Second Quarter 2016 Highlights

• Revenue increased 32% (13% excluding the timing impact of WrestleMania¹) to a record $199.0 million as WWE’s Live Event and Network segments achieved their highest quarterly revenue in Company history
• OIBDA² of $7.5 million was in line with the Company’s guidance
• WWE Network reached a record of 1.52 million average paid subscribers over the second quarter 2016 which represented a 25% increase from the second quarter 2015
• SmackDown transitioned to a live format on USA Network. Since July 25 WWE’s flagship programs Monday Night Raw and SmackDown have and will continue to feature unique talent and storylines
• Through the first six months of the year digital engagement metrics continued to grow with video views up over 100% to nearly 8 billion and social media engagements up 39% to 570 million versus the prior year
• The Company announced a multi-year content distribution deal in China with PPTV the return of a WWE live event to Shanghai in September and the signing of the first-ever Chinese talent

Select WrestleMania Highlights

WrestleMania (April 3 2016) achieved record breaking attendance ticket sales viewership and social media activity. WrestleMania broke WWE's attendance record attracting 101 763 fans at AT&T Stadium. WWE Network reached a record 1.82 million total subscribers following WrestleMania (April 4). During WrestleMania Week WWE Network featured 19 hours of prime-time premier programming and subscribers watched nearly 22 million hours of content averaging 12 hours per subscriber. WrestleMania generated more than 2.5 million mentions on Twitter in one day and over 250 million video views across WWE digital and social platforms during WrestleMania Week.

STAMFORD Conn.--(BUSINESS WIRE)-- WWE (NYSE:WWE) today announced financial results for its second quarter 2016. For the quarter the Company reported Net income of $0.8 million or $0.01 per share as compared to Net income of $5.1 million or $0.07 per share in the prior year quarter.

“I continue to be pleased with the execution of our strategy to optimize the long-term value of our content ” stated Vince McMahon WWE Chairman and Chief Executive Officer. “Progress on this objective is evidenced by the continued year-over-year growth of WWE Network the transition of SmackDown to a live format every week and the completion of our first exclusive content agreement in China.”

George Barrios WWE Chief Strategy & Financial Officer added “We achieved a 25% increase in average paid subscribers to WWE Network and generated earnings that were in line with our guidance. Over the past 12 months we delivered record revenue of $703 million. Additionally for the first half of 2016 we delivered revenue growth of 13% from the prior year period and our digital video views increased by more than 100% to nearly 8 billion and our social media engagements increased 39% to 570 million.”

Q3 2016 Business Outlook

For the third quarter 2016 the Company projects average paid subscribers to WWE Network of 1.49 million (+/- 2%) representing a year-over-year increase of approximately 27%. The third quarter subscriber forecast represents a sequential decline of 2% from the second quarter 2016 which compares to the 4% decline from the second to the third quarter 2015.

The Company also estimates third quarter 2016 Adjusted OIBDA³ of approximately $24 million to $28 million. This range represents an expected year-over-year increase from $23.4 million in the third quarter 2015 primarily due to the increased monetization of the Company’s video content and the continued strong performance of its Live Events business.

2016 Perspective

WWE management has previously indicated that if the average paid subscribers to WWE Network increases at a rate between 20% and 25% in 2016 2016 Adjusted OIBDA could be in a range of approximately $70 million to $85 million. If recent overarching trends regarding the acquisition and retention of subscribers continue over the remainder of 2016 management continues to believe average paid subscriber growth would be at the upper end of its range and 2016 Adjusted OIBDA would be between $80 million and $85 million. The range of 2016 Adjusted OIBDA includes the previously communicated incremental investment of $15 million to $20 million in content technology and emerging markets. As recent historical data may not offer a comparable basis for projecting future results and future results may differ from the range provided management offers these ranges of 2016 subscriber growth and financial performance to provide further perspective rather than as guidance.

Comparability of Results

WrestleMania 32 occurred on April 3 2016 and is reflected in second quarter 2016 results whereas the comparable prior year event occurred on March 29 2015 and was included as part of first quarter 2015 results. Despite the shift in timing WrestleMania had a significant impact on subscriber growth in the second quarter of both years. Therefore the timing impact of the event on second quarter 2016 results is best estimated by measuring the direct contribution the event generated from ticket merchandise and pay-per-view sales and production costs (excluding any attribution from WWE Network subscriptions). In aggregate these items increased second quarter 2016 revenue by $29.4 million and reduced OIBDA by $0.2 million with no net impact on EPS. Refer to the Supplemental Information - Pro Forma Income Statement & Reconciliation to GAAP Measures in this release for a pro-forma analysis excluding WrestleMania from second quarter 2016 results.

Three Months Ended June 30 2016 - Results Overview

Revenues increased 32% to a quarterly record high $199.0 million with the increase driven at least in part by the timing impact of WrestleMania. (On a pro-forma basis excluding this timing impact the Company’s overall revenues increased 13% from the prior year quarter.) North American revenues increased 39% from the prior year quarter primarily due to the impact of WrestleMania ticket and merchandise sales as well as by the growth of WWE Network subscribers and the escalation of television rights fees. The quarter also reflected higher ticket sales and prices at other North American events and increased digital advertising revenue which were partially offset by lower video game revenue due to the timing of a lower effective royalty rate (discussed below). Revenues from outside North America increased 15% driven by the increased monetization of content as reflected in the Media Division and by higher Live Event revenue from the EMEA region.

The following tables reflect net revenues by region and net revenues and OIBDA by division/segment (in millions):

Three Months Ended June 30 2016 – Segment Performance Commentary

The year-over-year changes in the Company’s financial performance were driven by its Network Television Live Events and Licensing and Corporate & Other business segments. A discussion of other business segments has been excluded from the narrative below. Refer to our second quarter 2016 Form 10-Q for management’s discussion and analysis of financial condition and results of operations pertaining to all of our segments.

Media Division

Revenues from the Company's Media division increased 19% to $117.5 million primarily due to the growth of WWE Network and the contractual escalation of television rights fees.

• Network revenues which include revenue generated by WWE Network and pay-per-view increased 29% to $51.8 million. WWE Network subscription revenue increased 25% to $45.9 million from $36.6 million in the prior year quarter based on a 25% year-over-year increase in average paid subscribers to 1.5 million.
  
  Network segment OIBDA declined $22.9 million from the prior year quarter due to the impact of $21.5 million in production and talent costs associated with WrestleMania. Excluding the timing impact of WrestleMania Network segment OIBDA declined $5.4 million as the growth in WWE Network subscription revenue was offset by increased programming expenses including a $5.3 million allocation of certain expenses shared between the Company’s Network and Television segments.⁴ A portion of the increase in Network programming expenses relates to the Company’s previously communicated strategic investments.
  
  The Company continued to increase the global subscriber base of WWE Network as measured on a year-over-year basis with launches over the trailing 12 months in six countries including Germany Malaysia and Japan. WWE Network had 1.56 million total subscribers at the end of the second quarter which represented a 27% increase from June 30 2015. WWE Network had 1.13 million U.S. paid subscribers and 381 000 international paid subscribers at quarter-end.
  
  Importantly with the increased size and maturity of the network’s subscriber base average monthly churn declined 20% to 9.9% for the first six months of 2016 from 12.3% for the comparable period in 2015. ⁵
  
  The following table provides WWE Network subscriber performance ^{6 7}

WWE Network content including the Company’s premier event WrestleMania (April 3 2016) other pay-per-views original series NXT Takeover and specials have continued to drive viewer engagement. During the quarter the Company introduced compelling new content for WWE Network including Camp WWE and Swerved Season 2 which rank among the network’s top original series to-date. The Company is on pace to add more than 300 hours of original content to the network’s featured programming in 2016 and more than 1 500 hours of archival content to WWE Network which would result in an on-demand library of nearly 6 000 hours at year-end 2016.

• Television revenues increased 8% to $56.1 million from $52.1 million in the prior year quarter primarily due to contractual increases in key distribution agreements the largest of which became effective in the fourth quarter 2014 and the first quarter 2015. As indicated above the allocation of certain shared expenses reduced Network segment OIBDA and increased Television segment OIBDA by $5.3 million in the second quarter 2016.
  
  SmackDown transitioned to a live format every week on USA Network beginning July 19 2016.

Live Events

Live Event revenues increased 97% to a quarterly record of $51.9 million primarily due to the timing of the Company's annual WrestleMania event which occurred in the second quarter 2016 as compared to the first quarter 2015. (Excluding this timing impact Live Event revenues increased 15% to $30.4 million from $26.4 million in the prior year quarter.)

• There were 81 total events (excluding NXT) in the current quarter including 62 events in North America and 19 events in international markets as compared to 86 events in the prior year quarter including 65 events in North America and 21 in international markets.
• North American live event revenues were $40.9 million in the current year quarter as compared to $16.9 million in the prior year quarter with growth driven by the timing of WrestleMania which generated revenue of approximately $21.5 million in the current year quarter. Excluding the impact of WrestleMania revenue from the Company’s North American live events increased 15% to $19.4 million as a 12% increase in average ticket prices to $51.87 was partially offset by the staging of four fewer events during the quarter.
• International live event revenue increased 16% to $11.0 million from $9.5 million in the prior year quarter reflecting the strong performance of the Company’s events in Europe. Average international attendance at these events increased 16% to 8 000 fans. As part of the Company’s international growth strategy it announced the return of a WWE live event to Shanghai on Saturday September 10 2016.
• Live Events reached a record quarterly OIBDA of $23.4 million including the strong performance of WrestleMania ticket sales which generated $15.5 million in Live Event OIBDA. Excluding the timing impact of WrestleMania the increase in Live Event OIBDA was primarily due to the strong performance of the Company’s European tour.