Early in the morning on August 16, World Wrestling Entertainment held an investor call to discuss its quarterly report — and its amended quarterly report once some of the unapproved spending by former boss Vince McMahon was discovered.
All this came out in July, and WWE actually restated its financial statements for the past three years to the US Securities and Exchange Commission to adjust for monies paid by former CEO and Chairman Vince McMahon, allegedly in relation to his sexual affairs. The changes reflected the unrecorded expenses in updated reports for 2019, 2020, 2021 and this year. McMahon supposedly paid almost $15 million to the women in question. [See the McMahon archive for more.]
However, little of that was discussed on Tuesday’s investor call.
Right off the bat, Stephanie McMahon, co-CEO — along with Nick Khan — talked about running the company, not addressing the reason she had moved into the position.
“Before I discuss highlights from the quarter I wanted to address some of our recent management changes. After more than 40 years of running WWE, my father Vince McMahon has retired. As a true founder and entrepreneur, my father — and my mother for that matter — poured their heart and souls into building this business and taking WWE from a regional wrestling promotion in the 1980s to the global media enterprise we are today. He built the foundation that WWE stands on and prepared us for the future,” said Stephanie McMahon.
“WWE and its board of directors have had succession plans in place and it is both a privilege and an honor to be leading WWE with my partner, Nick Khan, as co-CEOs, and with Paul ‘Triple H’ Levesque, also my husband, leading our talent and creative. Nick, Paul and I first met around 2015 about a talent that Nick was representing. Our relationship grew with the three of us having the opportunity to work together during our last media rights negotiation. Nick was still an agent at the time, but it became quite clear how well the three of us work together and what a tremendous asset Nick would be to our executive team,” she said. “A few years and Triple H Its 50th birthday party later, it’s hard to imagine where we are now. We independently fell in love with WWE as kids, and now have the opportunity to live our dream as professionals.”
It was left to Frank Riddick, CFO, deep into the section of prepared statements of McMahon, Levesque, Khan, to address the Vince McMahon situation.
“As we previously disclosed, a special committee consisting of the independent members of the board of directors has been conducting an investigation into alleged misconduct by Vince McMahon, who has resigned, and another executive who has left the company. The investigation is substantially complete and based on certain findings during the investigation, the company has revised its previously issued financial statements,” said Riddick [not naming John Laurinaitis]. “The revised financial statements reflect unrecorded expenses for payments made personally by Vince McMahon, totaling $19.6 million from 2006 to 2022. These payments had no cash impact on our business, but were recorded since they were paid by a principal shareholder and were deemed to have provided a benefit to the company. Our second quarter results include a $1.7 million expense associated with certain costs the company has incurred related to the investigation. Going forward, we expect to incur additional costs related to the investigation. Vince McMahon has agreed to pay the $1.7 million of expenses incurred to date and additional reasonable expenses of the investigation not covered by insurance.”
During the question and answer session with analysts, Stephanie McMahon was quizzed: “You ended your prepared remarks saying you’re committed to WWE. But you had just begun a leave of absence, and were forced back into the company when you came back as co-CEO. Can you tell investors, whether being co-CEO is what you want for the long term? And how important is it to you personally to continue your family’s legacy?”
I have worked in WWE since I’ve been about eight years old, modeling merchandise for our then catalog, in any variety of capacities. My parents couldn’t afford a nanny when we were bringing up the business so on weekends, I was sitting with our receptionist at headquarters. I’ve worked my entire life for this business. I love this business. I took a leave of absence realizing that I needed a little bit of time with my family, given the grueling schedule and nature. I got about three weeks, which is more than a lot of other folks get.
And I was not forced into returning is the CEO and chairman in the interim position — I offered. That it was an opportunity for me to come back and be a part of this company that I love and have the opportunity to lead this company.
This business is something I believe in to my core, I believe in the impact that we make on people’s lives, not only growing the business, which I believe we have so many different opportunities to do, as has been laid out by all of us here speaking today, but because of the impact that we make. I mean, we truly bring people together for generations from all over the world with all different backgrounds. We give them relief, we give them entertainment, we give them an opportunity to come together that is very rare and unusual and special. And whatever we can do to continue to deliver on that promise is what we want to do.
Now that being said, I understand your remarks and I think I’m reading between the lines subtly as in our business, but that being said, Vince McMahon, my father is still very much the controlling shareholder. He still has his eyes on what is the best for our business in terms of maximizing return to our shareholders, of which he is the biggest shareholder. Nick, Paul, Frank and I remain focused on delivering the maximum results for our shareholders so we will properly evaluate any opportunity that comes our way with that lens in mind.
For wrestling fans, the remarks by Levesque, who is now in charge of creative, were probably the most interesting. Those comments by Triple H are recapped here: Triple H on booking WWE: ‘It comes with a great responsibility’
Other Highlights from the Investors Call
On the money side, revenue was up 24% to $328.2 million, primarily driven by the return of live events plus the growth in the media and consumer products areas.
The city of Cardiff, Wales, has provided a “subsidy” to host the upcoming Clash at the Castle, which is something WWE wants to continue to pursue, getting cities and states to contribute to offer incentives to bring big shows to town.
WWE has been watching negotiations going on in other sports very closely. Netflix made an aggressive bid to get Formula 1 rights but eventually F1 stayed with the traditional route. “We thought Formula One was smart, for whatever that’s worth, in sticking with their incumbent and passing on a little bit more money to take a test for streaming only option,” said Khan. “We’ll see it all comes down to the dollars and value to the shareholders. So depending on what the marketplace says, we’ll take it all into consideration.”
Riddick was careful not to use the word “recession” but when asked in the Q&A session, he admitted that he had studied the numbers from WWE in 2008, the last big recession in the US, and he noted it’s not a proper comparison, because “mix of our business was different back then.” So much more of WWE’s revenue now comes from broadcasting deals.
The move to have Fanatics sell all WWE merchandise was noted, and also a one-time bump in revenue since all existing stock was sold to Fanatics.
Stephanie McMahon noted the premium live events: “Since our last call, we staged for premium live events. Each one has continued to trend up viewership growth since licensing WWE Network to Peacock here in the US and represents the highest viewership in their respective histories. The following four comparisons are all year over year. For Backlash in May we saw a 49% viewership increase. Hell in a Cell in June, we saw a 45% viewership increase. Money in the Bank in early July had a 17% viewership increase, and SummerSlam, at the end of July, we saw a 20% increase in viewership.”
Also noted by Stephanie McMahon was the deal with A&E: “The Sunday block of primetime programming delivered a 77% increase over the prior year’s timeslot. This marks the latest step at a growing partnership with A&E networks that will be delivered more than 130 hours of programming over the next several years.”