WWE News: WWE Second Quarter Earnings Report Released, Record Revenue

Basis of Presentation

For the second quarter of 2017, Operating income included $1.1 million in film impairment charges. For the six months ended June 30, 2017, Operating income included $5.6 million in expenses primarily related to certain legal matters and other contractual obligations, and $3.2 million in film impairment charges. As these items impact the comparability of results on a year-over-year basis, they have been excluded from the Company’s 2017 Adjusted OIBDA. A reconciliation of 2018 Adjusted OIBDA to Operating income (GAAP) for the three and six-month periods ended June 30, 2018 can be found in the supplemental schedules on pages 14-15 of this release.

For the second quarter and six-month period ended June 30, 2018, net income included a $3.0 million impairment of an equity investment which was recorded below Operating income as a Loss on equity investment. A reconciliation of Net Income to Adjusted Net Income for the three and six-month periods ended June 30, 2018 and 2017 can be found in the supplemental schedule on page 13 of this release.

Second-Quarter Results by Operating Segment

Media

Revenues increased 48% to $202.6 million, primarily due to the distribution of certain programming content in international markets as reflected in “Other.” Additionally, the growth in Media revenue reflected increased sales of advertising and sponsorships across platforms, the contractual escalation of core content rights fees, including license fees from the distribution of the Company’s flagship programs Raw and SmackDown, and the continued growth of WWE Network that yielded a 10% increase in average paid subscribers to 1.80 million.

Operating income increased $22.4 million to $32.0 million primarily due to the growth in revenue, which was partially offset by associated production costs and an increase in accrued management incentive compensation.

Adjusted OIBDA increased $26.7 million to $44.5 million.

Key Highlights: During the quarter, WWE continued to produce compelling content, monetize new opportunities across platforms, and optimize its future distribution. As Monday Night Raw and SmackDown Live remained the highest-rated programs on USA Network, WWE secured agreements with USA Network and Fox Sports, effective October 1, 2019, that increase the programs’ combined average annual value (AAV) in the U.S. to 3.6 times that of the prior deal with NBCU. Extending its reach on television, WWE delivered its third captivating season of Total Bellas, developed a new series, Miz & Mrs., that premiered on July 24, and announced the eighth season Fall return of Total Divas. On the Company’s streaming service, WWE Network, pay-per-views and original programming continued to drive viewer engagement. In partnership with the Saudi General Sports Authority, the Company produced the Greatest Royal Rumble, which was featured on WWE Network. Other examples of exciting new programming on the network included the UK Championship Tournament and a new season of Camp WWE. To these, the Company added the promise of more in-ring content to come with the next women’s tournament, Mae Young Classic 2018 and the first-ever all-women’s pay-per-view event, WWE Evolution. For its social and digital platforms, the Company produced more than 165 hours of content, including versions of its Best of WWEseries in Spanish, Portuguese, and German, and plans to launch a new series, WWE Now in Arabic.

Live Events

Revenues of $52.3 million were essentially unchanged from the prior year quarter as increases in the average ticket price at events in both North America and international markets was offset by a reduction in average attendance for the Company’s events worldwide. The year-over-year changes in ticket prices and average attendance were primarily due to changes in the mix of venues and territories.

• There were 90 total events (excluding NXT) in the current quarter, consisting of 61 events in North America and 29 events in international markets, as compared to 92 events in the prior year quarter, including 66 events in North America and 26 in international markets.
• North American ticket sales declined $2.4 million primarily due to the staging of five fewer events and an 8% decline in average attendance to 5,900. Partially offsetting these factors, the average ticket price increased 5% to $81.71.
• International live event revenue increased 9% to $13.5 million from $12.4 million in the prior year quarter. The staging of three additional events during the quarter and an 8% increase in average ticket price to $78.31 was partially offset by a 10% reduction in average attendance to approximately 5,700 fans.

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