Last quarter, they lost $3 million. This time, it's $1.6 million. I guess if you look on the bright side, they had less losses this time. (?)
STAMFORD, Conn.--(BUSINESS WIRE)--Nov. 21, 2002--World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its second fiscal quarter ended October 25, 2002.
Total revenues were $92.8 million as compared to $98.2 million in the prior year. The net loss for the quarter was $1.6 million versus net income of $4.8 million in the second fiscal quarter last year. In the current quarter, the Company recorded a $5.9 million charge ($3.7 million after-tax or $0.05 per common share), for the settlement of previously disclosed litigation with William Morris Agency, Inc. The net loss per common share was $0.02 for the quarter as compared to earnings per common share of $0.07 last year.
Earnings before interest, taxes, depreciation and amortization, and the impact of the William Morris Agency, Inc. settlement (EBITDA) were $7.2 million versus $8.4 million last year.
"We are continuing our rebuilding phase to strengthen television ratings, live event attendance, and pay-per-view buys," said Linda E. McMahon, Chief Executive Officer. "Our primary strategy is to continue to focus on developing new talent and compelling storylines, since history has proven that our success in developing new talent, whom we creatively interweave into our story lines, has reinvigorated the WWE brand time and time again. The increase in our talent roster and the emergence of new talent are also key to both our brand extension and international expansion strategies."
"In the international arena, our success is ahead of our expectations," continued Mrs. McMahon. "So far in calendar year 2002, we have conducted four international tours and have played to audiences totaling nearly 180,000 fans. This week we are in India and will perform three live events in New Delhi, Mumbai, and Bangalore. Based on the enthusiastic reaction that we witnessed from the fans who attended our recent tours, we accelerated our plans to launch future live event tours and have scheduled eight international tours for calendar year 2003 in Europe, Asia, Australia, Africa, and South America," said Mrs. McMahon.
"During the quarter, we extended our partnership with Total Sports Asia and inked new deals encompassing our licensing, home video/DVD, and publishing businesses. We are renewing our television contract with J Sky Sports in Japan which will result in a significant increase in television rights fees. The successful expansion of our international live event tours, in conjunction with the subsequent introduction of a wide array of WWE branded merchandise, ensures that we now have all of the critical elements in place to further increase our penetration in markets across the globe," added Mrs. McMahon.
Second Quarter Results
Total revenues were $92.8 million for the quarter versus $98.2 million in the prior year quarter.
Live and Televised Entertainment
Total revenues for Live and Televised businesses were $70.7 million as compared to $72.7 million in the same period last year.
-- Live Event revenues increased 12% to $18.1 million.
-- There were 87 events, including 3 international events, during the quarter as compared to 55 domestic events during the same period last year.
-- Attendance for the quarter was approximately 458,000 as compared to 472,000 in the prior year quarter. The current quarter includes attendance of approximately 72,000 from our international live event tours.
-- The average ticket price increased approximately 15% to $39.05 primarily attributable to the impact of higher international ticket prices which averaged approximately $59.00 for the quarter.
-- Pay-Per-View revenues declined 14% to $19.0 million from $22.2 million in the prior year quarter.
-- Total domestic pay-per-view buys for the quarter were 1.1 million as compared to 1.5 million in the prior year quarter.
-- The retail price of our domestic pay-per-views increased 17% from $29.95 to $34.95 effective April 2002.
-- Television Rights Fees revenues increased slightly to $13.8 million due to the executive producer fee that we received from the upcoming feature film, Helldorado, starring The Rock(TM).
-- Television Advertising revenues were $19.7 million as compared to $20.9 million last year. This decrease was principally due to the impact of lower television ratings and a decrease in sponsorship revenues in the quarter.
Total revenues were $22.1 million for the quarter versus $25.5 million last year.
-- Licensing revenues were $5.2 million as compared to $9.2 million in the prior year quarter.
-- The variance was impacted by the timing of cash receipts of $2.0 million which were received and recorded in the prior year second quarter.
-- Revenues from our book publishing and toy categories declined versus the prior year quarter and were offset in part by increased revenues from SmackDown! Records reflecting the recent release of WWE Forceable Entry.
-- Merchandise revenues decreased 4% to $5.3 million. The increase in merchandise sold at our venues was more than offset by declines in WWE Shopzone.com and catalog revenues.
-- Publishing revenues increased 12% to $3.9 million primarily due to the increase in the number of special magazine titles and an increase in the cover price of Raw Magazine.
-- Home video revenues increased 37% to $4.5 million from $3.3 million.
-- The total number of units sold increased 9%.
-- The number of DVD units sold, which wholesale for approximately $5.00 more than a VHS unit, accounted for approximately 72% of total units sold compared to approximately 31% in the prior year quarter.
-- According to Billboard Magazine, 6 of our home videos ranked among the 10 best selling home videos in the "Recreational Sports" category as of November 16, 2002.
-- The World(TM)revenues declined 32% to $2.0 million due to decreased traffic in the restaurant and bar at the venue.
Total profit contribution for the quarter was $28.6 million as compared to $35.4 million in the prior year quarter. Total profit contribution margin decreased to 31% from 36%.
The profit contribution margin for the Live and Televised businesses was approximately 30% versus 36% in the second quarter last year principally reflecting the decline in pay-per-view revenues and the charge of $3.5 million for the William Morris Agency, Inc. settlement.
The profit contribution margin for the Branded Merchandise businesses was 34% as compared to 37% during the same period last year primarily due to the decline in revenues at The World.(TM)
Selling, General and Administrative Expenses
SG&A expenses for the quarter were $27.3 million as compared to $27.0 million last year. SG&A for the quarter includes approximately $2.4 million associated with the William Morris Agency, Inc. settlement. Excluding the settlement and the absence of the expenses associated with the WWE Hotel and Casino, SG&A expenses for the quarter decreased approximately 6% reflecting the positive impact of the Company's initiatives to reduce and realign its operating budgets.
Six Months ended October 25, 2002
Total revenues for the six-month period ended October 25, 2002 were $180.9 million versus $188.9 million last year. Net income was $0.9 million and earnings per common share was $0.01 compared to $16.8 million and $0.23 respectively, in the prior fiscal year. The prior year results included a $5.8 million after-tax gain, or $0.08 per common share, associated with the revaluation and sale of certain equity instruments.
Live and Televised Entertainment
Total revenues for the Live and Televised businesses were $138.5 million as compared to $145.1 million in the same period last year.
-- Live Event revenues increased 20% to $37.0 million.
-- There were 174 events, including 7 international events year-to-date. This compares to 98 events, including 1 international event, during the same period last year.
-- Attendance increased 8% to approximately 958,000. This includes attendance of 109,000 from our international live event tours in the current year and approximately 16,000 in the prior year.
-- The average ticket price increased approximately 11% to $38.50 primarily due to the impact of higher international ticket prices in the current year.
-- The average ticket price for international events in the current year was approximately $59.30.
-- Pay-Per-View revenues declined 20% to $38.2 million from $47.6 million in the prior year.
-- Total domestic pay-per-view buys were 2.3 million as compared to 3.1 million in the prior year.
-- Television Rights Fees revenues increased slightly to $26.7 million primarily due to our Divas Undressed special that aired on TNN.
-- Television Advertising revenues were $36.5 million as compared to $40.4 million last year. This decrease was principally due to the impact of lower television ratings and decreased sponsorship revenues in the current year.
Total revenues were $42.4 million versus $43.8 million last year.
-- Licensing revenues were $8.4 million as compared to $10.4 million in the prior year. Strength in the video game software category was more than offset by declines in our book publishing and toy categories.
-- Merchandise revenues increased 11% to $11.6 million. The growth in revenues was primarily due to an increase in per capita spending at our live events to $8.78 from $7.87 in the prior year period.
-- Publishing revenues increased slightly to $7.8 million primarily due to the increase in the number of special magazine titles and an increase in the cover price of Raw Magazine.
-- Home video revenues increased 32% to $8.0 million from $6.1 million due to a 20% increase in the number of units sold. The number of units sold in DVD format accounted for about 62% of total units sold versus approximately 26% in the prior year.
-- The World revenues declined 32% to $4.3 million due to decreased traffic in the restaurant and bar at the venue.
Total profit contribution for the six months ended October 25, 2002 was $58.2 million as compared to $67.8 million in the prior year. Total profit contribution margin decreased to 32% from 36%.
The profit contribution margin for the Live and Televised businesses was approximately 32% versus 37% in the prior year primarily reflecting the decline in pay-per-view revenues and the William Morris Agency, Inc. settlement.
The profit contribution margin for the Branded Merchandise businesses was 34% versus 32% in the prior year primarily due to increases in home video revenues and the positive impact on expenses arising from the expiration in December 2001 of a prior licensing agreement with National Hot Rod Association (NHRA).
Selling, General and Administrative Expenses
SG&A expenses decreased approximately 2% to $51.2 million as compared to $52.3 million last year. The decrease was due to the absence of expenses associated with the WWE Hotel and Casino and the impact of the $1.1 million net gain from the settlements of outstanding litigation in the current year. Increases in advertising and promotion expenses were partially offset by the impact of the Company's expense reduction initiatives.
"That's how you become great, man: you hang your balls out there." - The dorky Kinko's clerk on Jerry Maguire
Taking a brief look through the numbers, attendance is slightly up overall. However, that is misleading, as the international events drew large crowds, while they also ran many more shows than the previous years. That means, in plain English, House Show business sucks. PPV buy rates are down from about a 130,000 per month, which shows its not just Nielsen viewer who bailed out, its overall viewers as well (and this does count a ppv that Flex was on). The World is a money pit. Two negative quarters in a row. In economic terms, the WWF/E is now officially in a recession.
I want you to know, I agree with everything I've just said.
Yep, and this doesn't surprise me at all. Attendance is down, so it's natural that merchandising is down. Ratings are down, so it's natural that advertising revenues and PPV buys follow suit. I'm not going to say WWE is in wCW type trouble, but they have a lot of work to do.
"Ensign Kodos, set coordinates for the obscure, T-shirt producing planet of Earth. We are going to visit... MY DAUGHTER!" -- Kang
WCW was losing more money than it was actually worth by the end. i'd say they've got a long way to go yet. Plus, WCW could've gone on bleeding for about four more years had it been owned privately like the WWE. WCW only closed down because Uncle Ted was unwilling to keep on pouring cash into it.
Taking into account the lawsuits and how much was embazzled out of the World, the WWE looks to have almost broken even. The problem I see is not just the WWE is bad financial situation is that the country is in a recession as well. If people don't have disposable incomes they will not go to live events, get shirts or even buy PPVs. We have to remember, the WWE does not live in a vaccum where if Raw is bad for a few weeks, the company goes bankrupt. The WWE lives off of interest, disposable money and business tatics. Granted interest maybe wanning, but people don't have the cash to buy the product, then its not really your fault.
I didn't read the entire details, but if depreciation and amortization are huge, I would argue that they only had a "paper loss". Generally, in the banking world, a firm's income statement will be tweaked to add back depreciation/amortization expenses to measure the true cash flow and repayment capabilities of the company. I have a difficult time imagining that WWE has very many assets that have to be replaced due to wear and tear, and would hazard a guess that Titan Towers carries a pretty big depreciation value.
Originally posted by It's FalseVince is a BILLIONAIRE!! He won't worry about a mere $1.6 million in losses.
So never fear, the Triple H Show (a.k.a Raw) will stay just the way it is. Don't look for any changes here.
Last time the numbers came out, Vince was worth 570 million, down in two years from 1.1 billion. I know, he's still rich. However, he's no longer anything near a billionaire. On the point of disposable income for wrestling, that is completely true. Look from the 50's on to when wrestling was good/the overall economy was bad. The only problem is that the WWF/E and their supporters were stating just two years ago how they were no longer in the peak and valley wrestling economics, that Vince's ideas had caused the company to be able to withstand weaknesses in the overall economy. Thus, when they go down like the economy has, those of us who remember those statements like to gloat. In case anyone was wondering, my guess in the pool for next wrestling boom is late '05/early '06.
I want you to know, I agree with everything I've just said.
Originally posted by Parts UnknownLast quarter, they lost $3 million. This time, it's $1.6 million
The statement about the $3 million was an earnings warning, not a quarterly report. They were announcing that for the upcoming quarter they were going to lose money, which they had not expected to, based on their lawsuit settlement. This is the quarter where that settlement comes into play. Last quarter they had a profit.
Realize that nearly every industry is down now. Microsoft hasn't made a profit in 2 years. The U.S. Goverment is going though a familar phase, something W's dad knows all out. Reduction In Force. Everything is down now. Some of you may not have been aware of the last time the economy soured (88-90) But there was a reason I couldn't get a SEGA Genesis back in the day.
Originally posted by SeVen ™Realize that nearly every industry is down now. Microsoft hasn't made a profit in 2 years.
Not sez my stock ^_^. Xbox sure hasn't been doing its part, but Microsoft is on the up...check out this Xbox quarterly from Gamespot, reporting a $177 million loss from the entertainment division, but still a $2.7 billion net profit as a company.
I may be mistaken, but didn't the WWE spend over $30 million last quarter on a stock buy back? If memory serves they were trying to reacquire outstanding stock and this went as a corporate expense. The WWE was showing a profit, but it used the profit to buy back the public shares. If this is so, did they do it again this quarter? There was an accountant who explained this 3 months ago on the board, but I've been so excited about Russo unmasking himself as Mr.Wrestling III, I can't recall.
(edited by NickBockwinkelFan on 22.11.02 0310) "Well, you can't involve friendship with business. It has to be one or the other. It's either business or friendship, or hit the bricks!" --Life Lessons from "The Tao of Bobby the Brain Heenan" Uncensored 2000 preview
I generally try to look at the brighter side of things, but I thought every match on this PPV was a botchfest disaster. I think the Champion of Champions match was the only one that didn't have a major botch at one point during the match.