WWE Network, Like The Starship Enterprise, Boldly Going Where No One Has Before
- The WWE Network is a trail blazer in streaming sports entertainment.
- WWE management should not use Netflix to compare its model.
- WWE PPV was an event-driven, live-based product as is the Network.
- With increasing and improved total content event-based subscribers will become permanent subscribers.
- WWE's trouble with increasing the number of subscribers to the WWE Network has helped turn the company net income and cash flow negative in 2014.
- Three out of four ratios used to determine dividend health suggest that a dividend cut could be in the future should WWE's financial situation fail to improve.
- A dividend cut by WWE is not unprecedented as it cut its dividend from $0.36 to $0.12 back in 2011.
- Both WWE and the Three Stooges share massive global appeal.
- WWE Network controls its own destiny determining all content.
- Over the Top gives WWE the global reach they could never have with just cable alone.
- Facebook is an example of how profitable a company can be by monetizing a large base of users.
Why You Shouldn't Count WWE Network Out Just Yet
- WWE's biggest gamble in 2014 was the launch of the WWE Network, which faltered out of the gate due to a lower-than-expected subscriber count.
- The Network's big draw was access to the company's vast archive of footage, plus its monthly pay-per-views for no additional cost.
- The successful debut of new talent and expected international expansion are reasons to believe 2015 could be a better year for the company.
Breakdown Of WWE Historical Dividend And Return Of Capital Payouts And Future Value
- WWE has paid a quarterly dividend and/or return of capital over the past 10 years.
- From 2004 through 2013, WWE stock has paid out $8.80/share.
- If you bought WWE at the 2004 low, your annual return through 2013 would be 8.78%.
- If you bought WWE at the 2004 high, your annual return through 2013 would be 2.85%.
The Real Reason WWE Network Is Stuck In A Sleeper Hold
- Netflix has been regularly cited as a competitor for WWE Network, but the two products are not comparable.
- There is a very close competitor in digital over-the-top sports entertainment.
- That WWE Network is struggling to achieve its subscriber goals is a problem it brought upon itself.
- WWE base sub count has been increasing for the past 2 quarters at over 16% on an annual basis.
- WWE last 6-month contract expires in Q4 2014.
- WWE new month-to-month subscription is the way to go with a base sub core renewing, providing a bottom count starting Dec. 1.
- WWE Network average sub count will exceed OIBDA that PPV generated in the Q1 2015.
WWE's Narrow-Minded Focus Is Alienating Fans And Investors
- WWE is pushing the WWE Network in an effort to follow a business model similar to Netflix.
- This business decision is cannibalizing higher margin revenues, driving the company from a profit to a loss even as it downsizes and cuts costs to produce its content.
- WWE Network is having problems gaining traction as it doesn't have enough content to keep users engaged.
- Further declines in profits should be expected as WWE offers cheap/free price plans to stimulate growth.
- Jim Cornette, a veteran of the wrestling business, believes that pro wrestling is dying. Ominous words for a company that achieves all of its revenues from wrestling.
WWE Network's Temporary Free Price Is A Last Ditch Effort To Grow Closer To Netflix
- WWE has changed the WWE Network pricing several times in recent months. Right now new subscriber's can join the service for free in the month of November.
- WWE's third quarter earnings showed that revenues increased 6% while net income swung to another loss, marking the 4th straight quarter of negative earnings.
- WWE added just 31,000 net subscribers to the WWE Network between June 30th and September 30th bringing the total subscriber count to 731,000 - well below 1,000,000 goal by year end.
- WWE has only been able to add 30,000 subscribers outside the U.S. since the WWE Network expanded internationally on August 12th.
- The WWE Network will continue to be a huge burden to the company overall as it tries to become the Netflix of professional wrestling.
WWE CFO Discusses WWE Network During Wells Fargo Media Conference
- WWE's CFO outlined the three most important elements for the company's streaming subscription network to grow internationally.
- He repeated ambitious subscriber goals of 2-4 million, but did not address subscriber cancellations in Q2 and Q3.
- He struck a careful balance between OTT/MVPD relations: “WWE is not a proponent of cord-cutting or cord-shaving”.
WWE Could Be In Trouble As Network Struggles To Meet Expectations
- WWE's 3rd quarter earnings release beat on income but disappointed on top line revenue and WWE Network subscriber numbers.
- The WWE Network saw subscriber numbers climb from 700K to just 731K in the most recent quarter. The network needs approximately 1 million subscribers to be profitable.
- The company also decided to drop the 6 month commitment for a subscription and is also offering free content in November.
- The company's strategy to market the network primarily to the existing customer base instead of new customers could be contributing to the company's troubles.
World Wrestling Entertainment: Looking Ahead At Its Upcoming PPV And Q3 Earnings
- Two important upcoming dates for WWE are October 26th for their next PPV, Hell In A Cell, and October 30th before the market opens for Q3 earnings.
- The most important number investors will be paying attention to during Q3 earnings is the total number of subscribers for the WWE Network.
- Through its live shows the past month, the WWE has sent several signals that subscriber totals will not meet the 1 million goal by the end of the year.
- The failure of Redbox Instant, the slowdown of Netflix subscriber growth, and the introduction of HBO and CBS streaming products possibly leaves the WWE Network in a bad situation.
World Wrestling Entertainment: Why I Won't Be A Shareholder Again Anytime Soon
- WWE has seen its net income gradually decline into the red in recent quarters despite revenues, TV ratings, and attendance increasing in these same quarters.
- With simple math, WWE's expectations for its WWE Network in terms of subscriber count goals by the end of this year are largely unrealistic.
- The WWE Network will likely cannibalize other parts of WWE's Media Division segment besides PPV buys and largely hurt WWE's biggest revenue stream.
- Both shareholders and WWE fans should expect the WWE Network to see pricing and program changes in the future, as the WWE tries to balance its bottom line.
Nov. 19, 2014, 9:42 AM| 1 Comment
Oct. 30, 2014, 9:18 AM
- World Wrestling Entertainment (NYSE:WWE) reports its WWE Network expanded to 731K subscribers in Q3.
- 31K subscriber were added during the period - 3K in the U.S. and 28K international.
- The company's media division increased revenue by 5.8% to $76.9M.
- Live events revenue -13.1% to $21.8M.
- Strategy: The company plans a new pricing plan of $9.99 per month beginning on November 1.
- WWE +1.7% premarket.
Oct. 30, 2014, 8:57 AM| Comment!
Oct. 24, 2014, 2:23 PM| Comment!
Oct. 22, 2014, 2:37 PM
- Shares of World Wrestling Entertainment (WWE -7.1%) slide lower again as sentiment remains shaky following a short presentation yesterday by Mangrove Partners.
- "We think people are really unhappy and that the number of [[streaming]] additions is going to prove very disappointing," warns analyst Nathaniel August.
Oct. 21, 2014, 1:16 PM| Comment!
Jul. 31, 2014, 3:58 PM
- World Wrestling Entertainment (WWE +3.2%) is an unusual gainer in an otherwise down day, after reporting a smaller than expected Q2 loss and announcing a 10-year deal with Rogers Media to be the exclusive distribution partner of all WWE pay-per-view events throughout Canada.
- The company plans to get its WWE Network to 1.4M subscribers; almost twice the number it had at the end of Q2; to achieve that, it announces new pricing options and plans to cut its workforce by 7%.
Jul. 31, 2014, 8:45 AM| Comment!
Jul. 25, 2014, 2:43 PM| Comment!
Jul. 17, 2014, 12:15 PM
- Shares of World Wrestling Entertainment (WWE +6.5%) move higher on heavy volume on renewed buyout speculation.
- The M&A buzz in the media sector kicked into a higher gear yesterday after 21st Century Fox made an offer for Time Warner.
- Though the streaming sub growth at WWE hasn't dazzled, analysts think the initiative could still draw interest from a company on the distribution side of the business.
May. 26, 2014, 10:12 AM
- Mari Cibelli's Marathon Partners - as its name suggests - invests for the long haul with a concentrated portfolio of growth names. Since the fund's 1997 inception, it's up an annualized 16.8%, more than double the S&P 500, and Cibelli is taking advantage of the selling in small caps to add to his favorites.
- One recent buy is Shutterfly (SFLY) which makes up about 20% of Marathon's AUM. Cibelli thinks consumers will grow disenchanted with rival products from Facebook and Snapchat, and sees SFLY revenue growing 16% per year through 2016, and enterprise value more than doubling to about $2.4B by then.
- Marathon's 2nd-largest holding is XOOM, where he expects pre-tax earnings to jump to $80M from less than $10M this year. If the stock sells for 20x that figure, it should more than double from here.
- World Wrestling Entertainment (WWE) is Marathon's 4th-largest holding at 6% of AUM, and the pummeling since March has brought the shares back down to around Cibelli's original 2011 purchase price of $11. The NBCUniversal deal will increase WWE's revenue by 50% instead of 100%, and Cibelli has adjusted his target price accordingly, but still sees the stock as a double by 2016.
May. 23, 2014, 8:11 AM
- Shares of World Wrestling Entertainment (WWE) are on watch after sinking over 40% in less than a week.
- Execs were on the defensive this week on the impact of the company's shift from a pay-per-view business to a subscriber model.
- CFO George Barrios said at a JPMorgan conference that the company is less than halfway to reaching its goal of 1.3M-1.4M subscribers for the WWE Network.
- Meanwhile, CEO Vince McMahon looks to be trying to unwind some of the initial bravado over a deal with NBCUniversal with several law firms stirring things up for disgruntled shareholders.
- JP Morgan Global Technology, Media and Telecom Conference webcast
May. 22, 2014, 6:41 AM
- WWE Studios will partner with Lions Gate (LGF) for six new action films under the terms of a new deal between the companies.
- The World Wrestling Entertainment (WWE) subsidiary has worked with Lions Gate before on productions to some degree of success.
- Paul Wright, also known as Big Show, will star in the first film of the new partnership.
May. 17, 2014, 8:25 AM
- World Wrestling (WWE) shares plunged 43% Friday after CEO Vince McMahon failed to wring a huge increase in TV fees from NBCUniversal, raising questions about WWE's future and highlighting a shortcoming in McMahon's leadership style: While an unbeatable promoter, he has at times struggled to master corporate negotiations and dealings with Wall Street.
- McMahon took the TV negotiations personally: He played hardball in talks with NBCUniversal, demanding to more than double the value of their previous ~$100M deal, but he wound up renewing the deal with an increase analysts estimate at 50% - nice, but well short of what Wall Street had come to expect, and what McMahon may have bragged he would get.
- "The bottom line is no other entities were willing to pay a higher price tag for the programming than its current partner.” analyst Daniel Moore says.
- Despite being short WWE two months ago, Lemelson Capital is now long WWE and calling for the board to replace the management team or explore a sale of the company.
May. 16, 2014, 12:46 PM
May. 16, 2014, 9:17 AM
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