The Wrestling Post: WWE Third Quarter Earnings

Welcome to another edition of The Wrestling Post.  This time we take a look at the third quarter earnings for the WWE.

For the quarter that ended on September 30, 2013, revenues for the WWE increased $9.1 million.  However, this was offset by an impairment charge based on losses from its movie division.

Notably, Summerslam PPV buys were down from the previous year.  In 2012, the annual event in Los Angeles did 358,000 PPV buys.  But this year with Daniel Bryan in the main event, it only drew 296,000 PPV buys.  PPV revenue was down 10% from the 3^rd quarter last year due in part to the poor Summerslam numbers.  Vince McMahon inferred that this year’s Summerslam was not an attraction fans wanted to see.  This could be a direct jab at Bryan.

On the plus side, TV rights fees increased 30% from last year from $34M to $44.1M.  There is an expectation that the WWE will broker new television deals by April 2014.  The U.S., U.K. and India deals for Raw and Smackdown are due and the company feels it’s positioned to be an attractive property for networks. During the Thursday teleconference, it mentioned the recent NASCAR/NBC Sports deal.  While the NASCAR/NBC Sports terms were not disclosed, the 10 year pact is said to be around $4 billion.  Previously, ESPN and TNT paid a combined $2.8 billion over 8 years.  Its likely the WWE would like a deal in this neighborhood.

Other notable information from the third quarter earnings:

–          The WWE is starting a John Cena apparel line to be sold at K-Mart.

–          PPV events are now being offered on Microsoft’s Xbox Live and on the Sony Playstation 3.

–          THQ’s video game, WWE ’13 saw sales of units drop over the prior year quarter.

–          Analysts seem optimistic about the potential future earnings based on the TV rights deal and the WWE Network.

–          Capital expenditures for 2013 included replacement of a corporate jet.

Payout Take:

Although there was no announcement about a WWE Network, it was reported that Stephanie McMahon did an interview with Broadcast & Cable and listed a launch for the network during the first quarter in 2014. This might be optimism more than reality as nothing specific came up during the earnings call.  What was of significance was the success of the E! reality TV series featuring the ladies of WWE, “Total Divas.”  It was so well-received that it earned another round of shows starting this month.  Also, the potential for a blockbuster rights fee deal is just around the corner which may have some analysts/investors interested on the WWE stock.  It would be interesting to see if the WWE does not get what it wants in terms of a deal from NBC Universal (owners of the USA Network) and shops around.  There is always the speculation that Fox Sports may jump into the mix for the WWE to give its new networks a jolt.  Of course, this is mere speculation here but that scenario could mean an instant influx of viewership.  It would also mean an astronomical monetary deal.