Film revamp, TV network launch, online businesses take toll
In one of the busiest periods of WWE’s history, the company is readying to launch a new TV network, overhauling its struggling film division, and prepping next month’s “WrestleMania 28,” featuring Dwayne “The Rock” Johnson, all while producing its weekly shows, events and expanding its presence overseas.
Much of the activity took a toll on WWE’s bottomline during the fourth quarter, with the company reporting a net loss of $8.6 million (versus net income of $8.1 million) and revenue declining to $112.9 million, from $122.5 million during the same year-ago period that wrapped Dec. 31.
Company chalked up declines to its TV, film and online businesses.
“In 2011, we evaluated several paths for creating new programs and distributing all of our content in a way that optimizes its value,” said Vince McMahon, chairman and CEO of WWE. “Executing this strategy effectively, including the potential creation of a WWE Network, has the power to transform our business. Our ongoing investment to expand and maximize the value of our content is the most potent approach for driving our future earnings.”
McMahon gave few new details on when its new WWE Network would launch this year, during a conference call with investors. Execs there have been busy negotiating carriage deals with a variety of partners.
It ponied up $4 million last quarter to staff up talent from the cable biz and produce a slate of series, which it fully owns, including reality fare like “Legends House.” Its TV licensing biz took a hit because its held back on distributing shows “NXT” and “Superstars” in the U.S.
It’s also developing a separate slate of series for its revamped YouTube channel, designed as a marketing vehicle to drive auds to WWE’s TV shows.
As for WWE Studios, McMahon wants to give the film arm some time to grow under new head Michael Luisi, who was tapped to oversee the division in last September (Daily Variety, Sept. 7).
Rather than fully develop and produce its own slate of films, Luisi has been busy picking up films from festivals like Sundance and Toronto, co-producing projects with other shingles, and locking down deals with Fox to grow its direct-to-homevideo franchisees like “The Marine” “to improve the profitability of our movie business,” McMahon said.
Company will invest another $15 million to $25 million on up to eight films this year, despite a string of disappointments — films that didn’t appeal to WWE’s fanbase.
Film arm earned $4.3 million in revenue during the quarter (compared to $7.9 million a year ago), while profits came in at $1 million. Division was forced to write off $12.2 million in impairment charges during the quarter due to pics “The Reunion,” “Bending the Rules,” “Barricade,” “See No Evil,” “Knucklehead” and “The Chaperone” not performing as well as expected on homevid.
In the past, its pics have received limited theatrical runs before hitting homevid. Films would play a large programming role on WWE Network, but would likely get more significant play in theaters through new partnerships.
Overall domestic retail revenue for homevid titles declined 14%, or $1.8 million, due to an 8% decrease in shipments to 825,000 units and a 5% decline in average effective prices to $13.50 during the quarter.
During the quarter, WWE saw dips in pay-per-view buys with “Hell in a Cell” down to 182,000 (versus 210,000); “Vengeance” at 121,000 (compared to 137,000 when it was called “Bragging Rights”); “Survivor Series” at 281,000 (244,000) and “TLC” at 179,000 (195,000). Still, revenue from PPVs were up 2% to $14.6 million. The company’s biggest PPV, “WrestleMania 28” takes place April 1, from Miami.
Revenue from live and televised entertainment business were off 2% to $81 million. Its 78 events (including 31 overseas), down from 84 a year ago, earned $26.9 million, up 1%.
TV rights fees generated $33.9 million, off from $35.7 million, due to the absence of “Superstars.” Meanwhile, revenue from consumer products decreased 15% to $18.7 million. Licensing revenue fell to $9.5 million from $12.3 million, primarily from a 15% decline in toy sales during the holidays, which took a toll on most toymakers.
Magazine revs were $2 million, down from $3.1 million, while digital media-related businesses declined 14% to $8.9 million.
WWE posted $483.9 million in revenue fro the year, up from $477.7 million, while net income came in at $24.8 million, down from $53.5 million, again primarily due to investments in new content platforms.