The WWE held its much-anticipated investor’s call on Thursday morning following the release of their fourth-quarter and year-end results for 2019.
The company was greatly lifted through the triggering of its new domestic television deals with the USA Network and Fox.
For the quarter, the company had a net income of $69.3 million off revenues of $322.8 million with operating income listed at $99.8 million and Adjusted OIBDA at $107.6 million. For the fourth quarter of 2018, they had a net income of $41.2 million and revenues of $272.5 million.
For the full year, they posted a net income of $77.1 million off revenue of $960.4 million compared to net income of $99.6 million and revenue of $930.2 million for 2018. Adjusted OIBDA was right at $180 million for the year, which was the low end of the estimate made in the last earnings report in the third quarter, which WWE had adjusted its estimate to last week when announcing the departures of co-presidents George Barrios and Michelle Wilson.
The major expenditures of 2019 were focused on the company’s new headquarters that they estimate another $130-160 million being spent on in 2020 that will also cover the upgrading of their technology infrastructure and then $80-100 million in 2021.
The core content rights are driving the company with $264.6 million in revenue for the quarter. The new deals for Raw and Friday Night SmackDown went into effect in October, so this was the first quarter with the new deals reflected. That figure also included whatever the rights fee is for NXT on the USA Network, which began in September.
For the year, they brought in $348.6 million in rights fees, up from $269.8 million in 2018.
The notable areas down included the WWE Network, Live Events, and to a lesser degree, consumer products.
The WWE Network averaged 1,420,000 paid subs for the quarter and down 10% from Q4 in 2018. They are projecting average paid subs of 1.47 million for Q1 of 2020, which given the time of the year and past markers hit during this quarter shows its a less popular service. In the first quarter of 2019, they averaged 1,584,000 subscribers worldwide and therefore, estimate an approximate drop of 114,000 to the average.
Based on the data and trends throughout 2019, it indicates the WWE Network hit its peak for WrestleMania 34 in 2018 and was not able to replicate the success of that period in the following year’s WrestleMania season.
At the end of 2019, the network had 1,459,000 total subscribers with 1,389,000 paid and 70,000 free subscribers. That breaks down to 1,048,000 in the U.S. and 411,000 international subs.
In the U.S, they had 996,000 paid at the end of the year and 393,000 international subs. The paid number is down from 1,116,000 in Q3 of 2019 and 412,000 international subs in the same quarter. The major difference was NXT being removed as a live program on the service once the deal with the USA Network commenced. One would assume that it would have a larger effect on the U.S. subscribers, but the show is also delayed by 24 hours for international viewers.
Live events continue to drop with the fourth quarter showing a $1 million loss in operating income off revenue of $27.4 million compared to operating income of $1.4 million and revenue of $34.4 in 2019.
The company only ran 70 events in the last quarter with 50 in North American and 20 international shows compared to 87 total events in Q4 of 2018. This is the quarter that features the big European tour each year, as well.
The upside of fewer events is that the average attendance in North America was 5,800 compared to Q3 with 4,400. This is enhanced by the elimination of less popular live events that drag the average down and more concentration on television tapings and pay-per-views to skew it higher. International attendance averaged 4,100 compared to 4,500 in the last quarter and 6,900 in Q4 of 2018. On the international shows, they did take in more revenue with a jump from $6.5 to $7 million but is due to a 30% increase in the average ticket price of $84.26 for international shows this past quarter.
For the forthcoming year, they are projected adjusted OIBDA at $250-300 million, which Vince McMahon added was on the conservative side citing a potential “transformative deal” with regards to their OTT content and will be the major source of discussion coming out of this report.
They were adamant on the investor’s call that the XFL is a separately run entity that employs 400 people and there are zero plans for the WWE to partner or merge with the league to quell those discussions.
It was stated that it’s only a question of timing regarding the closing of new content agreements in India and the MENA (Middle East North African) region downplayed any disruption to those deals being completed. The lack of closure to the deals was cited as reasons for the company not hitting certain financial markers this year.
Vince McMahon was very high on the potential OTT deal that he said could be announced in the first quarter mentioning how far along those negotiations are. He indicated it would be a possibility of selling their OTT content and mentioning the “major players” that are interested in those rights. It opens the door to the notion of the WWE licensing out its pay-per-view content and then, what becomes of the WWE Network if the major shows or all the pay-per-views are being licensed elsewhere.
We will have much more on the report and earnings call on today’s Café Hangout at 3 pm Eastern for Patrons to tune in live for. We will be joined by Brandon Thurston of Wrestlenomics to dissect the news and numbers.
WWE’s investor’s call can be heard in its entirety on the POST Wrestling Café.
