WWE Q3 – Why Raw is not shifting away from Three Hours

By James Caldwell, PWTorch assistant editor


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WWE’s long-term business will be driven by TV Revenue and WWE Network subscriber growth. However, with WWE unable to provide long-term guidance on Network growth, the business’s future is dependent on the TV segment, which has guaranteed revenue growth in the next 2-4 years due to new domestic and international contracts.

A major contributor to the guaranteed revenue increase is that extra hour of Raw, which is licensed not only domestically on USA Network, but to numerous international TV partners.

WWE disclosed in their quarterly earnings report:

“The Company’s seven largest distribution agreements account for revenue that is expected to increase from $130 million in 2014 to approximately $235 million in 2018, thereby providing approximately $105 million of revenue growth over this period (subject to counterparty risk). The Company projects that it will realize nearly $45 million of this growth in 2015.”

The key to why Raw will not be going away from three hours is as follows: “The remaining $60 million is expected to be recognized over the subsequent three years and include annual escalations over that period. Accordingly, revenue from these agreements is expected to reach approximately $190 million in 2016.”

The forecasted pattern is $130 million in 2014, $175 million in 2015, $190 million in 2016, and $235 million by 2018.

WWE does have other programming in the mix, such as Smackdown, Total Divas, and Main Event/Superstars distributed internationally, but the bulk of revenue growth will be from their flagship show, Raw, which has struggled creatively carrying a weekly, three-hour show.

Advertisers do not appear to be concerned, though, as WWE disclosed in their conference call presentation that “37 new advertisers were secured for WWE programming following NBCUniversal’s Upfront (presentation).”

– Within the Third Quarter, WWE reported TV Revenue of $65.2 million, up 55 percent from $42.2 million in the same period in Q3-2014.

WWE said the growth was “driven by the renegotiation of key domestic and international distribution agreements, the largest of which became effective in the fourth quarter 2014 and the first quarter 2015.”

WWE added that more episodes of Total Divas and the additional “Tough Enough” season on USA Network contributed to the year-over-year revenue increase.

– Through the first nine months of 2015, TV Revenue is $175.5 million, up 39 percent from the first nine months of 2014. This includes revenue from the new TV contracts (forecasted at $175 million for the entire year) and existing TV contracts.

Overall, “Revenues from the Company’s Media division increased 27 percent to $318.8 million from $250.4 million primarily due to the escalation of television rights fees and the ramp up of WWE Network.”

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