By James Caldwell, PWTorch assistant editor

WWE reported Thursday First Quarter 2012 revenue of $123.1 million compared to $119.9 million in the prior year quarter. WWE's Q1 revenue (January - March) exceeded analysts's expectations of $113.7 million by nearly ten million dollars.

WWE's operating income also increased to $16.0 million as compared to $13.2 million in last year's first quarter, mainly driving by the comparability of WWE Studios impairment losses. WWE reported a $0.8 million Studios loss in Q1-2012 compared to a $2.8 million loss in Q1-2011.

WWE's Net Income was $0.20 per share, which topped $0.11 per share in the prior year quarter and topped analysts's expectations of $0.05 per share. WWE CEO Vince McMahon commented on why business showed improvement in the first quarter:

"In the first quarter, EBITDA grew 19 percent, reflecting increased profits across all our businesses. Our results were highlighted by the strong performance of our live events as we entered a new market in the Middle East. We are very pleased that our positive first quarter execution continued in April with the successful staging of WrestleMania, which is expected to deliver nearly 1.3 million pay-per-view buys globally," said McMahon. "Through the first quarter, we made important progress on our key strategic initiatives, developing our foundation for creating and distributing new content, and building on our tremendous brand strength, especially in social media. Looking ahead, we are confident that we will leverage the broad appeal of our content to transform our business and drive long-term earnings growth."

Since analysts were expecting a down quarter and WWE produced results exceeding analysts's expectations, the following are reasons outlined in the report on why WWE reported more favorable results compared to last year's first quarter:

-- WWE reported a "$4.1 million benefit due to previously unrecognized tax benefits," which more than makes up the difference in the total revenue increase.

-- WWE reported an increase in online revenue of $1.2 million "driven by" the new partnership with YouTube that pays WWE to produce online shows.

-- WWE's Live & TV revenue segment increased $7.3 million (8 percent) from higher TV Rights Fees and an increase in Live Event Revenue, mainly by recognizing WrestleMania Axxess revenue. (Axxess occurred at the end of March compared to 2011, when it occurred in Q2 at the beginning of April.)

Axxess provided $1.6 million in incremental revenue in Q1-2012 compared to the prior year quarter. Meanwhile, international revenue was up $1.1 million compared to the prior year quarter due to the addition of a tour in Abu Dhabi tour that drew $2.2 million.

WWE noted domestic attendance decreased 13 percent in Q1-2012, which WWE says was offset by "the favorable impact associated with the timing of Fan Axxess events."

Concerning TV Rights Fees, WWE reported an increase of nearly $1.0 million "primarily due to additional rights fees and contractual increases from our existing programs, partially offset by the absence of rights fees for WWE Superstars."

-- WWE reported an increase of $1.2 million (14 percent) in Home Video revenue mainly due to higher-than-expected sales from home video releases in prior periods. Concerning the current period, WWE reported the increase was "partially offset by a 27 percent decline in average price and a 5 percent decrease in units shipped."

-- Overall, the line-by-line revenue increases were partially offset by a decline of nearly $4.0 million in WWE Studios revenue. WWE recognized revenue of $4.8 million in Q1-2012 compared to $8.6 million in the prior year quarter. WWE noted why:

"In the prior year quarter, we released The Chaperone. In the current quarter, we released Bending the Rules, which has generated lower than anticipated home video receipts in its initial weeks of release. As a result, we revised our long-term ultimate projections for this film and recorded an impairment charge of $0.8 million contributing to an overall WWE Studios loss of $1.0 million in the current year quarter. "

Caldwell's Analysis: The overall revenue increase is surprising considering analysts were pessimistic ahead of the earnings release and WWE's recent monthly business update through March indicated that business was down in the First Quarter. The comparability of results is a big factor, though, with WWE benefiting from the timing of Axxess, the addition of a lucrative international tour to offset a poor Central America tour, a significant tax benefit, and home video revenue from DVDs released in prior periods. WWE still reported stronger-than-expected total live event revenue (despite a 13 percent decline in domestic attendance) and an increase in TV Rights Fees. Plus, minimizing costs to increase profitability and reporting only a small WWE Studios loss (compared to prior periods) aided results.

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