 million for the first six months of 2016. WWE even claimed a net loss of $5.7 million for the second quarter of 2016, due to a free-trial promotion for WrestleMania. Instead of buying the event on pay-per-view, fans just signed up to the network and watched for free.

Even without the free trials, for the $9.99 monthly fee, fans are essentially able to bypass the $50 price tag of buying a single pay-per-view event outright, while also getting other types of exclusive content. "They are selling a service for $10 a pop that they were able to charge $50 for in the past," Chris Harrington said. "They didn't get five times more people to cover that [monetary difference]; they just added [internal] costs in order to operate the network."

Trend schedule from the SEC filing showing that WWE Network lost money in Q2 2016.

Because the profit margin of the network is only in the 10 percent range, WWE needs to boost their subscriber numbers just to survive, let alone sustain growth and keep shareholders happy. "If you get more TV viewers, WWE gets the same amount of money. If you get more network subscribers, WWE gets more money," Harrington told me. "That's a great thing, but the challenge is, where do all these added subscribers come from, especially if TV ratings keep falling?"

Another way to gauge WWE Network's progress is the "churn" numbers, or how many people terminate the service after signing up. For the second quarter of 2016, WWE gained 625,000 total subscribers, but lost 471,000, giving them a net addition of only 153,000.

I was curious to know the total churn numbers since the network's inception. "We don't give those numbers out publicly," George Barrios told me, but according to documents submitted to the SEC, WWE Network has amassed 4,587,000 total accounts since launching in 2014, while 3,076,000 accounts have left the service (leaving us with the current number of active accounts: 1,511,000). That means that 67 percent of accounts that were created were eventually canceled (I refer to them as "accounts" rather than "subscribers" because theoretically one person could sign up and bail more than once, thus skewing the metrics).

This is a clearer indication of consumer satisfaction (especially in regards to the quality of the content) than merely boasting about the increase in revenue and the current number of subscribers. Despite the remarkable rate at which subscribers leave the service, WWE claims its network has a 90 percent satisfaction rate.

There is another metric, called over-churn, which is basically "win-backs" of fans who left the network but ended up returning. WWE claims in quarterly reports that its potential digital market is 159 million households, 61 million of which are former followers; wrangling lapsed viewers (recently or otherwise) is a big part of the company's expansion strategy. When asked about those recaptured fans, however, Barrios said, "We don't give that specific metric. We don't think it is relevant." He summed up by saying, "If the network is growing year after year, that's all that matters."

WWE continues to tout to shareholders that the network has a potential audience of 159 million households. Graph via the WWE Q2 Investor Presentation

WWE boasts having one of the largest fan bases of any sports-entertainment company on social media, with 672 million total followers across all platforms and more than 10 billion total views on YouTube. (If one person follows two different wrestlers on Twitter, however, it counts as two people, so these numbers should be taken with a grain of salt.)

But the financial return of social media (which is lumped into all digital media, minus the network) is incredibly low compared to that of television. Dividing total digital revenue by total number of followers, WWE only makes three cents per online user outside of WWE Network (with a slim operating income of $100,000 for the first half this year) compared to roughly $21 per person for domestic television, with an operating income of roughly $55.5 million during the same period. Moreover, their global views for ad-supported video-on-demand services like YouTube dropped by 300 million from the first to second quarters of 2016, the first decrease in the history of the division.

Despite all their innovation in the digital space, WWE is still beholden to television, which accounted for $231.1 million in revenue in 2015—35 percent of the company's total revenue—and $116.8 million for the first half of 2016, according to SEC filings. Without it, the company would surely drown.

Vince McMahon wanted to remove himself from the grips of television—from having someone else own the vessel through which his product is presented—but his obsession with creating a global media empire might ultimately be his company's undoing. The continued existence of WWE Studios, which produces feature films and other projects, has been bleeding the company of revenue for years. In 2015, the division posted an operating loss of $1.5 million, and only contributed roughly 1 percent to the company's overall annual revenue, according to SEC filings. Now, with WWE Network, the company has nearly all of its eggs in one basket.

"The product, without question, is struggling," a former senior-level executive said. "But he can't fix the problem because it's him—he's the problem."

Now in his 70s, Vince McMahon is clearly readying his company to continue in the hands of his successor. He's also still looking for ways to expand and further WWE's global reach.

China has been on WWE's radar for some time now, especially as a source of subscribers for WWE Network. They've inked a deal to broadcast Raw and SmackDown in China, been signing Chinese talent on their roster, and even hired Jay Li, a former executive at Skullcandy, as vice-president and general manager of Greater China. Their next step is to roll out the network in the burgeoning Asian territory. "We've hired people in the market to build that footprint for us in China," said CRO Michelle Wilson. "It's a great opportunity for us in the future."

But China is a fickle market. Netflix, ESPN, Disney, and Discovery have all run into snags when trying to launch over-the-top networks there. Moreover, compared to television deals in India and the UK, WWE's return in China is slated to be much smaller. "This reinforces all of my concerns that WWE is overpromising their ability to navigate such a byzantine system of regulations to bring the network to their final marketplace," said Chris Harrington. To make matters worse, the president of WWE International, Gerrit Meier, left the company in June, leaving widespread international strategy presumably to George Barrios—a pattern we have seen in many of WWE's key divisions.

Shane McMahon would be a solid choice to help navigate this part of the company's expansion into China. After leaving WWE in 2009, he became the CEO of You On Demand, a pay-per-view service in China; after stepping down as CEO in 2013 and serving as its chairman for a while, he now sits on the Board of Directors. But there's a hang-up. According to his contract with You On Demand, Shane has a non-compete in China—even when it comes to his father's business. Furthermore, while he was CEO and Chairman of You On Demand, the company reported annual losses of between $6 and $16 million.

Since coming back into the picture at his father's company earlier this year, Shane has largely been seen as an on-screen personality, dubbed the fictional "commissioner" of SmackDown, which has split off into a separate brand from Raw, with an independent roster and creative team. He does not yet have an official title in the back office, nor is he on the WWE Board of Directors with his sister Stephanie and brother-in-law Paul Levesque. "Shane is back as a performer on our TV programming," Levesque told me over email.

And even with Shane's return, WrestleMania 32, which was such an important event for the company, garnered mostly tepid reviews. The storylines were criticized as bland, the company puzzlingly did not promote an appearance by NBA Hall of Famer Shaquille O'Neal, and the main event between Triple H and Roman Reigns was widely panned for being uninteresting.

Although Shane lost his match to the Undertaker at WrestleMania, he still regularly appears on television, but his long-term role with the company is still uncertain. At this point, Levesque and Stephanie have a clearer path toward succeeding Vince. But this is still Vince's company for the foreseeable future—and he doesn't seem to be slowing down the expansion of his empire anytime soon, however risky that may be.

Now it's just a matter of seeing whether this is best for business.
