World Wrestling Profit Declines on Lower Ad Sales

Jun 13, 2006  •  Post A Comment

World Wrestling Entertainment reported a 34 percent decline in fiscal fourth-quarter profit, hurt by declines in cable advertising and live-event revenue.

WWE, best known for its “WrestleMania,” “SmackDown” and “Raw” franchises, reported net income of $10.6 million for the three months ended April 30, compared with $16.1 million a year ago. The company said in a release Tuesday that the drop to a reduction in cable advertising revenue more than offset increases in revenue at its consumer products and digital-media divisions. On a per-share basis, the Stamford, Conn.-based company’s profit was 15 cents, compared with 23 cents a year ago.

Revenue slipped 3 percent to $114.3 million.

News of the profit and revenue declines sent WWE shares tumbling 6 percent at midday Tuesday to $15.92.

WWE’s quarterly results reflect a new deal reached in October with cable network USA under which WWE no longer participates in the domestic television advertising sales of WWE shows that run on the channel. That led TV advertising sales revenue to tumble to $2.2 million from a year-earlier $12.5 million. WWE continues to receive TV ad revenue from its Canadian programs.

Also weighing on the results was the company’s push into emerging markets such as the Philippines and Thailand, which tend to generate lower revenues compared with other overseas markets. The company said it expects to make up any shortfall in live events in those markets with revenue from licensing, pay-per-view events and home video.