July 31, 2014
WWE announced its 2nd Quarter earnings on Thursday. The big news was that the WWE Network added just 33,000 subscribers from the 1st Quarter. In addition, it reported laying off 7% of its work force.
While the number of subscribers is off from the company’s initial projections, the WWE indicated that the existing subscribers are happy with it. The company indicated that the Network will roll out in its present form internationally.
Similar to how the UFC introduced pricing options for Fight Pass, the WWE will also roll out options to its current payment plans. Fans can now pay $19.99 per month with no commitment to renew. This is likely to grab those wanting to order specifically to watch a “PPV” event. The other new option is that one can pay one time the $9.99 x 6 months. These two options will be in addition to the current $9.99 per month plan with a 6 month commitment.
The WWE also announced a 10 year deal with Rogers Communications in Canada for the Network to be a traditional pay-tv option.
Overall, WWE reported a Net loss of $14.5 million, or $0.19 per share compared to last year’s second quarter net income of $5.2 million or $0.07 per share. The wide swing is due to the costs for the Network.
Payout Take: WWE stock was up slightly to $12.48 on Thursday. Unfortunately, when a company cuts jobs, the stock experiences a positive bump due in part to the belief that the company is addressing issues with excess. The Hartford Courant states that 53 of the 762 positions with the company would be cut. The article also states that the cuts “along with other efficiencies” should improve the operating income by $30 million (before depreciation and amortization) in 2015.
As for the Network, the number of gained subscribers at this point suggests that it will not reach its targeted goal of 1 million by the end of the year.
July 31, 2014
On Tuesday this week, a Minnesota jury found in favor of former governor and professional wrestler Jesse Ventura in a defamation case against the estate of a former Navy SEAL that wrote in his best-selling book about a fight with Ventura. The jury awarded Ventura $1.8 million.
Ventura won $500,000 for his defamation claim as he denied getting into a fight with Chris Kyle, a former member of the Navy SEALs and elite sniper. He also won $1.3 million for unjust enrichment.
Essentially, the book, “American Sniper: The Autobiography of the Most Lethal Sniper in U.S. Military History,” written by Kyle included a part wherein he talked about an encounter at a bar in Coronado, California where a “celebrity SEAL” was talking a little too much. In the book, he was referred to as “Scruff Face.” Kyle stated that he punched him. It came out in media interviews promoting the book that the “celebrity SEAL” was Ventura.
Ventura sued in 2012 and continued the suit against the estate of Kyle after Kyle died in a shooting at a Texas firing range. He claimed that the book caused him to lose earnings and alienated him from the SEAL community
Source: NY Times
As a public figure, the standard for proving defamation is higher than that of a private person. Ventura is considered as a public figure for a variety of reasons including formerly holding public office, performing as a wrestler and hosting a variety of television shows.
In honor of those that have taken the bar this week, here are the factors for defamation:
- There must be a statement that has been published;
- The statement is false; and
- The false statement must cause injury.
For a public figure, like Ventura, to win a defamation claim, he must prove that the writer had knowledge that the information was false.
There’s no indication that the estate of Kyle will appeal the ruling. It appears that insurance paid the defense for Kyle’s estate and presumably will pay the verdict. Ventura states that the jury award will essentially pay off the lawyers. The jury deliberated several days after closing arguments which some suspected that Ventura had proved his case and it was a matter of how much he would receive. It would be interesting to know the evidence which showed that the incident retold in the book was false.
July 28, 2014
TMZ Sports first reported that TNA Impact Wrestling on Spike TV will not be renewed by the network. The company has been with Spike TV since October 2005.
While ratings usually hover around 1.2 million viewers on Thursday nights and once served as lead-in for Bellator, the promotion has fallen on hard times. Attendance and finances have been the leading causes for the downturn in what is the de facto number 2 professional wrestling company.
According to Dave Meltzer on Sunday night’s Wrestling Observer podcast, the TMZ report has been confirmed by people within TNA. The current deal runs through October although it’s not clear whether Spike TV will continue to air it through the end of the deal.
Recently, King Mo re-emerged with the organization and it’s not clear whether he will continue on as part-time wrestler, part-time MMA fighter if TNA continues on another network.
Payout Take: It’s an interesting move on the part of Spike TV to cancel TNA as it does have a following of at least 1 million viewers each week. Compare that with Bellator ratings and TNA would seemingly be safe on the network. Perhaps TNA is going a different direction here. As for TNA, it’s not clear if the company will fold or seek to find another network to air on. But, if you look at the WWE’s rights fee deal, pro wrestling may not be a burgeoning property in the television industry.
May 30, 2014
Before we head into one of the bigger combat sports Saturdays in a while, we welcome you to another edition of the Wrestling Post.
In a bit of bad timing for the WWE, this Sunday its Pay Per View event, Payback in Chicago will now go up against Game 7 for the Chicago Blackhawks as it plays the Los Angeles Kings to see who makes it to the Stanley Cup. The card itself is not that strong and the importance for many Chicago sports fans will be centered around the hockey team.
Also on Sunday will be the Season Finale for Total Divas on E! In its second season, (and renewed for a third) the episode culminates at Wrestlemania and Daniel Bryan’s wedding. This season’s average through 10 episodes is slightly over 1.16 million viewers. It’s likely that it will not surpass its first season of almost 1.3 million viewers per episode. For the second time this season, the episode will run up against its own brand so we might expect a certain segment of fans putting the finale on the DVR.
Regardless of the outcome of the finale, Total Divas has proven to be an asset for the E! network. According to a recent press release, the network credited Total Divas for its 7% increase across key demos.
Via E! press release:
Returning series Total Divas is one key driver of growth, out-delivering year-ago programming across all key demos by impressive triple digit growth up to +135% in Total Viewers (1.0 Million), +103% in Women 18-34 (252,000), and +142% in Adults 18-49 (628,000). Total Divas is pacing as E!’s best sophomore original series in two years (since May 2012) and is the network’s second-most watched original program after Keeping Up with the Kardashians. Total Divas also ranks as a Top 5 ad-supported cable show on Sundays 9pm to 10pm in Women 18-34 (#3) and Adults 18-34 (#5).
Payout Take: Despite what you may think about the reality show, it has become valuable to the E! network. Even though there has been a slight decrease in viewership this season, it is doing well with key demos. In its first season, it was positioned to succeed with a prime spot after its top series, Keeping Up with the Kardashians. This season has gone without Kim and Chloe as a lead-in but still has produced on one of the busiest nights on television.
May 21, 2014
The WWE conducted a special conference call on Monday in order to mitigate some of the damage that occurred with the announcement of its deal with NBC Universal. Although terms of the deal were not divulged, investors took the news as bad and the stock has tumbled.
The conference call did not reveal anything new except for the fact that WWE CEO Vince McMahon stated he was “a little disappointed” in its new deal with NBC Universal. He indicated that the deal altogether was “at about $200 million.” McMahon was frank on the conference call stating that the deal was not what the company wanted or what its researched showed with respect to its domestic television deal. He also admitted in the Q&A portion that launching the WWE Network had a negative impact on negotiating its TV rights deal.
One of the takeaways here is that the WWE may have underestimated the impact the loss of its PPV revenue may have on its core business.
It still projects that it will have 1 million network subscribers at the end of 2014 and the possibility of 2 to 2.5 million subscribers at the end of 2015. With the subscriber projection of 1 million at the end of 2014, it would have an estimated 2014 OIBDA (Operating Income Before Depreciation and Amortization) loss of $40 million for the network alone and $35-$45 million for WWE. If the WWE achieves its 2 to 2.5 million subscribers number by the end of 2015 it will have turned around the loss to an OIBDA of $105 million to $160 million for the network and $125 million to $200 million for WWE.
Despite the promising outlook, investors are not happy right now. Marketwatch reports that the Former Attorney General of Louisiana has commenced an investigation into the WWE. The crux of the investigation will seek “whether WWE and/or its officers and directors violated state or federal securities laws.”
Unless the investigation produces material information that the officers and directors knew that it was misleading investors, it’s unlikely that the investigation would produce much. McMahon alluded to the fact that the company’s research reflected the fact that a TV rights deal could garner double the WWE’s current deal. Obviously, if the research was flawed and/or not sound in its conclusions, there may be an issue. But, I would not suspect any criminal or civil penalties as a result of a disappointint TV deal.
Monday’s Business Outlook Conference Call was a way for the WWE to calm its investors. But the conference call probably did not make any holder of the stock happy considering McMahon expressed his own dismay on the new deal. Earlier this year, the rights fee deal was thought to be a big boon for the company based on other sports’ rights deals such as NASCAR, but it did not come to fruition. Based on the huge hit the WWE took after news of its domestic television deal and the news that PPV revenue will contribute more than expected to the company’s losses, many investors are cutting their losses. The steep decline in stock price caused an investigation and the possibility that executives will be removed to satiate angry stockholders that saw their portfolio take a huge hit.
Just a few months ago, the WWE stock was trading above $30 and now (at the time of this writing) it’s trading below $11. The stock has been downgraded by analysts which can’t help foster confidence right now. Now, analysts will take aim at its network to see if the company can come through with its projections.
April 18, 2014
Welcome to another edition of The Wrestling Post. In this edition we write about a new PPV announced, DirecTV plays hard ball and the latest ratings from Total Divas.
Ring of Honor tries PPV Sunday June 22nd
This week Ring of Honor announced that it would be holding its first PPV ever for the company Sunday, June 22nd.
Notably, the ROH PPV is the same weekend as Glory’s first PPV and a week after TNA Wrestling’s PPV, Slammiversary. ROH had previously put on iPPVs with some noted difficulties.
The Sinclair Broadcasting-owned ROH have expanded its reach with its weekly show as more affiliates carry ROH. Of course, it’s at 1:00 am on Friday night here in Seattle so you can still DVR the show. Hopefully promotion of the PPV will attract fans to buy the PPV.
Payout Take: The PPV can be seen as ROH capitalizing on the WWE popularity and its champion – Daniel Bryan worked Ring of Honor for some time. 104,000 buys is the unofficial number of ECW’s very first PPV – Barely Legal in 1997. We shall see if ROH can do better in 2014. ROH has more financial backing and should put on more of a polished product. Obviously PPV has evolved since the late 1990s and we will see which satellite/cable companies pick up the PPV but it will be an interesting comparison.
DirecTV drops WWE PPVs
Earlier this week, DirecTV announced that it would no longer offer WWE PPVs to its subscribers per PW Torch. WWE did release a statement acknowledging the move by the satellite company. “Yes, DIRECTV has decided to stop offering our PPV’s residentially and commercially. The only other option would be to work through the local cable provider.”
DirecTV did leave an out that it may return to carrying WWE PPVs. You may recall that the Dish Network first announced that it would no longer carry the company’s PPVs since it launched its digital network. However, the distributor changed its mind and carried Wrestlemania XXX. The domestic buys for Wrestlemania XXX, the first PPV carried on the WWE Network, drew 400,000 purchases.
Payout Take: While the WWE is hoping for the success of its network, it still seeks its distributors to continue to carry its PPV. Distributors such as DTV and Dish saw this as a direct hit against its profits from the WWE PPVs. We all knew that the WWE Network would cannibalize its PPV profits but would benefit the WWE bottom line in the long run. We will see whether DTV stands it ground. It has played hard ball in the past. One need only look at the acrimonious negotiations between DTV and the Pac 12 Network and The Weather Channel to see it doesn’t back down.
Total Divas ratings
Episode 4 for the second season of Total Divas on E! scored 1.164 million viewers for a 0.5 rating among adults 18-49 according to Television By Numbers. The episode was the first in two weeks having taken off for Wrestlemania XXX Sunday.
The 1.164 million is the second-lowest rating this season for the reality show. This season’s average is at 1.26 million viewers.
March 26, 2014
Forbes.com posted an article which features WWE chairman and CEO Vince McMahon. The article boasts the achievements of McMahon while cautioning about the risks of the WWE Network.
The article, written by Lifestyle editor Michael Solomon, is an overall positive piece on the McMahon success story. The piece highlights the company’s big investment in the network which is underscored by the fact that revenues “have barely budged (remaining at $500 million since 08) over the last few years.” This may be due to the $75 million it has reportedly spent on setting up the WWE Network. It also writes about the company’s failed attempt to establish its network as a “premium” channel to be distributed on the network. The Forbes.com piece spins this in the positive for the WWE and mostly everyone has bought into the“over the top” strategy of the network.
As it is currently set up, the network needs 1 million subscribers to break even. At 2 million subscribers, it projects adding $50 million to its EBITDA. The first numbers on the network will come out after Wrestlemania.
Due to the network, the WWE has cannibalized its PPV business which will change how the company will do business. The shift has drawn the ire of DirecTV and Dish Network. DirecTV had some harsh words for the WWE and Dish Network actually told its subscribers that it would not carry Wrestlemania XXX this April 6th. However, it has since backtracked on its stance and will now carry the show.
The article will be published in the print edition of Forbes the week leading up to Wrestlemania Sunday giving it a prime PR piece leading up to its biggest event of the year.
Television by Numbers reports the second episode of Total Divas (9pm ET/6pm PT) scored a viewer average of 1.28 million viewers on Sunday night. Thus, it did better than the last hour (936K average) of UFC Fight Night 36 although the last quarter hour featuring Rua-Hendo did 1.25 million.
Last week the WWE and Mattel, Inc. announced new kids property called WWE Slam City. In addition to merchandise, the WWE has launched a series featuring WWE characters which appears on WWESlamCity.com, YouTube and its Network. The obvious hope is that this property will facilitate continued growth in its consumer products division.
March 5, 2014
Welcome to another edition of The Wrestling Post. In this post we look at WWE stock, the net worth of Vince McMahon and a move in programming for the WWE Network.
WWE Stock at all-time high
Despite the rocky start to its network launch, WWE stock is trading at an all-time high. The stock price went up as high as $27.43 on Wednesday and was at $27.10 in after-hours trading.
Payout Take: The buzz around the WWE Network and the anticipated media rights deal has investors seeing value in the company. There are some that have been displeased with the network due to the many glitches during the first week but the WWE has done a good job in quelling the uprising of negative reviews and for the most part the tech issues have been addressed. This spring will be the biggest in the company’s history as its rights fee deal will likely occur sometime in April and it will reveal the first set of subscriptions numbers for the network. Both will be key indicators for the stock in 2014.
Vince McMahon is a billionaire
Forbes.com came out with a list of “notable newcomers” of billionaires based on net worth for 2014. WWE CEO Vince McMahon made the list with a net worth of $1.2 billion. Forbes.com describes McMahon’s source of wealth as the WWE and states, “…transformed the World Wrestling Federation from a regional operation into an international phenomenon. WWE went public in 1999 and today its programs are broadcast in nearly 150 countries and more than 30 languages.” McMahon returns to the list as his net worth had dipped in 2012-2013.
Other newcomers to the billionaire club include Michael Kors, Drew Houston (Dropbox founder) and Brian Acton (WhatsApp founder who was turned down by Facebook for a job. Four years later Facebook paid him $3 billion for his company).
Payout Take: With the WWE’s stock at all-time highs, the hopes of the potential Network revenues and an anticipated rights fee deal this spring that should double (if not more), McMahon’s wealth will only go up in the near future.
February 26, 2014
On Monday the WWE launched its much heralded Network which it advertised to be available on almost every platform imaginable. The good news is that number of those signing up exceeded expectations. The bad news is that it is experiencing technical difficulties across most platforms.
The WWE’s technological partner in the venture, MLB Advanced Media, indicated that it had not expected the demand it has received from people signing up. The WWE released a statement Monday regarding the issues upon signing up and the subsequent technical issues subscribers found once they were able to attain access.
MLBAM, WWE’s tech partner, was overwhelmed and its systems have been unable to process most orders since 9 am due to demand for WWE Network.
— WWE Network (@WWENetwork) February 24, 2014
The WWE also stated that MLBAM was aggressively working to resolve the matter on Monday morning. Although not directly, the WWE inferred that the fault lay with MLBAM for the tech issues. At least, that’s how it is being interpreted in the press. One would think that a part of this has to do with the one week free trial. Even as of Wednesday, there are still problems with logging in.
We are working to fix log-in issues on the @WWENetwork application that are effecting viewers with accounts created in the last 24 hours.
— WWE Network (@WWENetwork) February 26, 2014
In my own experience, I was able to sign up at 6:01 a.m. on Monday via PC, one minute after the promoted launch, but was only able to watch last year’s Wrestlemania in the first hour. I was not able to go through the library until mid-morning. Later that day, the stream was fine for me on the PC but I experienced issues on my iPad. Notably, I have experienced more buffering issues on the PC on Tuesday night and today.
Certainly, these issues are being worked on but the technical issues are a concern for the WWE going forward since its heavy investment in the product. The WWE and MLB Advanced Media must make the fixes soon. If the free trial ends with the problems persisting, its likely that the WWE will lose a lot of potential customers.
Tech issues were a given as to challenges facing this network. The question is how fast can the WWE and ML BAM fix them. If we are to spin this in a positive light, the overwhelming demand for the Network reflects the fact that its promotion of its product created a swell of interest. But, the tech issues could make folks concerned and they may decide not to subscribe if they feel that these issues will be an inherent part of being a subscriber.
February 20, 2014
The WWE announced its fourth quarter earnings on Thursday and despite not beating loss per share estimates, its stock reached a 52 week high during the day. In addition, Vince McMahon spoke about the CM Punk situation.
As it relates to Punk, when asked about his abrupt departure from the WWE, McMahon indicated that he was on a “sabbatical” and left it at that without further follow up. Without going further and/or causing a SEC investigation on the matter, McMahon left the door open for future work with Phil Brooks. Regardless of the rumors of Punk released from the company, McMahon believes that its likely Brooks will return. Certainly, how professional wrestling is, returning to the ring is always a possibility.
As for the financials, the WWE loss per share was at $0.10 per share. Analyst estimates had the company’s losses per share for the fourth quarter of 2013 at $0.05 per share.
WWE’s total revenue for Q4 2013 was $118.4 million and it had a net lost $7.9 million. In comparison, Q4 2012 saw it take in $115.1 million in total revenue which earned a $0.6 million profit. The much-anticipated WWE Network costs, weak DVD sales (likely due indirectly by the Network) and “compressed television production margins” as stated in the WWE press release were the reasons for the losses this year.
Some other notes:
The company also released information for the full year 2013. Last year, WWE made a $2.8 million profit with revenues at $508 million. 2012 saw $31.4 million in profits with $484 million in revenue.
PPV revenue increased during the Q4 due to having one more PPV in the quarter. It earned $15.7 million for the quarter.
The WWE’s consumer products business decreased 31% to $14.1 million due to “declines in the Company’s home entertainment business and toy licensing.” Although licensing revenues declined, domestic retail toy sales increased in 2013. It also indicated that “construction toys” have demonstrated strong growth. We may see more of this with its recent renewed agreement with Mattel.
The WWE’s movie division showed a $5 million revenue increase over 2012 but this was mainly due to timing of the release of the movies in 2012.
WWE stock was up 7.5% to $24.74 at the close of trading on Thursday.
The overall takeaway from the numbers is that the WWE has spent a lot of money on the WWE Network. One need only compare the revenues vs. profits in 2012 versus 2013 to know a bulk of the revenues is being reinvested into the Network. The WWE has already projected a $12M to $15M loss for this year’s first quarter due to the costs to launch the Network. The good news is that most of its key areas are experiencing growth and while there may be some concern with its consumer products division, the recent Mattel deal should help with sluggish sales. But of course, the big news is the bullish feeling analysts have about the potential rights fees deal the WWE is set to sign.