Vince McMahon had a tough time once again with anxious shareholders worried about the WWE network and how their social media success hasn't translated into increased profitability. (Photo by Michael N. Todaro/Getty Images)
Earlier today, WWE announced their second quarter financial results for 2012. It was not great news for the here and now, as despite PPV buys being up across the board, their profits were down $2.4 million from the same quarter last year, but still at a relatively healthy $11.9 million, which comfortably covers their dividend payments. Throwing out film impairment charges and WWE Network costs, which impedes comparability between the two years, painted a worse picture of their core business, as without these items profits were down $3.4 million.
However, as Vince McMahon noted, there is hope for the future, thanks to TV rights fees increasing over the next six months due to the extension of Monday Night Raw to three hours and their new TV deal with ION Television:
In the second quarter, we made important progress on our key strategic initiatives, expanding our content and distribution and enhancing our brand strength. The production and licensing of a third hour of Raw and the launch of a new program, WWE Main Event, for ION Television, as well as our exploding social media presence which now reaches over 100 million global fans, exemplify our achievement of these goals. In order to cultivate further the unique passion of our global fans, we continued to integrate social media in our program content and entered a strategic investment agreement with Tout, which enables users to capture and share 15-second videos. Integrating our fans' voice in our programming enables us to escalate fan interaction, enhance our programming content, and drive the value of our investment.
Unfortunately, touting (get it?) their global social media success didn't go down well with stockholders, as that hasn't translated to increased international business or any evidence of boosted TV ratings abroad. Investing $5 million on 15 second mobile phone video messaging service Tout is a way to attempt to monetize that social media popularity, but whether that is fruitful is dependent on Tout taking off, which there is no guarantee of. Regardless, WWE investors should be happier in coming months, as profits are expected to be up 5-15% for the year as a whole, not only due to increased television revenue, but also reduced losses in their overhauled film division.
Apart from digital media, pay-per-view and TV licensing revenue, there were declines in most other business segments. Excluding WrestleMania, domestic attendance was down 4% to 5,400 fans per show, but this was offset by a 4% increase in ticket prices. International events revenue was down 10%, due to slumping attendance in Latin America (mainly Mexico). Licensing revenue was down 45%, largely due to not having a second video game title released this year (no updated version of WWE All Stars) and toy royalties being down 12%. Finally, WWE Magazine revenue dropped 12% and is getting to the point where it's no longer profitable to keep producing it.
Other than the announcement of the WWE Network being postponed again, there were a couple of interesting notes from the conference call. Apparently Vince McMahon credited their increased PPV business solely due to better creative, even though without The Rock or Brock Lesnar wrestling that uptick wouldn't have been nearly so pronounced. Finally, in news that will displease some fans, McMahon isn't budging on the PG rating of his shows:
When asked about PG, he reiterated that they weren't going PG-13 anytime soon, but PG offered them a lot of latitude that they'd take advantage of, and that it was fair to say that at times they'd gone way too far into the G realm.
Really, moving back to PG-13 isn't an option while Linda McMahon still has political ambitions and WWE has a lucrative licensing deal with Mattel. Sorry to disappoint y'all, Cagesiders.