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2020 was the most profitable year in WWE history

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WWE has released its financial results for the fourth quarter (Q4) and full year of 2020. Despite the fact that many businesses spent most of 2020 dealing with the hardships of a global pandemic, WWE achieved record profits during the year. However, their Q4 performance was down compared to the same period last year.

Here is a summary statement from their press release about their Q4 and full year performance for 2020:

“During the fourth quarter, we continued to produce live content in new ways, which successfully increased audience interaction and engagement,” said Vince McMahon, WWE Chairman & CEO. “As we continued to adapt our business to the changing media environment, we completed an important agreement to license WWE Network content to Peacock, which we expect will expand the reach of our brands and enhance the value of our content.”

Kristina Salen, WWE Chief Financial Officer, added “For the year, we achieved record revenue and Adjusted OIBDA, which was at the high end of our rescinded guidance. Adjusted OIBDA increased nearly 60% reflecting the full year impact of our new content distribution agreements in the U.S. and comprehensive efforts to contain costs in challenging times. In 2021, we anticipate Adjusted OIBDA of $270 million to $305 million, reflecting the increasing monetization of our content tempered by the ongoing impact of COVID-19.”

Here is a numerical breakdown of their Q4 and full year 2020 results:

WWE’s revenue is largely driven by their very lucrative television rights fees for Raw and SmackDown. Q4 2019 is when those new TV deals kicked in, so Q4 2020 did not outperform Q4 2019 on that front (unlike every other quarter from 2020). The main reason why there is a $54 million dollar gap in the Media Revenue for Q4 2019 and Q4 2020 is because Q4 2020 did not include a Saudi Arabia show. That was one negative consequence of the coronavirus pandemic to WWE’s bottom line.

The absence of Live Event revenue in Q4 2020 compared to Q4 2019, another consequence of the coronavirus pandemic, created an additional $26.7 million gap in Total Revenue for those two quarters.

Overall, WWE’s preferred metric for profit, Total Adjusted OIBDA, was down by $56.4 million in Q4 2020 compared to Q4 2019.

Despite Q4 2020 being way down compared to Q4 2019, the full year numbers for 2020 still blow 2019 away. That’s because 2020 benefited from the full year of those new televisions rights fees, whereas Q1 through Q3 in 2019 occurred before that big money kicked in. WWE brought in $538.3 million in TV rights fees in 2020, compared to $348.6 million in 2019. That’s a revenue difference of roughly $190 million.

WWE’s Live Event revenue for 2019 outperformed 2020 by roughly $105 million, for obvious reasons. When that is combined with the extra Saudi money in 2019, it offsets all but around $14 million of 2020’s advantage in Total Revenue.

The big gap between the two years actually occurred within Total Operating Income. WWE saved a ton of money thanks to a tremendous reduction in operating expenses and production costs. This is basically the tradeoff that comes with not taking the show on the road, particularly pre-ThunderDome. Operating expenses in 2020 were $88.7 million lower in 2020 compared to 2019.

Overall, Total Adjusted OIBDA for 2020 was $286.2 million, compared to $180.0 million in 2019. That $14 million edge in Total Revenue and $88.7 million reduction in operating expenses accounts for most of that difference in profit.

WWE also provided some details on their WWE Network subscribers in Q4 2020 compared to Q4 2019:

“WWE Network’s average paid subscribers were 1.5 million, an increase of 6%.”

And also for the full year 2020 compared to 2019:

“WWE Network’s average paid subscribers were 1.6 million (flat on a year-over-year basis).”

Here is the accompanying graph:

With WWE Network moving over to NBCUniversal’s Peacock streaming service in March, these Network numbers don’t really matter anymore. WWE is going to reportedly get a billion dollars from the deal over five years, and will make way more money off their Network content as a result.

Moving on, here’s their nifty chart showing that Raw ratings have dropped 21% while the top 25 networks ratings have remained steady year-over-year in Q4.

WWE’s statement about its outlook for 2021 anticipates a similar level of profit (emphasizing the Peacock deal) even while acknowledging that expenses will increase due to production at the ThunderDome and employees returning from furlough:

“...management expects restrictions related to COVID-19, particularly related to the cancellation, postponement or reduced capacity of ticketed live events, to continue at least through the first half of 2021. Additionally, management anticipates a significant year-over-year increase in WWE’s expense base due to the return of employees from furlough and continued higher expenses associated with the production of its weekly Raw and SmackDown television content at the WWE ThunderDome from its stadium residence at Tropicana Field. The Company estimates it can achieve 2021 Adjusted OIBDA of $270 - $305 million as revenue growth, driven by the impact of the Peacock transaction, the gradual ramp-up of ticketed live events, including large-scale international events, and the escalation of core content rights fees, is offset by the increase in personnel and production expenses.

The bottom line is that WWE’s net income for 2020 broke the company record, and they are well-positioned to thrive in 2021, despite the global pandemic. If their soft wrestlers weren’t banned from Twitch out of pure corporate greed, I’m sure that they would all be celebrating the big news.

It’s great to be Vince McMahon right now.