WWE 2022 Q3 Financial Analysis: Revenue, TV & Peacock Viewership Up, Q4 Projections

With Vince McMahon gone as the head of WWE, the new regime led by Nick Khan, Stephanie McMahon, and Paul “Triple H” Levesque has made way for changes to how the company operates, both inside the ring and behind the scenes. 

Though the new trio of leaders inside WWE led to a new company identity of sorts, the business paradigm that had been in place for years under Vince’s leadership remained much the same. That was to be expected since WWE was already in a great spot prior to Vince’s resignation earlier this year due to its various media rights deals creating record revenue and profits on a regular basis.

The change in regime occurred within the first month of this past quarter, making this the first quarterly financial earnings report where Khan, Stephanie, and Levesque was in charge for the majority of it.

Despite very minor hurdles that resulted in the company’s operating income going down such as an uptick in costs associated with content creation, increases in media rights fees for both Raw and SmackDown resulted in WWE posting positive figures for this semester. 

The earnings report is a positive first step for the new regime in the wake of Vince’s departure and ensuing eight-figure cost in investigating his alleged misconduct that led to him stepping down this past summer.  

As expected, the company posted record quarterly revenue figures, clearing the way for what will be a strong fourth quarter and ending 2022 with another billion dollar year in net revenue.

WWE Posts Quarterly Record Revenue:

For the past quarter, total net revenue was $304.6 million, up nearly $50 million from last year’s Q3 revenue of $255.8 million. This is thanks in part to an increase in both domestic and international media rights fees for Raw and SmackDown as well as the delivery of third-party original programming. 

Within the media revenue section, the specifics of the core content media rights fees were defined. For this quarter, the company made $156.7 million in rights fees, up $15.4 million from last year’s Q3. For the first nine months of the year, WWE made $450 million in rights fees, which is up $37.2 million from that point last year. 

WWE also noted a $14.4 million increase in Q3 from 2021 to 2022 in the “Other” section which the company defined in the earnings report as “Other revenue within the Media segment reflects revenue from the distribution of other WWE content, including, but not limited to, certain live in-ring programming content in international markets, scripted, reality and other programming, as well as theatrical and direct-to-home video releases.”

Total net revenue for WWE this past quarter ended at $304.6 million, up nearly $50 million from last year, which only generated $255.8 million in total net revenue. pic.twitter.com/lBMQ5TaF75

— Carlos Toro Torres (@CarlosToroMedia) November 2, 2022

The strong third quarter WWE had this year, including 17% increase in Adjusted OIBDA allowed the company to remain strong in its 2022 Adjusted OIBDA guidance projection of $370 million – $385 million. Now, the company expects to end the year on the upper-end of that range.

— Carlos Toro Torres (@CarlosToroMedia) November 2, 2022

Frank Riddick, WWE President & Chief Financial Officer, added “In the quarter, we exceeded our guidance. Adjusted OIBDA increased 17% reflecting 19% revenue growth over the prior year. Our financial performance was primarily driven by growth in our Media segment as well as a shift in the timing of revenue related to certain licensing agreements. These items more than offset an increase in certain costs to support the creation of content. For 2022, we now anticipate Adjusted OIBDA at the upper-end of the range of $370 to $385 million.” 

Consumer products revenue finished at $36.4 million, up from last year’s Q3 revenue of $25.1 million, thanks to a substantial increase in product licensing and a slight bump in merchandise sales at live events, offsetting a minor dip in online sales. 

During the quarter, approximately $10 million in revenue was recorded primarily as a result of the company revising its estimates related to revenue recognition for certain licensing agreements with minimum guarantees. Before the change in estimates, WWE expected to recognize the majority (approximately $9 million) of this amount in 2022 Q4. 

For the year through nine months, the company generated $112.7 million in consumer products revenue, nearly doubling what 2021 was able to produce up to that point. 

WWE Viewership Stays Steady:

Before Vince’s departure, WWE ratings remained steady for both Raw on the USA Network and SmackDown on FOX. Last quarter, Raw and SmackDown’s viewership was nearly identical with both programs seeing a miniscule increase in viewership year-over-year while primetime cable and network television saw a drop in viewership.

As for this past quarter, Raw averaged 1.866 million viewers per episode, up four percent from last year’s 1.79 million viewers per episode. It is a stark contrast to what the USA Network and top 25 cable networks have produced in that same timeframe with both losing primetime viewership in the double-digit percentage points. 

A similar story can be seen with SmackDown’s viewership. The show averaged 2.163 million viewers per episode on FOX in Q3 this year, up one percent from 2021 Q3’s 2.148 million viewers episode. The rest of FOX’s primetime programming is down five percent in Q3 from 2021 to 2022. While the top four broadcast networks still averaged 2.802 million viewers in this past quarter, it is down 16 percent during that same time period last year. The bottom line is that WWE’s viewership and ratings have been consistent while most of television has seen a downward turn.  

The renewed interest in the on-screen product is partially due to the change in regime leading to different aspects of the creative switching things up. Those changes have been seen as mostly positive by fans and pundits, which helps retain television audiences in an era where linear television viewership is going down.

Viewership holding steady at this point in time will only pay dividends down the line as the company is preparing to negotiate new U.S. media rights, as early as 2023. 

Speaking of the media rights deals, Khan made note to point out Amazon’s early success with the NFL and being the exclusive U.S. streaming home of Thursday Night Football games, all but confirming that WWE is more than open to exploring streaming platforms for key WWE programming rights for the right money. Seeing as how networks and broadcasters are consistently paying more money for live programming, Khan sounded very confident that WWE will follow that trend and perhaps even surpass the massive U.S. media rights deals that Raw and SmackDown was able to garner a few years ago. 

A similar story can be seen with SmackDown on FOX’s viewership, seeing a 1% increase in viewership (2.163 million viewers per episode this quarter) while the rest of the top 4 broadcast networks saw primetime viewership go down 16%. pic.twitter.com/pLU3kq8nGR

— Carlos Toro Torres (@CarlosToroMedia) November 2, 2022

On a slightly different note, Stephanie said on the investors call that, year-to-date, premium live event viewership on Peacock is up 38 percent from last year. WWE noted in its third quarter 2022 highlights that WWE domestic premium live events (Money in the Bank, SummerSlam and Extreme Rules) were the most viewed event in its history with year-over-year increases of 17 percent, 20 percent, and 36 percent, respectively, in domestic unique viewership on Peacock.

Projections For 2022 Q4 & 2023 Full Year:

As the year comes to a close, there is already strong evidence that the fourth quarter will result in WWE once again setting record numbers. WWE’s total net revenue through nine months this year is already at $966.2 million, shattering the pace set from last year’s record revenue pace when it was at just $784.9 million through nine months. Last year, WWE finished with $1.095 billion in revenue and barring any catastrophic business dealings, there is no question that the company will set new records. 

As for what to expect in just Q4 for this year in terms of revenue, WWE generated $310.3 million last year and $238.2 million in 2020. Expect Q4 to finish around that $300 million ballpark, finishing the year with at least $1.2 billion in total net revenue. 

As for Adjusted OIBDA, there is enough to fully believe that WWE will fulfill the full-year guidance Riddick previously mentioned. Through nine months this year, WWE’s Adjusted OIBDA sits at $294.4 million, up from last year’s $229.9 million. Last year, WWE’s Total Adjusted OIBDA finished at $97.2 million in Q4, but the company stated that it is projecting between $83 million to $90 million for next quarter, firmly putting it in the aforementioned full-year guidance range. 

Live Event Attendance & Revenue:

Ticket sales revenue in North America remained steady year-to-year for the third quarter, but what made this year more successful than last year was the Clash at the Castle premium live event in Cardiff, Wales. 

Revenue increased 26 percent, or $7.2 million, to $35.2 million this quarter, due an increase in international ticket sales from Clash at the Castle. There were 58 total ticketed live events in the current quarter, consisting of 57 events in North America and 1 international event. Average attendance for WWE’s North America live events was approximately 6,300. In the prior year period, WWE returned to staging weekly, ticketed live events for the first time since the onset of the COVID-19 outbreak and in the prior year period, WWE staged 42 total ticketed live events, consisting of 38 events in North America and 4 events in international markets. 

Average attendance at the company’s North America events was approximately 8,300, which reflected pent-up consumer demand as well as a higher mix of larger capacity venues. 

The sheer increase in live events more than made up for the decrease in average attendance, resulting in similar ticket revenue in North America. 

Average live event attendance is down year-over-year but the company was able to produce 19 more events in North America and revenue was up 26%, or $7.2 million, to $35.2 million this quarter, primarily due an increase in international ticket sales from Clash at the Castle. pic.twitter.com/M24g4RFTsC

— Carlos Toro Torres (@CarlosToroMedia) November 2, 2022

Other News & Notes:

• “Contras Las Cuerdas,” an upcoming series about an aspiring luchadora WWE is working on, is expected to premiere on Netflix in Q1 2023. 
• WWE and Hulu entered a short-term extension when it comes to the Raw re-airing rights with the deal aligning with the timing of some of its current live rights deals. Riddick noted that the company is happy with the deal, but that it will cause some headwind in the short-term. Expect it to have a minor impact on the media section of revenue in the next few quarters, but nothing that would really affect the company’s bottom line. 
• According to Nick Khan, gross revenue is exceeding $4.6 million for the Royal Rumble in San Antonio in 2023, turning the event taking place in a couple of months into one of its most financially successful one in Royal Rumble history.
• The special committee WWE formed to investigate Vince’s alleged misconduct has been disbanded with the company announcing that the investigation cost nearly $20 million. Below is the full statement from the earnings report. 

“As previously announced, a Special Committee of independent members of the Board of Directors was formed to investigate alleged misconduct by Vincent K. McMahon, the Company’s former Chairman and Chief Executive Officer, who resigned from all positions held with the Company on July 22, 2022 but remains a stockholder with a controlling interest, and another executive, who is also no longer with the Company. The Special Committee investigation is now complete and the Special Committee has been disbanded. Management is working with the Board to implement the recommendations of the Special Committee related to the investigation. For the three and nine-month periods ended September 30, 2022, the Company’s consolidated pre-tax results include the impact of $17.7 million and $19.4 million, respectively, associated with certain costs related to the investigation. Please see the Company’s SEC filings, including, but not limited to, its annual report on Form 10-K/A and quarterly reports on Form 10-Q/A and Form 10-Q for further details and ongoing risks regarding this matter.”

• WWE stock shot up in these first few months with Khan, Stephanie, and Levesque in charge, seeing an increase of nearly 30 percent since July 22, Vince’s official last day in WWE. When comparing the stock from the end of 2021 Q3 and the end of 2022 Q3, the stock rose from $56.26 per share on September 30, 2021 to $70.17 per share on September 30, 2022, marking a 24.72 percent increase during that period. 
• Operating Income decreased 8 percent, or $5.1 million, to $58.9 million, as the increase in revenue was offset by an increase in operating expenses. The increase in operating expenses was driven by higher costs to support the creation of content as well as the impact of certain costs related to the Special Committee investigation into Vince’s alleged misconduct. WWE’s operating income margin decreased to 19 percent from 25 percent.

Graphs provided by WWE. You can listen to the full earnings call on Fightful’s YouTube channel at this link.