World Wrestling Entertainment announced its 2nd Quarter results for 2012. Revenues were off by $1 million from last year and there was no word on the launch of the WWE Network.
The much-talked about Network and the much-maligned film division were the key reasons for the shortfall in this quarter’s revenues. Interestingly, the launch of the WWE Network has been pushed back again although more information on it will come out next quarter. The company spent $1.7 million on the network this quarter.
In addition, the WWE adjusted Wrestlemania 28 PPV buys once again. This time it was adjusted up to 1,217,000 from the last estimate of 1.1.
Despite the comparison from 2011, it was a busy quarter for the WWE. PPV buys were up 17% from the second quarter which offset the decline of its video game business and decline in attendance at live events overseas. A new show on the ION network was announced. Raw celebrated episode 1000 and drew 6 million viewers with a huge rating. It also took interest in social networking tool, Tout.
As for the investment, the WWE is optimistic in leveraging Tout to benefit its fans over social media (via Seeking Alpha):
Integrating fan Touts in our programming, such as the July 16 episode of RAW, it set a precedent for reaching an unheralded level of fan interaction. Our faith in the capability of Tout’s content sharing technology, our knowledge of our fans’ appetite to engage in this form of communication and our ability to drive usage of the Tout platform led us to invest $5 million in the series B financing installments.
While there were no new releases from the film division, it lost $3.3 million in costs. On the bright side, the WWE stressed its new strategy of partnership with others in its film division which should help reduce its financial exposure.
Some additional notes:
– The WWE announced the re-release of a “digitally remastered” No Holds Barred starring Hulk Hogan. The WWE has been running commercials for this for the past couple weeks. Honestly, I thought the commercials were a joke. It appears that nostalgia is strong as its anticipated sales will hit $300,000. The WWE indicated it spent $100,000 on it so it is making a nice profit.
– Revenue from its television distribution rights grew by 1%
– Its magazine publishing division continues to experience losses ($0.3 million) while its digital media division has increased 26% since last quarter on the strength of rights fees from content from YouTube.
Payout Take:
The WWE Network is still a moving target. Despite the costs going into the network, there is no significant news from the company on when it will launch, what the format would be and what will be the distribution structure?
This quarter, the WWE stressed that it is making investments in content which is the reason why its revenues are down. It is banking on the creation of content which will provide future revenues. One can see that this is working through the digital media division and its YouTube channel. It will be interesting to see how its investment and use of Tout will catch on with fans. The WWE is one of the leaders in social media but Tout is a new platform that it hopes will find a lot of early adapters.
WWE network should forever be pushed back. It’s just a failed enterprise, IMO.