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WWE Q3: Breakdown of TV & Live Event Business - Is Raw's third hour providing a financial benefit?

Nov 1, 2012 - 8:42:31 AM
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By James Caldwell, PWTorch assistant editor

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WWE's total Live and Televised Entertainment Revenue in Third Quarter 2012 was up only one percent compared to the prior-year quarter. This is despite the addition of a third hour of Raw and the addition of "Saturday Morning Slam" during the quarter. (Main Event launched at the beginning of the fourth quarter.)

The following is a break down of WWE arrived at a one percent increase in their vital TV & Live Shows business.

-- Live Event Revenues were $22.8 million, as compared to $23.0 million in the prior year quarter. This was the result of an increase in the number of domestic shows offset by a reduction in the number of more-lucrative international shows.

Reflecting WWE's recent marketing to increase top-line ticket prices, WWE reported that average ticket prices for their domestic shows increased three percent to $42.73 from $41.34 in the prior-year quarter. Internationally, WWE reported average ticket price of $98.23 over seven int'l events compared to $80.08 over 15 int'l events in Q3-2011.

-- Television Rights Fee Revenue was $34.0 million in both Q3-2012 and Q3-2011. WWE slipped in an important note that Q3-2012 revenue was hurt by "a reduction in sponsorship revenue related to our television assets."

Overall, WWE reported that an increase in license fees from new programming and an increase in contracts for existing programs were offset by "the timing and number of domestic Smackdown and international telecast weeks within our fiscal quarter (i.e., 13 telecast weeks compared to 14 in the prior year quarter)."

-- Offsetting the Live Events Revenue decline and pushing the quarter close to a one percent increase was the PPV Revenue category, which was $16.3 million compared to $15.8 million in Q3-2011. WWE noted this was due to "incremental Pay-Per-View revenue from the strong performance of our Summerslam event." [ Read more details on the PPV segment here ]

-- Putting the third quarter at the one percent increase was Venue Merchandise up to $4.5 million compared to $3.6 million in the prior-year quarter. WWE reported that this was due to merchandise sales at more domestic shows increasing one percent compared to the prior-year quarter.

Caldwell's Analysis: What the TV Revenue segments shows is that WWE has not benefited from the addition of a third hour of Raw. Granted, WWE is saying that one fewer week in the third quarter hurt their international TV revenue, but the addition of a third hour of Raw and a new Saturday morning TV show should have at least provided a slight boost in revenue. It looks like the key phrase in their report is "a reduction in sponsorship revenue related to our television assets." WWE did not say which show(s) were impacted by the reduction in ad revenue, but it points to an overall watering-down of the TV product. Through one quarter, it appears that the financial benefit of a third hour of Raw is not worth the cost of impairing their flagship show.


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