WWE reports surprisingly strong second quarter: Smart COVID-19 pivot
Revenues were down for WWE in the second quarter of 2020, but not for the reason you’d think – declining ratings.
And actually, overall, the company’s second quarter earnings report, which was released on Thursday, was positive, because of its fluid response to the COVID-19 economic slowdown.
“Our second quarter financial performance was strong and demonstrated our ability to respond to the challenges posed by COVID-19,” WWE Chairman & CEO Vince McMahon said. “We continue to adapt our business to the changing environment, focusing on the development of new content for global distribution platforms and increasing audience engagement to drive growth and value for our shareholders.”
Revenues, according to the company’s earnings report, were $223.4 million, down $45.5 million from the second quarter of 2019, but that is a bit of an accident of history – a result of WWE benefiting from a large-scale event in Saudi Arabia in 2Q 2019.
Revenues for the first half of 2020 reached a public WWE record $514.4 million, up 14 percent from the first half of 2019.
The big jumps on the books were in operating income, at $55.7 million in 2Q 2020, up $38.6 million from 2Q 2019, and net income, which was at $43.8 million in the quarter, up $33.4 million from 2Q 2019.
These increases are attributable to WWE’s moves to shed contracts and to be able to realize efficiencies in terms of production costs.
Without live events, WWE has been able to move content production on-site to the WWE Performance Center in Orlando, Fla., resulting in substantial savings in terms of the costs associated with filming its weekly and monthly shows, by being able to produce them in-house, as opposed to having to pack up the traveling circus and take it from town to town two to three nights a week.
This is occurring, interestingly, as WWE’s margins on live events, both as host venues for the weekly and monthly TV and WWE Network content, and for the company’s touring shows, had been on the decline of late, down 12.9 percent in 2019, which in turn had pushed an additional 10.6 percent hit in merchandise sales, a combined hit that cost the company just under $30 million last year.
Per the 2Q earnings report, WWE was able to nearly double its online merchandise revenues in the quarter, to $12.6 million, which almost entirely offset the expected decline from not having live events for the three-month period.
Overall merchandise sales were down $800,000, 3.4 percent, from the second quarter of 2019.
Revenues for WWE Network were down 4.6 percent in the quarter, from $51.8 million in 2Q 2019 to $49.4 million in 2Q 2020, but the quarter ended on an uptick, with paid subscribers up 6 percent, to 1.69 million.
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