ESPN to provide coverage at Wrestlemania

March 30, 2016

ESPN will be airing “SportsCenter” live from Wrestlemania this Sunday taking place at AT&T Stadium on Sunday.  It will also feature live cut-ins throughout the day.

The move is a “specific content play” as the network attempts to appeal to ESPN viewers that also are WWE fans.  The network had been featuring WWE in segments which now lead up to Sunday’s WrestleMania.  This past Monday, ESPN anchor, and former WWE announcer, Jonathan Coachman made a guest appearance on Monday Night Raw to promote the event.

This past January, ESPN also featured Lucha Underground stars to promote its return to the El Rey Network.  Last year it aired from the Barclays Center in Brooklyn where Summerslam took place.

(H/t via Sports Business Daily)

Payout Perspective:

The coverage is good for the WWE and promotes its network.  It reflects the fact that ESPN is attempting to broaden its reach.  While pro wrestling is considered “sports entertainment” and not purely sports, ESPN will be giving it the coverage like any other sport.  It’s clear that it is a ratings-grab which the WWE does not mind at all.

WWE stock downgraded a day after Q4 earnings announcement

February 12, 2016

The WWE posted strong fourth quarter earnings as revenue increased 21% to $658.8 million, the highest in Company’s history.  However, that was not enough for investors as the stock was downgraded a day after the earnings announcement.

The WWE reported a net loss of $1.2M adjusted for non-recurring costs which equated to a profit of 4 cents per share.  While the WWE beat analyst expectations, it took a hit as the stock was downgraded to a ‘Hold’ from a ‘Buy’ by The Street Ratings.

The WWE Network reported 1.22 million paid subscribers at the end of Q4.  It was a 49% increase from 2014 Q14.  The WWE announced that it was the fifth largest direct-to-consumer OTT subscription service in the U.S. next to Netflix, Amazon Video, Hulu and MLB.TV.  The WWE Network continues to expand internationally as it extended its reach to Germany, Austria, Switzerland and Japan with plans to expand into the Pacific Rim .  It announced 277,000 international subscribers.  This means that there was roughly 940,000 domestic subscribers and 277,000 overseas.  According to Chris Harrington of The Wrestling Observer, there were 389,000 additions although there was a churn of 405,000 subscribers.  But this quarter showed the most international subscribers since the network was offered internationally.

In January, the WWE was added to the S&P SmallCap 600 Index.

The 4th Quarter for 2015 brought the annual revenue is up 21% from the previous year.  Per Harrington, the operating income and net income were the highest since 2013 but below the profitabil8ty of the 2007-2010 traditional PPV era.

The stock was down slightly after yesterday’s trading and was down once again on Friday to $14.65.

ESPN covers Summerslam Sunday

August 23, 2015

While there is a Sunday night UFC Fight Night from Saskatoon, Canada airing on FS1 DSunday night, the event might be overshadowed by WWE’s Summerslam which will air at the same time as the live MMA event on the WWE Network and through PPV.

The WWE has received support in promoting this event from ESPN which is airing live at the Barclay’s Center in Brooklyn, New York where the company is holding three sold out events which started last night with the WWE’s developmental arm NXT holding an event.  In addition to Sunday’s Summerslam, the company will air Monday Night Raw from the same venue.  Former WWE commentator and current ESPN anchor Jonathan Coachman was a central part of the coverage.

According to Forbes.com, there was some controversy as to whether ESPN should cover the WWE event.  However, the company decided to make the decision to cover it for a variety of reasons.  Forbes.com touched on the fact that ESPN is losing subscribers and covering the WWE is a way for ESPN to attract more viewers.  Earlier this year, ESPN aired Brock Lesnar’s decision as to whether he would sign with the UFC or stick with the WWE.  It also produced a documentary featuring WWE superstars.

Strategically the WWE has offered a free month of WWE Network for non-subscribers which should boost viewership.  The offer is an almost quarterly strategy to entice curious fans to sign up.  As of the last earnings call, it appears that paid subscriptions are doing well and offering the free month is one of the reasons the sub numbers have progressively increased.

Payout Perspective:

This summer, ESPN has done live remotes at unique sporting events across the nation to give little known events some notoriety.  This, of course, is a little different.  In the past, ESPN has covered Wrestlemania in the past but never in a serious capacity.  ESPN’s involvement in covering Summerslam is great for the WWE.  In year’s past, the company’s biggest card of the summer was held in Los Angeles but interest had waned.  This year appears to have had a resurgence and part of that has to be due to ESPN’s involvement.  Brock Lesnar was on the network earlier in the week and you may recall he indicated that Vince McMahon was a better promoter than Dana White.

Based on the attendance from Saturday and the anticipated attendance for the next two events, it appears that the WWE has found a new home for Summerslam.

WWE reports 2nd quarter earnings

July 30, 2015

The WWE announced its second quarter earnings on Thursday and the numbers pleased many analysts.  The WWE reported net income of $5.1 million ($0.07 per share) compared to a net loss of $14.5 million ($0.19 loss per share) in the second quarter last year.

The WWE reported quarterly revenue of $150.2 million exceeding $1.5 million better than analysts expectations.

The total number of WWE Network subscribers increased 75% from the second quarter in 2014.  The WWE Network had 1,156,000 paid subscribers at 2015 2nd quarter end.  It is a 31% increase from the first quarter of 2015.  The network continues to think of its future plans which includes new content and adding approximately 180 hours of original content by year’s end.

WWE stock has increased 59% since the start of 2015.  It closed up $2.88, 17%, to $19.36 on Thursday.

Notable earnings highlights and announcements:

  • Live Event revenues decreased 34% to $26.4 million from $40.3 million in the prior year quarter primarily due to the timing of WrestleMania.
  • The WWE video game, WWE2K15, has done well. It has assisted in boosting the Consumer Products Division revenues up 36% from $16.0 million to $21.8 million this quarter.  Licensing revenues increased 105% from $5.5 million to $11.3 million on the strength of the game based on higher unit sales and effective royalty rates.
  • WWE Studios increased slightly from $1.7 million (Q2 in 2014) to $2.1 million this year.
  • In enticing fans to subscribe to the WWE, it plans to introduce a 3 month subscription card at retail which would give a “no credit card required” payment option.
  • Despite the Network, PPV buys are still solid with an average of approximately 56,000 for the 3 events of the second quarter. Although not considered a PPV, a July 4th live event from Japan, Beast in the East become the most watched program of all-time on the network excluding PPVs.
  • Television revenues increased 19% from $43.8 million (Q2 in 2014) to $52.1 million. The revenues do not include the timing of Total Divas which began airing in July.

Payout Perspective:

The one take in comparing the WWE Network from this quarter last year was that the network was only available in the U.S. in July 2014.  Now, the WWE has expanded internationally.  Still, a bulk of the over 1 million subscribers are in the U.S.  The earnings report is a win for the WWE as it appears that its most recent big gamble, the network, is doing well.  The big challenge is maintaining and retaining subscribers.  There is still a deficit in the amount of investment in the infrastructure of the network lost PPV revenue and TV licensing fees.  Yet, the network appears to have caught on.

Hulk Hogan terminated by WWE after audio of racist rant surfaces

July 24, 2015

World Wrestling Entertainment has terminated the contract of Hall of Fame wrestler Hulk Hogan.  The decision was made based on audio that surfaced from 8 years ago.

Hogan has been wiped from the WWE web site and eliminated from his current position on the USA reality television series “Tough Enough.”

The audio tapes relate to racist comments made by Hogan 8 years ago.  The information appears to be a part of sealed information from the pending Gawker lawsuit in which Hogan sued the web site for releasing a sex tape.  It would appear that the release of the audio tapes were done as retribution for the lawsuit.

Hogan has released a statement apologizing for the racist comments.   The bad news for Hogan is that there are inferences that there is more audio coming out.

Payout Perspective:

Even though many people here are MMA fans, it’s clear that everyone knows Hulk Hogan.  This makes the decision by the WWE to immediately distance itself from one of its biggest stars ever more surprising, yet appropriate.  As a publicly traded company, the WWE did not want to come under fire for Hogan’s comments and suffer any financial repercussions.  While its WWE Network is gaining traction with consumers, it’s still needs to find a way for the investment to break even.  Negative publicity like this is not good for business.  As for Hogan, his reputation is marred and he joins Bill Cosby as a pop culture figure of the 1980s who we now see in a different light.

Did Gawker have anything to do with the release of these tapes?  Not sure.  But, it will make the trial between Hogan and Gawker that much more contentious.

The Wrestling Post – 06.02.15

June 2, 2015

Welcome back to another edition of The Wrestling Post.  This time around we take at the WWE Network offering another free month and the uncertainty of the status of TNA Wrestling.

WWE offers another free month on its Network

With the success of recruiting and retaining more network subscribers through its “free” network months, the WWE has added another free month of June for non-subscribers.  It just came off a “free” month of May which culminated in a special live show.

Payout Take:  There is no initial reason given for the second consecutive month of the “free” Network offer.  We can’t read into anything but from the past indicators, the WWE has been able to collect a fair number of new paid subscribers from its free promotion.  Thus, when people sign up for the free month, they tend to stay on and pay the following month instead of cancelling after the free month is up.  The one question is whether the “free” month will be a mainstay for the network.  It appears that the this strategy is the “go to” move to boost subscribers.  We shall see if this means another improvement with its overall subscription numbers when it makes another announcement after the end of the second quarter.

Ring of Honor now on Destination America; TNA status in jeopardy

In what was a newsworthy week last week for the Discovery Network’s offshoot, Destination America, it was announced that wrestling promotion Ring of Honor will air on the network starting Wednesday, June 3rd.  The interesting part about this situation is that the ROH announcement came after news that Destination America would not renew TNA Wrestling next year.  The Wrestling Observer first reported the news that TNA Wrestling would be not renewed as Dave Meltzer obtained an internal memo from Destination America indicating that the promotion would not be renewed.  TNA Wrestling is being moved from Friday to Wednesday and will now serve as the lead-in for ROH.  While there was the possibility that Destination America could have changed its mind if TNA ratings skyrocketed on Wednesday nights, the ROH announcement makes it highly unlikely TNA will be back on Destination America once its contract ends this year.   The station had an “out clause” at the end of the current TV season according to The Wrestling Observer.

Ring of Honor programming is currently available regionally via the Sinclair Broadcast Group. The Destination America deal is great for the promotion since it gives them national exposure and taps into markets that it could not reach with Sinclair.  According to The Wrestling Observer, the deal with ROH will only go through December 2, 2015 so we may see more movement from Destination America this year.

Payout Take:   Regardless of the semantics (cancelled vs. not renewed), Destination America made the decision that the production costs of carrying TNA Wrestling outweighed the ratings (and ad revenue) it received from the program.  Ring of Honor is a cheaper alternative for Destination America since it will not be paying for production costs for ROH.  Wednesday will be filled with wrestling as it joins Lucha Underground and NXT with live wrestling that night.

WWE Q1 2015 results

April 30, 2015

The WWE announced its results for the first quarter of 2015.  In a release from the company, it stated that revenues increased 40% to $176.2 million which is the highest quarterly revenue in WWE history.  The results exceeded analyst expectations for the company.

After five consecutive quarters in the red, it’s the first quarter where the WWE has shown a positive operating income.  As for the WWE Network, it reached 1.3 million total subscribers, a benchmark it announced the day after Wrestlemania.  The WWE reports that its average of network subscribers is at 927,000 at the end of the first quarter.  Again, the network’s free promotion, which was February this quarter, contributed to the Network’s growth as 154,000 subscribers converted from free to paid subscribers.

For its quarter ending March 31, 2015, it reported net income of $9.8 million ($0.13 per share) as compared to a net loss of $8.0 million ($0.11 per share) in the first quarter last year.

According to Chief Strategy & Financial Officer George Barrios the positive financial results were “driven primarily by the escalation of our [WWE] television rights fees and the expansion of the WWE Network subscribers.”

The WWE indicated that it will implement a five-part strategy the rest of 2015 for the Network.  This includes 1) creating new content; 2) implementing high impact customer acquisition and retention programs; 3) introducing new features; 4) expanding distribution platforms, and 5) entering new geographies.

As for the rest of WWE business, each division, except WWE Studios ($1.5M vs. $4.3M) is up over this quarter last year.  The total net revenues for this quarter were $176.2 as compared to $125.6 at the end of the quarter for 2014.  The Network segment, which includes revenue generated from Network and PPV increased $19.2 million from the prior year quarter.  The Network alone generated $28.6 million in revenue based on an average of 927,000 paid subscribers.

At the time of this writing, WWE stock is down slightly at $14.16 per share.

Payout Perspective:

A good quarter for the WWE.  Beating the analyst expectations is a good achievement by the company.  Wrestlemania was the likely key driver here especially when you look at the number of converted free to paid subscribers going into March, which was Wrestlemania month.  Of course, we do not know how many dropped the network in April.  We will see if the WWE can continue its positive momentum and see if its strategy for the network continues to net subscribers.

WWE Network averages 918,000 subscribers through Q1 2015

March 30, 2015

The WWE announced its network subscription numbers on Monday and Wall Street was unimpressed.  The WWE Network surpassed 1.3 million subscribers which is almost double its total from a year ago.  The current average is approximately 918,000 paid subscribers through the first quarter of 2015.

The WWE stock dipped during the day on Monday on “confusion over the company’s subscription growth,” according to analyst Laura Martin of Needham & Co.  Last year, the company announced WWE Network subscriptions at 667,000.  The average is at 918,000 per company press release.

The WWE Network surpassed 1 million subscribers in late January.

Payout Perspective:

As of the time of this writing, WWE stock was rallying in after-hours trading.  The 1.3 million subscribers sounds like a good number considering we are over a year in with the platform, but the fluctuations in how many subscribers there are at a current time still remains a source of confusion for investors.  Thus, this may be the reason the stock dipped today.  The network announced 8 new original series for the network during WrestleMania 31 on Sunday which the company hopes will facilitate consumer retention of the network.

WWE partners with DraftKings

March 19, 2015

DraftKings and the WWE announced a partnership on Wednesday which will see the Boston-based fantasy sports operator initiate a contest where a fan will win a trip to the WWE’s SummerSlam which will be held at the Barclay’s Center in Brooklyn, New York this year.

The winner of the contest will have the opportunity to attend SummerSlam as well as access to a VIP party where they will get to meet WWE Superstars and Divas.

DraftKings will be a promotional partner for SummerSlam which will entail integration within the event’s telecast on the WWE Network and PPV. It will also include integration within the WWE’s digital and social media platforms. DraftKings will also launch an integrated media campaign on WWE’s platforms leading up to this month’s WrestleMania 31.

Via a portion of the WWE’s press release:

“As daily fantasy sports continue to grow in popularity, we’ve seen dramatic growth in interest from fans in the WWE community,” said Jason Robins, Co-founder and CEO of DraftKings. “WWE is extremely creative when it comes to engaging their fans, and has been a great partner for DraftKings in developing contests and one-of-a-kind new experiences that fans are sure to enjoy.”

“We are always looking for innovative ways to deliver unique experiences to our fans,” said Michelle Wilson, WWE Chief Revenue & Marketing Officer. “WWE’s partnership with DraftKings will deliver an extraordinary opportunity to our fans, while providing DraftKings with maximum exposure during two of our biggest global events, WrestleMania and SummerSlam.”

For info on the contest visit here. The contest runs through April 15th.

Payout Perspective:

Until a year ago, I did not know that you could gamble on professional wrestling. Sure, DraftKings is “fantasy sports” but we understand the similarities.  The partnership makes sense from the perspective that the WWE does a great job with its social media and digital platforms and the exposure to a broad audience should assist DraftKings. For the WWE, DraftKings provides another sponsor as well as help assisting it with promoting the two biggest events of its year.

As we know, DraftKings signed a sponsorship deal with the UFC earlier this year.  Activations for each company appear to differ but the general takeaway is that fantasy sports is growing and expanding.

WWE Network celebrates one year

February 25, 2015

The WWE celebrated the one year anniversary of its network on Tuesday by allowing all free access to its network.  Variety also posted an article summarizing what the company learned with its over the top network.

Its clear that the Network is inextricably tied with the company’s future financial performance as it is stated in the WWE’s latest earnings report that the company’s future financial performance is dependent on subscription adoption of the WWE Network.

The company surprised analysts by besting Wall Street expectations for the fourth quarter and all of 2014.  While the company has incurred a net lost due primarily to the large investment in the network, it has not been as heavy as previously predicted.

As it reported in January, the network surpassed 1 million subscribers and is picking up more viewers as it rolls out in more foreign companies.  It has also done well with its promotions for the network including a free November and allowing subscribers to pay mont-to-month rather than establish a 6 month commitment as it was originally rolled out.

Variety cited 4 lessons the WWE has learned since its launch last February. Among the lessons it indicated the “balancing act” the company had with its “direct-to-consumer” initiative while maintaining its partnerships for distribution.  Essentially, this means keeping the people paying for its television rights fees happy as while as having amicable relations with the cable and satellite company.  The latter being a harder balance considering the company has cut into PPV revenues.  It also may have angered companies by playing most of the Royal Rumble last month during an episode of Raw due to the live event cancellation as a result of snow.

Payout Perspective:

The WWE Network has had measured success despite criticism about the product.  It may have not met its lofty expectations of subscribers yet but one may have to wait to see how it fares with international distribution. For its part, the WWE has been willing to make changes on the fly to the network (i.e. Free November, month-to-month payment, content, convenient options for viewer usage, etc.) It was a bold move for the WWE to take this step to create the network and the early adopters have spoken.  In year 2, we will see if more subscribers add on, or if the Network will face more hurdles for subscribers and retention.

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