Impact has had cash flow challenges. It began experiencing cash flow deficits as a result of moving Impact’s television show lirom Destination America to Pop TV (both cable networks). The cash flow deficits were expected and required to transition the brand from a license model to a barter sales contract tied to advertising sales. The change was necessary in order to secure the company’s valuable digital rights, full sponsorship/advertising rights and non-exclusivity rights, all of which are critical to the long-term growth and success of the brand. When making such a transition, it is typical for advertising sales to take time to increase to a level at which the barter sales contract generates revenue similar to a license structure.

It’s not clear what the part about the change being “necessary” to “secure the company’s valuable digital rights” actually means. Reportedly, Destination America opted out about four months into the deal effective later in the year, with the internal reasoning being that too many network sponsors put Impact on their “Do Not Advertise” list.

While Carter and Broadhead don’t specifically say that the move from Destination America to PopTV was voluntary, it’s not a huge stretch to read the statements that way. Both affidavits do say that “Impact made the strategic decision to move from a license fee to a barter system in the United States.” If not referring to the network switch, it’s possible that it could be explained by PopTV having offered a very low license fee or maybe TNA turning down options where the license fee was $0.

Analysis: Even if you try to take it at face value, TNA management is saying that they gave up guaranteed money for a share of ad revenue, which is mind boggling in light of the long history of pro wrestling getting rock bottom rates from sponsors. At best, this is an admission of incredibly bad decision making, unless the nebulous claims about digital rights somehow explain it. Even then, in the event the idea is that the PopTV deal gives TNA full control of its digital rights domestically and Destination America didn’t, how exactly did TNA management expect to exploit these newly freed up digital rights?