WWE moved the earnings call date back a day, to Wednesday evening rather than Thursday morning. The company noted that was to accommodate scheduling related to their Saudi Arabia event on Saturday.
Does that mean there will be more involvement on the call from the newly-appointed chief content officer, Paul Levesque, than they previously planned? They may want to have him comment and highlight that he’s done an effective job since taking over creative in late July.
I expect positive stories about TV ratings. Monday Night Raw is holding up well in year-over-year comparisons, despite NFL competition starting in September. Smackdown is also up year-over-year in four of the last five months. I expect an emphasis on “Easter eggs” as they point to how they hinted at the return of Bray Wyatt with clues in their programming and QR codes.
Stronger ratings will help their case for an upgrade in live rights fees. I believe serious negotiations for U.S. rights to Raw and Smackdown will start in Q2 2023 (April to June) and may even be finalized in that quarter. Given NFL on Thursdays has done well on Prime Video, Amazon seems like a more realistic player for one of the WWE shows. Current deals with NBCUniversal and Fox expire in the fall of 2024.
NFL Thursday Night ratings make it seem less likely a core WWE show would be airing in obscurity on a streaming platform. Streaming one of the flagship shows may actually expand WWE’s reach, given the younger demographics of streaming and pay TV’s continued decline and aging audience. Although the trade-off of moving away from the wide reach of broadcast (Fox, in the case of Smackdown) in favor of streaming (hypothetically, Prime Video), may be negative. Amazon can to afford to pay content providers like WWE commensurate to the tech giant’s current lesser ability to reach audiences.
Smackdown I believe is more likely to find a new home since it’s held by Fox. It’s questionable whether Fox is happy with the show’s ratings performance. And Fox can certainly live without WWE content. Contrasting against that, NBCU is deeply invested in WWE, so I see them likely to hold on to Raw and keep it on the USA Network.
Next-day Hulu rights are still in question. Did WWE and Hulu agree to an extension? Don’t expect clarity on that, but I’d work with the assumption that those rights will be dealt with live rights. Where NXT ends up in all of this seems in play, as well. It’s not publicly known when the agreement putting NXT on the USA Network expires, but it’s possible WWE has aligned those rights with Raw and Smackdown’s deals.
If Comcast/NBCU really wants to acquire WWE, it seems like 2023 is the time, ahead of another likely rights fees upgrade. Vince McMahon’s exit reasonably opened up speculation about whether WWE will be acquired. However, I’m neither convinced that Comcast wants to own WWE and fit it into its set of brands, nor that WWE is enthusiastic about selling with family members like Stephanie McMahon and Paul Levesque recently elevated in their executive roles. Acquisition seems somewhat inevitable, though. Endeavor is a well-suited acquirer and their president, Mark Shapiro, sounded interested in his comments on The Town podcast recently. Maybe that happens someday.
WWE’s September 3 “Clash at the Castle” event will be another highlight. Because of how WWE breaks down its revenue lines, we should get an idea of what the live gate was for the event since that was the only international event in Q3.
Domestically, I expect them to report an average paid attendance of around 7,000 per event, based on my reading of WrestleTix data, which would be their highest excluding-Wrestlemania quarterly average since the return-to-touring quarter of Q3 2021.
It will be interesting to see what their merchandise numbers are like, too. I built $28.5 million in revenue for the quarter toward the consumer products division, which consists of three areas: product licensing, venue merchandise, and eCommerce.
Consumer metrics have improved somewhat since Vince left, I believe due to the quality of the content. Some fans say not much has changed, but it seems to me enough has perceptibly changed to strengthen TV ratings and attendance, at least in the short term. It’ll be curious to see how WWE spins these trends without contrasting against the weak performance of their disgraced former CEO and Chairman.
I’ll cover the earnings report Wednesday evening on Twitter, @BrandonThurston. The call is at 5 pm ET, live on corporate.wwe.com.
I’ll be talking about the report with John Pollock of POST Wrestling on Thursday at 1 pm ET. It streams live on POST Wrestling’s YouTube channel and will be in both the Wrestlenomics Radio and POST Wrestling podcast feeds afterward.
My full WWE financial model and outlook are available to subscribers.
My latest estimates for WWE’s Q3 2022:
Revenue: $293.7 million
Operating income: $37.7 million
Adjusted OIBDA: $55.3 million
Net income: $24.5 million
For full-year 2022:
Revenue: $1.302 billion
Operating income: $291.3 million
Adjusted OIBDA: $369.4 million
Net income: $206.8 million
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