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WWE Q4 financial notes: Record yearly revenue, Peacock optimism

On a Thursday investors call that featured a lot of positive vibes around the recent Peacock deal, WWE reported a record year of revenue despite a large year-over-year drop in the fourth quarter that showed how important the Saudi Arabia deal is for them.

2020 revenue finished at a company record $974.2 million, up from 2019's $960.4 million -- an increase of 1%. Their operating income saw a massive jump, up 70% to $208.6 million, up from $116.5 million in 2019.

Those numbers were despite a fourth quarter that saw revenue drop to $238.2 million, down 26% year over year from 2019's $322.8 million. Live event losses mainly due to the absence of a Saudi Arabia show, advertising, and investment in the ThunderDome were given as reasons for the decline.

Despite not talking for the majority of the call, WWE chairman Vince McMahon was in attendance, speaking briefly at the onset that wasn't heard for those listening as the audio started a few minutes late. WWE president Nick Khan, Stephanie McMahon, CFO Kristina Salen and Michael Weitz handled the majority of the speaking duties. 

As noted, the impending Network move to NBCU's Peacock was a focus. Both Khan and McMahon were excited about the crossover opportunities NBC provides with Khan specifically mentioning the WrestleMania venue announcement discussed during an NFL playoff game. He said to expect more piggybacking with big NBC events tied into WWE pay-per-view promotion.

McMahon couldn't directly answer how new sponsorship opportunities would work under the Peacock deal, but reiterated the experience of Comcast/NBCU and WWE being alongside brand names like the Olympics and Sunday Night Football. Khan said the numbers "have seen a strong uptick" since McMahon took over sales and sponsorship six months ago.

As always, international markets are a big part of WWE's future to which Khan said they are just getting started. They pointed to the recent India-focused Superstar Spectacle gaining 20 million viewers and mentioned the Latin American market several times with Puerto Rican star Bad Bunny and Damian Priest mentioned in the same breath.

Tied into the Q4 revenue drop, Salen was asked about the profitability of Saudi Arabia events and said that by looking at the fourth quarter, it should give a good indication of what the absence of an event can have.

Salen said outside WrestleMania, they don't expect to have ticketed events until the second half of 2021 at the earliest. She said the eventual ramp up of live events, one large scale international event, core content rights and the Peacock deal in terms of future revenue increases, but cautioned several times that increasing production costs, personnel returning from furlough and the Thunderdome will offset some of that.

She said that the TV production expenses would not be offset by ticket and merchandise revenue when they return to having live events and that live production on Monday/Friday vs. Monday/Tuesday in 2019 is a big difference.

During the question and answer portion of the call, Khan was asked about how to reverse rating trends for Raw and whether bringing content over from the Network could help. He said both parties would have to agree, but they are always hoping to exceed NBC's expectations and increase ratings. They are focused on growing Peacock's subscriber base. 

Later, he said that, "We don't believe we have lost eyeballs, but they have shifted from linear eyeballs to digital platforms," pushing how good their numbers are on various social networks. "A continued good in-ring product will bring more eyes to linear platforms," he said while adding that there was a big focus on the U.S. presidential race and the coronavirus by viewers.

Khan said he was happy with their network relationships and that "broadcast isn't going anyway" specifically mentioning Fox's Royal Rumble pre-show. He also said that the shutdown of NBC Sports Network won't have any effect or impact on either Raw or NXT.

Other news and notes from the presentation and Q&A:

  • WWE Network subscribers increased to 1.5 million, up 6%.
  • They are planning to restart work on the new WWE offices in the second half of 2021, expected to run between $65-85 million.
  • They have worked out a deal with "a major sports league" to do championship belts with team logos based on how they send WWE title belts to championship winning teams. They think that's an area that will grow in the future.
  • Operating income was down 64% year-over-year from 2019's $99.8 million in Q4.
  • No surprise here, but event revenue was down 97% year-over-year in Q4.
  • Consumer revenue was down 12% year-over-year to $27 million, down from $30.8 million in 2019's Q4.
  • Their cash and short term investments grew to $593.4 million, up from $250.4 million in 2019's Q4.
  • Khan said that in terms of content partner satisfaction, they go by the three Rs: revenue (opportunity for the partners to sell against it), relevancy (excitement level) and ratings (subscriptions).

To listen to the full call, click below.

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