The Lawsuit That Put WCW Out Of Business

In 1996, WWE (then Titan Sports doing business as the World Wrestling Federation) sued WCW over the execution of what became the NWO storyline.  WCW implied a bit too strongly that Scott Hall and Kevin Nash (whose names weren't mentioned on TV for several weeks) were Razor Ramon and Diesel invading WCW on the WWF's behalf, so it wasn't very surprising...

This led to a series of lawsuits filed by both companies as the war heated up.  The background facts in a 1997 filing regarding a motion to dismiss filed by WCW has, by far, the most amusing passage in any wrestling related court filing I've read online:

"Plaintiff contends that success in the professional wrestling business depends upon the development of interesting wrestling characters and story lines. Characters must have names, personalities, histories, relationships, personas, and visual appearances that appeal to consumers.

Plaintiff alleges that WWF programming combines character-driven story lines with skillful wrestling while WCW has no reputation for creativity. TBS proposed inter-promotional matches in order to associate WCW with WWF, but Plaintiff rejected this idea."

As part of the same lawsuit, WWE subpoenaed wrestling newsletter columnist turned WCW Hotline personality/Pittsburgh radio sports talk show host Mark Madden.  Madden asserted journalistic privilege when asked who his sources were for one of his hotline reports.

The issue of whether or not Madden was actually serving as a journalist became its own mess.  Eventually, the court ruled against him in vicious fashion:

"Madden's activities in this case cannot be considered 'reporting,' let alone 'investigative reporting.' By his own admission, he is an entertainer, not a reporter, disseminating hype, not news. Although Madden proclaims himself to be 'Pro Wrestling's only real journalist,' hyperbolic self-proclamation will not suffice as proof that an individual is a journalist.

Moreover, the record reveals that all of Madden's information was given to him directly by WCW executives. Madden's deposition testimony acknowledges that WCW employees were his sole source of information for his commentaries. He uncovered no story on his own nor did he independently investigate any of the information given to him by WCW executives.

Madden also fails the test in two other critical aspects: first, he was not gathering or investigating 'news,' and second, he had no intention at the start of his information gathering process to disseminate the information he acquired. Madden's work amounts to little more than creative fiction about admittedly fictional wrestling characters who have dramatic and ferocious-sounding pseudonyms like 'Razor Ramon' and 'Diesel.'"

The lawsuit went on for years, ending with a settlement in 2000.  One of the terms gave WWE the right to bid on WCW's assets if the company was liquidated.  As mentioned in the Sid lawsuit post, Time Warner cancelled WCW's television shows in March 2001 and sold the company assets to WWE.

The selling price was somewhere in the $2.5 million to $4.3 million range, depending on how it's calculated.  As a term of the sale, WWE promised to buy a certain amount of advertising on TBS and TNT for a few years.

So basically if I understand the whole thing correctly, while everyone tries to blame people in WCW in 2001 for ruining the company, WCW was basically put out of business from a lawsuit filed in 1996 when the whole Monday Night War started. The original first shot of the war, when Scott Hall walked onto Nitro, when Kevin Nash followed, hell even on the very first episode of Nitro when Lex Luger walked out to the ring... WCW stole WWF talent and tried to give the impression that they were still working for the WWF and that they were there on the behalf of the WWF and Vince McMahon. Because of this carelessness, WCW eventually lost the war and went out of business. This lawsuit is most likely what caused Turner to sell to AOL which canceled WCW wrestling, because it was no longer #1, it was losing money, and it owed a fortune for this lawsuit. It was the end for WCW. I think if they had won this lawsuit the war would have shifted the other way. If the WWF had to pay WCW it would have bankrupted the McMahon family. Instead, they won the lawsuit, and I agree rightfully so (WCW stole their characters and trademarks) and this not only put WCW out of business, it gave Vince the money to buy the company (which was given to him at a very low price). The part that makes me sick though is that Vince was able to pick up the WCW video library so cheap like it was worthless, and he has gone on to repackaged it all over and over into DVDs such as "The Rise And Fall Of WCW" or "The Rise And Fall Of The NWO" and many others. Each of those DVDs have made more money than the entire library cost Vince. Its ridiculous. I've read reports that the man that sold the library to Vince was an old friend of his from school, how is this possible? (That fact was according to an interview I read from Kevin Sullivan).