WORLD WRESTLING ENTERTAINMENT, INC. You should read the following discussion in conjunction with the consolidated financial statements and related notes included elsewhere in this report.
Our operations are organized around the following principal activities:
Media:
?The Media segment reflects the production and monetization of long-form and
short-form video content across various platforms, including WWE Network,
broadcast and pay television, digital and social media, as well as filmed
entertainment. Across these platforms, revenues principally consist of content
rights fees, subscriptions to WWE Network, and advertising and sponsorships.
Effective
Live Events:
?Live events provide ongoing content for our media platforms. Live Event segment
revenues consist primarily of ticket sales, including primary and secondary
distribution, revenues from events for which we receive a fixed fee, as well as
the sale of travel packages associated with the Company's global live events. As
a result of the global spread of the coronavirus pandemic ("COVID-19"), these
revenues have been greatly limited since
Consumer Products:
?The Consumer Products segment engages in the merchandising of WWE branded products, such as video games, toys and apparel, through licensing arrangements and direct-to-consumer sales. Revenues principally consist of royalties and licensee fees related to WWE branded products, and sales of merchandise distributed at our live events and through eCommerce platforms.
Results of Operation
The Company presents Adjusted OIBDA as the primary measure of segment profit (loss). The Company defines Adjusted OIBDA as operating income before depreciation and amortization, excluding stock-based compensation, certain impairment charges and other non-recurring material items. Adjusted OIBDA includes depreciation and amortization expenses directly related to supporting the operations of our segments, including content production asset amortization, depreciation and amortization of costs related to content delivery and technology assets utilized for WWE Network, as well as amortization of right-of-use assets related to finance leases of equipment used to produce and broadcast our live events. The Company believes the presentation of Adjusted OIBDA is relevant and useful for investors because it allows investors to view our segment performance in the same manner as the primary method used by management to evaluate segment performance and make decisions about allocating resources. Additionally, we believe that Adjusted OIBDA is a primary measure used by media investors, analysts and peers for comparative purposes.
Adjusted OIBDA is a non-GAAP financial measure and may be different than similarly titled non-GAAP financial measures used by other companies. A limitation of Adjusted OIBDA is that it excludes depreciation and amortization, which represents the periodic charge for certain fixed assets and intangible assets used in our business. Additionally, Adjusted OIBDA excludes stock-based compensation, a non-cash expense that may vary between periods with limited correlation to underlying operating performance, as well as other non-recurring material items. Adjusted OIBDA should not be regarded as an alternative to operating income or net income as an indicator of operating performance, or to the statement of cash flows as a measure of liquidity, nor should it be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP financial measure to Adjusted OIBDA. See Note 3, Segment Information, in the accompanying consolidated financial statements for a reconciliation of Adjusted OIBDA to operating income for the periods presented.
Unallocated corporate general and administrative expenses largely relate to corporate functions such as finance, legal, human resources, facilities and information technology. These unallocated corporate general and administrative expenses will be shown, as applicable, as a reconciling item in tables where segment and consolidated results are both shown.
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Summary
Three Months Ended
(dollars in millions, except where noted)
The following tables present our consolidated results followed by our Adjusted
OIBDA results:
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Net revenues
Media $ 233.9 $ 200.1 17 %
Live Events 9.2 1.0 820 %
Consumer Products 22.5 22.3 1 %
Total net revenues (1) 265.6 223.4 19 %
Operating expenses
Media 134.5 99.2 36 %
Live Events 8.0 4.6 74 %
Consumer Products 13.6 13.6 - %
Total operating expenses (2) 156.1 117.4 33 %
Marketing and selling expenses
Media 14.8 15.6 (5) %
Live Events 0.4 0.9 (56) %
Consumer Products 0.8 1.0 (20) %
Total marketing and selling expenses 16.0 17.5 (9) %
General and administrative expenses (3) 36.3 22.0 65 %
Depreciation and amortization 10.9 10.8 1 %
Operating income 46.3 55.7 (17) %
Interest expense 8.5 9.1 (7) %
Other (expense) income, net (0.1) 8.5 (101) %
Income before income taxes 37.7 55.1 (32) %
Provision for income taxes 8.5 11.3 (25) %
Net income $ 29.2 $ 43.8 (33) %
(1)Our consolidated net revenues increased by
(2)Our consolidated operating expenses increased by
(3)Our consolidated general and administrative expenses increased by
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Three Months Ended
June 30,
2021 2020
Reconciliation of Operating Income to Adjusted
OIBDA % of Rev % of Rev
Operating income $ 46.3 17 % $ 55.7 25 %
Depreciation and amortization 10.9 4 % 10.8 5 %
Stock-based compensation 2.8 1 % 7.0 3 %
Other adjustments (1) 8.1 3 % - - %
Adjusted OIBDA $ 68.1 26 % $ 73.5 33 %
(1)Other adjustments in the current year quarter include severance expenses primarily associated with the combination of WWE's television, digital and studios teams into one organization.
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Adjusted OIBDA
Media $ 86.2 $ 90.5 (5) %
Live Events 1.1 (4.2) 126 %
Consumer Products 8.4 8.1 4 %
Corporate (27.6) (20.9) (32) %
Total Adjusted OIBDA $ 68.1 $ 73.5 (7) %
Media
The following tables present the performance results and key drivers for our
Media segment:
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Net Revenues
Network (including pay-per-view) (1)
141.8 132.9 7 %
Advertising and sponsorship (3) 18.7 13.3 41 %
Other (4) 11.9 4.5 164 %
Total net revenues $ 233.9 $ 200.1 17 %
(1)Network revenues consist of revenues earned from fees from customers of WWE
Network and license fees under international licensed partner agreements, as
well as amounts earned from our pay-per-view broadcasts. Effective
(2)Core content rights fees consist primarily of licensing revenues earned from the distribution of our flagship programs, RAW and SmackDown, as well as our NXT programming, through global broadcast, pay television and digital platforms.
(3)Advertising and sponsorships revenues within our Media segment consist primarily of advertising revenues generated from the Company's content on third-party social media platforms and sponsorship fees from sponsors who promote their products utilizing the Company's media platforms, including promotion on the Company's digital websites and on-air promotional media spots.
(4)Other revenues within our Media segment reflect revenues earned 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.
Three Months Ended
June 30,
2021 2020
Reconciliation of Operating Income to Adjusted
OIBDA % of Rev % of Rev
Operating income $ 80.8 35 % $ 81.6 41 %
Depreciation and amortization 3.8 2 % 3.8 2 %
Stock-based compensation 1.6 1 % 5.1 3 %
Other adjustments - - % - - %
Adjusted OIBDA $ 86.2 37 % $ 90.5 45 %
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Media net revenues increased by
Media Adjusted OIBDA as a percentage of revenues decreased in the current year
quarter as compared to the prior year quarter. This decrease was driven by
increased content creation related costs of
Live Events
The following tables present the performance results and key drivers for our
Live Events segment:
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Net Revenues
North American ticket sales $ 6.7 $ - NM
International ticket sales - - - %
Advertising and sponsorship (1) 0.3 0.3 - %
Other (2) 2.2 0.7 214 %
Total net revenues $ 9.2 $ 1.0 820 %
Operating Metrics (3)
Total live event attendance 40,400 - NM
Number of North American events 2 - NM
Average North American attendance 20,190 - NM
Average North American ticket price (dollars)
- - - %
Average international attendance - - - %
Average international ticket price (dollars) $ - $ - - %
(1)Advertising and sponsorships revenues within our Live Events segment primarily consists of fees from advertisers and sponsors who promote their products utilizing the Company's live events (i.e., presenting sponsor of fan engagement events and advertising signage at the event).
(2)Other revenues within our Live Events segment primarily consists of the sale of travel packages associated with the Company's global live events and commission earned through secondary ticketing, as well as revenues from events for which the Company receives a fixed fee.
(3)Metrics exclude the events for our domestic and United Kingdom NXT brands. These are our developmental brands that typically conduct their events in smaller venues with lower ticket prices. We did not conduct any ticketed NXT events in the periods presented.
Three Months Ended
June 30,
2021 2020
Reconciliation of Operating Income (Loss) to
Adjusted OIBDA % of Rev % of Rev
Operating income (loss) $ 0.9 10 % $ (4.5) (450) %
Depreciation and amortization - - % - - %
Stock-based compensation 0.2 2 % 0.3 30 %
Other adjustments - - % - - %
Adjusted OIBDA $ 1.1 12 % $ (4.2) (420) %
Live Events net revenues, which include revenues from ticket sales and travel
packages, increased by
Live Events Adjusted OIBDA increased in the current year quarter as compared to the prior year quarter. This increase was driven by the impact of the return of two ticketed WrestleMania events.
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Consumer Products
The following tables present the performance results and key drivers for our
Consumer Products segment:
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Net Revenues
Consumer product licensing $ 11.3 $ 9.7 16 %
eCommerce 9.9 12.6 (21) %
Venue merchandise 1.3 - NM
Total net revenues $ 22.5 $ 22.3 1 %
Operating Metrics
Average eCommerce revenue per order (dollars)
134,000 215,500 (38) %
Venue merchandise domestic per capita spending
(dollars) $ 32.09 $ - NM
Three Months Ended
June 30,
2021 2020
Reconciliation of Operating Income to Adjusted
OIBDA % of Rev % of Rev
Operating income $ 7.9 35 % $ 7.6 34 %
Depreciation and amortization 0.1 0 % - - %
Stock-based compensation 0.4 2 % 0.5 2 %
Other adjustments - - % - - %
Adjusted OIBDA $ 8.4 37 % $ 8.1 36 %
Consumer Products net revenues were essentially unchanged in the current year
quarter as compared to the prior year quarter. Consumer product licensing
revenue increased by
Consumer Products Adjusted OIBDA as a percentage of revenues was essentially unchanged in the current year quarter as compared to the prior year quarter.
Corporate
Unallocated corporate general and administrative expenses largely relate to corporate administrative functions, including finance, investor relations, community relations, corporate communications, information technology, legal, human resources and our Board of Directors. The Company does not allocate these general and administrative expenses to its business segments.
Three Months Ended
June 30,
2021 2020
Reconciliation of Operating Loss to Adjusted OIBDA % of Rev % of Rev
Operating loss $ (43.3) (16) % $ (29.0) (13) %
Depreciation and amortization 7.0 3 % 7.0 3 %
Stock-based compensation 0.6 0 % 1.1 0 %
Other adjustments (1) 8.1 3 % - - %
Adjusted OIBDA $ (27.6) (10) % $ (20.9) (9) %
(1)Other adjustments in the current year quarter include severance expenses primarily associated with the combination of WWE's television, digital and studios teams into one organization. Our policy is to record Company-wide severance expenses as unallocated corporate general and administrative expenses.
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Corporate Adjusted OIBDA decreased by
Depreciation and Amortization
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Depreciation and amortization $ 10.9 $ 10.8 1 %
Depreciation and amortization expense was essentially unchanged in the current year quarter as compared to the prior year quarter.
Interest Expense
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Interest expense $ 8.5 $ 9.1 (7) %
Interest expense, which relates primarily to interest and amortization
associated with our convertible notes, our real estate and equipment finance
leases, the revolving credit facility and mortgage, declined by
Other Income (Expense), Net
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Other income (expense), net $ (0.1) $ 8.5 (101) %
Other income (expense), net is comprised of interest income, gains and losses
recorded on our equity investments, realized translation gains and losses, and
rental income. The decrease of
Income Taxes
Three Months Ended
June 30, Increase
2021 2020 (decrease)
Provision for (benefit from) income taxes $ 8.5 $ 11.3 (25) %
Effective tax rate 23 % 20 %
The effective tax rate increased in the current year quarter as compared to the prior year quarter. This increase was primarily driven by additional state income taxes.
?
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Six Months Ended
(dollars in millions, except where noted)
The following tables present our consolidated results followed by our Adjusted
OIBDA results:
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Net revenues
Media $ 475.9 $ 456.7 4 %
Live Events 9.7 18.5 (48) %
Consumer Products 43.5 39.2 11 %
Total net revenues (1) 529.1 514.4 3 %
Operating expenses
Media 258.4 243.6 6 %
Live Events 12.4 22.6 (45) %
Consumer Products 27.4 26.6 3 %
Total operating expenses (2) 298.2 292.8 2 %
Marketing and selling expenses
Media 32.1 34.5 (7) %
Live Events 0.9 3.7 (76) %
Consumer Products 1.9 2.0 (5) %
Total marketing and selling expenses (3) 34.9 40.2 (13) %
General and administrative expenses (4) 62.9 50.7 24 %
Depreciation and amortization 21.7 21.7 - %
Operating income 111.4 109.0 2 %
Interest expense 17.0 17.3 (2) %
Other income (expense), net 0.4 (1.9) 121 %
Income before income taxes 94.8 89.8 6 %
Provision for income taxes 21.8 19.8 10 %
Net income $ 73.0 $ 70.0 4 %
(1)Our consolidated net revenues increased by
(2)Our consolidated operating expenses increased by
(3)Our consolidated marketing and selling expenses decreased by
(4)Our consolidated general and administrative expenses increased by
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Six Months Ended
June 30,
2021 2020
Reconciliation of Operating Income to
Adjusted OIBDA % of Rev % of Rev
Operating income $ 111.4 21 % $ 109.0 21 %
Depreciation and amortization 21.7 4 % 21.7 4 %
Stock-based compensation 10.8 2 % 20.1 4 %
Other adjustments (1) 8.1 2 % - - %
Adjusted OIBDA $ 152.0 29 % $ 150.8 29 %
(1)Other adjustments in the current year period include severance expenses primarily associated with the combination of WWE's television, digital and studios teams into one organization.
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Adjusted OIBDA
Media $ 192.8 $ 193.1 (0) %
Live Events (3.2) (6.8) 53 %
Consumer Products 15.1 11.9 27 %
Corporate (52.7) (47.4) (11) %
Total Adjusted OIBDA
Media
The following tables present the performance results and key drivers for our
Media segment:
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Net Revenues
Network (including pay-per-view) (1)
281.5 266.1 6 %
Advertising and sponsorship (3) 34.3 30.7 12 %
Other (4) 19.2 67.0 (71) %
Total net revenues $ 475.9 $ 456.7 4 %
(1)Network revenues consist of revenues earned from fees from customers of WWE
Network and license fees under international licensed partner agreements, as
well as amounts earned from our pay-per-view broadcasts. Effective
(2)Core content rights fees consist primarily of licensing revenues earned from the distribution of our flagship programs, RAW and SmackDown, as well as our NXT programming, through global broadcast, pay television and digital platforms.
(3)Advertising and sponsorships revenues within our Media segment consist primarily of advertising revenues generated from the Company's content on third-party social media platforms and sponsorship fees from sponsors who promote their products utilizing the Company's media platforms, including promotion on the Company's digital websites and on-air promotional media spots.
(4)Other revenues within our Media segment reflect revenues earned 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.
Six Months Ended
June 30,
2021 2020
Reconciliation of Operating Income to
Adjusted OIBDA % of Rev % of Rev
Operating income $ 177.9 37 % $ 170.9 37 %
Depreciation and amortization 7.5 2 % 7.7 2 %
Stock-based compensation 7.4 2 % 14.5 3 %
Other adjustments - - % - - %
Adjusted OIBDA $ 192.8 41 % $ 193.1 42 %
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Media net revenues increased by
Media Adjusted OIBDA as a percentage of revenues was essentially unchanged in
the current year period as compared to the prior year period, as the incremental
network and core content rights fees revenues, as discussed above, were offset
by the absence of a large-scale international event and
Live Events
The following tables present the performance results and key drivers for our
Live Events segment:
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Net Revenues
North American ticket sales $ 6.7 $ 15.2 (56) %
International ticket sales - 0.2 (100) %
Advertising and sponsorship (1) 0.3 0.4 (25) %
Other (2) 2.7 2.7 - %
Total net revenues $ 9.7 $ 18.5 (48) %
Operating Metrics (3)
Total live event attendance 40,400 259,000 (84) %
Number of North American events 2 41 (95) %
Average North American attendance 20,190 6,320 219 %
Average North American ticket price (dollars)
- 1 (100) %
Average international attendance - - - %
Average international ticket price (dollars) $ - $ - - %
(1)Advertising and sponsorships revenues within our Live Events segment primarily consists of fees from advertisers and sponsors who promote their products utilizing the Company's live events (i.e., presenting sponsor of fan engagement events and advertising signage at the event).
(2)Other revenues within our Live Events segment primarily consists of the sale of travel packages associated with the Company's global live events and commission earned through secondary ticketing, as well as revenues from events for which the Company receives a fixed fee.
(3)Metrics exclude the events for our domestic and United Kingdom NXT brands.
These are our developmental brands that typically conduct their events in
smaller venues with lower ticket prices. We did not conduct any ticketed NXT
events in the current year period. We conducted 44 events with paid attendance
of 40,900 and average ticket prices of
Six Months Ended
June 30,
2021 2020
Reconciliation of Operating Loss to Adjusted OIBDA % of Rev % of Rev
Operating loss $ (3.6) (37) % $ (7.7) (42) %
Depreciation and amortization - - % - - %
Stock-based compensation 0.4 4 % 0.9 5 %
Other adjustments - - % - - %
Adjusted OIBDA $ (3.2) (33) % $ (6.8) (37) %
Live Events net revenues, which include revenues from ticket sales and travel
packages, decreased by
Live Events Adjusted OIBDA increased in the current year period as compared to the prior year period. This increase was driven by lower costs associated with the impact of the cancellation of ticketed events.
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Consumer Products
The following tables present the performance results and key drivers for our
Consumer Products segment:
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Net Revenues
Consumer product licensing $ 22.3 $ 17.4 28 %
eCommerce 19.9 18.6 7 %
Venue merchandise 1.3 3.2 (59) %
Total net revenues $ 43.5 $ 39.2 11 %
Operating Metrics
Average eCommerce revenue per order (dollars)
292,700 335,600 (13) %
Venue merchandise domestic per capita spending
(dollars) $ 32.09 $ 10.41 208 %
Six Months Ended
June 30,
2021 2020
Reconciliation of Operating Income to
Adjusted OIBDA % of Rev % of Rev
Operating income $ 14.1 32 % $ 10.5 27 %
Depreciation and amortization 0.1 0 % - - %
Stock-based compensation 0.9 2 % 1.4 4 %
Other adjustments - - % - - %
Adjusted OIBDA $ 15.1 35 % $ 11.9 30 %
Consumer Products net revenues increased by
Consumer Products Adjusted OIBDA as a percentage of revenues increased in the current year period as compared to the prior year period. This increase was driven by increased revenues, as discussed above.
Corporate
Unallocated corporate general and administrative expenses largely relate to corporate administrative functions, including finance, investor relations, community relations, corporate communications, information technology, legal, human resources and our Board of Directors. The Company does not allocate these general and administrative expenses to its business segments.
Six Months Ended
June 30,
2021 2020
Reconciliation of Operating Loss to Adjusted OIBDA % of Rev % of Rev
Operating loss $ (77.0) (15) % $ (64.7) (13) %
Depreciation and amortization 14.1 3 % 14.0 3 %
Stock-based compensation 2.1 0 % 3.3 1 %
Other adjustments (1) 8.1 2 % - - %
Adjusted OIBDA $ (52.7) (10) % $ (47.4) (9) %
(1)Other adjustments in the current year period include severance expenses primarily associated with the combination of WWE's television, digital and studios teams into one organization. Our policy is to record Company-wide severance expenses as unallocated corporate general and administrative expenses.
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Corporate Adjusted OIBDA decreased by
Depreciation and Amortization
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Depreciation and amortization
Depreciation and amortization expense remained flat in the current year period as compared to the prior year period.
Interest Expense
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Interest expense $ 17.0 $ 17.3 (2) %
Interest expense, which relates primarily to interest and amortization associated with our convertible notes, our real estate and equipment finance leases, the revolving credit facility and mortgage, was essentially unchanged in the current year period as compared to the prior year period.
Other Income (Expense), Net
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Other income (expense), net
Other income (expense), net is comprised of interest income, gains and losses
recorded on our equity investments, realized translation gains and losses, and
rental income. The increase of
Income Taxes
Six Months Ended
June 30, Increase
2021 2020 (decrease)
Provision for (benefit from) income taxes
23 % 22 %
The effective tax rate of 23% in the current year period approximates the
Company's currently projected annual effective tax rate for the year ended
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Liquidity and Capital Resources
We had cash and cash equivalents and short-term investments of
The COVID-19 pandemic has negatively impacted the global economy, disrupted
business operations and created significant volatility and disruption to
financial markets. Significant uncertainty remains as to the potential impact of
COVID-19 and its variants on our operations, and on the global economy as a
whole. While restrictions are easing in
We believe that our existing cash and cash equivalents and short-term investment
balances, along with cash generated from operations, will be sufficient to meet
our ongoing operating requirements for at least the next twelve months,
inclusive of dividend payments, debt service, content production activities,
planned capital expenditures and for any discretionary repurchase of shares of
our common stock under our approved share repurchase program (see below for
further details). The Company also has available capacity of
In
As it relates to our Convertible Notes (defined below), which pursuant to the terms are currently convertible, we believe that if note holders elected to convert their notes within the next twelve months, the Company has sufficient means to settle the Convertible Notes using any combination of existing cash and cash equivalents and investment balances, borrowings under our Revolving Credit Facility, cash generated from operations or through the issuance of shares.
Debt Summary and Borrowing Capacity
The Company has
In
In
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obligations due to any other creditors of the Company. As of
Cash Flows from Operating Activities
Cash generated from operating activities was
In the current year period, we spent
Our accounts receivable represents a significant portion of our current assets
and relate principally to a limited number of distributors and licensees. At
Cash Flows from Investing Activities
Cash used in investing activities was
Cash Flows from Financing Activities
Cash used in financing activities was
Contractual Obligations
Other than for obligations in the ordinary course of business, there have been
no significant changes to our contractual obligations that were previously
disclosed in our Report on Form 10-K for the fiscal year ended
Application of Critical Accounting Policies
There have been no significant changes to our critical accounting policies that
were previously disclosed in our Report on Form 10-K for our fiscal year ended
Recent Accounting Pronouncements
The information set forth under Note 2 to the Consolidated Financial Statements under the caption "Recent Accounting Pronouncements" is incorporated herein by reference.
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Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain statements that are forward-looking and are not based on historical
facts. When used in this Form 10-K and our other
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