WWE Touts Higher Ratings, Rights Fees and Ticket Sales, But Earnings Drop on Saudi Event Timing

Georg Szalai and Etan Vlessing
·5 min read
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Sports entertainment powerhouse WWE, which recently agreed to merge with Endeavor’s UFC to create a live sports and entertainment titan, reported lower first-quarter earnings and revenue on Wednesday, but both exceeded Wall Street expectations. While its business was propelled by higher media rights fees, as well as improved viewership and live events ticket sales, the company’s financials dropped as it didn’t get the major boost in the latest quarter that a big event held in Saudi Arabia in February 2022 had provided.

The results reported were for the three-month period ended March 31, or just before the big two-night WrestleMania 39 in Los Angeles in early April.

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Nick Khan, CEO of WWE, told analysts during a morning call that the merger with UFC, which is being spun off by Endeavor, was expected to close in the second half of 2023. The newly-combined WWE and UFC entity has yet to receive a brand name as WWE shares will be converted into a new company listed on the New York Stock Exchange under the symbol “TKO”.

Asked about the risks of being swallowed by a larger corporate entity in Endeavor and any impact on its corporate culture and strategy, Khan said he didn’t expect WWE to materially change content-wise as the company builds out its global footprint. “We’ve known these folks for a long period of time, so they’re not strangers to us. Their style is not strange to us,” he said of Endeavor.

Khan insisted UFC CEO Dana White had not been held back by parent Endeavor as he runs the MMA giant. “Has the Endeavor folks told him no, you should do this match or you should do it this way? That’s not what they do. That’s not what they say they do. And that’s not what they’re going to do,” he added.

Khan told analysts an immediate focus for WWE are talks on the domestic media rights renewals now underway with incumbent rights holder NBCUniversal for WWE Raw, while Fox is negotiating a potential renewal of a five-year deal for WWE Smackdown.

“With the ratings and viewership success we’ve seen for Raw and Smackdown, we believe we are well positioned as we enter these conversations,” Khan told analysts during a morning call about his flagship weekly shows.

“I believe that they’re both seeing the growth of the product, the impact of the product, in the right way,” he added about NBCUniversal and FoX. Khan didn’t put a timeline on concluding the renewal talks. WWE is also set to hold talks on broadcast rights renewals in Canada, where a ten-year deal with local sports channel Sportsnet is up for renegotiation.

During the latest financial quarter, overall revenue dropped 11 percent to $297.6 million, “primarily due to a shift in the timing of the staging of a large-scale international event, which occurred in the first quarter of 2022 but is expected to occur in the second quarter of 2023,” the company explained without directly mentioning Saudi Arabia. However, it has previously unveiled a big Night of Champions event for May 27 in Jeddah. The revenue decrease for the January-March period was partially offset by an increase in revenue related to higher media rights fees for the company’s flagship weekly programming and higher North American ticket sales.

First-quarter operating income fell 43 percent to $53.1 million amid the lower revenue and “relatively flat operating expenses.” Net income for the latest quarter came in at $36.7 million, down 44 percent.

“Viewership for WWE’s weekly flagship programs Raw and SmackDown both increased 7 percent, significantly outperforming overall cable and broadcast television, which declined 15 percent and 6 percent, respectively,” the company highlighted the positive underlying business trends. “North American live events ticket sales revenue increased 52 percent over the prior-year period, reflecting a 37 percent increase in average attendance.”

Frank Riddick, WWE’s president and CFO highlighted that, “our financial performance was primarily driven by the contractual escalation of media rights fees for our flagship weekly programming and strong consumer demand for our live events.”

Early this year, WWE, led by Khan and chief content officer Paul “Triple H” Levesque, saw co-founder Vince McMahon return to the boardroom as executive chairman after he had last year retired amid a misconduct probe led by the board.

After WrestleMania weekend, the mega-merger with mixed martial arts firm UFC was unveiled. The combined company will be 51 percent controlled by Endeavor and 49 percent owned by WWE shareholders. The partners expect the deal to close during the second half of 2023.

“We are off to a strong start in 2023,” said Khan on Wednesday in a statement. “Operationally, we continue to effectively execute our strategy, including staging the most successful WrestleMania of all time in early April. WrestleMania, as well as our other successful premium live events such as Royal Rumble and Elimination Chamber, and strong viewership for our weekly flagship programs, Raw and SmackDown, further expanded the reach of our brands and enhanced the value of our content.”

WWE writers are not members of the Writers Guild of America, and so the TV wrestling giant is not impacted by the current Hollywood writers strike. “Of course, we’re supportive of the writers who are members of the Guild and their efforts, and we’re hopeful that a deal can be reached between them,” Khan said.

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