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However, WWE reported a net loss in the quarter of $1.2 million ($0.02 per share). WWE noted this was an improvement of a net loss of $1.6 million in Q4-2014, but that was during the initial ramp-up period of WWE Network.
The Associated Press headlined their initial morning coverage of WWE financials with “WWE reports 4Q loss.” The stock market responded with an early sell-off of WWE stock.
Contributors to the net loss were WWE writing off a $7.1 million expense related to abandoning their long-term “media center expansion project.” WWE explained the decision:
“Recent changes in our operations further delayed the expansion project. In light of the Company’s current operating model, including the increased production demands of WWE Network, and headcount requirements, the Company has made the determination that these plans would not be viable and as such have deemed them abandoned.”
WWE also reported a $1.5 million “film impairment charge” related to the performance of a WWE Studios movie, Oculus, that affected earnings.
Update: During the follow-up conference call with investors, financial executive George Barrios explained what happened with the media expansion project.
Barrios noted that back in 2008, WWE began planning for an expanded media facility, but the wide-spread financial crisis hit, so they pulled back on plans. In the ensuing years, WWE figured they would use the space when the media center was the right solution for their business. However, they underwent “fundamental changes” to their operations, mainly from WWE Network, which caused them to change how they view the media center. So, if they eventually do a Media Center, the plans they started with in 2008 are no longer relevant. Therefore, they officially abandoned the project and recorded a loss.
– WWE’s fourth quarter 2015 revenue of $166.2 million was up 16 percent from $140.5 million in the prior year quarter.
This was mainly due to the performance of WWE’s Media Division, which produced $106.6 million (64 percent of the total revenue), up from $89.5 million in Q4-2014.
The increase was driven by TV Rights Revenue from their new TV contracts kicking in and an increase in WWE Network revenue following the ramp-up period in 2014.
WWE also realized a big gain in their Europe/Middle East/Africa region, reporting regional revenue of $37.1 million, compared to $21.2 million in Q4-2014. This was mainly due to the availability of WWE Network.
A full break down of the key Media Division shows that WWE Network revenue increased $13.6 million, TV Rights increased by $5 million, and Digital Media increased by $3.6 million, but Home Entertainment virtually fell off the map with a decline of $5.2 million.