FOR IMMEDIATE RELEASE

 

Contacts:

Media: Gary Davis 203-352-5066

Investors: Michael Weitz 203-352-8642

 

WWE® Reports 2007 Third Quarter Results

16% Revenue Increase Over Prior Year

 

STAMFORD , Conn. , November 1, 2007 - World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its third quarter ended September 30, 2007.  Revenues totaled $108.1 million as compared to $93.2 million in the prior year quarter while operating income was $13.4 million as compared to $12.5 million in the prior year quarter. Net income was $8.5 million, or $0.12 per share, as compared to $9.2 million, or $0.13 per share, in the prior year quarter. 

 

“In addition to the $12.8 million in film related revenues, we posted higher revenues from both the Live and Televised and Digital Media segments in the third quarter,” said Linda McMahon, Chief Executive Officer.  “We also announced the development and implementation of our strategic initiative for continued international expansion. We are establishing new regional offices in Brazil and Australia to complement our current offices in Canada , the UK and China .  This will enable senior leadership to be on the ground in these locations, and position our company for continued growth and provide increased access to our expanding WWE fan base,” concluded Mrs. McMahon.

 

Results By Business Segment

 

The following chart reflects net revenues and profit contribution by segment for the three months ended September 30, 2007 and September 30, 2006.  (Dollars in millions)

 

 

 

 

Live and Televised Entertainment

 

Revenues from our Live and Televised Entertainment businesses were $68.6 million for the current quarter as compared to $65.6 million in the prior year quarter, representing a 5% increase.

 

·         Live Event revenues were $20.1 million as compared to $17.3 million in the prior year quarter, primarily due to an increase in the number of international events.

 

• There were 78 total events, including 15 international events, during the current quarter as compared to 102 events, including 8 international events, in the prior year quarter.  The prior year quarter also included 27 stand alone ECW® events.  In the current quarter, our ECW events were co-branded and included as part of our SmackDown® events.

 

• International events generated $6.6 million of revenues as compared to $3.2 million in the prior year.  10 out of the 15 international events in the current quarter were structured as buy-out deals with guaranteed fixed revenues as compared to 5 buy-out deals in the prior year quarter. The remaining international events in which we sold tickets directly yielded an average ticket price of approximately $77.75 in the current quarter as compared to $66.30 in the prior year quarter.

 

• North American events generated $13.5 million of revenues as compared to $14.0 million in the prior year.  North American average attendance was approximately 5,500 in the current quarter as compared to 4,300 in the prior year quarter, an increase of 28%. The average ticket price for North American events was approximately $38.92 in the current quarter as compared to $35.17 in the prior year quarter.  Offsetting these increases was the absence of the stand-alone ECW events in the prior year quarter.

·         Pay-Per-View revenues were $18.8 million as compared to $19.7 million in the prior year quarter.  There were three pay-per-view events produced in each quarter. 

 

The details for the number of buys (in 000s) are as follows:

 

Events (in chronological order)		Three Months Ended September 30, 2007		Three Months Ended September 30, 2006
The Great American Bash®.......................		229		227
SummerSlam®...............................................		537		529
Unforgiven®.....................................................		210		289
Prior events......................................................		87		81
Total..................................................................		1,063		1,126

 

·         Venue Merchandise revenues were $3.9 million as compared to $4.4 million in the prior year quarter, primarily reflecting a decrease in per capita spending by our fans to approximately $10.15 in the current quarter as compared to $11.12 in the prior year quarter.  The per capita spend in the current quarter was negatively impacted by a decline in the number of T-shirts sold at arenas, due primarily to our expanded domestic licensing and the availability of our products at local retail outlets.

 

·         Television Rights Fees revenues were $22.8 million as compared to $22.5 million in the prior year quarter. 

 

·         WWE 24/7â„¢ revenues were $1.4 million as compared to $0.6 million in the prior year quarter, reflecting growth in the number of subscribers for our video-on-demand program.

 

Consumer Products

 

Revenues from our Consumer Products businesses were $19.0 million versus $21.7 million in the prior year quarter, representing a 13% decrease. 

 

·         Home Video net revenues were $5.7 million as compared to $11.4 million in the prior year quarter.  The decline in Home Video revenues primarily reflects changes in the timing of new releases as there were no new titles released in the current quarter, excluding the monthly releases of our pay-per-view events.  There are several new titles scheduled for release in the upcoming 4^th quarter, including retrospective titles on Superstars Rey Mysterio®, Shawn Michaels®, and John Cena®, among others. 

 

·         Licensing revenues were $9.4 million as compared to $7.2 million in the prior year quarter, primarily reflecting increases in apparel and toy related sales. Revenues increased by $1.2 million in both the apparel and toy categories as compared to the prior year quarter.

 

·         Magazine publishing net revenues were $3.9 million as compared to $3.1 million in the prior year quarter, reflecting increased newsstand and subscription copies sold. We published three issues of WWE Magazine in each quarter and published one additional magazine special in the current quarter.

 

Digital Media

 

Revenues from our Digital Media related businesses were $7.7 million as compared to $5.9 million in the prior year, representing a 31% increase. 

 

·         WWE.com revenues were $4.6 million as compared to $2.6 million in the prior year quarter.  Web-based advertising increased by $1.3 million, or 68%, while wireless content revenues increased by $0.7 million as compared to the prior year quarter. 

 

·         WWEShop revenues were $3.1 million as compared to $3.3 million in the prior year quarter.  The number of orders processed during the current quarter declined by 9%, but was offset by an increase in the average per order spend by our customers to $53.58, as compared to $50.05 per order in the prior year quarter.

 

WWE Films

 

Revenues from our WWE Films segment were $12.8 million in the current quarter.  WWE only participates in film revenue when our distributors have recouped their print and advertising costs and the results have been reported to us. This is the first quarter in which we have recorded film revenue, primarily relating to our feature film “The Marine”. Our capitalized feature film production asset balance is amortized in proportion with the recognition of revenue.  As a result, we have amortized approximately $10.0 million of feature film assets, yielding approximately $2.8 million in profit contribution for feature films.

 

Profit Contribution (Net revenues less cost of revenues)

 

Profit contribution was $44.7 million in the current quarter as compared to $38.2 million in the prior year quarter. Total profit contribution margin remained unchanged at approximately 41% as compared to the prior quarter.  

 

Selling, general and administrative expenses

 

SG&A expenses were $28.9 million for the current quarter as compared to $23.7 million in the prior year quarter, reflecting an increase in staff-related costs as well as professional and legal fees related to the Chris Benoit tragedy and the review of our Talent Wellness Program.

 

Effective tax rate

 

In the current quarter the effective tax rate was 40% as compared to 35% in the prior year quarter. This increase reflects the impact of approximately $0.8 million of realized investment losses which were not deductible for tax purposes.

 

EBITDA

 

EBITDA was approximately $15.8 million in the current quarter as compared to $14.5 million in the prior year quarter.

 

 

 

Summary Results for the Nine Months Ended

 

Total revenues through the nine months ended September 30, 2007 were $353.0 million as compared to $307.6 million in the prior year period, a 15% increase, while operating income for the current period was $43.7 million versus $48.2 million in the prior year period.  Net income was $30.6 million, or $0.42 per share, as compared to $33.3 million, or $0.47 per share, in the prior year period.  EBITDA was $50.7 million for the current nine month period as compared to $54.5 million in the prior year period.  As previously disclosed, the current year results reflect the $15.7 million asset impairment for our feature film “The Condemned”. Excluding this impairment charge, EBITDA would have been $66.4 million as compared to $54.5 million in the prior year period, representing a 22% increase.

 

The following chart reflects net revenues and profit contribution by segment for the nine months ended September 30, 2007 and September 30, 2006.  (Dollars in millions)

 

 

 

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were $234.5 million for the current period as compared to $219.5 million in the prior year, a 7% increase.

 

		September 30, 2007		September 30, 2006
Live Events .............................................		$  68.4		$  59.3
Pay-Per-View ..........................................		74.4		74.9
Venue Merchandise ................................		14.5		14.0
Television Rights Fees............................		68.6		63.9
Television Advertising .............................		3.7		4.8
WWE 24/7...............................................		3.8		1.6
Other........................................................ .................................................................		1.1		1.0
Total Live and Televised..........................		$234.5		$ 219.5

 

Consumer Products

Revenues from our Consumer Products businesses were $82.8 million versus $71.0 million in the prior year, an increase of 17%. 

 

		September 30, 2007		September 30, 2006
Home Video		$ 33.9		$ 35.9
Licensing       ............................................		37.7		25.7
Magazine Publishing ...............................		10.5		9.1
Other .......................................................  .................................................................		0.7		0.3
Total Consumer Products ......................		$ 82.8		$ 71.0

 

 

Digital Media

Revenues from our Digital Media related businesses were $22.9 million as compared to $17.1 million in the prior year, an increase of 34%. 

 

		September 30, 2007		September 30, 2006
WWE.com   ............................................		$ 12.0		$  7.7
WWE Shop  ............................................		10.9		9.4
Total Digital Media  ..................................		$ 22.9		$ 17.1

 

WWE Films

 

As discussed above, revenues from our WWE Films segment were $12.8 million primarily relating to our feature film The Marine.  We have approximately $29.2 million of capitalized film production costs on our balance sheet as of September 30, 2007.

 

Profit Contribution (Net revenues less cost of revenues)

 

Profit contribution was $131.0 million in the current period as compared to $128.2 million in the prior year period. Total profit contribution margin was approximately 37% in the current year as compared to 42% in the prior year period, primarily reflecting the impact of the feature film impairment.

 

Selling, general and administrative expenses

 

SG&A expenses were $80.3 million for the current period as compared to $73.7 million in the prior year period, primarily due to increased staff related costs, including costs associated with the expansion of our digital media operations. 

 

Effective tax rate

 

In the current period the effective tax rate was 37% as compared to 39% in the prior year period. This decline represents the benefit of increased tax exempt interest income, partially offset by the impact of additional realized investment losses which were not currently deductible for tax purposes.

 

Cash Flows

 

Net cash provided by operating activities was $73.1 million for the nine months ended September 30, 2007 as compared to $32.6 million in the prior year period.

 

Note: World Wrestling Entertainment, Inc. will host a conference call on November 1, 2007 at 11:00 a.m. ET to discuss the Company’s earnings results for third quarter of 2007.  All interested parties can access the conference call by dialing 800-894-5910 (conference ID: WWE).  Please reserve a line 15 minutes prior to the start time of the conference call.  A presentation that will be referenced during the call can be found at the Company web site at corporate.wwe.com. A replay of the call will be available approximately three hours after the conference call concludes, and can be accessed at corporate.wwe.com.

 

World Wrestling Entertainment, Inc. (NYSE: WWE) is an integrated media and entertainment company headquartered in Stamford , Conn.   Additional information on the Company can be found at wwe.com and corporate.wwe.com.  

 

Trademarks:  All World Wrestling Entertainment, Inc. programming, talent names, images, likenesses, slogans, wrestling moves, and logos are the exclusive property of World Wrestling Entertainment, Inc. and its subsidiaries.  All other trademarks, logos and copyrights are the property of their respective owners.  ECW is a trademark of WWE Libraries, Inc.

 

Forward-Looking Statements: This news release contains forward-looking statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties.  These risks and uncertainties include the conditions of the markets for live events, broadcast television, cable television, pay-per-view, Internet, feature films, entertainment, professional sports, and licensed merchandise; acceptance of the Company’s brands, media and merchandise within those markets; uncertainties relating to litigation; risks associated with producing live events both domestically and internationally; uncertainties associated with international markets; risks relating to maintaining and renewing key agreements, including television distribution agreements; and other risks and factors set forth from time to time in Company filings with the Securities and Exchange Commission.  Actual results could differ materially from those currently expected or anticipated.