Endeavor and W.W.E. Join Forces to Create Live-Combat Tag Team

The tens of hundreds of followers who crowded into SoFi Stadium in Los Angeles for WrestleMania this weekend acquired to look at wrestling icon John Cena be hurled to the canvas by Austin Idea, certainly one of World Wrestling Leisure’s greatest stars.

However offstage, bankers and executives huddled in convention suites on the stadium to place the ending touches on a brand new plot for W.W.E.’s future. Endeavor, an leisure colossus run by Hollywood energy dealer Ari Emanuel, was finalizing a deal to accumulate W.W.E. and merge it with Final Combating Championship, the fight sports activities league Endeavor owns.

Information of the deal, which goals to create a brand new public firm value greater than $21 billion, broke Sunday earlier than the second night time of WrestleMania, with Mr. Emanuel in attendance alongside Vince McMahon, the manager chairman of W.W.E. The businesses introduced the deal Monday morning, saying the as-yet unnamed agency — whose inventory will commerce beneath the image “TKO” — can be a juggernaut in stay leisure and fight sports activities. The deal is anticipated to shut close to the top of the 12 months, pending regulatory approval.

“Should-watch TV is a rarity lately,” mentioned Mark Shapiro, Endeavor’s president and chief working officer, who can even have these roles on the new firm. “And unicorns just like the U.F.C. and W.W.E. will probably be closely in demand.”

In fusing Final Combating Championship with World Wrestling Leisure, Mr. Emanuel and Mr. McMahon are betting that conventional TV corporations and video-streaming giants will proceed to pay high greenback for the rights to point out stay occasions — together with scripted and unscripted fights.

Current offers for stay sports activities bear that out. The Nationwide Soccer League in December struck an settlement with YouTube TV that values its Sunday Ticket package deal of video games at as a lot as $2.5 billion yearly — a rise of about $1 billion from the take care of its earlier companion, DirecTV. The Nationwide Basketball Affiliation is anticipating to sharply improve its charges after its present TV agreements expire following the 2024-25 season.

The extraordinary competitors between cable TV and deep-pocketed tech corporations is behind the ballooning prices. As viewers abandon conventional tv in droves, stay occasions like N.F.L. video games and W.W.E. matches proceed to attract huge scores, serving to anchor the cable TV enterprise. And tech giants like Amazon and Alphabet are utilizing stay sports activities to attract new subscribers to their providers, making a bidding conflict with their conventional rivals.

Executives intention to make use of the tie-up of W.W.E. and U.F.C. to benefit from that demand. U.F.C.’s contract with the Walt Disney Firm’s ESPN division ends within the subsequent few years, and W.W.E.’s take care of NBCUniversal’s U.S.A. community and the Fox broadcast community are set to run out subsequent 12 months.

The mix is the most recent in a sequence of audacious offers struck by Mr. Emanuel, the workaholic Hollywood expertise agent who rose from the mailroom to grow to be one of many leisure trade’s most vital figures. Mr. Emanuel would be the chief govt of the brand new firm and can hold his C.E.O. title at Endeavor, which is able to proceed to personal different companies, together with the William Morris Endeavor expertise company and the Skilled Bull Driving league.

The deal additionally gives a coda to a tumultuous chapter in Mr. McMahon’s profession. He was reinstated as govt chairman of W.W.E. in January after resigning from that place final 12 months following an investigation into allegations of sexual harassment. Mr. McMahon will keep on on the new firm as govt chairman, a part of an 11-person board that may embrace six members from Endeavor and 5 members from W.W.E.

Dana White, the president of U.F.C., will hold that function, and Nick Khan, the chief govt of W.W.E., will keep on as president. Patrick Whitesell, the outstanding Hollywood govt and agent who represents actors together with Matt Damon and Ben Affleck, will stay govt chairman of Endeavor.

The deal places a hefty valuation on U.F.C., which Endeavor and its backers bought for about $4 billion in 2016, and W.W.E., which was searching for about $9 billion in a deal. The all-stock deal values U.F.C. at $12.1 billion and W.W.E. at $9.3 billion. Mr. Shapiro mentioned that the aggressive bidding course of justified the “wholesome value” for W.W.E., together with the potential for a profitable deal in its upcoming rights negotiation.

Endeavor can also be betting the value tag will probably be justified by companies apart from rights. Mr. Shapiro mentioned that the corporate’s capability to promote sponsorships, create new occasions and strike offers with social-media corporations contributes to its worth.

The deal for W.W.E. got here collectively rapidly. Over the previous a number of weeks, Mr. Emanuel and Mr. Shapiro visited W.W.E.’s headquarters in Stamford, Conn., and the places of work of the funding financial institution The Raine Group in New York Metropolis to finalize the main points of the settlement. On Sunday, as WrestleMania reached its conclusion, Endeavor and W.W.E. pinned down the ultimate particulars.

“It’s been loopy,” mentioned Mr. Shapiro, the Endeavor govt.