– WWE stock is down more than 7% at press time after the company reported quarterly revenue and earnings that missed analyst estimates and “fell below management expectations.”
While the presence of WrestleMania 25 in the same quarter last year makes an apples-to-apples comparison difficult for some metrics, WWE Chairman and CEO pointed to domestic pay-per-view buys and live attendance as disappointing for the quarter as far as revenue was concerned. He blamed decreased profitability on reductions in revenue from high margin business lines and “the logistical costs related to the Icelandic volcano.”
But McMahon’s concern for North American revenue involved something more significant than logistical costs, like that of addressing a European volcano. In addition to blaming the economy, McMahon also declared that the changing “talent base” might have adversely impacted performance, particularly in the weak latter part of the quarter.
“Although we believe the continued softness in the economy played a part in our results, recent changes in our talent base may have also impacted key operating metrics, particularly domestic pay-per-view buys and live event attendance,” said McMahon, presumably suggesting the absence of veteran Superstars negatively impacted WWE’s performance for the past three months. He nonetheless was optimistic that some of the affecting challenges were temporary and would be overcome by “producing compelling content and cultivating consumer demand.”
Compared to last year, many of WWE’s performance metrics washed out. Home video and television licensing revenues were higher, while WWE.com, WWEShop.com and live event merchandise sales (even when excluding WrestleMania) were down.
In terms of pay-per-views, the comparison is difficult due to the presence of two extra pay-per-views last year–WrestleMania 25 and Backlash–and due to the increased price tag for this year’s events. Nonetheless, in terms of buys, the events were clearly down.