As the global pandemic continues, WWE posted its third-quarter earnings with the company topping last quarter’s results and putting the company in a position for its most profitable year ever.
While the company’s touring sector has halted its superior television rights fees and a cutback in expenses led to another massive quarter where WWE posted a net income of $48,278,000 off revenues of $221,595,000 for the period ending September 30, 2020.
This exceeded the Q2 2020 results that saw a net income of $43.8 million off revenues of $223.4 million. Their revenue was up 19 percent from the third quarter of 2019.
For the nine months ending on September 30th, WWE has posted a net income of $118,240,000 for the year, which has already surpassed last year’s record profit.
Beyond the escalators in its core content rights agreements, the company is also spending much less on expenses due to the pandemic and being based in Florida at stationary locations. After nine months, the company has operating expenses listed at $400.8 million compared with $466.7 for the same period in 2019.
The media division, including its core content rights, posted revenue of $201 million, which is nearly identical to last quarter’s $200.1 million figure. That’s broken down to $132,363,000 for core content rights, $47,767,000 in the Network sector, and $18,060,000 for ads and sponsorships.
Operating expenses for the media division are listed at $89.7 million for the quarter and came as the WWE launched its ThunderDome structure on August 21st at the Amway Center in Orlando, Florida. Brandon Thurston of Wrestlenomics noted that despite the ThunderDome undertaking, expenses in that sector were down from Q2, which was listed at $99.2 million this past year.
Television viewership was a big discussion point on the call with analysts. In the Q3 report, WWE reported a 29 percent year-over-year drop for RAW noting the USA Network is down 32 percent (which would include RAW) and the top twenty-five cable networks experience a 4 percent increase this quarter.
On FOX, SmackDown fell 2 percent but that’s comparing SmackDown on FOX this past quarter compared to airing on the USA Network in Q3 of 2019 that was in fewer homes on cable compared to network. FOX is down 33 percent year-to-year while the top four broadcast networks (NBC, ABC, CBS, and FOX) are down 24 percent on average.
Ads and sponsorships recovered and grew this quarter after falling to $13.3 million in the prior quarter, also topping its Q3 2019 level of $15,014,000.
The media segment is also where the international events, including the Saudi Arabia shows, are filed under the “Other” section, which won’t have a second show in 2020 due to the pandemic. They ran one card in Saudi Arabia this past February and it’s been previously stated that any shows they miss in Saudi Arabia will be tacked on at the end of the deal that runs through 2027 with the amended deal note calling for two events per year.
The live event business saw revenue of $703,000 with zero live events held beyond its tapings in Florida to fulfill their television commitments and the recently re-started NXT UK tapings at the BT Sport studios in London, England.
Consumer Products continue to be a big category during the pandemic with revenues of $19,923,000 and an operating income of $5.4 million, which is up from a year ago when you had live event merchandise revenue that brought in $3.5 million in revenue to that segment.
WWE is calling for an “incremental investment” in Q4 of $22-27 million that is largely associated with the WWE ThunderDome.
They reported cash and short-term investments of $638 million at the quarter’s end.
For the WWE Network, they ended the quarter with 1,549,000 paid subscribers consisting of 1,137,000 domestic and 412,000 international subs. The overall paid figure is down 8.3 percent or 141,000 paid subscribers from June 30, 2020. The streaming service averaged 1,604,000 paid subscribers during the quarter (1,172,000 domestic and 432,000 international). It’s worth noting that this past quarter outdid Q1 of 2020, which ended March 31st going into WrestleMania and contained the Royal Rumble in January.
This past quarter included five major events on the WWE Network with The Horror Show at Extreme Rules, NXT TakeOver: XXX, SummerSlam, Payback, and Clash of Champions.
There was a lot of news during the call with stock analysts including:
The announcement that Netflix is producing a documentary series on Vince McMahon that will be one of the highest budget documentaries they have produced. Bill Simmons will serve as the executive producer on the project while Chris Smith, who directed the Fyre Fest documentary, will direct.
The call featured Vince McMahon, Stephanie McMahon-Levesque, President & Chief Revenue Officer Nick Khan, and Chief Financial Officer Kristina Salen.
Khan noted that conversations have resumed regarding strategic options to license content from the WWE Network both domestically and abroad. Vince McMahon had pushed this heavily at the start of the year but did not materialize with a finalized deal.
Khan added that they were working on an event for the Indian market to air in 2021 and airing domestically that would help create Indian talent.
They were asked several times about declining television numbers with the company providing responses ranging from their numbers holding up against a cluttered sports field this fall, and Vince McMahon stating their audience “has never been bigger” and television ratings are one measurement. Khan stated that linear television has lost eyeballs, but consumption is up overall and is confident when WWE’s television rights come due with RAW and SmackDown’s contracts expiring in September 2024.
When asked about WWE’s deal coming up at the Amway Center, Salen said that there were lots of places for them to go and expected to be “at a venue like the Amway Center” for the remainder of 2020. It’s been noted that ECHL’s Orlando Solar Bears will begin to play at the Amway Center in December. The hockey team’s season begins in mid-December and their first home game is December 29th.
The company is not providing any OIDBA guidance yet for 2021 and wouldn’t commit when asked about the potential of holding events in Saudi Arabia next year.
On the WWE Network, Khan added that user data is very important to them when negotiating to license their content outside and credits the increase in hours of consumption to the addition of the free tier of the streaming service.
On Friday, we will be joined by Brandon Thurston of Wrestlenomics for a discussion on the third-quarter earnings report & call.
The full Q3 earnings call can be heard on the POST Wrestling Café.