WWE Q4 2020 Analysis: Full Year Outlook, What To Watch Out For In 2021, Peacock Deal

WWE underwent a myriad of changes in 2020 as a result of COVID-19, but one thing that did not change was how good the company's finances for the year ended. 

Despite WWE not having live events, touring and ticket sales for nearly 80 percent of the year, the company still generated more revenue than it did last year and any other year for that matter. 

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As far as the fourth quarter of 2020 is concerned, WWE’s revenue was down significantly, though it had much less to do with the pandemic and more with the lack of a major event in Saudi Arabia. The overall feeling coming out of 2020 is that WWE was able to steady its finances during the uncertainty that COVID-19 brought. 

For all intents and purposes, things are actually looking very promising. WWE will enter its second full calendar year under its current deals with NBCUniversal and FOX, whose core content rights fees are mainly responsible for the record revenues 2020 brought about. There's also the new deal with NBCUniversal that allowed it to acquire the U.S. licensing rights to the WWE Network and have it be a part of the Peacock streaming service.

Additionally, WWE management anticipates a significant year-over-year increase in WWE’s expense base due to the return of employees from furlough and continued higher expenses associated with the production of its weekly Raw and SmackDown television content at the WWE ThunderDome from its stadium residence. WWE estimates it can achieve 2021 Adjusted OIBDA of $270-$305 million as revenue growth, which is in the range of WWE's Adjusted OIBDA for 2020 ($286.2 million).

It's a change in tone compared to several months ago when WWE refused to even think about a projection for 2021. Having acclimated to conducting business in pro wrestling's COVID-19 era, it's an easier task projecting the future while leaving oneself wiggle room to adjust to changing policies.

This current projection for 2021 is primarily driven by the impact of the Peacock transaction and the hope that ticketed live events will return at some point this year, leading the way for international events to return (at least, that's what WWE hopes for this year and is in no way a guarantee to happen). Besides the Peacock deal, there's also the escalation of core content rights fees, which is offset by the increase in personnel and production expenses. 

All in all, there's a lot to be excited for if you're WWE management. Barring any catastrophic developments for this year, it is a much easier time now to have some type of idea of how the next few months will be as far as predicting the company's finances. 

WWE 2020 Q4's Revenue Stays Strong:

This past year ended in a significant decrease in revenue compared to 2019 Q4 due to the aforementioned lack of events in Saudi Arabia. WWE generated $238.2 million of revenue for 2020 Q4, down more than 25 percent compared to 2019, which did $322.8 million.

The lack of any ticket sales resulted in a loss of $26 million in revenue for live events. In addition, operating income reflected a loss of $7.0 million, a decrease of $6.0 million, as the decline in North America and international ticket sales was partially offset by a reduction in event-related expenses.

The main difference between 2020 and 2019's Q4 was the creation of the ThunderDome, a state-of-the-art set that WWE created which allowed fans to virtually attend Raw and SmackDown shows as well as pay-per-views. Aside from the costs of renting out the Amway Center in Orlando, Florida and Tampa Bay's Tropicana Field, the ThunderDome doesn't make that much of a difference when it comes to the finances. It's impact on the ratings, however, might tell a different story. 

The decrease in revenue was to be expected given what we learned from WWE’s Q2 and Q3 numbers for 2020, but the stability that came from the core content rights fees ensured WWE that there was no reason for concern in the short term.

Since we now have an idea of what WWE's finances look like during a pandemic, the overall 2020 Q4 numbers aren't surprising. Even with no ticket sales, the company's fourth quarter was able to outperform the prior two quarters in overall revenue.

WWE 2020 Full Year Outlook, What To Expect For 2021:

The company ended 2020 with record revenue margins, finishing the year at $974.2 million, up from 2019’s $960.4 million.

The reason for the increase in revenue despite the lack of ticket sales and major international events is the company enjoying the new core content rights deal that kicked off in the fall of 2019. 

WWE had the benefit of a revamped deal with NBCUniversal that kept Raw on the USA Network and a new deal with FOX to move SmackDown to network television. Both deals are each worth more than a billion dollars, nearly bulletproofing the company’s finances for the foreseeable future. 

As far as how WWE has performed during the pandemic, revenue-wise, the company averaged $203.86 million per quarter in the media category. Even assuming all of 2021 follows the same pattern as the last nine months of 2020 went, you're looking at more than $800 million of revenue in media alone, which would beat out nearly every other year in the company's history. 

Although that would be a reasonable number to expect for the first quarter of 2021, the potential costs and revenue to be gained from the Peacock deal could impact the final number. 2020’s Q1 (which was mostly impacted by COVID-19) generated $256.6 million of revenue. Expect 2021 Q1 to resemble more like 2020’s Q2-Q4 than 2020’s Q1 thanks to similar nature WWE is running its business at this time. 

The interesting thing to note when looking at WWE’s short-term future is the eventual return of ticketed live events. WWE noted on its earning core that it doesn’t expect to return to ticketed live events until the second half of 2021.

Of course, that date is closer to an educated guess than a hard deadline. COVID-19 has completely altered the way businesses look at their projected outlook. With WWE, the lack of live touring due to the pandemic has impacted its finances. 

Between April and December, WWE generated $113.4 million in 2018 and $99.4 million in 2019 in terms of live event revenue. With no touring currently scheduled for the first half of 2019, WWE stands to lose upwards of $70 million in live events.  

Despite this, WWE was able to grow in other aspects. WWE Shop finished 2020 with $41.2 million in sales, which is up from 2019’s $29.9 million and 2018’s $34.9 million. 

The Adjusted OIBDA was also up for 2020, ending at $286.2 million which is far greater than 2019’s $180 million, leaving the company in a great position to remain a financially stable entity for 2021. 

Operating Income was $208.6 million, an increase of 79 percent or $92.1 million, primarily driven by the substantial increase in core content rights fees, which have a high incremental margin. The increase in operating income was partially offset by a $10.0 million increase in management incentive compensation, an $8.5 million increase in depreciation and amortization primarily associated with the Company’s workplace strategy, and a $7.0 million increase in severance expense resulting from a reduction in force due to COVID-19. The Company’s operating income margin increased to 21.4 percent from 12.1 percent.

WWE Viewership And The Case For Linear Eyeballs:

As with every earnings call that WWE conducts, the topic of ratings was brought up with the issue being its decline. 

Television viewing habits changed throughout 2019 and in an election year, news programs were consistently among the most-watched programs on cable.

WWE has been dealing with declining viewership for years, but in some respects, the pandemic has worsen some of those viewing habits. Raw has been dealt the worse hand between it and SmackDown, with viewership plummeting in 2020 Q4.

In 2020 Q4, Raw averaged roughly 1.733 million viewers per episode, which is a stark contrast to the approximately 2.180 million viewers per episode in 2019 Q4.

It's even worse when looking at Raw's Q3 numbers between 2020 and 2019. For 2020, Raw averaged 1.722 million viewers in Q3 while 2019 averaged 2.476 million viewers per episode. 

SmackDown, on the other hand, has remained mostly stable mainly in Q3. Both 2019 and 2020 averaged 2.059 million viewers (2019) and 2.002 million viewers (2020) per episode. However in Q3, 2019 had SmackDown on USA Network while 2020 had the show on FOX. 

As far as Q4 is concerned when both years had the show on FOX, SmackDown did see a decrease in viewership year-to-year. 2019 averaged roughly 2.467 million viewers per episode while 2020 averaged 2.105 million viewers. 

One thing about WWE's viewership decline. Yes, COVID-19 and the election certainly impacted the ratings and viewership, but to pretend the decline is solely responsible for is misleading. It's been an issue that has been going for years and doesn't appear to be getting fixed anytime soon.

WWE President Nick Khan spoke on the earnings call and deflected the idea that WWE's declining ratings is something to be worried about and instead said some of the attention has shifted from linear to digital platforms. 

“We don't believe we've lost eyeballs. We believe eyeballs tend to shift from linear to digital platforms. If you look at our Facebook numbers, which are significantly up the last six months or so, including the revenue against those numbers, we think the eyeballs are there. We're always looking to grow ratings. Now that we're coming out of a competitive Presidential race that a lot of people were focused on, we're still all in the midst of a virus that a lot of people are focused on, we believe with a continued great in-ring product that the eyeballs are continuing to grow and will result in more linear eyeballs as some of the other stuff that I just mentioned passes. We feel good about our position and we think our network partners do as well," Khan said.

To an extent, Khan is correct. WWE's digital presence has been growing, with global views on platforms such as YouTube, Twitter and Facebook reaching nearly 40 billion for 2020. More people are watching WWE content on a digital platform, but it doesn't necessarily mean that the decline in TV viewership is something that can be brushed aside. There's no concrete way to determine how much the "linear to digital" line holds at face value because viewing habits for both linear and digital are vastly different. 

There should be some level of concern regarding the declining ratings because there is no guarantee what the core content rights fees are going to look like once WWE's present deals are up. It certainly wouldn't hurt WWE's chances at yielding similar results for the late 2020s if the viewership goes up a bit or at the very least, stops decreasing at a 15 percent clip year-to-year.

WWE Network's Final Subscriber Count Ahead Of Peacock Deal:

WWE Network subscribers for the fourth quarter of 2020 finished at 1.470 million, up from last year’s Q4 at 1.389 million subscribers. However, it is still down from Q3, which finished at 1.549 million subscribers, though the drop in Network subscribers was to be expected when looking at recent history. 

However, this will be the last time there will be a detailed look at the WWE Network subscriber count in its current incarnation. In January, WWE entered into a multi-year WWE Network U.S. licensing agreement (effective March 18, 2021) with Peacock, NBCU’s streaming service. 

This means that the WWE Network in the United States, as it stands, is on its last legs. How WWE benefits from the Peacock in the long-term picture remains to be seen. The company does believe, however, that the agreement enables WWE to reach a larger audience and realize a greater economic return as compared to a stand-alone subscription service.

From a consumer standpoint, it appears that the Peacock deal could be seen as beneficial. Consumers not only get to watch WWE Network content with no ads at the same pre-Peacock price of $9.99 a month with the added bonus of getting to access all of Peacock's library of content. It's even better for those who are looking to save money as they can access Peacock (and by extension, the WWE content) at $4.99 with ads.

Though there are still plenty of questions regarding the transition and how it affects the user experience for those that had the WWE Network, WWE focused on the benefits that the Peacock deal would bring. 

Here’s a breakdown on the ending paid subscribers in terms of region per quarter per year:

  • 2018 Q1 U.S.: 1.190 million
  • 2018 Q1 International: 434,000
  • 2018 Q1 Total: 1.624 million


  • 2018 Q2 U.S.: 1.272 million
  • 2018 Q2 International: 470,000
  • 2018 Q2 Total: 1.742 million


  • 2018 Q3 U.S.: 1.186 million
  • 2018 Q3 International: 429,000
  • 2018 Q3 Total: 1.615 million


  • 2018 Q4 U.S.: 1.116 million
  • 2018 Q4 International: 412,000
  • 2018 Q4 Total: 1.528 million


  • 2019 Q1 U.S.: 1.172 million
  • 2019 Q1 International: 425,000
  • 2019 Q1 Total: 1.597 million


  • 2019 Q2 U.S.: 1.167 million
  • 2019 Q2 International: 430,000
  • 2019 Q2 Total: 1.597 million


  • 2019 Q3 U.S.: 1.062 million
  • 2019 Q3 International: 404,000
  • 2019 Q3 Total: 1.466 million


  • 2019 Q4 U.S.: 996,000
  • 2019 Q4 International: 393,000
  • 2019 Q4 Total: 1.389 million


  • 2020 Q1 U.S.: 1.083 million
  • 2020 Q1 International: 412,000
  • 2020 Q1 Total: 1.495 million


  • 2020 Q2 U.S.: 1.229 million 
  • 2020 Q2 International: 461,000
  • 2020 Q2 Total: 1.690 million


  • 2020 Q3 U.S.: 1.137 million
  • 2020 Q3 International: 412,000
  • 2020 Q3 Total: 1.549 million


  • 2020 Q4 U.S.: 1.081 million
  • 2020 Q4 International: 389,000
  • 2020 Q4 Total: 1.470 million

Average paid subscribers for this quarter sat 1.503 million, which is up six percent compared to last year’s fourth quarter. Though it is an increase from last year, it still does not reach the highs that 2018's Q4 (1.585 million) reached within the last three years.

Here’s a breakdown on the average paid subscribers in terms of region per quarter per year:

  • 2018 Q1 U.S.: 1.130 million
  • 2018 Q1 International: 422,000
  • 2018 Q1 Total: 1.558 million


  • 2018 Q2 U.S.: 1.316 million
  • 2018 Q2 International: 484,000
  • 2018 Q2 Total: 1.8 million


  • 2018 Q3 U.S.: 1.213 million
  • 2018 Q3 International: 451,000
  • 2018 Q3 Total: 1.664 million


  • 2018 Q4 U.S.: 1.156 million
  • 2018 Q4 International: 429,000
  • 2018 Q4 Total: 1.586 million


  • 2019 Q1 U.S.: 1.157 million
  • 2019 Q1 International: 427,000
  • 2019 Q1 Total: 1.584 million


  • 2019 Q2 U.S.: 1.237 million
  • 2019 Q2 International: 451,000
  • 2019 Q2 Total: 1.688 million


  • 2019 Q3 U.S.: 1.099 million
  • 2019 Q3 International: 412,000
  • 2019 Q3 Total: 1.511 million


  • 2019 Q4 U.S.: 1.024 million
  • 2019 Q4 International: 395,000
  • 2019 Q4 Total: 1.419 million


  • 2020 Q1 U.S.: 1.053 million
  • 2020 Q1 International: 408,000
  • 2020 Q1 Total: 1.461 million


  • 2020 Q2 U.S.: 1.207 million
  • 2020 Q2 International: 454,000
  • 2020 Q2 Total: 1.661 million


  • 2020 Q3 U.S.: 1.172 million
  • 2020 Q3 International: 432,000
  • 2020 Q3 Total: 1.604 million


  • 2020 Q4 U.S.: 1.104 million
  • 2020 Q4 International: 399,000
  • 2020 Q4 Total: 1.503 million

WWE Chief Brand Officer Stephanie McMahon explained on the call why the move was made and why it makes sense pulling the trigger on this during a pandemic.

"The landscape has changed. COVID-19 and quarantine accelerated a behavioral viewership shift to streaming platforms. Streaming behemoths are investing heavily in technology and infrastructure in order to scale. With operational efficiencies, creating more flexible pricing options. The biggest thing all of these providers have in common is the need for branded content. In order to be competitive, we need to pivot away from the technology necessary for an optimum user experience and allocate our resources against what we do best; content creation, production, and storytelling. We get to do it with a trusted partner we have had for 30 years; NBCU. Partnering with NBCU's Peacock not only provides a greater value proposition for our current subscribers, it also allows us to deliver our most premium content to a significantly larger audience, including the 33 million people who have already signed up for the service. Additionally, the partnership gives greater access to NBCU's best-in-class teams across sales, marketing and promotion across some of the most iconic franchises in the United States and around the world. With NBCU and Peacock; every three years is the Super Bowl, every two years is the Olympics, and every year is WrestleMania. We believe more than ever in the power of our brand," she said.

Other News And Notes:

  • WWE stock closed at $56 per share, which is far better than what it was a year ago. Granted, multiple things were against WWE's stock by this time in 2020. WWE was reeling from the departure of George Barrios and Michelle Wilson and the pandemic shutting down a live WrestleMania 36 in front of fans did not help things. Since then, the ThunderDome and the Peacock deals have been major helps for the company's stock.
  • In the "Consumer Products" section, WWE's revenue was $27.0 million, a decrease of 12 percent or $3.8 million year-to-year, primarily due to lower video game royalties, driven by the absence of a 2021 release of a WWE2K video game, as well as the decline in venue merchandise sales resulting from the absence of ticketed live events in the quarter. These factors were partially offset by an increase in eCommerce merchandise sales.
  • An interesting note on WWE's core content rights fees: 2020 was the first full year that WWE benefited from stronger broadcast deals whereas 2018 was the last full calendar year under the old deals. In 2020, WWE generated $538.3 million in core content rights fees while 2018 only generated $269.8 million.

Tables and graphs provided by WWE. Television viewership numbers provided by Showbuzz Daily. You can follow Carlos Toro on Twitter @CarlosToroMedia.

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