WWE Entertainment, Inc. Revises Full Year Revenue and EBITDA Estimates for Fiscal Year 2001
The company expects that earnings before interest, taxes, depreciation and amortization (EBITDA) will be 8%-10% lower than the prior company estimates. As a result of these revisions, there will be a modest impact to the second quarter with the majority of the impact occurring in the third quarter. The fourth quarter is consistent with prior projections. The company also notes that estimates for its new football league, the XFL, are tracking in line with prior estimates.
Commenting on the announcement, Linda McMahon, Chief Executive Officer of WWE, said, "We did not effectively manage our licensing program. While we negotiated good deals, introduced great products in the marketplace, we failed to provide the retail marketing support and monitoring that was needed. This spring we began to restructure the licensing department and changed its name and focus to Consumer Products. Over the summer, we added brand managers with extensive retail support and marketing experience and recently appointed a Senior Vice President, Donna Goldsmith, to lead the charge."
Ms. McMahon anticipates that revenues in licensing will not meet expectations in part due to slower than expected sell-through of older toy products as well as a decrease in the estimated revenues from its association with the National Hot Rod Association (NHRA). The company continues to work closely with its licensee, JAKKS Pacific, and it is closely monitoring the retail sales of its newly designed line of action figures. Early indications are that the new line is selling well.
Licensing revenues from the association with the National Hot Rod Association (NHRA) are below plan principally due to aforementioned management issues. The company has since changed management and fully expects to monetize the success that the company's NHRA team is having on the track by focusing on sponsorship sales and merchandise development. Ms. McMahon also noted that in other areas of its licensing businesses, such as video games, sales remain strong.
Revenues in the Live and Televised businesses are trending ahead of expectations. Live Events revenues continue to increase due to increased ticket prices and strong attendance. Pay-per-view revenues are tracking ahead of expectations and the company anticipates that it will exceed its record 6.8 million pay-per-view buys recorded in fiscal 2000 and retain its status as the number one pay-per-view provider in the world. Preliminary reports for the September 24th pay-per-view indicate that buys were 50% greater than the current estimate. The company's estimates include prior period buys that result from timing differences in the reporting of the buys.
In terms of television programming, WWE Raw Is War had a successful debut this past Monday night on TNN and registered an impressive 5.5 rating. Ms. McMahon stated, "We are obviously quite pleased with the results especially since we had less than a week's time to advertise and give our fans notice of the move to TNN. I think that speaks volumes as to the demand for and popularity of our programming and the extent to which our fans will go to seek our brand of entertainment." It was also reported that WWE RAW IS WAR on TNN was the most watched program in the network's 17 year history. The program was watched by 16 percent more men aged 18-34 and six percent more women aged 18-34 than the prior week's telecast on USA Network.
The company has reduced its estimates for the sale of broadcast commercial inventory. It is confident that this effect is temporary and will have no bearing on long-term results.
As a result of the decline in licensing revenues, the mix of revenues has changed and Branded Merchandise now represents approximately 30% of total revenues versus 34% in prior estimates. Although the mix has changed, the overall margin is consistent with prior estimates. In terms of expenses, the company indicates that overhead is expected to exceed prior estimates. The increase is primarily due to additional expenses associated with increases in headcount, retail marketing support programs, and the transition of programming to TNN resulting from the delay in the USA versus Viacom/WWE court appeal decision.
Forward-Looking Statements : This news release contains forward-looking statements which are subject to various risks and uncertainties. These risks and uncertainties include the conditions of the markets for live events, broadcast television, cable television, pay-per-view, Internet, food and beverage, entertainment, professional sports, and licensed merchandise; acceptance of the Company's brands, media and merchandise within those markets; and other risks and factors identified in documents filed with the Securities and Exchange Commission. Actual results could differ materially from those currently anticipated.
WWE Entertainment, Inc. is headquartered in Stamford, Connecticut, with sales offices in New York City, Chicago and Toronto. WWE is an integrated media and entertainment company, engaged in the development, production and marketing of television programming, pay-per-view programming and live events, and the licensing and sale of branded consumer products featuring the highly successful WWE (WWE) brand. The company currently has more than 600 employees and has exclusive contracts with approximately 125 performers. The Company can be found on NASDAQ under the symbol WWE and online at WWE.com and WWECORPBIZ.com.
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