WWE Releases Full 2012 Financials - Business Recovers

[Todd]

After one of the worst years in the modern era for the company in 2011, the business has recovered slightly in 2012 but overall is fairly stagnant. Here are the highlights:

- Overall revenue stayed almost exactly the same.
- International revenue was down and North American revenue was up, mainly because WWE removed some international live events and added some North American live events.

- Overall revenue from the live wrestling product was up 4%, largely due to more hours of television programming and strength of PPV.
- Live event revenue was slightly down due to a lack of demand in North America compared with internationally in 2011.
- Television rights fees were up considerably, mainly due to an extra hour of Raw and also due to other additional programming.
- PPV was up by a fair margin, aided by the return to programming of talent Brock Lesnar and an additional PPV appearance by talent Triple H.

- The consumer product business was down by 7% largely due to a lack of demand in the licensing department.
- Home entertainment was up slightly, largely due to the well recieved documentary on talent CM Punk.

- Digital media revenue was up 23%, an enormous jump, largely down to on-air promotion of online services Twitter and Tout, as well as the newly-launched WWE App.

- WWE Studios revenue was down by more than half, largely due to a change in the film distribution process to increase profitability.

- Profit contribution is up 18% because of strong TV and PPV, and the re-positioning of the film distribution business.

- Bottom line profit is $0.6m which sounds dreadful, but needs perspective as it was recovering from an $8.6m loss the prior year, and a lot of the costs on the business in 2012 are for projects that cannot or are yet to heed revenue (in the case of cannot - Linda McMahon's Senate campaign; in the case of are yet to - the proposed WWE Network).

- Free cash flow is $14.9m, compared with a loss of $2.1m, which is a huge recovery.

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I know this kind of stuff bores a lot of people, but there are also people interested in this kind of stuff.

My conclusion is basically that Vince has finally realised his stupid fucking film business is worthless, and has re-positioned it cleverly so he doesn't have to throw away any equipment until it loses its value (which takes about five minutes in the film business). As a result, WWE goes back to making money. Simple.

Also, the wrestling product was well on target for a huge increase until it suffered from a number of problems in the second half of the year, arguably one or all of the following: predictability in the main event scene, an extra hour added to Raw, questionable booking of Ryback, over-booking of CM Punk in main event scene.

Overall though this is good news for WWE, and is sure to get better this year as Nielsen starts measuring the internet. I cannot explain how huge this is for WWE. Just to put it into perspective, here are two talents' YouTube rank when a part of their name is typed into the search engine:

- John Cena is ranked second if you type in 'John', in front of John Legend and John Lennon
- Ryback is ranked fifth if you type in 'Ry', in front of Ryan Seacrest

The same applies for almost all main event talents. The future is bright.

[HR]

Who's Cena behind? John...Mayer?

[Ice]

This stuff interest me to an extent. It's when people start making cases about who they should and shouldn't push based on a bunch of numbers that I get annoyed.

So what this is basically saying is that 2011 was god awful and 2012 was only slightly better?

[Todd]

Who's Cena behind? John...Mayer?

Yes.

And Ice, the wrestling product has been stagnant for a while now (probably since 2008) but the biggest problem last year was insane costs and depreciation on film equipment.

[Ice]

Yes.

And Ice, the wrestling product has been stagnant for a while now (probably since 2008) but the biggest problem last year was insane costs and depreciation on film equipment.

Sounds like they're bringing a lot of it on themselves if that's truly the case. How much better would those numbers be if they weren't spending a grip on movies that nobody ever sees? If they cut some of those easily makes up some of the ground I would think.

[Todd]

I often wonder Ice. In fact, I often wonder how good a position the company would be in if he didn't waste his time on stuff like the films, the XFL, the Senate campaign, etc. He is so unbelievably shit at making money out of anything not related to wrestling. I think sometimes he needs to look in the mirror and remind himself that no matter how big he got, he's still just a wrestling promoter.

[Matt]

Thanks for this, Todd, I love seeing this broken down into layman's terms for financial idiots like myself who can't read a ledger sheet to save my life.

The change in WWE Studios has been noticeable all year, and I think you're right, it looks like they're trying to milk what they can out of the asset instead of trying to use it as a vehicle to make WWE talent into mainstream stars.

[Old School Coco]

Live event revenue was slightly down due to a lack of demand in North America

For all the shuffling of deck chairs (extra programming, part timers, etc) used to get business back the way it is, I think this tells another story. Interest in the product is stagnant.

Unfair assessment, Todd?

[Todd]

Fair assessment. Interest has been stagnant since the Benoit murders.

The lack of demand for North American live events is down to WWE taking international events out of the calendar because they were down in 2011, and replacing them with North American events. It was a mistake, because it didn't affect the revenue at all, and it only decreases international brand recognition. They miss Shane McMahon in that regard, he knew what he was doing and was basically responsible for the promotion of the company's global brand.