A deep dive into WWE financials: Is it as bad as Wall Street is making it out to be?
WWE is touting record annual revenues. It’s also taking hits from investors for weak live-event and WWE Network revenues.
Mixed, then, is the word, in terms of reviews, though mixed isn’t good from a Wall Street perspective.
WWE shares are trading, at this writing, mid-morning Friday, at $44.61 a share, 55 percent off the 52-week high ($100.45), and 25 percent down just in the past week, which, yikes.
It might be much ado about not much, though, when you look at the fundamentals of the business.
Yes, live-event revenues, down sharply – off $18.6 million from 2018, a 12.9 percent drop, per the company press release on financials released on Thursday.
Consumer product sales – merch – are also down 10.6 percent, $10.9 million in real dollars.
The line item that you’d notice the most involves the WWE Network. The Network was supposed to be the future of how the entertainment business is supposed to work, but it seems to have flattened out, and now is turning in the wrong direction.
Network subs were down 10 percent in 2019, to 1.42 million, and for those who remember the days when WWE was telling the world that it could foresee the day when it would get past the 2 million subs mark, yeah, wow, on that.
The numbers are flailing to the point that WWE Chairman Vince McMahon mused on the earnings call Thursday that the company is considering selling the Network’s major events – ostensibly, at least the big shows like WrestleMania and Summerslam, and, who knows, maybe the entirety of the monthly Sunday-night live events – to an outside streaming service.
UFC, famously, has done this, selling its big shows to ESPN for a reported $1.5 billion over five years.
If WWE can get anything close to that for its programming, you’d have to say, go for it, even if it would also mean the effective end of the Network, the main appeal for which is the access to those major events.
Back-of-the-envelope math suggests WWE is bringing in around $170 million annually from Network subscriptions, which, fleshing that out over five years, comes to around $850 million in real dollars.
You definitely go for that, when you do the math.
As for the other fundamentals: the money from NBCUniversal and Fox, both worth billions over the next five years, ain’t going anywhere.
It’s the TV money that has the overall picture looking good, even with the losses in live-events, merch and Network subs.
Honestly, if I’m an investor, I use the decline in live-event revenues to set a corrective course, in the form of dramatically cutting back on the touring schedule, which would be less taxing on the talent, and thus be a benefit to the quality of the TV and major-events products, which are your moneymakers anymore anyway.
The TV ratings being at multi-year lows should be a concern, but the issue there is something that you’d consider fixable, assuming a fresh approach to the product.
Better creative, a change in approach to live events, an UFC-to-ESPN-like deal for major events, and WWE is still the cash cow that it’s been forever.
Story by Chris Graham