WWE reports strong fourth-quarter 2015 results, record revenue, over 1.2 million network subs

Fourth-Quarter 2015 Highlights

• Revenue increased 18% to $166.2 million driving a $6.0 million increase in Adjusted OIBDA¹ to $11.1 million
• WWE Network had 1.22 million ending paid subscribers, representing a 49% increase from the fourth quarter 2014; WWE Network hit an all-time high of 1.24 million average paid subscribers for the quarter
• WWE Network was recognized as the fifth largest direct-to-consumer (“OTT”) subscription service in the U.S. according to Parks Associates, ranking alongside Netflix, Amazon Video, Hulu and MLB.TV
• WWE was added to the S&P SmallCap 600 Index (effective January 20, 2016)

Full Year 2015 Highlights

• Revenue increased 21% to $658.8 million, the highest in the Company’s history, including record levels of revenue from WWE’s Network, Television, Live event, Venue Merchandise, and WWE Shop businesses
• Total international revenue increased by 46% to a record $169.8 million
• Adjusted OIBDA¹ reached $68.7 million, representing an $80.3 million increase from 2014
• Network segment generated revenue of $159.4 million and OIBDA¹ of $48.4 million that nearly doubled the average annual revenue of the Company’s pay-per-view business before network launch
• WWE Network subscribers watched an estimated total of 256 million hours of content, representing an average of 188 hours per household placing it among the top cable and broadcast networks
• WWE content garnered more than 8 billion views on YouTube; WWE was the most followed sports channel on YouTube and the second most followed sports brand on Facebook
• WWE generated 790 million social media fan engagements in 2015²; Sprinklr’s Social Business Index ranked WWE as the 6th most social brand worldwide, alongside Disney, Time Warner and Google

 ⁽¹⁾ Reconciliation of Operating Income to Adjusted OIBDA can be found in the Supplemental Information in this release.

⁽²⁾ Social media fan engagements are defined as the cumulative fan response to WWE content measured by the number of “likes”, “follows”, “shares”, “mentions”, and “retweets” across social media platforms such as Facebook, Twitter, YouTube, Instagram and Tumblr.

STAMFORD, Conn., February 11, 2016 – WWE (NYSE:WWE) today announced financial results for its fourth quarter and year ended December 31, 2015. For the quarter, the Company reported a Net loss of $1.2 million, or $0.02 loss per share, as compared to a Net loss of $1.6 million, or $0.02 loss per share, in the prior year quarter. Excluding items affecting comparability, Adjusted OIBDA increased to $11.1 million from $5.1 million. Adjusted net income was $3.4 million, or $0.04 per share as compared to Adjusted net loss of $0.6 million, or $0.01 loss per share, in the fourth quarter last year.

“Our record revenue in 2015 reflected innovation across all of our businesses, which was highlighted by the successful execution of our network strategy,” said WWE Chairman & CEO Vince McMahon. “Over the next year, we will continue to focus on producing engaging content across all platforms, investing in emerging markets, and deploying technology across the enterprise to drive our long-term growth.”

George Barrios, Chief Strategy & Financial Officer, added, “Our strong performance in 2015 reflected the effective execution of our strategy and our investments in content, technology and global markets. As an example, these initiatives led to WWE Network subscribers watching an estimated average of 188 hours of content per household, and WWE garnering more than 8 billion views on YouTube and achieving record international revenues of $170 million. These metrics demonstrate the unique power of our brands and our potential to capitalize on a multi-platform content strategy to drive long-term growth.”

WWE Network Update

• Performance: Network segment revenue increased 50% from the prior year quarter. Driving the growth in revenue, WWE Network had 1,217,000 paid subscribers at quarter end, up 49% and averaged approximately 1,237,000 paid subscribers during the quarter, representing a 72% increase from the prior year quarter.
• Distribution: WWE continued to broaden the global distribution of WWE Network, which was made available across the Indian subcontinent in November 2015. In January 2016, the Company made the network available in Germany, Austria, Switzerland and Japan and has continued to develop plans for geographic expansion to China, Thailand and the Philippines. At quarter-end, WWE Network had approximately 277,000 international subscribers. From inception through December 31, 2015, WWE Network attracted more than 2.5 million unique subscribers with approximately 51% of these subscribers active as of year-end.
• Content: During the quarter, the Company premiered more than 85 hours of original content onWWE Network, and increased the network’s comprehensive on-demand library to more than 4,300 hours. Among the content that debuted during the quarter were the original series Breaking Groundand two live specials, Live from Madison Square Garden (produced in New York) and NXT Takeover: London (produced from Wembley Arena in the U.K.). WWE Network’s compelling live and original content, including the Company’s pay-per-views, original series, NXT Live, and other specials continued to drive viewer engagement. Over the year, WWE Network subscribers watched an estimated average of 188 hours of content per household placing it among the top cable and broadcast networks.³ The Company expects to add more than 300 hours of original content to the network’s featured programming in 2016, including its premier event, WrestleMania (April 3) and more than 1,000 hours of archival content to the network’s on-demand library. Other exciting original programming coming to the network includes Camp WWE, an animated series (premiering in May), Edge & Christian’s Show That Totally Reeks of Awesomeness, a comedic variety show featuring its titled Superstars and a live special, March to WrestleMania (March 12), as well as a new season ofSwerved and new episodes of WWE 24 and Stone Cold Podcast.

⁽³⁾ For additional information, see the Company’s Fourth-Quarter 2015 Earnings Presentation, which can be found on the Company’s web site at ir.corporate.wwe.com.

Q1 2016 Business Outlook

For the first quarter 2016, the Company projects average paid subscribers of 1,280,000 (+/- 2%), representing an approximate year-over-year increase of 38%.

As a reminder, WrestleMania will occur on April 3 within the second quarter of 2016 as compared to last year’s event, which occurred within the first quarter. Given that timing, management anticipates the most significant subscriber additions within the quarter will occur towards the latter part of March. As such, these additions are not expected to have a significant impact on the Company’s first quarter subscriber average or the Company’s first quarter financial results.

The Company also estimates first quarter 2016 Adjusted OIBDA of approximately $15 million to $19 million.⁴ The range of projected first quarter results reflects a year-over-year decline primarily due to the timing of WrestleMania and related event ticket sales – as last year’s event grossed approximately $15 million – and an increase in accrued management incentive compensation.

Although the Company is not providing an estimate of first quarter ending subscribers with this release, the Company plans to communicate an update on network subscriber levels on April 4, 2016 the day after WrestleMania.

⁽⁴⁾ Reconciliation of Operating Income to Adjusted OIBDA can be found in the Supplemental Information in this release.

Comparability of Results

For the fourth quarter 2015, Corporate and Other expense includes a $7.1 million non-cash abandonment charge to write-off the value of costs related to a media center expansion project.  These costs were incurred several years ago but the expansion was delayed due to the economic uncertainty at the time.  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. For the fourth quarter of 2014, results included $1.5 million in film impairment charges primarily related to the expected performance of the movie, Oculus, which was released theatrically in April 2014.

For the full year 2015, Corporate and Other expense includes the $7.1 million non-cash abandonment charge as described above. For the full year 2014, results included a one-time pre-tax restructuring charge of $4.2 million comprised of severance and other costs ($2.4 million recorded in operating expenses and $1.8 million in depreciation expense), a $4.0 million impairment of an equity investment, and a $1.6 million adjustment to reduce the carrying value of the old corporate aircraft to its estimated fair value in conjunction with the sale of this asset, which occurred during the third quarter 2014, as well as the aforementioned film impairment charges.

In order to facilitate an analysis of financial results on a comparable basis, the Company’s results have been adjusted where applicable to exclude these items. (See Schedule of Adjustments in Supplemental Information).

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Forward-Looking Statements: This press release contains forward-looking statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties. These risks and uncertainties include, without limitation, risks relating to: WWE Network; major distribution agreements; our need to continue to develop creative and entertaining programs and events; the possibility of a decline in the popularity of our brand of sports entertainment; the continued importance of key performers and the services of Vincent K. McMahon; possible adverse changes in the regulatory atmosphere and related private sector initiatives; the highly competitive, rapidly changing and increasingly fragmented nature of the markets in which we operate and greater financial resources or marketplace presence of many of our competitors; uncertainties associated with international markets; our difficulty or inability to promote and conduct our live events and/or other businesses if we do not comply with applicable regulations; our dependence on our intellectual property rights, our need to protect those rights, and the risks of our infringement of others’ intellectual property rights; the complexity of our rights agreements across distribution mechanisms and geographical areas; potential substantial liability in the event of accidents or injuries occurring during our physically demanding events including, without limitation, claims relating to CTE; large public events as well as travel to and from such events; our feature film business; our expansion into new or complementary businesses and/or strategic investments; our computer systems and online operations; privacy norms and regulations; a possible decline in general economic conditions and disruption in financial markets; our accounts receivable; our revolving credit facility; litigation; our potential failure to meet market expectations for our financial performance, which could adversely affect our stock; Vincent K. McMahon exercises control over our affairs, and his interests may conflict with the holders of our Class A common stock; a substantial number of shares are eligible for sale by the McMahons and the sale, or the perception of possible sales, of those shares could lower our stock price; and the relatively small public “float” of our Class A common stock. In addition, our dividend is dependent on a number of factors, including, among other things, our liquidity and historical and projected cash flow, strategic plan (including alternative uses of capital), our financial results and condition, contractual and legal restrictions on the payment of dividends (including under our revolving credit facility), general economic and competitive conditions and such other factors as our Board of Directors may consider relevant. Forward-looking statements made by the Company speak only as of the date made and are subject to change without any obligation on the part of the Company to update or revise them. Undue reliance should not be placed on these statements.  For more information about risks and uncertainties associated with the Company’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s SEC filings, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q.