WWE reported a net loss in the Second Quarter 2014, reflecting the ongoing cost of launching WWE Network earlier this year.
For Q2-2014, WWE reported a Net Loss of $14.5 million, as compared to Net Income of $5.2 million in Q2-2013.
However, revenue was $156.3 million, up three percent from the previous year quarter's $152.3 million.
WWE attributed the increase to the presence of Network revenue, which was not present in Q2-2013, more than offsetting the loss in PPV revenue.
WWE CEO Vince McMahon remained bullish on WWE's business outlook, saying the Network remains WWE's "single greatest opportunity to transform WWE's business model."
Financial executive George Barrios added that WWE "identified efficiencies across WWE, which include a 7.0 percent reduction in staff" to improve the company's business going forward in hopes of reducing expected Net Losses for the remainder of 2014.
Along with announcing Second Quarter 2014 earnings results, WWE issued a revised Business Outlook for 2014 that reduced the predicted Net Loss for the year, based on cutting 7.0 percent of their work force and bumping up the international roll-out of WWE Network.
Coinciding with the Net Loss, WWE "anticipates recording a one-time, pre-tax restructuring charge of approximately $4.5 million in the third quarter of 2014, comprised of severance and other costs."
WWE estimates that the result will be a $10 million reduction in 2014 expenses. However, WWE said the "rate of WWE Network subscriber adoption is a critical determinant of the Company’s projected future financial performance."
WWE is still predicting a Net Loss at potential subscriber levels in 2014. Now, WWE turns to the international roll-out in August to see if they can achieve a break-even point, which would require doubling the average subscription level over the just-completed six-month period.
Specifically, WWE said the average level of subscribers over the 6-month period through June 30 was 409,000 (which is weighed down by the Network launching in mid-February). WWE has to achieve an "average subscriber rate" of 1.0 million to break even, as shown below.
This also means making up for the anticipated loss of domestic subs when the first wave of six-month renewals is up in August.
Individual PPV buys
WrestleMania
2009 - 960,000 buys
2010 - 885,000 buys
2011 - 1,059,000 buys
2012 - 1,217,000 buys
2013 - 1,039,000 buys
2014 - 690,000 buys (Network Era)
Extreme Rules (Post-WM)
2010 - 182,000 buys
2011 - 209,000 buys
2012 - 263,000 buys
2013 - 231,000 buys
2014 - 108,000 buys (Network Era)
June PPV
2010 - 143,000 buys (Fatal Four-Way)
2011 - 170,000 buys (Cap. Punishment)
2012 - 194,000 buys (No Way Out)
2013 - 186,000 buys (Payback)
2014 - 67,000 buys (Payback) & 122,000 buys (MITB)
Second Quarter PPV Revenue
2009 Q2 - $35.6 million (WM quarter)
2010 Q2 - $10.4 million (non-WM quarter)
2011 Q2 - $34.4 million (WM quarter and with $5 increase compared to 2009)
2012 Q2 - $40.8 million (WM quarter)
2013 Q2 - $37.1 million (WM quarter)
2014 Q2 - $23.8 million (WM quarter/Network Era)
PPV Revenue (first six months of year)
2007: $55.6 million
2008: $59.1 million
2009: $49.2 million
2010: $42.8 million
2011: $47.9 million
2012: $54.3 million
2013: $52.2 million
2014: Not Given due to Network shift
WWE Revenue & Profit/Loss Break Down - Q2-2014
Media Division
- TV Rights Revenue: $43.8 million, up 13 percent from $38.7 million in Q2-2013, reflecting the addition of "Total Divas" Revenue, which did not premiere until Q3-2013.
TV Profit was $11.7 million, slightly up from $11.3 million in Q2-2013.
- WWE Network: $19.4 million in revenue (versus zero revenue in Q2-2013).
- PPV: $23.9 million in revenue (down 36 percent from $38.2 million in Q2-2013). No individual profit/loss was reported for the PPV segment, as it's now lumped in with Network business...
Combined PPV and Network Revenue was $43.3 million, as compared to individual PPV Revenue of $38.2 million in Q2-2013.
Network loss was $7.3 million in the current quarter, compared to a comparable Network/PPV profit of $8.2 million in Q2-2013.
- Home Entertainment: $5.4 million in revenue, down 24 percent from $7.1 million in the previous year quarter. Profit was $2.8 million, down slightly from $3.1 million.
WWE reported a 40 percent decline in units shipped during the quarter.
- Digital Media: $5.2 million in revenue, down 30 percent from $7.4 million. WWE reported a loss of $0.8 million, as compared to a profit of 1.1 million in Q2-2013.
WWE attributed the loss to "lower monetization of the Company's pay-per-view webcasts via WWE.com, as these events became available in the U.S. on WWE Network, as well as lower advertising across various platforms."
Live Events
- Live Events: $40.3 million in revenue, down 3.0 percent from $41.6 million in Q2-2013. Profit was $15.5 million, down 10 percent from $17.2 million.
WWE reported a decline in revenue "primarily due to the location of WrestleMania, and the staging of fewer events in North America. These factors were partially offset by the impact of higher average ticket prices in the Company's international markets."
Consumer Products Division
- Licensing Revenue: $5.5 million in revenue, down 18 percent from $6.7 million in Q2-2013. Profit was only $1.5 million, down 65 percent from $4.3 million in Q2-2013.
WWE attributed this to poor distribution of their franchise video game from the "WWE2K" series, reporting the segment's results were "primarily driven by lower sales and effective pricing of our franchise video game."
- Venue Merchandise: $6.5 million in revenue, down slightly from $6.9 million. Profit was $2.6 million, essentially even with $2.7 million.
- WWEShop: $4.0 million in revenue, up 33 percent from $3.0 million in Q2-2013. Profit increased to $1.0 million from $0.4 million.
WWE reported that business was "driven by a 29 percent increase in the volume of online merchandise orders to more than 81,000 orders globally. Orders increased primarily due to mobile shop optimization and a new distribution model in the U.K. utilizing Amazon."
WWE Studios
- WWE Studios division: $1.7 million in revenue, down slightly from $2.1 million. Also, WWE reported a net loss of $0.2 million, improving slightly on a $0.4 net loss in Q2-2013.
Going forward, WWE reported that "recent movies, such as Scooby Doo! WrestleMania Mystery (direct-to-DVD), Oculus (theatrical), and Road to Paloma (direct-to-DVD) released in March, April, and July 2014, respectively, have shown performances that are in-line with expectations."
Corporate
- WWE reported "Corporate & Other" Revenue of $0.6 million, the same as Q2-2013. However, costs increased 8.4 percent to $41.4 million from $33.0 million.
WWE disclosed: "As defined, these expenses include corporate overhead and certain expenses related to sales, marketing, and talent development costs, which have not been allocated to specific segments.
The increase in Corporate and Other expense during the quarter was driven by a $2.5 million increase in professional fees, a $2.3 million increase in salary and benefit costs, and increased marketing expenses to support key content, and brand initiatives, including the expansion of the Company's international infrastructure, talent development, and brand marketing."
For Q2-2014, WWE reported a Net Loss of $14.5 million, as compared to Net Income of $5.2 million in Q2-2013.
However, revenue was $156.3 million, up three percent from the previous year quarter's $152.3 million.
WWE attributed the increase to the presence of Network revenue, which was not present in Q2-2013, more than offsetting the loss in PPV revenue.
WWE CEO Vince McMahon remained bullish on WWE's business outlook, saying the Network remains WWE's "single greatest opportunity to transform WWE's business model."
Financial executive George Barrios added that WWE "identified efficiencies across WWE, which include a 7.0 percent reduction in staff" to improve the company's business going forward in hopes of reducing expected Net Losses for the remainder of 2014.
Along with announcing Second Quarter 2014 earnings results, WWE issued a revised Business Outlook for 2014 that reduced the predicted Net Loss for the year, based on cutting 7.0 percent of their work force and bumping up the international roll-out of WWE Network.
Coinciding with the Net Loss, WWE "anticipates recording a one-time, pre-tax restructuring charge of approximately $4.5 million in the third quarter of 2014, comprised of severance and other costs."
WWE estimates that the result will be a $10 million reduction in 2014 expenses. However, WWE said the "rate of WWE Network subscriber adoption is a critical determinant of the Company’s projected future financial performance."
WWE is still predicting a Net Loss at potential subscriber levels in 2014. Now, WWE turns to the international roll-out in August to see if they can achieve a break-even point, which would require doubling the average subscription level over the just-completed six-month period.
Specifically, WWE said the average level of subscribers over the 6-month period through June 30 was 409,000 (which is weighed down by the Network launching in mid-February). WWE has to achieve an "average subscriber rate" of 1.0 million to break even, as shown below.
This also means making up for the anticipated loss of domestic subs when the first wave of six-month renewals is up in August.
Individual PPV buys
WrestleMania
2009 - 960,000 buys
2010 - 885,000 buys
2011 - 1,059,000 buys
2012 - 1,217,000 buys
2013 - 1,039,000 buys
2014 - 690,000 buys (Network Era)
Extreme Rules (Post-WM)
2010 - 182,000 buys
2011 - 209,000 buys
2012 - 263,000 buys
2013 - 231,000 buys
2014 - 108,000 buys (Network Era)
June PPV
2010 - 143,000 buys (Fatal Four-Way)
2011 - 170,000 buys (Cap. Punishment)
2012 - 194,000 buys (No Way Out)
2013 - 186,000 buys (Payback)
2014 - 67,000 buys (Payback) & 122,000 buys (MITB)
Second Quarter PPV Revenue
2009 Q2 - $35.6 million (WM quarter)
2010 Q2 - $10.4 million (non-WM quarter)
2011 Q2 - $34.4 million (WM quarter and with $5 increase compared to 2009)
2012 Q2 - $40.8 million (WM quarter)
2013 Q2 - $37.1 million (WM quarter)
2014 Q2 - $23.8 million (WM quarter/Network Era)
PPV Revenue (first six months of year)
2007: $55.6 million
2008: $59.1 million
2009: $49.2 million
2010: $42.8 million
2011: $47.9 million
2012: $54.3 million
2013: $52.2 million
2014: Not Given due to Network shift
WWE Revenue & Profit/Loss Break Down - Q2-2014
Media Division
- TV Rights Revenue: $43.8 million, up 13 percent from $38.7 million in Q2-2013, reflecting the addition of "Total Divas" Revenue, which did not premiere until Q3-2013.
TV Profit was $11.7 million, slightly up from $11.3 million in Q2-2013.
- WWE Network: $19.4 million in revenue (versus zero revenue in Q2-2013).
- PPV: $23.9 million in revenue (down 36 percent from $38.2 million in Q2-2013). No individual profit/loss was reported for the PPV segment, as it's now lumped in with Network business...
Combined PPV and Network Revenue was $43.3 million, as compared to individual PPV Revenue of $38.2 million in Q2-2013.
Network loss was $7.3 million in the current quarter, compared to a comparable Network/PPV profit of $8.2 million in Q2-2013.
- Home Entertainment: $5.4 million in revenue, down 24 percent from $7.1 million in the previous year quarter. Profit was $2.8 million, down slightly from $3.1 million.
WWE reported a 40 percent decline in units shipped during the quarter.
- Digital Media: $5.2 million in revenue, down 30 percent from $7.4 million. WWE reported a loss of $0.8 million, as compared to a profit of 1.1 million in Q2-2013.
WWE attributed the loss to "lower monetization of the Company's pay-per-view webcasts via WWE.com, as these events became available in the U.S. on WWE Network, as well as lower advertising across various platforms."
Live Events
- Live Events: $40.3 million in revenue, down 3.0 percent from $41.6 million in Q2-2013. Profit was $15.5 million, down 10 percent from $17.2 million.
WWE reported a decline in revenue "primarily due to the location of WrestleMania, and the staging of fewer events in North America. These factors were partially offset by the impact of higher average ticket prices in the Company's international markets."
Consumer Products Division
- Licensing Revenue: $5.5 million in revenue, down 18 percent from $6.7 million in Q2-2013. Profit was only $1.5 million, down 65 percent from $4.3 million in Q2-2013.
WWE attributed this to poor distribution of their franchise video game from the "WWE2K" series, reporting the segment's results were "primarily driven by lower sales and effective pricing of our franchise video game."
- Venue Merchandise: $6.5 million in revenue, down slightly from $6.9 million. Profit was $2.6 million, essentially even with $2.7 million.
- WWEShop: $4.0 million in revenue, up 33 percent from $3.0 million in Q2-2013. Profit increased to $1.0 million from $0.4 million.
WWE reported that business was "driven by a 29 percent increase in the volume of online merchandise orders to more than 81,000 orders globally. Orders increased primarily due to mobile shop optimization and a new distribution model in the U.K. utilizing Amazon."
WWE Studios
- WWE Studios division: $1.7 million in revenue, down slightly from $2.1 million. Also, WWE reported a net loss of $0.2 million, improving slightly on a $0.4 net loss in Q2-2013.
Going forward, WWE reported that "recent movies, such as Scooby Doo! WrestleMania Mystery (direct-to-DVD), Oculus (theatrical), and Road to Paloma (direct-to-DVD) released in March, April, and July 2014, respectively, have shown performances that are in-line with expectations."
Corporate
- WWE reported "Corporate & Other" Revenue of $0.6 million, the same as Q2-2013. However, costs increased 8.4 percent to $41.4 million from $33.0 million.
WWE disclosed: "As defined, these expenses include corporate overhead and certain expenses related to sales, marketing, and talent development costs, which have not been allocated to specific segments.
The increase in Corporate and Other expense during the quarter was driven by a $2.5 million increase in professional fees, a $2.3 million increase in salary and benefit costs, and increased marketing expenses to support key content, and brand initiatives, including the expansion of the Company's international infrastructure, talent development, and brand marketing."
College doesn't guarantee success. Street education guarantees success. You learn how to communicate with people, hustle and understand what they really want. I am cancelling my Universe, because the only way I would keep it is if RAW was without commercials and a live Main Event/Smackdown but dem Ivy Leagers don't know what the fukk is wrong when the solution is obvious.
