WWE Q3 Results: Key sectors decline, stock takes a hit

Originally published at https://www.postwrestling.com/2019/10/31/wwe-q3-results-key-sectors-decline-stock-takes-a-hit/

The WWE releases its third-quarter earnings report on Thursday showing decreases in revenue, WWE Network subscriptions, and other key areas.

For the quarter, the company made $5.8 million in net income off revenue of $186.3 million, those figures are down from the third quarter of 2018 that generated $33.6 million in net income and revenue of $188.4 million.

The company also revised its guidance of hitting the $200 million mark for adjusted OIBDA. The new expectation is a figure between $180-190, which they stated would still be a company record. They pegged this mainly to a deal in the MENA (Middle East North Africa) region not being completed that they had anticipated.

In the media division, they brought in $146.1 million in revenue, representing an increase from $142.1 million last year. This was largely a result of core content television rights rising from $65.9 million in 2018 to $72.2 for this year’s quarter. This is an area that will see enormous gains for the fourth quarter of 2019 and beyond due to the USA Network and Fox deals going into effect for the company.

In their key performance indicators section, they listed Raw and SmackDown being down 6% and 4% respectively. This was characterized as a step forward as the declines were lower than the first two quarters of 2019. The chart listed USA Network down 15% and a 7% drop among the top 25 cable networks.

Live events were a money loser this quarter with operating income listed a loss of $3.5 million off $23.2 million in revenue. For the quarter, they ran 74 total events and 67 domestic shows. This is compared to 90 in the same quarter last year with 86 North American shows.

If you factor out the difference in total shows, the average revenue per show they ran for the quarter was $273,134 and is up from $260,465 per show in 2018. The key difference is that the reduction in shows are live events that are going to be less profitable and it helps the average with a higher concentration of pay-per-view and television tapings while eliminating bottom level house shows.

They averaged 4,400 in attendance, which was down from 4,500 in the prior quarter. The major events from this past year’s quarter were over SummerSlam weekend with four straight nights at the Scotiabank Arena in Toronto.

Consumer products brought in $17 million in revenue, a drop from $19.6 million last year with an operating income of $3.4 million this year.

The WWE Network, which went through an overhaul during the quarter, saw a lower than expected average of paid subscribers. The company’s guidance was an expectation of 1.53 million average subscribers and ended up averaging 1.51.

They had 1,530,000 total subscribers during the quarter, with 1.466 million paid and 64,000 free worldwide. That is a drop of 8% from Q2 2019.

Of the 1.466 million paid subscribers, it’s a breakdown of 1,062,000 in the U.S. and 404,000 international as paid subs are down 8%.

They are not bullish on a turnaround in the fourth quarter with a projection of 1.43 million paid subscribers for the period from October through the end of 2019.

They are still planning for a tiered system of the network to be introduced and Barrios dismissed the idea of decreasing the price of the network to be competitive with other “broader services” such as Disney+ and HBO Max. He said they are targeting a passionate fanbase and it’s a smaller group of their overall audience.

On the investor’s call, WWE co-president George Barrios was confident they would have a new television deal for India by the end of the year, which has been delayed throughout the year.

There were questions regarding AEW and Eric Bischoff that Barrios didn’t provide much depth on. He is happy with the changes made in creative but would not comment on specific people. Regarding AEW, he lumped them with lots of competition they have in the market space but cited the enormous platform and influence WWE has and felt would be a factor among talent considering an alternative company to work at.

As of Thursday afternoon, the company stock was down 16% and trading around $55-56.

If you’d like to listen to the conference call, we’ve hosted it on our Patreon feed (for free) here.