World Wrestling Entertainment Inc. Reports Operating Results (10-Q)
World Wrestling Entertainment Inc. has a market cap of $1.03 billion; its shares were traded at around $14.07 with a P/E ratio of 20.1 and P/S ratio of 2.18. The dividend yield of World Wrestling Entertainment Inc. stocks is 10.23%.WWE is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Ron Baron of Baron Funds, John Keeley of Keeley Fund Management, Mario Gabelli of GAMCO Investors.
Highlight of Business Operations: The comparability of our results are impacted by two significant items. First, as previously disclosed, our WWE Studios business changed to a self-distribution model with the release of Legendary in the current quarter – under this model, we recognize revenues and expenses for our films on a gross basis upon release. Previous releases were distributed by third-party distribution partners and we participated in revenues upon their recoupment of distribution expenses and fees – as a result, the revenue and related expenses were recorded on a net basis after the distributor s recoupment, which occurred in periods subsequent to the initial release. The current quarter includes $3.8 million of revenue and $5.4 million of cost of revenue relating to Legendary. The cost of revenue includes $1.8 million of amortization of production costs.
Comparability is also impacted by film and television production incentives received relating to qualified production activities. Operating income was positively impacted by the realization of tax credits of $6.1 million in the current quarter as compared to $2.5 million in the prior year quarter. The incentives are recorded as an offset to the related production activity; accordingly, we reduced cost of revenues by $4.0 million and $1.4 million in the current and prior year quarter, respectively and selling, general and administrative expenses by $2.1 million and $1.1 million in the current and prior year quarter, respectively.
Live events revenues decreased primarily as a result of having 15 fewer domestic events in the current quarter as compared to the prior year. The decrease in the number of events was primarily due to touring logistics and our television production schedule. The quarter-over-quarter decline also reflected a 10% decrease in average attendance at our North American live events to approximately 5,200 from 5,800, partially offset by a 13% increase in North American average ticket prices to $41.07. Average attendance at our international events was approximately 6,700 in the current quarter as compared to 9,100 in the prior year; the decrease in average attendance was due in part to the challenges related to our talent transition and the overall economic environment. The average ticket price for international events was $86.07 in the current quarter as compared to $65.59 in the prior year, partially as a result of benefits in exchange rates. The total profit contribution margin for live events was 22% as compared to 28% in the prior year quarter. The decrease in the profit margin was due to the fixed nature of certain event related costs, including travel costs, which did not decrease with the corresponding reduction in revenue.
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