The COVID-19 pandemic has forced many businesses to adjust to the concept of a “new normal,” which World Wrestling Entertainment (WWE) knows all too well. WWE reported strong Q3 earnings on October 29, which were mostly in-line with industry expectations.
WWE posted a revenue increase of 19%, to $221.60 million, which was just marginally below expectations for $221.67 million, and earnings per share of 56 cents vs. 43 cents, according to Bloomberg. The wrestling and entertainment company also posted an operating income of $63.4 million, an increase of nearly $57.0 million and adjusted OIBDA was $84.3 million, an increase of $58.9 million.
Digital content has carried WWE during the pandemic — and for good reason. The company has not held a ticketed event since mid-March 2020. Average paid subscribers for its WWE Network were 1.6 million, an increase of 6%. Digital video views increased 3% in Q3 for a total of 9.2 billion. Hours consumed also increased 3% to 342 million. WWE also posted strong eCommerce revenues increased 60% to $9.1 million.
WWE recently surpassed 50 billion views on YouTube, making WWE the fifth most-viewed YouTube channel in the world. According to WWE’s Chief Brand Officer & Director Stephanie McMahon, the company has also partnered with TikTok, where it is the second most popular sports brand behind the NBA.
In a recent note, Morgan Stanley analyst Benjamin Swinburne says that WWE has benefited from production cost savings related to the COVID-19 pandemic and believes that WWE’s digital content will continue to perform well.
“While rating pressures have weighed on shares, overall engagement with the product has been elevated outside of the bundle. We are encouraged by the recent rebound in average paid subs at WWE Network (+6% YoY), which we think bodes well for potential strategic partnerships down the road.”
Swinburne believes that the wrestling entertainment company is still a fundamentally attractive business. “Upside remains from incremental opportunities investing around international markets (Sony/India event), consumer products, and digital.”
One digital stride that the company has taken is the implementation of WWE Thunderdome, a virtual way to bring fans into the arena via live video on LED boards for WWE events. This technology is similar to what was used when the NBA restarted the 2020 season in Orlando, Florida.
Despite strong earnings, WWE believes that the impact that COVID-19 will have on its business remains uncertain and could be material. For that reason, the company is not reinstating full year 2020 guidance. Several coronavirus outbreaks have been reported at WWE’s performance center in Orlando, Florida.
Cultivating new business opportunities is a high priority for the wrestling entertainment company. WWE will be doing business with streaming giant Netflix (NFLX). The company has sold a multipart documentary on the life of CEO Vince McMahon. According to WWE President & Chief Revenue Officer Nick Khan, the documentary will be one of the highest budgeted docs in Netflix’s history. It will be directed by Chris Smith, the Director of Netflix’s Fyre Festival documentary.
During a call with analysts, WWE chairman and CEO Vince McMahon’s optimism was high, especially when it came to new management. WWE parted ways with longtime co-vice presidents George Barrios and Michelle Wilson. In August, it was announced that Nick Khan would be assuming the role of president as well as chief revenue officer.
“I think that I’ve never felt as confident as I currently do in terms of this of our new management. It’s really extraordinary what this has done for the entire business and other executives and much further below. There’s a new spirit, a new vibrance. And I don’t know if you find this anywhere, there’s a view of optimism, not just for optimism sake, but when you look at where we’re going to go in the future and use the resources that we have as well as other things like, this is a fun, exciting place to be.”
Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.
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