WWE Fourth Quarter Business Results

[Guest buffybeast]

Fourth Quarter Results

 

Total revenues increased 4% to $135.9 million compared to $131.1 million in the prior year quarter due to increased revenues in the Live and Televised Entertainment business segment.

 

Live and Televised Entertainment

 

Total revenues for our Live and Televised businesses for the quarter increased 6% to $105.0 million from $99.3 million in the same period last year.

 

Live Event revenues increased 8% to $27.9 million in the current quarter.

There were 78 events, including 3 international events, during the quarter. This compares to 59 events during the same period last year.

Attendance for the quarter was approximately 693,300 which included attendance of 38,400 from our international live event tours. This compares to attendance of 695,400 in the prior year quarter.

T

he Company enjoyed its highest grossing event, WrestleMania X8, with attendance of 68,237. This event shattered attendance and box office records at Toronto’s Skydome.

 

The average ticket price increased approximately 10% to $37.91.

Pay-Per-View revenues for the quarter were $40.6 million as compared to $39.3 million in the prior year quarter.

 

Domestic pay-per-view buys for the quarter were 2.4 million versus 2.3 million buys last year.

 

Commencing with our April pay-per-view, Backlash, the price of our pay-per-view programs increased from $29.95 to $34.95.

 

Our estimates for WrestleMania X8 pay-per-view buys are in line with last year’s record results of approximately 1.0 million buys.

 

Television Rights Fees revenues increased 17% to $14.2 million due to the growth in international rights fees, rights fees for our Tough Enough television series, and other television specials.

 

Television Advertising revenues were approximately $21.9 million and were essentially the same as compared to the prior year quarter.

 

Branded Merchandise

 

Total revenues decreased approximately 3% to $30.9 million for the quarter versus $31.8 million last year.

 

Licensing revenues were $5.6 million as compared to $7.5 million in the prior year quarter. An increase in video game revenues was offset by lower revenues from sales of WWE book titles.

 

Merchandise revenues were $8.8 million, an increase of 3% versus last year. This was principally due to an increase in per capita spending from $9.09 to $9.47 in the current year quarter.

 

Publishing revenues increased 5% to $5.9 million primarily due to the increase in the number of special magazine titles and increases in the cover price of Raw Magazine and the Divas 2002 magazine.

 

Home video revenues increased to $4.9 million due to an 86% increase in the number of home video units sold. The number of titles sold in DVD format accounted for about 49% of total units sold versus approximately 13% in the prior year quarter.

 

The World (formerly WWF New York) revenues declined 13% to $3.8 million. The Company has re-branded this venue and has expanded into new areas such as rock concerts and corporate hospitality events. In May, Metropolitan Entertainment was contracted to be the exclusive producer of all concerts and comedy acts for The World.

 

Profit Contribution

 

Total profit contribution for the quarter was $59.5 million as compared to $55.7 million in the prior year quarter. Total profit contribution margin increased to 44% from 43%.

 

The profit contribution margin for the Live and Televised businesses was approximately 44% versus 45% in the fourth quarter last year.

 

The profit contribution margin for the Branded Merchandise businesses was 44% as compared to 35% during the same period last year. In the fourth quarter 2001, the Company recorded additional inventory and return reserves which impacted the margins in our Branded Merchandise business segment.

 

Selling, General and Administrative Expenses

 

SG&A expenses for the quarter increased 5% to $31.1 million as compared to $29.6 million last year. The increase was primarily due to costs associated with the Company’s name change as well as increased expenses at The World. These increases were slightly offset by lower professional fees.

 

Fiscal Year Results

 

Total revenues were $425.0 million as compared to $456.0 million in the prior year.

 

Live and Televised Entertainment

 

Total revenues for our Live and Televised businesses were $323.5 million versus to $335.7 million in the prior year.

 

Live Event revenues were $74.1 million as compared to $81.9 million in the prior year.

 

There were 237 events during the year versus 212 last year.

 

Annual attendance decreased 17% to approximately 2.0 million.

 

Pay-Per-View revenues were $112.0 million as compared to $128.2 million last year.

 

Domestic pay-per-view buys for the year were 7.1 million as compared to 8.0 million last year.

 

Fiscal 2002 revenues were impacted by the loss of carriage from one of our satellite providers for four months of the year.

 

Television Rights Fees revenues increased 52% to $53.3 million reflecting the full year impact of our agreement with Viacom, improved international agreements, and the addition of our Tough Enough television series and other television specials.

 

Television Advertising revenues decreased 7% to $83.6 million.

 

Branded Merchandise

 

Total revenues were $101.5 million for the year versus $120.4 million last year.

 

Licensing revenues were $23.0 million as compared to $31.6 million in the prior year primarily due to the impact of lower revenues from our video games and book publishing businesses.

 

Merchandise revenues for the year were $26.2 million, a decrease of 9% versus last year, principally due to the decline in attendance. This was slightly offset by an increase in per capita spending to $8.47 from $8.29 for last year.

 

Publishing revenues decreased 4% to $17.6 million primarily due to a decline in magazine circulation which was partially offset by the increase in the number of magazine specials and increases in the cover price for Raw

 

Magazine and the Divas 2002 magazine.

 

Home video revenues increased 12% to $13.6 million due to increased sales of DVD’s resulting from the increase in the number titles offered in DVD format in the current year. This was slightly offset by a decrease in VHS tape sales.

 

New Media revenues decreased to $4.4 million as compared to $5.6 million in the prior year primarily due to reduced advertising revenues.

 

The World revenues declined 15% to $14.1 million principally due to the slowdown in tourism in New York’s Times Square.

 

Profit Contribution

 

Total profit contribution for the year was $164.8 million as compared to $197.0 million last year. The profit contribution margin decreased to 39% from 43% last year.

 

The profit contribution margin for the Live and Televised businesses was approximately 40% versus 44% last year primarily due to the decline in our pay-per-view business.

 

The profit contribution margin for the Branded Merchandise businesses was 35% as compared to 41% in the prior year.

 

Selling, General and Administrative Expenses

 

SG&A expenses increased to $109.6 million from $104.1 million last year. This increase was primarily due to increased advertising and promotion costs associated with our television programs and pay-per-views, expenses associated with our name change, and increased expenses at The World. Included in Fiscal 2001 SG&A expenses was a charge related to the settlement of an outstanding lawsuit.

 

Guidance for Fiscal Year 2003

 

As part of its ongoing business operations, the Company has provided the following guidance for fiscal year 2003. This guidance is subject to various risks and uncertainties outlined in the forward-looking statement included in this release and other Security Exchange Commission filings of the Company. In addition to the information contained herein, the Company has posted a detailed breakdown of its revenues by business segment on its business web site www.wwecorpbiz.com in an effort to provide additional useful information for public dissemination. This information will remain on the Company’s web site for a period of 10 days.

 

Revenues are expected to grow 7% for the year. The Live and Televised segment will represent approximately 77% of total revenues for the year and Branded Merchandise will account for 23%. It is anticipated that quarterly sales patterns will be generally consistent with the prior fiscal year.

 

The Company intends to perform approximately 339 events, including 12 international events, with projected attendance of approximately 2.6 million.

 

The average ticket price is anticipated to be approximately $36.00.

 

The Company is estimating 7.2 million domestic pay-per-view buys for the year and anticipates that 40% to 45% of these buys will be achieved in the first 6 months of the year. Included in the estimates are approximately 800,000 out-of- period buys. Total out-of-period buys were approximately 1.0 million for fiscal year 2002.

 

Estimated advertising revenues will be approximately $75.0 million assuming a stabilizing advertising market.

 

The Company expects annual television rights fees from its domestic and international distribution contracts to be approximately $55.0 million for the year.

 

Branded Merchandise revenues are anticipated to grow 4% due in part to the increase in the number of live events.

Revenues from The World are expected to grow approximately 6% to $15.0 million as the venue returns to a more normal level of business and new revenue streams take hold.

 

The Company expects its profit contribution margins in its business segments to be in the range of 38% to 39% of revenues.

SG&A expenses are expected to be 26% of revenues.

 

Depreciation and amortization is expected to be approximately $15.0 million for the year.

 

Interest income, net of interest expense, is expected to be approximately $4.0 million in 2003.

 

The effective tax rate is expected to be 38% for the year.

Capital spending for the year is expected to be approximately $15.0 million.

[Guest thebigjig]

You mean... the sky... ISN'T falling?!?!

 

*shocked*

[Guest jester]

It's good to hear that they're making money. I'm not one of those people who want the WWEEEEEE to close, even if I don't like what's going on during the shows these days. However, there's a couple things that worry me. Revenues have increased by a little:

 

"Total revenues increased 4% to $135.9 million"

"revenues for our Live and Televised businesses for the quarter increased 6% to $105.0 million"

 

BUT

 

"There were 78 events, including 3 international events, during the quarter. This compares to 59 events during the same period last year. "

 

You increase the number of events significantly, but revenue doesn't go up significantly?

 

And attendance was DOWN, even with the extra shows:

 

"693,300 which included attendance of 38,400 from our international live event tours. This compares to attendance of 695,400 in the prior year quarter. "

Admittedly, I'm no business guy so I may have no clue what I'm talking about here. It's good that the company isn't bleeding red ink, but it looks to me like they put a lot of extra wrestling out there, and didn't get the boom they wanted.

 

Anyone have a different take?

 

jester

[Guest buffybeast]

I agree, Jester. It looks like they put on more shows this past quarter and drew LESS people than the same quarter last year. And they are also playing smaller venues this year than last.

[Guest bob_barron]

The WWE is gonna die! SEE!

 

Oh wait...they're still making a profit.

 

Yea- the WWE is gonna die- I hope this shuts a lot of people up.

[Guest RickyChosyu]

The WWE is gonna die! SEE!

 

Oh wait...they're still making a profit.

Considering last year was probably the highest money-lossing year since 1996, anything less than an increase in revenues would be a total disater.

[Guest Brian]

Ricky, I've never seen the WWE turn a negative profit for a financial year in the last four years.

[Guest joshicho]

WWE is gonna survive!!! I was worried there for a minute. But they wont last much longer if WMXXX is headlined by Taker vs HHH

[Guest buffybeast]

I think part of the reason WWF made a lot more money this year than last year is due in part to the increase in ticket prices, ppv prices and merchandising prices.

[Guest joshicho]

Yeah, plus the increase in events. It was bound to happen basically. They have a strong Fiscal policy.

 

btw/ i know this is slightly off-topic, but on 1bob's site, the table the WWE gave them, is that a trading, profit and loss account? I'm only young and a student of Business Studies, and would like to know. Thanks

[Guest jester]

I think part of the reason WWF made a lot more money this year than last year is due in part to the increase in ticket prices, ppv prices and merchandising prices.

I think you're right. Didn't they put a lot of extra merchandise out this year, what with the WCW stuff they could not exploit? Seems like a lot of videos/DVDs came out this year...

 

jester

[Guest Brian]

"WWE had a fairly quiet quarterly investors report earlier today. They reviewed the fourth quarter (February through April) as well as the year itself. Largely due to Wrestlemania and adding more live events due to the brand extension, total revenue for the quarter increased from $131.1 million for the WM quarter last year to $135.9 million this year. Total attendance was flat, but average per show was well down. Increasing the number of shows from 59 to 78, including the three Asian shows, led to only a slight drop in attendance, but actually more revenue because of higher ticket prices (average ticket for a WWE event is now $37.91). PPV was slightly up, largely due to the strong showing of No Way Out. Television rights fees increased 17% due to international deals, TV specials and Tough Enough. TV ad revenue is the same, even with lower ratings, because of more shows to sell. Branded merchandise was down 3%, all of which was due to licensing declines as actual merchandise was up because the lower attended shows have ended up with higher per spectator buys. During that quarter, the company averaged $9.47 in merchandise sales at live events per paying customer. Home videos were way up due to the popularity of the DVD's which now make-up 49% of home videos sold as compared to 13% last year. That percentage will go way up. The World saw revenues drop 13%. Pre-tax profit for the quarter was a whopping $59.5 million. It should be noted that the business downturn really started in May, so the current situation was really not taken into account in these figures. For the fiscal year, revenues dropped from the record $456 million in 2000-2001 to $425 million, which still made it the second biggest grossing year in company history, even with the ratings declines. PPV and live events for the year were down from the previous years records, but TV revenue was way up."

 

- Credit to Meltzer