A Trump versus Xi wrestling match might just help

By Pete Sweeney

(The author is a Breakingviews columnist.)

HONG KONG, Dec 26 ( Breakingviews) - Can Sino-American trade disputes be settled on the mat? Don't expect Xi Jinping and Donald Trump to don tights for a Presidential SmackDown. But don't be surprised to see Tencent, China's$370 billion technology champion, tag up with World Wrestling Entertainment to bring more American professional brawlers like Triple H and The Undertaker to the People's Republic, and build a Chinese league.

WWE was founded by cabinet official Linda McMahon and her husband Vince, now its chief executive. He was famously tackled to the floor and shaved bald by Trump during the "Battle of the Billionaires" in 2007. Ridiculous, perhaps, but such scripted brawls between muscle-bound actor-thugs in spandex generated $657 million in revenue for WWE in the first nine months of 2018. Its shares were up nearly 150 percent for the year in early December, changing hands at around 60 times forward earnings. Ridiculous has won respect.

Dominant at home, WWE needs to grow abroad. It has been attacking the China market for years, bringing occasional "SmackDown" exhibitions through Shanghai and Shenzhen — Tencent's hometown — and posting matches online. Despite cultural differences, WWE's recipe of braggadocio and beatings could be copied straight out of a Chinese Qing dynasty Kung Fu television show, and has proven popular.

WWE's streaming contract with local partner PPTV comes up in 2019. Tencent would make a better match for the next round. Its WeChat app alone boasts 1 billion monthly users. It's China's largest video-game company, an important money-making channel. Tencent Video broadcasts National Football League and National Basketball Association games; its sports division is moving into events management. It can help WWE build a local league, key to winning real market traction.

One obvious way to jackhammer the deal would be for Tencent to buy a stake in the $5 billion entertainment company. It won't come cheaply. But good-humoured headlines about China acquiring dual-use smackdown technology will help Tencent's international profile — even if a Xi-Trump cage match is out of the question.

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- In September 2018 WWE held its third straight annual tournament in Shanghai, bringing professional wrestling stars like John Cena to perform for local fans. In 2017 WWE held an event in Shenzhen for the first time. The company has been holding events in China since the Shanghai World Trade Expo in 2010, and was broadcasting shows through local television stations prior to that.

- In June 2016 WWE and Chinese streaming sports-video site PPTV announced a multi-year content-distribution agreement, delivering live content in Mandarin. PPTV also has rights to stream English Premier League soccer games and other foreign sports events. The contract is up for renewal in 2019.

- In the same month WWE signed 22-year-old Bin Wang to a development contract, making him the first Chinese athlete to train to become a WWE professional wrestler.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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