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WWE reports first quarter 2014 financials: $8 million loss, no update on television deal, and more

Highlights from the financial report issued ahead of today's conference call, with comments from Vince McMahon and the others on key elements of the numbers.

WWE released their financial results for the first quarter of 2014 (January 1 - March 31) this morning.  A conference call is scheduled for 11AM Eastern time this morning, but the full report has already been made available on their corporate web site, and prompted comments from Vince McMahon and others ahead of that call.

Here are some highlights, along with those comments:

WWE reported a net loss of $8.0 million dollars, or $0.11 per share, compared to net income of $3.0 million over the same period last year. This was attributed to start up costs associated with WWE Network.

The statement from Vince McMahon specifically addressed those numbers:

For the quarter, our earnings reflected the launch of our WWE Network, which delivers unparalleled depth of programming, ease of use and value to our fans. With almost 670,000 WWE Network subscribers in the U.S. and nearly 400,000 domestic pay-per-view buying homes for WrestleMania 30, we are confident that we will reach our goal of 1 million subscribers by the end of 2014. To drive WWE Network subscriber growth, we are highly focused on further developing our programming, expanding distribution platforms and executing customer acquisition campaigns. The expansion of WWE Network in the U.S. and international markets will provide a platform for long-term growth over the coming years.

With regards to a new television rights deal for Raw, Smackdown, Total Divas and any other programming that may be distributed (at least initially) outside of the Network, there continued to be no updates.  Chief Strategy & Financial Officer George Barrios' quote spoke to that, stating:

Regarding our TV licensing agreements, we are continuing to negotiate with potential distribution partners in the U.S. and India. Over the past several years, we have invested in people, content and technology, and we continue to believe the successful execution of our key initiatives could potentially result in doubling or tripling our 2012 OIBDA results to a range of $125 million to $190 million by 2015. We will provide more information and further guidance for 2014 and 2015 as appropriate.

Due to the advent of WWE Network, the company has re-organized their business segments to reflect their new venture. These sections are now:

  • Media Division (WWEN, pay-per-view, television, home entertainment and digital media): notable here is that PPV is now included with the Network even though it is still technically a distinct revenue stream.  Also, what had once been reported as "" is now included in digital and includes WWE Magazine and other online video content.  Home video was a consumer products element but is now here, while WWE Shop revenue had been included with the web site but is now in consume products.
  • Live events (now separate from TV and PPV)
  • Consumer Products (Licensing and merchandise - both at live venues and at WWE Shop online)
  • WWE Studios
  • Corporate and other

Within those segments:

  • TV revenues increased 8% from Q1 2013.  The increase was attributed to the success of Total Divas, contractual increases for existing programs and an extra Monday for Raw during the three month period.
  • Home entertainment revenue rose to $10.5 million from $7.0 million last year, primarily due to contractual guarantees.
  • Digital media was down from $7.1 million to $6.7 million.  The drop was based on lower newstand revenue for the company's print magazine.
  • Licensing revenues dropped $10 million to $14.0 million, largely driven by the change in video game partners.
  • Merchandise sales at live shows fell 2% (despite a 4% increase in attendance), while revenue at WWE Shop rose 20%.  The latter increase was attributed to an improved mobile store and a new partnership with Amazon UK.
  • WWE Studios, a frequent whipping boy in these reports, saw revenue increase to $4.3 million over $1.9 million in the same quarter last year.  Last year's success story, The Call, was highlighted and the company is confident that recent theatrical and DVD releases like Oculus and Scooby Doo! WrestleMania Mystery can continue the trend.
  • PPV revenue was reported as $13.8 million, down 9% (or 1.3 million dollars) from Q1 2013.  The company attributed this drop for the last pre-Network PPVs to a 10% decline in buys, including weak performance in several international markets.

Cageside Seats will have you covered with more from the conference call (and analysis from sharper financial minds than mine).

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