WWE Earnings disappoint for Q4

February 24, 2012

The WWE announced its Q4 2011 results on Thursday and the earnings were described as disappointing. WWE earnings were lower for the fifth straight quarter.

The main culprit for the poor performance of the company was its film division and television licensing decisions according to Vince McMahon. In addition, costs from starting the WWE Network were cited as reasons for the softening of its earnings.

With respect to its film division, McMahon indicated that the company would utilize different strategies to try to bolster the division’s profitability but if that did not work, the WWE would be out of the film business. The WWE lost $12.2 million in the Q4 alone due to film impairment charges.

The television licensing decisions were based on the WWE’s decision not to distribute two of its properties, WWE Superstars and NXT, which have been showing online.

Via WWE press release:

Revenues totaled $112.9 million as compared to $122.5 million in the prior year quarter. Operating loss was ($13.1) million as compared to Operating income of $14.4 million in the prior year quarter. Net loss was ($8.6) million, or ($0.12) per share, as compared to Net income of $8.1 million, or $0.11 per share, in the prior year quarter. Excluding the impact of film impairments and network related expenses in the current year quarter, Adjusted Operating income was $3.1 million as compared to $14.4 million in the prior year quarter. Adjusted Net income was $1.8 million, or $0.02 per share, as compared to $8.1 million, or $0.11 per share, in the prior year quarter.

The WWE spent $4 million in Q4 on the creation of the WWE Network. However, the position on rolling out the new network was uncertain.

On the positive side, McMahon said during the earnings call that live attendance was up 7% for the quarter. Yet, this may be due to the fact that there were 11 fewer events in the quarter.

The PPV revenues were up 2% from 2010’s Q4 and up 6% over 2011. However, this can be seen as the result of a strong Wrestlemania PPV which is likely due in part to the return of Dwayne “The Rock” Johnson.

(H/t: Seeking Alpha)

Payout Perspective:

While overall revenues were up from 2010, it was mainly due to the success of Wrestlemania 27. It also looks like the WWE may need to see a significant turnaround if it wants to remain in the movie business otherwise it may continue to see huge losses. The gloomy numbers may mean some downsizing of the WWE talent roster which traditionally comes after Wrestlemania.

The other notable news coming out of the earnings call was McMahon’s description of the WWE Network as “potential creation” of the network. This is interesting considering the prior hype for the network which included commercials for it on Raw and the initial belief that it would roll out by Wrestlemania this year. It looks like the WWE wants to make sure it gets it right before unveiling it. However, its sunk $4.0 million alone this quarter into the creation of the network and has committed staff and other startups to this venture in prior quarters.

It will be interesting to see how the WWE will try to turn things around. Based on the great  performance and impact last year’s Wrestlemania had on the WWE earnings, it will hope that this year’s Wrestlemania on April 1 will produce more of the same.

One Response to “WWE Earnings disappoint for Q4”

  1. Bruce on February 25th, 2012 4:21 PM

    Maybe a whole bunch of WWE fans left to UFC?? JK

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