Shares of TKO Group Holding (TKO -0.50%) charged sharply higher on Tuesday, soaring as much as 23.9%. As of 2:02 p.m. ET, the stock was still up 12.2%.

The catalyst that sent the sports entertainment surging was a report that the company inked a massive deal with streaming pioneer Netflix (NFLX -1.80%).

Raw finds a new home

WWE announced on Tuesday morning that Netflix would become the exclusive home of WWE's flagship wrestling program, Raw, in the U.S., Canada, Britain, and Latin America. In a press release, the company said the program will begin streaming on Netflix on Monday nights beginning in January 2025, expanding to additional geographies over time. The company noted that this marked a "major programming shift," as Raw was leaving linear (broadcast and cable) television "for the first time since its inception 31 years ago."

The company also pointed out that Raw was the "No. 1 show on the USA Network, where it brings in 17.5 million unique viewers over the course of the year." USA is a division of Comcast.

A regulatory filing shed additional light on the details. It revealed the 10-year deal was valued at $5 billion, while giving Netflix the option to extend for an additional 10 years. As part of the agreement, Netflix will also become the exclusive home for other WWE programming outside the U.S. This includes SmackDown and NXT, as well as the company's premium live events, including WrestleMania, SummerSlam, and Royal Rumble.

Furthermore, the company announced that it had appointed actor and former WWE superstar Dwayne "The Rock" Johnson to its board of directors. Johnson used the fame brought by his professional wrestling to jump-start a movie career, becoming one of Hollywood's most bankable stars. Johnson is known for his regular appearances in the Fast and the Furious movie franchise, as well as family-friendly fare including Jungle Cruise, Jumanji, and Black Adam.

Blockbuster deals

TKO continues to astound critics, notching one blockbuster deal after another. In late 2023, WWE's Smackdown moved from Fox to USA for a reported $1.4 billion, up from $1 billion Fox paid for a similar deal in 2019.

That said, TKO has yet to prove itself to investors, as the stock has fallen 15% since the company was formed from the merger of WWE and UFC in late 2023 -- even after today's vigorous rise. Investors should approach with caution.