WWE Q1 2021 Analysis: How WWE's Finances Look With New Peacock Deal

The story of WWE’s finances for 2020 (aside from the coronavirus pandemic’s effect on them) was how much more profitable it is as a company under new deals with FOX and NBCUniversal.

For the year of 2021, the story is how much better they’ll be compared to the previous year thanks to a new deal that brought the U.S. version of the WWE Network to the Peacock streaming service. At a reported amount of $1 billion, there will be a noticeable improvement year-to-year.

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With the Peacock deal now underway, analyzing WWE Network subscription numbers in the United States is no longer possible under previously known methods. WWE content makes up a small percentage of Peacock’s overall library content. However, the full WWE Network archive has yet to be fully transferred to Peacock and with no automatic migration from a WWE Network account to a Peacock account, it’s nearly impossible to gauge how many new subscribers Peacock acquired from the deal.

By this time, last year, there was a lot of unknown in regards to how the finances would be affected due to the pandemic. The lack of fans and live touring would mean plenty of changes across multiple aspects within the company.

Now that the company appears to have stabilized how it performs financially, the Peacock deal will further ensure that the company will remain profitable for years to come. Regardless of the creative direction the television product goes on a weekly basis, the core content rights fees WWE is receiving has almost made the company bulletproof in a financial sense.

Even Vince McMahon noted in the earnings press release that WWE has been able to not survive the pandemic as well as they did, but also thrive in monetizing their content “in a changing media landscape.”

WWE's Total Revenue Down, Net Income Up:

WWE’s Total Revenue ended at $263.5 million, which is down $27.5 million from last year’s Q1 ($291 million) thanks in large part to the lack of live events, ticket sales and large scale international shows as a result of the pandemic.

If there is one thing that is preventing someone from having a clear look at how WWE’s finances adjusted during the pandemic year-to-year, it’s the first two-and-a-half months of 2020 when WWE operated as usual before the pandemic.

The first two months of 2020 saw a stadium crowd for the Royal Rumble as well as a large-scale event in Saudi Arabia. Such events resulted in $17.5 million in live events for the first quarter of 2020, whereas WWE had approximately $500,000 in the first quarter of 2021.

However, the lack of major events with fans in attendance isn’t the only reason for the drop in total revenue.

The media section of their revenues is also down this quarter, with 2021 Q1 doing $242 million which is down $14.6 million from 2020’s Q1 ($256.6 million). Breaking down WWE’s media revenue further, the biggest dropoff from 2020 to 2021 is the $55.2 million decrease in what WWE deems “media monetization reflect revenues earned from the distribution of other content, including, but not limited to, scripted, reality and other in-ring programming, as well as theatrical and direct-to-home video releases.”

However, the drop in total revenue from last year should be nowhere near cause for concern. WWE’s 2021 Q1 still outperformed all but two quarters since the start of 2019. This past quarter total revenue ($263.5 million) blew away 2019’s Q1 revenue ($182.4 million).

WWE’s net income was still up from this time last year, finishing at $43.8 million this quarter as opposed to the $26.2 million 2020 Q1 made. At $43.8 million, it was tied for the third-best quarter in terms of net income since the start of 2019. Only the 2019 Q4 and 2020 Q3 had a higher net income and the 2020 Q2 also did $43.8 million in net income.

With the finances set as they are, expecting upwards of $40 million in net income per quarter is to be expected, further accentuated by the previous expectations that 2021 could very well be WWE’s most profitable year to date.

With WWE having done WrestleMania 37 in front of a paying crowd, things do look promising for next quarter.

WWE’s Adjusted OIBDA finished at $83.9 million for 2021 Q1, which is up nine percent from 2020 Q1. As far as projections are concerned, the company is not changing their stance on the 2021 projection of $270 million to $305 million. The Peacock deal, as well as the gradual return to live events, touring and the previously established deals with FOX and NBCUniversal is keeping that projection intact.

Peacock & The Future Of The WWE Network Internationally:

The WWE Network effectively ceased to exist in its prior format, at least in the United States, towards the end of 2021’s Q1 due to the Peacock deal.

For those expecting a similar type of deal to be negotiated in international markets, WWE confirmed in the earnings call that is the goal. Although the company declined to mention any concrete talks with any specific markets, the earnings call did tout the success of the business relationship in such markets like the United Kingdom, India and China, which are three of the biggest international markets both companies have.

In terms of WWE Network revenue, the company made $79.4 million in the first quarter of this year which is much more than the $43.5 million that 2020 Q1 did. This is interesting as it essentially confirmed one thing: WWE got upfront payment from the Peacock deal as that partnership officially started in mid-March. That helped offset the loss in revenue in other departments, resulting in the final total revenue of $242 million for this quarter.

WWE did not mention how many non-U.S. subscribers the Network currently has. With no U.S. version of the Network around, there might not be much of a need, from the company’s perspective, to talk about those numbers especially when the hope that WWE can strike similar deals in international markets similar to the Peacock deal in the United States.

Such deals could take some time to complete as the Network has a significantly smaller subscriber base outside the U.S. than inside the U.S.

As a reminder, below is 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 spoke on the success of WrestleMania 37 on Peacock with the company saying that the two-night event was the most-watched program in the streaming service’s short history. Although WWE President Nick Khan did not put out a specific number in terms of viewership, he did speak on how WWE management got calls on Sunday night/Monday morning after WrestleMania from Peacock talking about how much of a success it was.

The Constant Battle Of WWE’s Declining Viewership:

There is no question that the coronavirus pandemic has impacted overall television viewership across the board.

For Raw, viewership was down 17 percent from last year’s Q1 as this past quarter averaged 1.86 million viewers per episode on the USA Network as 2020’s Q1 averaged 2.244 million viewers per episode. SmackDown has seen a similar drop in viewership, with 2021 Q1 averaging 2.191 million viewers per episode on FOX which is down from the 2.491 million viewers the show averaged in 2020 Q1 (a 12 percent drop).

Though it is not exactly a great silver lining, SmackDown’s viewership decrease has not been as bad as FOX’s broadcasts in primetime (down 44 percent) and the top four broadcast networks (down 19 percent) compared to last year.

Still, there is something to WWE’s declining viewership. As mentioned, the pandemic has certainly impacted viewership and the current ThunderDome set-up, past the initial viewership bump with every venue change, has not been a proven solution to the viewership decrease.

One can always point to the creative, call it sub-par and pin that as the sole reason for the perceived drop in the company’s popularity.

When asked about the viewership and ratings decline, Khan noted that the numbers (assuming that he's referring to numbers beyond linear television) are “robust,” but that they take a look at a variety of different platforms, from linear television to social media, and know what works and what doesn’t.

Of course, Khan did not specify what exactly is working and what isn’t.

Viewership and ratings questions being asked in these earnings calls are commonplace at this point. As Sean Ross Sapp noted on Twitter, WWE previously used different reasons for the decline in viewership and responded with various solutions that ended up being a band-aid hastily tacked on to a stab wound.

There is no one solution to fixing the declining viewership just as there is no singular reason for the company’s declining ratings. The pandemic, changes in television viewing habits, more non-television platforms and more have played a role in the viewership drop.

Other News & Notes:

  • WWE did not commit to a specific date to when they could resume touring and do live events, but did note that the hope is to do it starting in the second half of 2021. In addition, WWE mentioned that it wants to do full touring and would like to not have to constantly do semi-permanent residency like it has for months with the ThunderDome set-up.
  • During the earnings call, Khan revealed that WWE has sold a multi-episode anime series to Crunchyroll. Khan said "As we continue to expand WWE's brand beyond the ring, we remain focused on developing the slate of original programming from WWE Studios. We sold a multi-episode anime series to Crunchyroll, which is now owned by Sony.” No further details on the Crunchyroll deal were announced.
  • Since the January 2020 departures of then-co-Presidents George Barrios and Michelle Wilson, WWE has made several changes and additions to its management team. The key change is Khan being named the new WWE President. On April 20, WWE hired Chris Legentil as the new Senior Vice President & Head of Global Communication and Scott Zanghellini as the new Head of Revenue Strategy and Development. Alex Varga was also hired as Vice President of Revenue Strategy and Development. Vince McMahon spoke on his current management team, saying, "Like every other form of entertainment or sport, we're coming out of COVID. At first, we were in survival mode but we found new life. Once we felt secure, we then saw this as an opportunity to rethink the way we do business and open what I call a WWE treasure chest. The only way you can do that is to have the best management team in WWE history. We have that team. A team that's innovative, a team that drives revenue and has reorganized our company in a more efficient way to take advantage of new revenue streams, new online platforms, new consumer products, new content creation, and new opportunities to expand our media rights portfolio on a global basis. I'm always excited about our business and I don't think I've ever been more excited than I am now."
  • WWE touted a lot of highlights from the two nights of WrestleMania 37, but specifically talked about Bad Bunny’s performance at the show and his overall impact in the Hispanic community in regards to WWE’s reach. Stephanie McMahon said in the earnings call that Bad Bunny’s appearances on WWE programming was a hit with the Hispanic community. Stephanie said, "Notably, all Raw appearances featuring Bad Bunny showed an increase of 31% in the Hispanic persons 18 to 34 and Bad Bunny’s total social Impressions during the time of his storyline equaled nearly 700 million."
  • One year ago, WWE’s stock price dropped significantly, thanks in part to Barrios and Wilson’s departure. As of April 22, WWE’s stock closed at $56.22 per share, which is up from this time last year when the stock price was just under $40 per share. The company has seemed to stabilize its stock price as of late, but is still nowhere close to where it was around this time in 2019, when it was more than $80 per share.
  • Digital video views finished at 9.4 billion, a decrease of two percent from 2020 Q1 at 9.6 billion, and hours consumed were 367 million, an increase of seven percent from 2020 Q1 at 344 million, across digital and social platforms. For WrestleMania Week, the company drew in nearly 1.1 billion video views across digital and social platforms, which set a record for the company.
  • WWE merch sales were up compared to last year, which is welcome news to WWE especially when considering that 2020 Q1 still had two complete months of live events, resulting in $3.2 million in merch sales at events. For 2021, WWE made $21 million in merch sales, up from last year’s $16.9 million. The two main reasons for the revenue increase are an uptick in online sales (a common sight during the pandemic) and in consumer product licensing. The rollout of new title belts and the legends championships have been a key factor in the increase in online sales.

Graphs & Tables provided by WWE. You can follow Carlos Toro on Twitter @CarlosToroMedia

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