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The 7 - Pro Wrestling - WWE Quarter 2 Financial Report
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RYDER FAKIN
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#1 Posted on 17.11.03 0824.01
Reposted on: 17.11.10 0824.30
For the full report (with $$$ breakdown, etc.) Click Here (wwe.com corporate)...

World Wrestling Entertainment, Inc., Reports Q2 Results, Profitability Up, Expectations Raised

STAMFORD, Conn., Nov. 17, 2003 - World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its second quarter ended October 24, 2003. The Company reported income from continuing operations of $16.9 million, or $0.25 per share, versus $0.3 million, or zero cents per share in the prior year. Revenues totaled $94.4 million as compared to $90.3 million in the prior year quarter.

“I am pleased with our strong results for the quarter. As a result of improved operating results across almost all lines of business, we were able to exceed our expectations. In particular, increased overall pay-per-view buys, coupled with strong ad sales revenues and the continued benefits from the cost-cutting measures initiated in fiscal 2003, all contributed to the strong quarter. Management is focused on execution and continuing to improve our profitability,” said Linda McMahon, WWE CEO. “I am excited by our results and momentum as we gear up for WrestleMania XX at Madison Square Garden in March 2004”.

EBITDA was $28.8 million in the current quarter as compared to $3.5 million in the prior year quarter. The increase in EBITDA was attributable to continued growth in our international business, increased pay-per-view buys for the quarter, a reduction in our overhead and a number of unusual factors which are more fully described below. Results for our international business reflect an increased number of events held and new distribution agreements for our programming.

The current quarter included two unusual factors that positively contributed to EBITDA. Due solely to timing, this quarter reflects four pay-per-view events as compared to three in the prior year quarter. Revenues for the current quarter included approximately $5.3 million related to our July 2003 pay-per-view event and EBITDA for the quarter included $3.3 million for that event. In addition, the Company’s EBITDA benefited from a $5.9 million favorable settlement of litigation. The settlement payment was from an equipment manufacturer and related to the tragic death of Owen Hart in May 1999. EBITDA for the prior year quarter included a $5.9 million unfavorable settlement of litigation.

Operating income for the quarter was $26.0 million versus $1.4 million in the prior year quarter. Net income was $17.2 million, or $0.25 per share, as compared to a net loss of $1.6 million, or a net loss of $0.02 per share, in the prior year quarter. Included in the net loss for the prior year quarter was a $1.9 million loss, after tax, from discontinued operations related to our entertainment complex.

Total revenues through the first six months of fiscal 2004 were $169.1 million as compared to $175.8 million in the prior year period. EBITDA was $34.5 million for the current six months period as compared to $10.6 million in the prior year period. EBITDA for the current year period included $5.9 million related to the favorable settlement of litigation. EBITDA for the prior year period included $2.4 million in net unfavorable settlements of litigation. Operating income for the current period was $28.9 million versus $6.5 million in the prior year period. Net income was $19.8 million, or $0.29 per share, as compared to $0.9 million, or $0.01 per share, in the prior year period. Included in net income for the prior year was a $3.2 million loss after tax from discontinued operations related to our entertainment complex.

Results By Business Segment

Live and Televised Entertainment
Revenues from the Company’s Live and Televised businesses were $76.7 million for the current quarter as compared to $70.7 million in the prior year quarter.

• Pay-Per-View revenues were $24.7 million versus $19.0 million in the prior year quarter. In the second quarter of fiscal 2004, four pay-per-view events were produced as compared to three in the prior year quarter. Our first quarter of 2004 included only two pay-per-view events due to the timing of our first quarter end as compared to the air date of our calendar July program. The Company will produce 12 pay-per-view events in fiscal 2004.
• Total domestic pay-per-view buys for the quarter were 1.5 million as compared to 1.1 million in the prior year quarter.
• Total buys for the Company’s July 2003 event, Vengeance, were 322,000. The event contributed EBITDA of approximately $3.3 million to our second fiscal quarter.

• Live Event revenues were $17.7 million as compared to $18.1 million in the second quarter of last year.
• There were 84 events, including 7 international events, during the quarter as compared to 87 events, including 3 international events, during the same period last year.
• The average attendance at our live events was approximately 5,100 as compared to approximately 5,300 in the prior year quarter.
• The average ticket price increased $2.29 to $40.70 for the quarter due to the increased number of international events, which have higher average ticket prices.

• Television Advertising revenues were $18.1 million as compared to $19.7 million in the prior year quarter. Commencing with the new television season, which began September 29, 2003, UPN began to sell the inventory related to our SmackDown! program and pay us a rights fee. The decline in advertising revenues was due to this new arrangement, offset partially by increased advertising revenues from our Spike TV programming. These increased revenues were a result of the strong upfront we enjoyed.
• Average household ratings for the quarter for our RAW program and Smackdown! program were in line when compared to the prior year quarter.

• Television Rights Fees revenues were $16.3 million as compared to $13.8 million in the prior year quarter. The increase was due primarily to new international distribution contracts as well as rights fees received under the new UPN contract.

Branded Merchandise
Revenues from the Company’s Branded Merchandise businesses were $17.7 million versus $19.7 million in the prior year quarter.

• Merchandise revenues were $4.1 million as compared to $5.3 million in the prior year quarter. The decrease was due primarily to a change that occurred in fiscal 2004 from the direct sale of our merchandise to a licensing arrangement for merchandise sold at our Canadian and International events.

• Publishing revenues were $2.8 million as compared to $3.4 million in the prior year quarter. The decrease was due to one less special magazine published in the quarter as compared to the prior year quarter.

• Home Video revenues were $4.1 million as compared to $4.5 million in the prior year quarter, the decrease due primarily to a decrease in units sold. Sales of catalog titles were down 67% from the year ago quarter. The reduction in catalog units was related to a court ordered injunction prohibiting the sale of such titles containing our former logo.

• Licensing revenues were $4.9 million as compared to $5.2 million in the prior year quarter. The decrease was due primarily to lower toy sales and lower record sales, partially offset by an increase in video game sales.

Profit Contribution (Net revenues less cost of revenues)
Profit contribution for the quarter was $42.2 million as compared to $28.2 million in the prior year quarter. Total profit contribution margin was approximately 45% for the current quarter as compared to 31% for the prior year quarter.

The profit contribution margin for the Live and Televised businesses was approximately 44% for the current quarter as compared to 30% in the prior year quarter. The profit margin for the current period was favorably impacted by the airing of one additional pay-per-view event, the change in our UPN agreement and decreased television production costs. Additionally, the prior year profit contribution margin was negatively impacted by a $3.5 million charge related to a litigation settlement.

The profit contribution margin for the Branded Merchandise businesses was approximately 47% for the current quarter as compared to 36% in the prior year quarter. The increase is due primarily to improved merchandise, publishing and home video margins.

Selling, general and administrative expenses
SG&A expenses decreased by $11.2 million for the quarter to $13.4 million as compared to $24.6 million in the prior year quarter. Included in the current quarter was the favorable settlement of litigation of $5.9 million while the prior year quarter included an unfavorable litigation settlement of $2.4 million. Excluding these items, SG&A expenses decreased by $2.9 million as compared to the prior year quarter due primarily to lower professional fees and to a lesser extent, a decrease in advertising and promotion expenses and the impact of the cost cutting measures taken during fiscal 2003.

Discontinued Operations
The discontinued operations of The World generated income of $0.3 million, after tax, as compared to a loss of $1.9 million, after tax, in the prior year quarter.

Fiscal 2004 Outlook
The Company anticipates that its net revenue results for fiscal 2004 will be between $325.0 and $350.0 million, EBITDA will be between $55.0 and $60.0 million and Income from Continuing operations will be between $31.0 and $33.0 million, or between $0.45 and $0.48 per share. The increase in the EBITDA range reflects overall improved operating results principally due to the strength of our pay-per-view business and the settlement of litigation.


Note: World Wrestling Entertainment, Inc. will host a conference call on Monday, November 17, 2003, at 11:00 a.m. ET to discuss the Company’s second quarter earnings results for fiscal year 2004. All interested parties can access the conference call by dialing 800-795-1259 (conference ID: WWE). Please reserve a line 15 minutes prior to the start time of the conference call. A presentation that will be referenced during the call can be found at the Company web site at corporate.wwe.com. A replay of the call will be available approximately three hours after the conference call concludes, and can be accessed at corporate.wwe.com.


World Wrestling Entertainment, Inc. (NYSE: WWE) is an integrated media and entertainment company headquartered in Stamford, Conn. Additional information on the Company can be found at wwe.com and corporate.wwe.com. For additional information on WrestleMania XX, to be broadcast live on pay-per-view from Madison Square Garden in New York City on March 14, 2004, go to wrestlemania.wwe.com. Information on television ratings and community activities can be found at parents.wwe.com.

* * * * *

The sky doesn't appear to be falling to me...

FLEA



(edited by RYDER FAKIN on 17.11.03 0925)
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thecubsfan
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#2 Posted on 17.11.03 0949.28
Reposted on: 17.11.10 0950.18
You so need to work on your linking abilities (.pdf on wwecorpbiz.com), but actually, the funny thing is that I thought the instantpundit take would be "yea, they did get a nice 8 digit profit, but it's due to circumstances - all the indicators are trailing down."

Let me pick out my highlights

- For the quarter, and the corp-year-to-date, average attendence is down 200 people, and income from the shows is down 2%, and merchandise is down 10%. (Blaming any significant part of that loss on the name situation seems to be pushing it - that big of a factor this late?)

- PPV buys for the quarter were up, 1542k to 1121, but the .pdf shows the breakdown for the three that are traditionally during this quarter (Aug/Sep/Oct) - 935k for 2004, 948k for 2003.

- RAW is up .1, SmackDown down .2 from the YTD Quarter, and they're both pretty much steady for this year. Because of the new TV deal and better deals elsewhere, TV license fees is the only place where revenue has truly gone up this quarter.

- Because UPN is now selling the ads, revenue there is down 8%

- If you throw out the lawsuits and the extra PPV (to give a more comprable situation), they're up $10 mil as compared to $19.

Which is good...but it's pretty apparent they're still treading water and may or may not have bottomed out from a Live perspective. Most of measures to keep those numbers around the same level have been to increase prices and find new markets to sell the product, and they're going to eventually hit a breaking point for both those sources. Might still be a bit down the road, though.

Attendence down will mean Meltzer sells this as "no turn around". But, with WMXX six months away, it might be worth taking a chance now - even when it won't meet expectations, the name and push they'll making for the event (and the money they'll be getting for it) might make the stock bubble up by then. Might not be a bad risk getting in now.

(edited by thecubsfan on 17.11.03 1021)
redsoxnation
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#3 Posted on 17.11.03 1054.09
Reposted on: 17.11.10 1059.02
IF we discount the Owen Hart case (one time loss) from all of the numbers, last year's Quarter 2 would have been 6.2 million instead of .3 million.
Discounting Owen Hart from the numbers (one time gain), that would make this year at 11 million. Having an extra PPV bumped it by approximately 3 million, so that puts things at 8 million.
Placing numbers in that context, its still a nice 25% increase in the profit from last year's quarter 2. However, its not the resounding difference that 16 million compared to .3 million would sound.
And, as an aside, could they somehow go through one press release without the Mania is at MSG bouquet. I know the McMahon family has a hard-on for MSG, but it gets sickening for those who despise New York on principle.
thecubsfan
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#4 Posted on 17.11.03 1417.33
Reposted on: 17.11.10 1417.43
Since WMXX is the current focus of the whole orginization, on one level or another, I think it might be a little bit obtuse to refer to it only as "WMXX at an undisclosed location on the East Coast"
JoshMann
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#5 Posted on 17.11.03 1420.53
Reposted on: 17.11.10 1422.11
Isn't that what they did for WM XI, though? :P
SKLOKAZOID
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#6 Posted on 17.11.03 1506.15
Reposted on: 17.11.10 1508.14
$16.9 million? That's more than the Matrix Revolutions made this weekend.

I wouldn't exactly write off the doomsayers because WWE made a profit this ONE QUARTER. The last three months do not wash away the last three years.

When things are heading into a tailspin in business, it's not a straight line, but more of a zig-zag. As WWE bites, claws, and scratches its way out of the Jaws of Hell, it will have some instances where business will go up.

But, I'll go easy on them since they actually had a good PPV last night. If I still spent money on them, I would have ordered it. But, they'll have to keep it up.
JustinShapiro
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#7 Posted on 17.11.03 1555.47
Reposted on: 17.11.10 1558.10
"The sky doesn't appear to be falling to me..."

a) We both know it's not!, b) even if it was, I don't think a falling sky would ever be reflected in a WWE press release anyway -- they'll cut costs, fire people, and tour overseas until their asses break and they turn a profit no matter what. Smart Business but not actually indicative of anything except answering the perennial non-question about WWE going out of business.

Nev'theless -- as long as anyone doesn't sell this as "oh man what a turnaround" when attendance and PPV both realistically went down ever so slightly, as per my accountant the Cubs Fan's analysis -- the decline might've bottomed out, or at least stabilized (TV, PPV, and attendance all being close to the same as last year), barring something really stupid. At least through April, since theoretically they should be peaking around Maniatime and then after that Cinderella turns back into a pumpkin, or whatever it she does.

If there's any lesson to be learned over the last year, it's that the initial PPV buyrate estimates should never be taken seriously, because they always end up higher. (Thread next week: "It seems Survivor Series has done the worst Survivor Series buyrate since '96!")

(edited by JMShapiro on 17.11.03 1356)
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#8 Posted on 17.11.03 1624.44
Reposted on: 17.11.10 1629.02
DVD sales should eventually turn into quite the cash cow for the WWE. They've barley tapped into the massive vault that they now own. There's no point in Vince burying the past now.


    The reduction in catalog units was related to a court ordered injunction prohibiting the sale of such titles containing our former logo.



Is this one of those things that is going to be lifted in time or is this a permenant ban on the WWF scratched logo?

redsoxnation
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#9 Posted on 17.11.03 1634.38
Reposted on: 17.11.10 1635.10
    Originally posted by BigDaddyLoco
    DVD sales should eventually turn into quite the cash cow for the WWE. They've barley tapped into the massive vault that they now own. There's no point in Vince burying the past now.


      The reduction in catalog units was related to a court ordered injunction prohibiting the sale of such titles containing our former logo.



    Is this one of those things that is going to be lifted in time or is this a permenant ban on the WWF scratched logo?









Unless they work out some financial deal with the wildlife people (throw them a couple of million for use of the logo on old material, and maybe do a kickback of throwing one of their ads in a can't skip portion of the DVD), its a permanent ban.
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