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World Wrestling (WWE) Poised for Growth: Should You Hold?
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World Wrestling Entertainment Inc. is executing a five-part strategy to strengthen and expand the WWE Network. Recently, the company sealed a major deal in China. We believe that these strategic initiatives will boost the company’s performance.
Hidden Catalysts
In order to boost revenues of the WWE Network, the company has been implementing certain strategies. These include development of fresh content, execution of customer acquisition and retention programs, increase in distribution platform, introduction of new features and foray into new locations. These strategies have started to bear fruit as evidenced by growth in the company’s subscriber base.
In fact, WWE Network’s total subscriber base jumped 10.7% to 1.469 million year over year during the first quarter of 2016. The number of average paid subscribers surged 39% from the first quarter of 2015 to above 1.29 million. WWE Network is also available in the Indian subcontinent, Germany, Austria, Switzerland and Japan.
Management expects contractual increase of television rights fees as well as the acquisition and retention of WWE Network subscribers to be the primary growth drivers in 2016 and beyond.
Recently, WWE signed a multi-year agreement with China’s premier digital streaming company, PPTV. Per the agreement, the company will air its leading shows – Raw and SmackDown – in Mandarin. The company will also hold the live events in China for the first time in more than three years. The live event is scheduled for Sep 10, 2016 at 7 pm. Tickets for the live event have become available from Jun 18, 2016. WWE superstars Roman Reigns, Charlotte, John Cena, Seth Rollins and Sasha Banks will be present at the live events.
Decline in pay-per-view revenues is a major concern for WWE. In 2015, the company generated pay-per-view revenues of $20.6 million compared with $45.2 million, $82.5 million and $83.6 million in 2014, 2013 and 2012, respectively. These represent 3%, 8%, 16% and 17% of total revenue in 2015, 2014, 2013 and 2012, respectively.
Launch of the WWE Network was responsible for this sharp decline in pay-per-view revenues. The introduction of WWE Network had altered the distribution of WWE’s pay-per-view programs and lowered the monetization of assets via other platforms like pay-per-view as well as content distributed on digital platforms. The company continues to distribute programming via pay-per-view channels following the launch of WWE Network, however, some of the earlier distributors do not carry such programming anymore.
The company expects adjusted OIBDA of nearly $5 million to $9 million for the second quarter of 2016. This projection is lower than the company’s second-quarter 2015 OIBDA of $13.2 million, primarily due to tactical investments as well as the timing impact of WrestleMania production costs and fall in royalty rate related to the company’s franchise video game.
WWE, which share space with Live Nation Entertainment, Inc. (LYV - Free Report) , currently carries a Zacks Rank #3 (Hold).
Key Stock Picks
Some better-ranked stocks worth considering include MSG Networks Inc. and Dish Network Corp. . Both these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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World Wrestling (WWE) Poised for Growth: Should You Hold?
World Wrestling Entertainment Inc. is executing a five-part strategy to strengthen and expand the WWE Network. Recently, the company sealed a major deal in China. We believe that these strategic initiatives will boost the company’s performance.
Hidden Catalysts
In order to boost revenues of the WWE Network, the company has been implementing certain strategies. These include development of fresh content, execution of customer acquisition and retention programs, increase in distribution platform, introduction of new features and foray into new locations. These strategies have started to bear fruit as evidenced by growth in the company’s subscriber base.
In fact, WWE Network’s total subscriber base jumped 10.7% to 1.469 million year over year during the first quarter of 2016. The number of average paid subscribers surged 39% from the first quarter of 2015 to above 1.29 million. WWE Network is also available in the Indian subcontinent, Germany, Austria, Switzerland and Japan.
Management expects contractual increase of television rights fees as well as the acquisition and retention of WWE Network subscribers to be the primary growth drivers in 2016 and beyond.
Recently, WWE signed a multi-year agreement with China’s premier digital streaming company, PPTV. Per the agreement, the company will air its leading shows – Raw and SmackDown – in Mandarin. The company will also hold the live events in China for the first time in more than three years. The live event is scheduled for Sep 10, 2016 at 7 pm. Tickets for the live event have become available from Jun 18, 2016. WWE superstars Roman Reigns, Charlotte, John Cena, Seth Rollins and Sasha Banks will be present at the live events.
WORLD WRESTLING Price and Consensus
WORLD WRESTLING Price and Consensus | WORLD WRESTLING Quote
Concerns
Decline in pay-per-view revenues is a major concern for WWE. In 2015, the company generated pay-per-view revenues of $20.6 million compared with $45.2 million, $82.5 million and $83.6 million in 2014, 2013 and 2012, respectively. These represent 3%, 8%, 16% and 17% of total revenue in 2015, 2014, 2013 and 2012, respectively.
Launch of the WWE Network was responsible for this sharp decline in pay-per-view revenues. The introduction of WWE Network had altered the distribution of WWE’s pay-per-view programs and lowered the monetization of assets via other platforms like pay-per-view as well as content distributed on digital platforms. The company continues to distribute programming via pay-per-view channels following the launch of WWE Network, however, some of the earlier distributors do not carry such programming anymore.
The company expects adjusted OIBDA of nearly $5 million to $9 million for the second quarter of 2016. This projection is lower than the company’s second-quarter 2015 OIBDA of $13.2 million, primarily due to tactical investments as well as the timing impact of WrestleMania production costs and fall in royalty rate related to the company’s franchise video game.
WWE, which share space with Live Nation Entertainment, Inc. (LYV - Free Report) , currently carries a Zacks Rank #3 (Hold).
Key Stock Picks
Some better-ranked stocks worth considering include MSG Networks Inc. and Dish Network Corp. . Both these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>