WWE posts 3rd Quarter results, will hold event in Saudi Arabia

October 26, 2018

The WWE announced its third quarter results for the year on Thursday morning.  It also confirmed that it will go forward with an event in Saudi Arabia despite the murder of journalist Jamal Khashoggi.

The WWE addressed the controversial in today’s earnings release which called the killing “heinous” but stated that as with other US companies that are continuing operations in Sauid Arabia, the WWE decided to “uphold its contractual obligations to the General Sports Authority and stage the event.”

When asked by analysts today on the earnings call, Vince McMahon stated, “[i]t’s a very sensitive subject.  I think our statement says what we wanna say.”  In recent weeks, the WWE promoted the event without indicating that Crown Jewel on November 3rd would take place in Saudi Arabia.  The event will be the second in Saudi Arabia as the WWE held, “Greatest Royal Rumble” this past April.  The reason for the events in Saudi Arabia boil down to the massive amounts of revenue for the company.

The WWE earnings for the third quarter beat analyst expectations as Wall Street predicted Earnings Per Share of 21 cents.  The company announced an Earnings Per Share of 37 cents on revenue of $188.4 million.  Subscriptions to the WWE Network grew 9% to more than 1.66 million.  The media division increased 9% to $142.1 million due license fees and sales of ad and sponsorships.

Revenue at live events dropped this quarter by 15.5% to $26.7 million due to fewer events and an 8% decrease in North American attendance.  International events saw an even bigger decrease of 18% in average attendance.  In consumer products, revenue declined 18% to $19.6 million due to new revenue recognition standards and lower sales of merchandise online and at WWE venues.

WWE shares are at $75.68, down approximately 2.18% as of Thursday afternoon after hours trading.

Payout Perspective:

The Saudi Arabia event which will be held November 3rd likely will help with company’s revenue, but there will be a public relation hit based on the controversy surrounding the death of the Washington Post journalist.  The partnership with Saudi Arabia caused controversy as women couldn’t participate in the country.  But, the WWE has signed a 10-year agreement with Saudi Arabia and estimates $50 million of incremental revenue and more than $15 million in operating income to the company.  The infusion of cash will please shareholders.

 

The WWE has done well with its media division as shows like Total Divas and Miz & Mrs have increased license fees and sales of advertising and sponsorships.  Aside from its media division, the WWE has seen a decline in operating income in the other sectors of its business.  The decrease in attendance likely caused, in part, the lower revenue in the consumer products.

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