Former WWE executives George  Barrios and Michelle Wilson, about a year after their surprise departure from the scripted sports giant, have formed a Special Purpose Acquisition Corp. -- Isos Acquisition Corp. -- to raise $200 million to purchase a company in the digital media space. 

Isos filed a prospectus with the Securities and Exchange Commission on Jan. 20 to issue 20 million shares at $10 each. The money would be used to purchase a company in the digital media space. Isos has about two years to find a target, at which time they would either make a deal or return the proceeds of the IPO back to shareholders.

Isos believes there is ample opportunity in the digital media space, with the global entertainment and media market expected to grow at an annual rate of 4.9% to reach $42.3 trillion by 2023, according to The Business Research Company Media Investment Global Outlook 2020, which was cited in the prospectus. North America accounted for about one-third of the total addressable market in 2019, or $519 billion, the report stated. 

SPACs, also known as blank check companies, have become a popular method of taking smaller private companies public. Use of the financing vehicle exploded in 2020,  when about 248 SPACs were created, more than four times the 59 formed in 2019, according to SPAC Insider. SPACs raised a total of $83 billion in 2020, compared to $13.6 billion in 2019. So far in 2021, about 59 SPACs have been formed, raising $16.8 billion, according to SPAC Insider. 

Several media companies have used SPACs to go public, including streaming company CuriosityStream and online betting company DraftKings. Severbal former and current media chiefs have formed their own SPACs over the past several months, including former Walt Disney Co., streaming chief  Kevin Mayer; current Dish Network chairman Charlie Ergen and former AT&T Broadband CEO Leo J. Hindery Jr. 

Barrios and Wilson were named co-presidents of WWE in February 2018, but abruptly resigned in January 2020 after what WWE chairman and CEO Vince McMahon said was a failure to see eye-to-eye regarding the company’s future direction. Both had been instrumental in the wrestling giant’s success. WWE stock plummeted on the news of their departure (it was down 23% at one point on Jan. 31, 2020, but has since recovered that lost ground. 

According to the Isos prospectus, the company has attracted some top TV, finance and entertainment executives to its board of directors, including former NBA China CEO and DirecTV EVP Derek Chang; former Sirius XM SVP and head of corporate strategy Barbara Daniels; former Telemundo chief operating officer Jacqueline Hernández; Fandom CEO Perkins Miller; Facebook VP of Global Sports and Media Partnerships Dan Reed; and Boston Consulting Group managing director and senior partner John Rose.

JP Morgan and LionTree Partners are serving as bookrunners for the IPO. LionTree and Apollo Global Management also have agreed to participate financially in the company, with Apollo agreeing to purchase 7.5 million warrants for shares of Isos at $10 each in a private placement once it finds a business target and completes the combination. LionTree has agreed to purchase 1.3 million warrants at $1.50 each (for a total of $7 million) under the same terms. 

Barrios and Wilson formed Isos Capital Management in December, to seek out investments in the sports space. Aside from working together at WWE for about 11 years -- Barrios was hired in 2008, Wilson rejoined the company in 2009 -- the two have extensive experience in the  business and sports space. Barrios was CFO of The New York Times Co. and served stints at HBO and Time Warner before joining WWE. Wilson had worked for McMahon’s first attempt at a professional football league -- XFL -- in 2001, and later worked as a marketing executive at the NBA, US Tennis Association and Nabisco before joining WWE in 2009 as EVP and chief marketing officer.

The two hope to leverage that experience to find an attractive digital media target.

According to the prospectus, Barrios and Wilson were part of a management group that drove WWE’s stock price up 426% in four year (from Jan. 1, 2015 to Dec. 31, 2019), creating $4.8 billion of enterprise value over the same period.

World Wrestling Entertainment stock started to inch back this week, rising more than 3% in early trading Tuesday but still far short of reversing the 27% decline of the shares since it fired two top executives a week before it is scheduled to report Q4 results.

WWE shares were priced at $48.97 each in afternoon trading Feb. 5, 3.4% above their closing price the day before, when they rose another 2.8%. The shares are still well behind their price on Jan. 30 ($62.30), when the company announced its co-presidents George Barrios and Michelle Wilson had abruptly left the company. News that the well-liked and respected executives were gone, and a statement from the company that they had differences as to the direction of the company with chairman and CEO Vince McMahon, sent the stock into a tailspin. WWE stock fell 21% on Jan. 31 to $48.88 per share and another 6% on Feb. 1 to $46.08 per share.

“I am grateful for all that was accomplished during their tenure, but the Board and I decided a change was necessary as we have different views on how best to achieve our strategic priorities moving forward," McMahon said of Barrios’ and Wilson’s departure in a press release.

That has led to some wild speculation about the executives’ departure, none of which has been substantiated.  But if nothing else, it appears that McMahon, who has come under criticism as WWE ratings have plunged, will have a lot to answer to during its Q4 earnings call on Feb. 6.

Already some analysts have chimed in, and many will likely try hard to make sense of the changes and seek solutions to the scripted sports giant’s ratings decline. But as one pundit put it, the responsibility will ultimately land in McMahon’s lap.

WWE has been on shaky ratings ground for awhile. Although Barrios and Wilson were praised earlier this year for landing a carriage deal for its SmackDown programming with Fox, ratings have been poor. And they’ve been poor for awhile.

Still, Barrios and Wilson had been the public face of WWE, and losing two seasoned executives at a time when the traditional TV market is in constant turmoil is not something investors would cheer. Over the past 12 months, WWE shares have declined 43%, from $82.34 on Jan,. 31, 2019.

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Injuries to top talent like Roman Reigns and AJ Styles were blamed for ratings softness last year, but those wrestlers have since returned and the viewership numbers haven’t gotten better. 

In a blog post, LightShed Partners media analyst Brandon Ross said despite the changes McMahon has already made, engagement with WWE content is disappointing and ratings at its flagship SmackDown are down even after it moved to Fox.

“We anticipated at least 3 million weekly viewers given the increased reach of broadcast TV and the breadth of Fox’s substantial promotion platform,” Ross wrote. “Viewership has settled in at ~2.4 million per week.”

Ross added that he has no knowledge of the circumstances behind Wilson’s and Barrios’ departures or even if they should bear any if the blame for WWE’s ratings slump.

“However, what we do know is that content needs to improve at WWE if the company is going to be investible,” Ross wrote. “And no matter who comes in to take the place of the former Presidents, the burden of improving the content sits squarely on Vince, who has held tight control over the creative at WWE for decades.”

Righting the WWE ship will be critical over the next three years, Ross wrote, pointing out that is when Monday Night Raw and SmackDown enter their next renewal cycle.

“While the stars aligned last deal for rights to be bid up, we are very skeptical a remotely similar demand backdrop will exist,” Ross wrote. “The entirety of the $465 million per year WWE is receiving domestically comes from the Pay TV universe, where subscriber losses continue to accelerate.”

Ross added that by the time talks start again for the programming, pay TV subs could be in the 70 million range, substantially reducing the WWE’s negotiating leverage.

“Vince McMahon, the pressure is on,” Ross wrote.

WWE has named George Barrios and Michelle Wilson as co-presidents, the company said Thursday (Feb. 8).

Wilson, formerly chief revenue and marketing officer, and Barrios, formerly chief strategy and financial officer, have also been appointed to the company’s board of directors, according to the WWE.

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“The successful transformation of our business model has put us in a position to capitalize on all that the changing global media landscape has to offer,” said WWE chair & CEO Vince McMahon in a statement. “I am confident that our executive management team, led by Michelle and George, will achieve continued success across key strategic initiatives and ensure our long-term growth.”

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WWE said it has had four years of record revenue and launched its subscription video-on-demand service (WWE Network) to augment a core business that includes TV programming, such as WWE Raw, and pay-per-events (Wrestlemania).