On Thursday, the WWE announced its First Quarter earnings for 2014. Despite a loss of $8 million ($0.11 per share) due to the WWE Network, it beat analyst expectations by 0.05.
This quarter in 2013, the WWE saw net income of $3.0 million or $0.04 per share.
The most notable news was the lack of news on a new domestic rights TV deal which was initially thought to be completed by late-April or early May. Yet, there was no word on the status.
The WWE reported that despite the $4.4 million of network subscription revenue (based on 495,000 subscribers at quarter’s end), it was partially offset by $1.3 million decline in pay-per-view revenue. Notably, Wrestlemania XXX was not factored into these numbers. Here, we see the obvious cannibalization of its product. The announcements by DirecTV and Dish Network that it would not carry this Sunday’s PPV are a looming threat to the PPV revenue. The concerns would be whether purchasers of the WWE PPVs could transfer to the WWE Network to view the PPVs and how much more PPV revenue could it lose if big distributors refuse to air its PPVs.
It reiterated its belief that it would have 1 million subscribers by the end of the year. It also believed its expansion of the network to more platforms (e.g. Xbox One) and international markets will provide long-term growth over time.
WWE stock finished up 4% slightly over $20 for Thursday but is off 7% as of this writing on Friday.
Payout Perspective:
There was nothing earth-shattering about the losses as most knew that the WWE would be reporting this due to the Network expenses. The lack of news of a new domestic rights TV deal is hard to read. It could be good news or bad news. Based on the stock price, it appears that investors are taking this as bad news. The Network remains the big news this quarter. While Wrestlemania viewership on the Network and PPV did over 1 million viewers, we may not see these types of combined numbers again. The news that distributors are beginning to backlash against the WWE for its Network is something to keep an eye on the rest of this year.
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