WWE posts $43.8 million profit for the quarter, Q&A notes and analysis

Originally published at WWE posts $43.8 million profit for the quarter, Q&A notes and analysis

WWE released its first-quarter earnings report for 2021 posting a profit of $43.8 million for the quarter.

The company was boosted by the start of the Peacock streaming deal, which had a large upfront payment attached that complimented the rise of core content rights fees that more than offset the lack of live events during the pandemic,

For the quarter, they generated $263,524,000 in revenue, which was down from $291 million in the first quarter of 2020. This year’s quarter saw net income of $43,832,000 (adjusted for currency it totaled $43,765,000) compared to last year’s net income of $24,145,000.

One major difference from last year was that WWE hosted a show in Saudi Arabia in February 2020, which was the last time they staged a card in the country. Previously, it was noted that any missed events in Saudi Arabia would be tacked on at the end of the ten-year deal they signed in 2018 with the General Sports Authority and calls for two events per year.

In the Media division, they posted revenue of $242,027,000 million, which was down from $256.6 million last year. However, Adjusted OIBDA in this division grew from $102,636,000 to $106,599,000. This is the area where the upfront delivery from Peacock was recognized.

Live Events were non-existent this quarter beyond a small segment of fans attending NXT events at the Performance Center. For the quarter, this section generated $472,000 in revenue (cited as due to travel packages, commissions through secondary ticketing, and revenue from events where WWE receives a fixed fee) compared to $17,529,000, which everyone understands the discrepancy. WWE ran live events until March 11, 2020, before they began running empty arena shows once the shutdown occurred.

Regarding the future of live events, Nick Khan stated they were bullish on live events and the ability to sell merchandise at shows but Kristina Salen noted they don’t have plans to return to touring until the second half of 2021.

Consumer Products grew from $16,922,000 to $21,025,000 in revenue as its eCommerce business continues to soar during the pandemic and make-up for the lack of venue merchandise sales. eCommerce business grew 66.2 percent from the same quarter last year while consumer product licensing jumped up 43 percent year-over-year.

For its television viewership, Raw was listed at a drop of 17 percent year-over-year going from an average audience of 2,244,000 to 1,860,000 while the USA Network has experienced a 14 percent drop during that same period (which Raw would account for a portion of that drop), and the top 25 cable networks down 11 percent.

Friday Night SmackDown averaged 2,191,000 viewers in the first quarter of 2021, which is down 12 percent from last year. They listed FOX being down 44 percent from 5,053,000 to 2,819,000 and the top four broadcast networks being down 19 percent this year.

The company is maintaining its guidance for the year with Adjusted OIBDA projected between $270-$305 million noting the impact of the Peacock, a ramp-up of live events “including large scale international events” and the growth of core content rights fees.

On the Q&A, Nick Khan emphasized that buyers are looking at linear viewers, as well as streaming and digital numbers and that is how WWE views its ratings, although they only disclose linear viewership numbers.

Between what was emphasized by Khan regarding digital and streaming numbers, as well as the Peacock stats, we have fewer metrics to go by for popularity and have no indication of how the WWE Network is performing. Throughout the call, they trumpeted WrestleMania as a big success in both subscribers and viewership on Peacock but are unable to share any data.

In the 10-Q filing, there was a note about the settlement the company has engaged in regarding the consolidated suit with the City of Warren Police and Fire Retirement System and suit filed by Paul Szaniwski on behalf of a group against WWE, Vince McMahon, George Barrios, and Michelle Wilson. This is the suit that alleged various public statements regarding WWE’s relationship with Saudi Arabia were false and misleading and the plaintiff class allegedly purchase WWE stock at an artificially inflated price. It listed that they entered into a settlement agreement for $39 million, which is still pending a judge’s approval with a hearing date listed for June 15th and the entire settlement is expected to be covered by insurance carriers.

The Q&A with analysts featured Vince McMahon, Stephanie McMahon-Leveque, Nick Khan, and Kristina Salen speaking on behalf of the company with the following items brought up:

  • Vince McMahon called this the best WWE management team in history
  • Nick Khan outlined the recent sports rights fee deals involving the NFL and NHL and how despite some viewership decline they received increases
  • Khan doesn’t believe the NHL’s relationship with NBC will continue after the conclusion of their present deal. Later in the call, he stated that NXT’s move to Tuesday was not a result of the NHL.
  • It was made clear they are looking to license the WWE Network in other parts of the world similar to the Peacock deal in the U.S. and monetize all of its content
  • There will be more NFTs in the future and appear to be bullish on that market. Khan stated that The Undertaker NFT had 100 cards made available and sold out within 35 seconds
  • The Steve Austin documentary was the highest-rated A&E Biography since 2005 on the network
  • Stephanie McMahon called WrestleMania “the most-viewed live event in the history of Peacock”
  • Stephanie added that Raw numbers have been “steady” since the introduction of the ThunderDome while Friday Night SmackDown is up 9 percent in the new setting
  • Bad Bunny’s appearances on Raw showed an increase of 31 percent in among Hispanic persons aged 18-34
  • The Superstar Spectacular from this past January did “5x” their usual ratings figures in India for the taped event from the ThunderDome in Florida

The full WWE first-quarter earnings Q&A can be heard on the POST Wrestling Café. On Friday, John Pollock will be joined by Brandon Thurston of Wrestlenomics to discuss the Q1 earnings report & call with analysts.