– The reason WWE continues making cuts (even those that save very little money such as “Superstar” Billy Graham’s $500 a week deal and less talent being brought on the road) while the company remains profitable is because the feeling in Wall Street is that stock isn’t a good buy at the moment as their profits aren’t coming close to meeting the dividend. Company officials don’t want to give up the dividend, feeling it gives them a niche as an attractive buy because of the payout. However, leading market analysts that were bullish on WWE’s stock have gotten off the bandwagon.
The company’s arena business is far stronger than expected in North America right now and television revenue will increase in light of their deal with WGN. On the negative side, there is a feeling that video game revenue is on the downswing because that particular sector is weakening. DVD revenue is also on the downswing and likely not turning around anytime soon because they’ve released DVDs on pretty much every big name in wrestling history that would generate big numbers. The upcoming Randy Savage DVD may be the last DVD release to generate big numbers for a while.
Most of all, many people are pointing at the significant decrease in pay-per-view revenue as it’s been the largest profit center of the company for the past decade. Coming out of today’s financial report, WWE missed analyst expectations by $12.5 million as their first quarter revenue total of $107.8 million was significantly below analysts’ expectations of $120.3 million.
– Company officials have described the next few months as a rebuilding period because they hope to push new talent to the top even if the ratings slip a little. They also plan on calling up more talent from Florida Championship Wrestling within the next few months and giving them a purpose as opposed to putting them on television and having them flounder. However, the question remains as to who those people are.
Another detail in light of the extra hour of television being produced every week is that more and more, the ideas for entertainment will be put on RAW with ECW, SmackDown and Superstars generally focusing on wrestling.