WWE held its Q2 investors call on Thursday, where company officers responded to questions about its “Rock Bottom” ratings and presented financial results that suggest the company is a long way away from taking its “Last Ride.”


And that’s the Bottom Line

For the three months ended June 30, the company earned total revenues of $223.4MM (all figures USD) and earned total operating income of $55.7MM. The revenue figure declined $45MM from the same period last year, and that was nearly all attributed to the absence of any revenue from live events, as this was the first quarter where the company had no shows as a result of the COVID-19 situation.

Total operating income increased three-fold from the same period last year ($17.1MM) thanks in much part to savings realized from cost-reductions – in no small part because they had no costs incurred relating to live event production – and the introduction of a new model for producing content.


 Enough is enough, and it’s time for a change

In its investor package, it was highlighted that WWE “continues to adapt its business model to the changing environment, with a focus on enhancing content production and furthering fan engagement.” With respect to the potential COVID-19 impact on business, the company noted that “(it) could be material” but remains uncertain. To combat the potential downturns, “management remains focused on developing new content for global distribution platforms and increasing audience engagement in new and exciting ways.”

Some of the new original content touted included a new series called The Quest for Lost Treasures, which features Stephanie McMahon and Paul “Triple H” Levesque, a game show featuring WWE superstar R-Truth and other WWE network exclusive shows.

The company is also exploring changes to the WWE Network – the first was the launch of the free version, and in some areas, they have also introduced localized pricing in certain geographies, and are exploring the viability of introducing advertising on the network.


What the world is watching

Ratings for the company’s flagship show, RAW, declined substantially from Q1, dropping 24% – which was slightly better than the drop for USA Network generally, but significantly worse than the average decline in ratings for the top 25 cable networks, which fell only 1% during the period.

On the other hand, the ratings for Smackdown Live! actually increased by 4% over the quarter, bucking the trend of the Fox Network overall (4% decline), and performing much better than the overall average ratings for the top 4 broadcast networks, which saw an overall average rating decline of 12%. However, it was noted that the ratings have still been sluggish in 2020 overall.

While television ratings are on a downward trend overall, some huge numbers were seen on the company’s digital platforms, including the WWE network. WrestleMania week was noted to have set viewership records with nearly 1 billion video views across digital and social networks, up 20% from 2019.

Total ad-supported video on demand views (e.g. Facebook, Instagram, WWE.com, the WWE App, and starting in Q2 the free WWE Network) were at their highest quarterly levels in the past three years, with people watching a total of 9.9 billion videos (spending a total of 374 million hours). These numbers, said Riddick, could actually have been higher except the company geo-blocked certain content in India to support their TV licensing agreements in that country.


What does everybody want?

Another positive note was the increased level of e-commerce sales which nearly fully made up for the loss of merchandise sales at live events. During the quarter, the company had e-commerce sales of $12.6MM, with much of this credited to a new line of collectible title belts and video game revenues.


Just when they think they’ve got the answers, I change the questions

As is customary, the call ended with questions from investors (primarily, large investment firms and research companies). This time, the questions were largely focused on the ratings and how the company plans to regain momentum in a post-COVID world.

Here are some highlights:

  • About the lower ratings, McMahon reiterated comments made by Riddick about the importance of having live audience interaction during their events to help make the presentation more exciting. “More than any other sport, our audience is a part of the program. Audience interaction is always a plus. It goes all the way back to the origination of this genre in terms of ‘Yays’ and ‘Boos’. The audience is integral to our success in television ratings.”
  • But he also noted that the company “can have more compelling characters, better storylines, new characters coming in… and more content that’s not necessarily in-ring, but… focuses on our personalities and their stories outside of the ring.”
  • In terms of whether or not the company will be presenting a show in Saudi Arabia this year, McMahon said that he doubts it will happen in light of the current global circumstances.
  • There were several questions about the free version of the WWE Network and its impact on subscriptions and views, however there had not been enough time to fully assess the impacts. Vince did note, however, that the paid subscriptions had not been hurt by the launch of the free version.
  • If you had 3 as the “over-under” number for mentions of the Undertaker: Last Ride network special, congratulations on your win.
  • In response to a question as to why NXT and All Elite Wrestling’s Dynamite show have bounced back in the ratings better than Raw and Smackdown, McMahon noted that “They’re new. It’s up to us to make RAW and Smackdown feel more youthful. That is where we’re going. (In terms of) building new characters, you always have to build new characters. Constantly.”
  • The same person asked about the creative direction of RAW, and whether Paul Heyman was fired specifically because of it, and whether Triple H has been considered as a replacement for Heyman, given how successful NXT has been under his stewardship. About Triple H’s involvement in the non-NXT shows, Vince noted, “That happens. It’s all hands on deck in terms of all that we do.” About Heyman, McMahon only noted that “He did a very, very good job in terms of creativity.”
  • As to when the company will resume live events, Riddick said that things are still too uncertain at this point to try to speculate. It will be a function, he noted, of a combination of the local laws around social distancing – which will likely mean a phased approach – as well as venue restrictions and the audience appetite for attending large public events in general.
  • About the purchase of Evolve Wrestling earlier this month, Riddick noted that it was a very small content purchase deal, and at the moment, they are not actively pursuing any other merger or acquisition opportunities.