'The Rock' appointed to TKO board of directors

Netflix (NFLX) will be adding the WWE's flagship show Raw to its portfolio of live sports streaming events in 2025. This $5 billion deal is with TKO Group Holdings (TKO), the parent company of WWE.

TKO has also announced the addition of actor and former wrestling star Dwayne “The Rock” Johnson to its board of directors. TKO stock has surged Tuesday morning following these headlines.

Yahoo Finance’s Seana Smith and Brad Smith weigh in on this deal.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

[AUDIO LOGO]

BRAD SMITH: Netflix is leaping into live streaming for the first time by starting airing. They're going to start to air WWE's flagship program, Raw, next year. This comes along with a 10-year deal valued at $5 billion with TKO Group Holdings, the parent company of WWE. TKO Group Holdings is also announcing that it's going to add actor and former wrestling star, Dwayne "The Rock" Johnson to its board of directors here in this announcement, too.

SEANA SMITH: And we saw all the excitement at the opening bell. He was down there ringing the bell. It was a massive crowd. You can see it's a huge reaction there for The Rock. We saw the huge reaction in the share price there of TKO. Not exactly a surprise, but really, what this means for Netflix is one of the things-- I'm sure there will be a question on the earnings call later on tonight about content spend, what exactly that looks like here for the company.

Because I'm taking a look at the Street's reaction. At least initially, it is a bit mixed in terms that there is some upbeat, optimistic comments just about the fact that this is going to add subscribers, the fact that this adds a whole other stream of revenue here when it comes to advertising, but also some questions just about future content spend, what exactly this could signal here for Netflix. But it's exciting. Who doesn't love The Rock?

BRAD SMITH: I mean, who doesn't love The Rock? I mean, the latest edition of a major sports profile, actor profile to a board. I mean, Shaq on the board of directors, or at least, in that position and being able to have a line of direct communication into the company on Papa John's as well. And so all of this considered, I think it's significant for Netflix and how much this partnership actually brings to them in terms of continued revenue on subscriptions, the number of WWE fans that now tap into the platform to watch there.

SEANA SMITH: Yeah, exactly. And our entertainment reporter Allie Canal has been reporting about this morning, just exactly what this means here for the company going forward, if this really tells us about the direction of Netflix here. Because we know, at least in terms of the numbers that we're expecting to get tonight, all eyes-- and we talked to Eric Sheridan from Goldman Sachs about this that all eyes are going to be on that subscriber number there.

Also, what we're seeing in terms of average revenue per member, which is what Netflix calls that, and then beyond that, the content spend, one of the outlying factors that he brought up as certainly a focal point here for Netflix going forward. How much that could potentially pressure future margins here is going to be a question for Netflix down the road.

But again, there was initially some excitement in Netflix, the share price, here at the open. Also, obviously, TKO, that stock price taking off here. Not necessarily a huge surprise, but again, I think it's a big win. They're going to get global subscriber counts up here on this deal. To what extent, though, and what this means for future plans is what the big debate is at this point.

Yeah.