WWE Mulls Channel Launch

STAMFORD: Among the key growth initiatives cited by WWE for its 2013-15 business plan, devised to potentially double or triple its current EBITDA results, is the potential launch of a WWE network. 

Also part of the plans are the renewal of key content agreements and the execution of its digital strategy. The company said that leveraging its global brand strength is a key pillar of the long-term strategy. It cites research that shows that in the U.S. approximately 34 percent of digital mutli-channel TV households have an affinity for WWE content; one-quarter of which are characterized as "very passionate fan households." To maximize the value of the WWE content, the company outlined three approaches: licensing content to established networks, potentially launching a WWE network through traditional cable, satellite and telco distribution, and monetizing content through OTT distribution.

Regarding the potential of a WWE network, the company said that it is evaluating multiple approaches. "We believe that a premium subscription model is the best approach in the U.S. to capitalize on our fans’ commitment to our brands and their desire for more WWE content," the company said. "Based on our market research, we estimate that a fully distributed domestic pay network could ultimately attract between 2 million and 4 million subscribers at a ‘steady state.’" At a proposed price per month between $12.99 and $14.99, this could represent incremental revenue to WWE of between $125 million and $250 million and incremental EBITDA between $50 million and $150 million.

For its fourth quarter, WWE reported revenues of $115.1 million, compared to last year’s $112.9 million. Net income was $600,000, compared to a loss of $8.6 million in the prior-year quarter.

“In the fourth quarter, we continued to make important progress on our key strategic initiatives, expanding the production and licensing of new programs and enhancing our brands,” stated Vince McMahon, the chairman and CEO. “Although we did not announce the launch of a domestic television network during the year, we believe, now more than ever, that we can realize the full value of our intellectual property using a variety of approaches in our global markets. Our confidence is based on the rising value of content and the tremendous global appeal of our brands.”

“In 2012, our traditional core businesses (excluding the results of WWE Studios and network-related expenses) delivered EBITDA of $77 million, in line with our performance over the preceding four years, which has ranged from $76 million to $96 million. Based on the anticipated expiration of key commercial agreements and other opportunities to maximize our content value, we believe we have the potential to achieve a significant increase in earnings,” added George Barrios, the chief financial officer. “In order to achieve this growth, it is critical that we invest in our production and creative capabilities. We expect that 2013 EBITDA performance will approximate our 2012 results, plus or minus 10 percent. In addition, we anticipate that net income will be impacted by incremental expenses from the return to a more normalized tax rate (30 to 35 percent as compared to 26 percent in 2012) and increased depreciation of approximately $2 million to $3 million that derives from our ongoing capital investments to support our long-term growth initiatives."