On the same day the company announced its latest cuts, WWE announced its third-quarter earnings while upgrading its guidance projections.
For the period covering July through the end of September, WWE was led by a return to live events with fans and generated $255,853,000 in revenue and posted a net income of $43,486,000 for the quarter.
Those figures compare to $221,595,000 and $48,278,000 for the same quarter in 2020 during the pandemic. For reference, expenses were lower for the prior-year quarter due to the 2/3 of the quarter’s television being run out of the WWE Performance Center at a lower cost before moving to the ThunderDome in late August.
It was a strong quarter where the live events division, which was limping along prior to the pandemic, was a standpoint part of the presentation as the company touted revenue of $28,045,000 in the division, which was comically compared to last year’s quarter that generated all of $703,000 due to the pandemic and they were able to promote a “39x” increase.
Due to the success, WWE is increasing its guidance for Adjusted OIBDA (Operating Income Before Depreciation and Amortization) from a range of $270-305 million to $305-315 for the entirety of 2021. This comes in addition to $31 million returned to shareholders over the quarter from a combination of the shareholder repurchasing program and the dividend payout.
For the quarter, the company ran 38 North American events that averaged 8,320 (including SummerSlam at Allegiant Stadium) with an average ticket price of $75.13. They also ran four International events in the U.K. that averaged 7,420 with an average ticket price of $81.96. Total attendance for the first quarter with live fans back in arenas was 346,000.
The Media division that is the ultimate pillar of WWE’s finances reported revenue of $202,758,000, which is up from $200,969,000 for the prior-year quarter due to an escalation in the Core Content Rights ($141,327,000 and up from $132,400,000), although WWE Network revenue did experience a decrease from $47.8 million to $43.1 million this quarter under the Peacock licensing agreement that went into effect earlier this year.
In terms of television performance, Raw was listed with an average of 1,790,000 viewers for the quarter (up 1 percent from the same quarter last year) while the USA Network was up by 11 percent and the Top 25 Cable Networks dropped 25 percent. SmackDown averaged 2,148,000, which is up by 6 percent from last year while Fox is up 13 percent and the Top 4 Broadcast Networks are up by 18 percent, so SmackDown is not performing at the level of either the networks or Fox itself.
One key in all of the television numbers is that last year was a unique year where the fall season featured not only the MLB playoffs but also the NBA and NHL playoffs meaning last year was more competitive with live sports than this year that only features the MLB playoffs.
The Consumer Products division was obviously enhanced by the return of live events and had revenues of $25.1 million with an increase of $5.2 million citing live event merchandise sales including the big SummerSlam event in August. Licensing in the division was up to $11.6 million (from $10.8 million in Q3 2020).
The eCommerce business, which was surprisingly high in the early stages of the pandemic and largely replaced the live event merchandise sales that were lost, was down for this year’s quarter with $8.2 million in revenue compared to $9.1 million last year. The average WWE Shop was $62.34 based on 133,100 orders compared to $59.10 per order off 153,200 orders in 2020, meaning fewer orders but a higher per cap average of those continuing to buy. In theory, this should be a big sector for the holiday quarter with a combination of people buying gifts on WWE Shop and the post-Christmas house shows that are always among the strongest of the year.
Venue Merchandise brought in $5.3 million in revenue with a per capita figure of $14.20 in merch at the live shows.
The Q&A conference call with the stock analysts was largely focused on Nick Khan’s overview of the key business deals completed during the quarter and projections for the future.
Khan placed a heavy emphasis on the re-airing rights to Raw that come due in the “back half of 2022” (without being more specific) along with the shopping of the WWE Network’s international rights, which seems to infer the idea of licensing the network as it has with Peacock domestically.
Khan stated the rights to replay Raw belong to Hulu, who Khan feels will see NBC Universal sell their portion of Hulu to Disney at its 2024 valuation and that the battle for Raw’s replay rights would be “intense and fun”.
The company is looking to announce “a slew” of scripted and unscripted programming to stay “young and diverse” and also noted a children’s animated project that was recently sold to a streamer.
The company is extremely aggressive in the marketing of its intellectual property (IE: its talent) through programming concepts, sales, and sponsorships, the Fox deal for NFTs, the Panini trading card deal, etc.
Khan said he is very “bullish” on the next round of television rights negotiations where Raw and SmackDown’s existing deals with NBC Universal and Fox come due in late 2024. He also mentioned new streaming buyers in the market like Amazon, ESPN+, and Peacock that want to build their subscription bases and noted “the value of live” that they offer.
Khan has seen some early samples of the Vince McMahon bio series that is being developed for Netflix and Executive Produced by Bill Simmons, which he said is “out of this world”.
The other major emphasis was their pay-per-view strategy and creating big events and noting at least four stadium events in the U.S. (Royal Rumble, two-night WrestleMania, Money in the Bank, and SummerSlam already announced).
On choosing Nissan Stadium for SummerSlam in Nashville. Khan revealed that this past year’s SummerSlam didn’t see one ticket purchased from someone in Tennessee and that the cities of Las Vegas and Nashville share many commonalities and are destination cities with robust ticket demand but not a lot of crossover between the two.
Chief Brand Officer Stephanie McMahon-Levesque spoke on sponsorships and advertising and shift from “transactional” forms of deals to “contractual” to attract multi-year deals in the seven figures and believes this area could be one generating “hundreds of millions of dollars” one day when asked by an analyst. She cited four key areas of growth with content integration, digital and social, superstar brands, and international.
On John Cena, McMahon-Levesque noted that he was the top merchandise seller over the summer especially among the youth audience and that he grew numbers for Raw and SmackDown by 20 percent among those aged 2-17 and increased the 18-49 audience by 10 percent.
John Pollock will be joined by Brandon Thurston of Wrestlenomics Radio on Friday afternoon to discuss the WWE’s third-quarter earnings report and call with stock analysts.
