WWE released its financial results for the first quarter of 2020 on Thursday. Despite layoffs of over 20 performers and employees, the company announced strong earnings with revenues increasing 60% to $291M from Q1 in 2019. But, notably, the earnings call included the news that there would not be a new WWE2K video game.
When asked about the video game, Vince McMahon stated that there would not be a new game this year. The past two WWE2K video games came out to mixed reviews.
The net revenues for through the first quarter of 2020 was $291M as compared to $182.4M in 2019’s first quarter.
Operating income was $53.3 million this quarter as opposed to a loss of $6.8 million in the previous year.
In addition, WWE Network posted 1.46 million paid subscribers. This was a decrease of 8%. Despite the drop, it’s the rights fees that have been the key segment for the company.
This is what jumped out to me on the #WWE Earnings call. First two lines. pic.twitter.com/elCI3YdlYb
— Jason Cruz (@dilletaunt) April 23, 2020
In addressing the business obstacles as a result of COVID-19, it stated that it “implemented short-term cost reductions and cash flow improvement actions. These precautionary measures include reducing executive and board member compensation, decreasing operating expenses, cutting third-party staffing, consulting and talent costs, and reducing employee headcount by way of furlough.” In addition, it deferred spending on the Company’s new headquarters, suspended stock buy backs and drew $200 million from its revolving credit facility after quarter-end (i.e., took out a loan).
It was clear that live events were impacted due to the loss of live events which included WrestleMania this quarter. According to its financials, it lost $3.2 million this quarter. There was also a $35.7 million corporate loss on its balance sheet as well.
The company’s rights fees have balanced out its losses. Its core content fees were $133.2 million as opposed to $68.1 this time last year. The company’s deal with Saudi Arabia helped with the financials. Also, a new deal with Fox which added content for Fox Sports 1 on Tuesday nights.
Payout Perspective:
With the WWE laying off performers, staff and issuing furloughs, it appears that the company showed investors that it got leaner. Listing WWE as an essential business in Florida has helped the company produce new content to push out. Even without live events, one can see that the core competency of the business is its valuable rights fees that it can license content here and abroad. Also, we see the importance of the Saudi Arabia deal which has helped bolster the balance sheets in light of financial faltering in some segments.
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