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WWE wrestles to a draw in latest earnings report

by Alex Wendland
Feb 28, 2013


Alex Wendland/MEDILL

Despite earnings trouble in the past several quarters, WWE stock has remained relatively steady.

World Wrestling Entertainment Inc. inched up the card into profitability in the fourth quarter, as charges relating to the Stanford, Conn. company’s film group dropped substantially.

In the latest quarter, WWE swung to a profit of $600,000, or 1 cent per diluted share, from a loss of $8.6 million, or 12 cents per share, in the year-ago period.

Analysts surveyed by Yahoo Finance had predicted that WWE would have per-share net of 1 cent in the latest quarter.

Revenue rose nearly 2 percent to $115.1 million from $112.9 million last year.

The company said excluding special items, adjusted earnings were 2 cents per share in both quarters.

In the year-ago period, WWE was hurt by a $12.2 million “film impairment” charge. In the latest quarter, that charge was a less-damaging $500,000.

WWE was bolstered in part by a 48 percent increase in revenue from home entertainment sales. Compilation DVD sets of former WWE talent continue to capture “lapsed” fans, or fans that haven’t watched WWE content in a year or more.

WWE’s compilation sets are also helped by modest costs of production. Many of WWE’s revenue drivers are cost-heavy, but using a “greatest hits” format allows for extraordinarily high margins by using existing content libraries.

WWE Studios, the film branch of the company, posted a $600,000 loss as compared to a $13.8 million loss in the quarter a year ago. The improvement can be attributed to the studio not producing a feature film in the latest quarter. In the 2011 quarter, production on “The Reunion” accounted for $12.2 million of the loss.

Television revenue continues to be a major growth engine for the company. WWE’s ratings remain some of the highest on cable and the company saw a 20 percent increase in such revenue compared to last year.

“We continue to make important progress on our key strategic initiatives, expanding the production and licensing of new programs and enhancing our brands,” WWE CEO Vince McMahon said in a press release.

As has been the case for several quarters, WWE continues to search for a carrier for its dedicated network.

WWE appears set to finally pull the trigger on its proposed network. Despite swirling rumors that the company may partner with YouTube as a pilot pay channel, WWE seems set on a premium model similar to HBO with a price per month between $12.99 and $14.99.

For the year ended Dec. 31, WWE earned rose 21 percent to $31.4 million, or 42 cents per diluted share, from $24.8 million, or 33 cents per share, in the prior year.

Full-year revenue was essentially flat, rising less than 1 percent to $484 million from $483.9 million.

Shares for WWE rose/fell $X.XX, or X.X percent on Thursday to close at $X.XX in trading on the New York Stock Exchange.