The lawsuit alleges that the defendants "(i) made false and misleading statements, (ii) engaged in a scheme to deceive the market, and (iii) engaged in a course of conduct that artificially inflated the price of WWE securities and operated as a fraud or deceit on Class Period purchasers of WWE securities by misrepresenting the Company's business and prospects."
Swanson, in his lawsuit, claims that he purchased WWE stock during the time period that the company was negotiating its new TV deal with NBC Universal. He alleges that the company made "false and misleading statements about the WWEâ€™s much publicized ability to transform the Companyâ€™s earnings profile through, among other things, the negotiation of a lucrative new long-term television license deal."
Citing that the new TV deal was to be the "primary driver of WWE's transformation" with comparisons to NASCAR's recent TV contract (worth $820 million) and proclaiming their programming to be "DVR-proof" while allegedly downplaying "the fact that advertisers pay less to reach WWE's viewers than traditional sports and any other show on the USA Network and the negative impact on the television license negotiations resulting from the Company's launch of its WWE Network, a 24/7 subscription-based streaming network containing pay-per-view events and original and historical programming."
Noting that the eventually announced WWE deal with NBC Universal led to a $92 million deal (an increase from the previous $57 million dollar deal), the lawsuit states that "the stock price of WWE fell to $11.27 per share on May 16, 2014, a decline of 43% from the previous closing price of $19.93 per share."
Beyond the company itself, McMahon and Barrios are being personally sued because of statements they made during stockholder conference calls and in Barrios' case, a presentation at the December 2013 UBS Global Media and Communications Conference, during that period.
The lawsuit also alleges that WWE knew the following but concealed it from stockholders:
"-WWEâ€™s ability to command premium pricing for its television license agreement was significantly undermined by the Company's rollout of the WWE Network.
-WWEâ€™s ability to command premium pricing for its television license agreement was significantly undermined by the low advertising rates for professional wrestling compared to other live sports
-As a result of the foregoing, there was no reasonable expectation that WWE could double the value of its domestic television license agreement."
Swanson is seeking the court to declare his lawsuit a "proper class action lawsuit", award members of the class damages, including interest, and rule that the defendants' cover "reasonable costs and attorney' fees."
WWE has yet to respond to the lawsuit. The court has given them until 11/25 to file a motion to dismiss.
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