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With subscriptions down 10%, WWE says they’ll pursue strategic alternatives to the Network

WWE has released their earnings results for the fourth quarter of 2019, as well as an outlook on their 2020 business expectations.

They highlight a quarterly revenue of $322.8 million, which is the most quarterly revenue in the history of the company. As you can see in the picture below, this revenue was primarily driven by increases in their Media segment, which is tied to their televisions rights fees from their new deals with Fox and USA networks that kicked off in fall 2019.

WWE.com

These numbers also show a sharp decline in live event revenue, which is consistent with rumors that WWE is making drastic changes to its struggling house show business.

WWE notes that this revenue growth was partially offset by a decline in WWE Network revenue. The average paid subscriptions to their streaming service decreased 10% to 1.42 million. They also note that revenue growth was partially offset by the absence of Mixed Match Challenge on Facebook Watch, which is reflected in the “Other” category in the graphic below.

https://www.wwe.com/

As far as live event business is concerned, WWE cites the lack of Super Show-Down (the late 2018 iteration from Australia) as a key difference in the numbers between the fourth quarters of 2018 to 2019. Overall, WWE only ran 70 total live events in the fourth quarter of 2019, compared to 87 live events in the previous year’s fourth quarter. WWE goes on to highlight their partnership with the Kingdom of Saudi Arabia as a significant success in their Live Event segment.

As far as the full year 2019 performance goes with Live Events, WWE states that revenues declined 13% from the prior year. This is primarily attributed to “lower ticket sales, driven by the staging of 56 fewer events worldwide and lower average attendance, as well as the absence of Super Show-Down, a large-scale event in Australia.”

WWE.com

When discussing decreased performance in the Consumer Products business segment, WWE says that it’s primarily a result of “lower video game royalties, which were driven by the Company’s franchise console game WWE 2K20.” That sounds appropriate, considering the reception that game has received.

One of the most interesting lines in the release comes when discussing their business outlook for 2020:

The Company is pursuing several strategic initiatives that could increase the monetization of its content in 2020 and/ or subsequent years. These include distribution of content in the Middle East and India as well as the evaluation of strategic alternatives for the Company’s direct-to-consumer service, WWE Network. At this time, the outcome of these initiatives is subject to considerable uncertainty.

The evaluation of strategic alternatives to WWE Network? What in the world could that mean?

Overall WWE’s revenues are higher than ever due to their televisions rights, but they acknowledge performing on the lower end of their expected range due to decreases in their other business segments.

Which numbers stand out to you the most from WWE’s financial results, Cagesiders?