WWF releases third quarter results
By JOHN POWELL --
World Wrestling Federation Entertainment, Inc. today announced financial results for its third fiscal quarter. Total revenues for the quarter were $100.2 million versus $111.2 million in the prior year's quarter. Net income was $9.4 million compared to $11.7 million in the third quarter last year. Earnings per common share from continuing operations were $0.07 and earnings from discontinued operations were $0.06 per common share.
Across the board WWF earnings are slightly down. Of particular note is that home video revenues decreased 18 per cent and licensing revenues decreased 22 per cent. House show attendance is down from 446,600 compared to 512,800 in the third quarter last year. On the positive side, new media advertising revenues increased 20 per cent as did advertising revenues -- $21.3 million for the quarter versus $22.4 million during the same period last year. Television rights fees revenues also increased 14 per cent.
"During the quarter we made significant progress on a number of key strategic fronts," said Linda E. McMahon, Chief Executive Officer. "We increased the number of live events and introduced new talent. Both of these initiatives were well received by our fans. We are now playing markets that heretofore we could not visit given the size of our talent pool and logistical constraints on our television shoots. We are encouraged by the early signs of success as we lay the foundation to support the creation of multiple story lines and the
introduction of new talent under the WWFE umbrella," added Mrs. McMahon. McMahon believes that the return of such talents as Hollywood Hogan, Kevin Nash and Scott Hall will increase interest and therefore drive up profits as well.
McMahon was also quite pleased with the response to WrestleMania 18 which will take place on March 17th in Toronto's SkyDome. According to McMahon nearly 58,000 tickets have been sold to fans who represent 15 countries, 47 states in America and 10 Canadian provinces. The average ticket price for WrestleMania 18 is approximately $68.25 versus $56.15 for last year's show.
"I am happy to report that this will be highest grossing single live event in the company's history in surpassing last year's record while having approximately 10,000 fewer seats than the Houston Astro Dome for WrestleMania 17," said an enthusiastic McMahon.
During the press conference McMahon also revealed that there will definitely be a split in the promotion following WrestleMania. The split will give the WWF the chance to add a new pay-per-view every so often but there is no plan to add one every month. Prices for pay-per-views will be increasing in April by $5.00.
Another area that the WWF is excited about is the upcoming international tour. The WWF is hoping that they will be able to land a foothold in these new markets and expand their brand. The first event will be March 1st at the Yokohama Arena in Tokyo. The event is already sold out. McMahon stated that the Australian tour date would also be broadcast on pay-per-view in North America.
"The tour will continue on to Singapore and Malaysia which represent two strong
television markets for us and are markets that we have not previously visited. In May, we will move on to Europe where we have four live events scheduled. In August, we will travel to Australia and in October we will return to Europe. We have also signed several licensing agreements in Europe and have opened our international office in the Hammersmith section of London," concluded Mrs. McMahon.
Quarterly Results by Business Segment
Total revenues were $100.2 million compared to $111.2 million in the prior year quarter.
Live and Televised Entertainment
Total revenues for our Live and Televised businesses were $73.4 million
for the quarter compared to $79.5 million in the prior year quarter.
Live Event revenues: Live Event revenues were $15.3 million for the quarter. There were 61 events during the quarter versus 48 last year. Attendance was 446,600 compared to 512,800 in the third quarter last year. The average ticket price increased approximately 3% to $34.21.
Pay-Per-View revenues: Pay-Per-View revenues for the quarter were $23.8 million.
In period domestic pay-per-view buys for the quarter were 1.4 million as compared to
1.7 million last year.
There were approximately 0.2 million out-of-period buys versus 0.1 million last year.
DirecTV resumed the airing of WWFE pay-per-views, beginning with the No Way Out
pay-per-view that aired on February 17, 2002.
Television Rights Fees revenues increased 14% to $13.0 million and were driven by
our improved international and domestic agreements.
Television Advertising revenues held up well in a depressed advertising market.
Advertising revenues were $21.3 million for the quarter versus $22.4 million during the
same period last year.
Total revenues were $26.8 million for the quarter versus $31.7 million last
Licensing revenues decreased 22% to $8.1 million primarily due to the timing of the introduction of new video game titles in the current quarter as compared to the same period last year. As the installed base for new game consoles (i.e., Xbox, PlayStation 2 and Nintendo Gamecube) takes hold, we expect to benefit given the demonstrated popularity of our video games.
Merchandise revenues for the quarter were $7.0 million, a decrease of 3% versus last year, principally due to the decline in attendance. However, per capita spending increased from $7.80 to approximately $8.15 for the current quarter.
Publishing revenues decreased 10% to $4.2 million principally due to a decline in newsstand units sold.
Home video revenues decreased 18% to $2.6 million due to lower sell through rates and the attendant increase in return reserves.
New Media advertising revenues increased 20% during the quarter to $1.3 million.
WWF New York revenues declined 15% to $3.9 million as the impact of the drop off in tourism in the Times Square area since September 11th, 2001 continues to have a negative effect on revenues.
Total profit contribution for the quarter was $37.5 million as compared to $46.2 million last
year. The decline in profit contribution was principally due to an $11.0 million decrease in
revenues and the inclusion of additional inventory reserves recorded in the quarter. The total
profit contribution margin was 37% for the quarter as compared to 42% last year.
The profit contribution margin for the Live and Televised businesses was approximately 40%
versus 43% in the third quarter last year. The decrease in revenues due to lower pay-per-view
buys accounted for the majority of the margin decline in this category.
The profit contribution margin for the Branded Merchandise businesses was 30% as
compared to 37% during the same period last year due to the aforementioned reserves
booked in the quarter.
Selling, General and Administrative Expenses
Selling, General and Administrative expenses for the quarter were $26.2 million as compared
to $22.7 million last year. Increased advertising and promotion expenses, legal fees,
overhead expenses at WWF New York, and some staff-related expenses which included a
$2.0 million charge for a reduction in the work force, were partially offset by reductions in
consulting fees and relocation and recruitment expenses.