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THE MARKET DOESN'T APPEAR TO LIKE WWE'S FOURTH QUARTER NUMBERS AND MORE THOUGHTS FROM TODAY'S EARNINGS RELEASE

WWE reported fourth quarter and full year earnings today after the market closed.  Here are my quick thoughts on what they reported.

*As I said earlier this week, this would be the first quarter where the new TV deal money didn’t save them with more money in the coffers than the previous year.  They were going to be cycling TV money from last year, but not have any live event revenue so it was obvious that they would be down overall in revenue.  The question was could they find a way make the fourth quarter more palatable through savings measures?  The answer was no.  As I type this the stock is down in after hours trading.  It was down more than two dollars but has come back a bit, which makes sense because…

*The new deal with Peacock starts in Q1.  Given that they will keep the Network revenue outside of the US, they will be making much more money on the new deal.  And while they will be cycling some live event revenue from last year, that will end in March and then for the rest of the year they won’t have to cycle against any of that, all while bringing in more revenue from the Network.  That will make the bottom line look better for the remainder of the year.

*That should buy them time with investors to find new ways to create revenues, such as more sold super shows, like the Saudi Arabia events.  New revenue creation will be essential for the stock to continue to grow long term.

*The restriction of the pandemic have made projecting a business like WWE a little harder, for obvious reasons.  The fact that they managed to never shut down, no matter how you feel about the decision, is a positive to investors.

*At 5:03 ET it’s back down $2.75 in after hours trading.  Are they overvalued right now?  Yahoo Finance says yes and I tend to agree with them.  I want to see how they will create new revenue streams now that they have almost completely maximized their primary asset, TV content.

Thoughts On The Investor Call:

Michael Weitz said good morning and Vince McMahon corrected him.  It was pretty funny and everyone had a good laugh.

Vince rightly said they never missed a week of programming showing they are committed to their audience.  Vince loves the name Thunderdome.  He put over that it allows fans to be at the show.  Vince put over the Peacock deal, which he should.  It’s a great deal and great for the fans too, since they can save money if they choose to go with the cheaper deal.

He expects a gradual return to fans in the stands.  They need to determine at what point they can make money.  Yep, exactly.  20 percent attendance?  Probably not when you look at the costs involved.

Nick Khan came on and started talking Peacock.  Everything is moving there.  Good!  WWE will keep access to the audience data, good move for sure.  If you have Comcast internet or cable, it will be free to you.  Khan mentioned other can get Peacock for $4.99 with no upcharge.  It’s a great deal for them and the fans, for sure.  NBCU is owned by Comcast so they have a plan to make it work well for them, believe me.

Khan said that he talked with other companies but Peacock made the most sense.  I think they also offered the most because they were only deep pocketed company that had a need for what WWE brings, plus a synergy with their TV.

Khan talked about growing outside of the US.  He mentioned the India show that aired in the country on networks that had a reach of 50M people.  These are the kinds of things that they need to show the market they are working on for the growth aspect I talked about above.  Khan said that the show was viewed by 20M people in India.  That is strong.  He said expect more of these events in India.

He said that they are also looking at the Latin American market.  He mentioned Bad Bunny appearing.  Mike Johnson and I talked about this a lot on the show yesterday.  He made a point of saying Bunny and Damien Priest have set the table for future storylines.  Yep, smart, smart move.  It doesn’t matter if I know who Bad Bunny is, he is popular and those kinds of stars can move the needle for WWE.  Look for more engagement in the LatAm region he said.  Smart, smart move.

At this point the stock is down $4.00 after hours as Khan is talking about the WWE studio things that they have planned.  He announced that they will be making WWE belts for sports teams.

Stephanie is on now.  She said that one thing Vince told her was to be ahead of the curve.  She talked about a lot of the things they have done to stay ahead of the curve, the Network and the move to Peacock.  She said they are doing it now because of the massive move to streaming.  She is right, I would ever pay for cable again.  Streamers need content and that’s what they do best, create content.  NBCU being a partner made it all the better.  She made a great point of saying it gives them access to NBC’s structure and hierarchy.  I expect a lot of cross promotion with WWE and other NBCU entities.

The stock is bouncing between $52 and $53.25 in after hours.  It closed at $56.

Steph is pointing out impressive WWE numbers and just mentioned Sasha Banks appearing on The Mandalorian.  She put over Bad Bunny, who said he has always wanted to be a WWE star.  They lucked out on that one.  Steph definitely knows branding.  Some rich people bring their kids into their business and it’s an epic fail.  That is NOT the case with Steph, no way, no how.

Now it’s time for the financials.  If you see Mike Johnson, make sure he is still away in a few minutes.

Interesting point was they expect the highest impact of Peacock to be in 2021.  That would lead me to believe that the deal is not severely tiered, with it going up significantly each year.  The biggest year to year rise will be this year.

Questions were pretty eh until someone asked how will they get back lost fans.

Nick said he doesn’t believe they have lost eyeballs, they have just shifted to online (which pays less).  He thinks that now that the election is over and the pandemic gets better, they will bring people back.  So, no plan folks.  He did emphasize ratings are important because, well they are.

Nick said what I expected, there will be cross promotion on NBC platforms.  He also said that he doesn’t believe that broadcast network is going anywhere.  I agree with him on that.  As people cut the cord to cable, more and more are going back to getting over the air broadcast networks from antennas.  What’s old is new again.

He does see more cable networks closing but it will be smaller ones and won’t have any affect on USA (and RAW/NXT).  We have talked about that a lot here on audio so if you listened to any of that, you know that is my feeling as well.  With that said, down the road could then up on, say, Amazon down the road?  For sure.  They will look to their current partners first but they are always aware of what the other entities are doing and looking for.

The last caller asked about the profitability of the Saudi Events.  In the fourth quarter you can see it.  It’s tens of millions of dollars, and the reason why they need to do more of them.

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