WWE is under pressure from the investors. Reason, the ratings have fallen 19% for RAW and 15% for flagship Smackdown. Aided by the cost cutting measure and sustained cost savings, company released strong quarterly results but investors are continuously questioning the ratings decline.
World Wrestling Entertainment, facing increased investor pressure amid falling TV ratings, blamed its ongoing viewership challenges on the lack of in-person audiences for its events.
The company, reporting its second-quarter earnings for 2020, said ratings for key programs Raw and Smackdown are down 19 per cent and 15 per cent, respectively, since the Covid-19 pandemic hit the United States in earnest in mid-March.
Since then, WWE has staged events in a controlled environment without attending fans from its WWE Performance Center in Florida. But that shift to the empty venue, the company argues, translates to a materially different television product.
“As far as ratings are concerned, more than any other sports, surely our audience is a part of the program,” said Vince McMahon, WWE chairman and chief executive. “Audience interaction that always is the plus, and it goes all the way back to the origination of the genre. The audience is integral to our success and our television ratings because of the interaction or lack thereof.”
WWE Quarterly Earnings – Second Quarter 2020 – Highlights
Second Quarter 2020 Highlights
- Revenues were $223.4 million as compared to $268.9 million in the prior year quarter reflecting the timing of the Company’s large-scale event in Saudi Arabia; Revenues reached a record $514.4 million year-to-date, representing 14% growth from the prior year period
- Operating income was $55.7 million as compared to $17.1 million in the prior year quarter
- Adj. OIBDA1 increased to $73.5 million from $34.6 million in the prior year quarter
- Free Version of WWE Network was announced on June 1, unlocking a portion of WWE’s content library to expand reach and engagement of its direct-to-consumer streaming service for all fans
- WWE Network average paid subscribers declined 1.5% to 1.66 million while ending paid subscribers increased 6% to 1.69 million
- Digital video views increased 10% to a record 9.9 billion and hours consumed increased 15% to a record 374 million across digital and social media platforms3
- eCommerce revenues nearly doubled to $12.6 million, substantially offsetting the loss of venue merchandise sales with 76 fewer events in the quarter
COVID-19 Actions and Business Outlook
- Due to COVID-19 and related government-mandated impacts on WWE, the Company continued its various short-term cost reductions and cash flow improvement actions. These actions contributed to WWE’s enhanced liquidity, which reached $548 million in cash and short-term investments as of June 30, 2020
- The Company is continuing to adapt its business to the changing environment with a focus on enhancing the production of content and furthering fan engagement
- Management may resume its opportunistic acquisition of stock under the Company’s $500 million share repurchase program, subject to WWE’s business outlook and liquidity as well as whether share repurchases compare favorably to other capital allocation alternatives
- Management continues to believe the Company’s growth prospects remain strong and that WWE is well positioned to take full advantage of the changing media landscape and increasing value of live sports rights over the longer term