WWE posted yet another record-breaking year of profits with similar expectations for the upcoming year.
Thursday’s release of its fourth-quarter and year-end financials painted a strong picture as the company continues to navigate “strategic alternatives” that could see the company sold before its next round of domestic television rights are settled.
While not present on the call, Vince McMahon’s presence during this process was cast with frequent mentions of his return as executive chairman and a declarative statement by CEO Nick Khan.
In the first question during the Q&A, LightShed analyst Brandon Ross asked point-blank if McMahon would step aside if a buyer made that request and it ensured a greater value for shareholders. Khan responded, “yes”. This comes amid speculation that McMahon would only engineer a sale advantageous to his standing with a new ownership group.
Khan emphasized that talks were “still in the early stages” with the company retaining the Raine Group to explore, and that, putting off a potential sale until after the next set of domestic television rights is settled could take multiple buyers off the table.
The earnings call was led by Nick Khan, who was joined by Paul Levesque and Frank Riddick prior to the Q&A portion. Khan was extremely complimentary towards former co-CEO Stephanie McMahon, who recently resigned from her position, stating that Stephanie added, “an immeasurable impact on the company”.
Khan mentioned the recent successes of Raw and SmackDown including John Cena’s return on 12/30, the Raw is XXX special and last Friday’s edition of SmackDown that did 2.5 million viewers on the eve of the Royal Rumble. He added that Raw has seen a spike in the 18-34 demographic and that average watch times for both programs are experiencing all-time highs.
They are aggressively targeting sponsorship opportunities, citing the recent involvement of MTN Dew and Applebee’s representing ‘seven-figure deals’. WWE SVP Craig Stimmel recently confirmed that another sponsored match will be taking place at WrestleMania 39.
Levesque largely took over Stephanie’s role on these calls going over social stats and figures while weaving in ongoing stories among the major characters as well as the NIL program. After the success of the WWE’s TikTok account, they will be launching three international accounts to “speak directly to our fans in the region”.
In 2022, WWE took in $1,291,523,000 which translates to a net income of $195,588,000 – both record-setting for the company and the second consecutive year that $1 billion in revenue has been achieved.
In a breakdown of the fourth-quarter results, the company posted net income of $38.8 million off revenues of $325.3 million (down from $60.9 million in the prior year’s quarter). The company generated five percent higher revenue than in the same quarter in 2021, though this was offset by greater expenses including the production of content, the investigation into Vince McMahon, and higher stock compensation.
The media division (including core content rights and streaming) reported revenues of $1,033,900,000 led by the escalation of core content rights increasing by 5.4% to $596.8 million for the year. The fourth quarter was assisted by the timing of Crown Jewel, where the revenue is reported in the “Other” section under media with $61.7 million for the quarter and $148.5 million for the year including two shows in Saudi Arabia this year compared to one in 2021.
Regarding television performance, in the fourth quarter, Raw averaged 1,593,000 viewers and 1,735,000 for the full year, down 2% and 1% respectively from the previous year. The fourth quarter average is semi-misleading as the 12/26 episode of Raw was a “Best of” show that only did 1,111,000 viewers and the average of the previous twelve episodes in the quarter would be 1,636,000 against Monday Night Football.
For the same periods, USA Network averaged 544,000 for the quarter and 618,000 in 2022 (down 10% and 12% respectively). It emphasizes yet again how strongly Raw boosts the overall cable network average and how imperative it would be for USA to retain Raw programming unless they are willing to risk a major downturn.
In Q4, NXT averaged 652,000 viewers, or 20% above the USA average from October through the end of December.
Live events generated $23.8 million for the quarter (up from $20.1 million) and $123.1 million for the year (a big leap from $57.8 million in 2021, which was affected by not having live crowds for over six months due to the pandemic).
The company ran 218 live events in North America (not including NXT) and 13 international events. In North America, they averaged 6,070 fans per event with an average ticket price of $73.13. Internationally, they drew an average of 6,880 fans per show and a ticket price of $114.66 with those numbers assisted by the big Clash at the Castle event in Wales last September.
They singled out India as a region that they greatly want to expand into, with the pandemic thwarting many of those plans. Khan said with the pending merger between Zee and Sony in the country, they are awaiting its approval and plan to run a major live event post-merger.
Consumer products saw revenues of $134.5 million for the year (up from $101.2 million) and $21.8 for the fourth quarter (down from $32.6 million). The drop from last year’s quarter was a result of eCommerce dropping from $11.0 million to $5.0 million this year along with a $5.8 million decrease in product licensing in the quarter. For the full year, product licensing posted a large increase from $52.0 million in 2021 to $77.5 this past year.
Venue merchandise was way up this year and was outlined as an initiative during the call, specifically mentioning customized merchandise when they go to different cities and events. For the year, venue merchandise brought in $23.8 million, which was up $10.1 million in 2021 but was also offset by a lack of fans for half of the year.
For the upcoming year, the company projects adjusted OIBDA between $395-410 million and another record year for revenue. It was noted that the domestic television rights for NXT come due in September, with the company being optimistic about the growth opportunities with that deal while noting WWE and USA Network are very happy with the program’s performance.
Tune in at 1 p.m. ET as John Pollock & Brandon Thurston break down the WWE financials and the earnings call from Thursday.
