Six Months Ended June 30, 2013 - Results by Region and Business Segment
Revenues increased 4% to $276.3 million as growth from North America was offset by declines across WWE's international markets. Revenues from North America increased 9% primarily due to the licensing of new television and digital content, the performance of WrestleMania, and an increase in the number of live events. Revenues from outside North America declined 11% primarily due to an anticipated reduction in the number of live events, lower revenue from home entertainment, as well as weaker sales of licensed products. Excluding revenue from Live Events, revenues from outside North America declined 2% versus the prior year period. There was no significant impact from changes in foreign exchange rates in the current year period.
WWE Studios recognized revenue of $4.0 million as compared to $5.4 million in the prior year period, reflecting differences in revenue recognition between the various distribution models of our movies. Although there were five films released in the current year period (12 Rounds 2: Reloaded, No One Lives, Dead Man Down, The Call and The Marine 3: Homefront), revenues for these movies will be recognized on a net basis as participation statements are received rather than upon release as was the case with our self-distributed movie, Bending the Rules, in the prior year period. In addition, the decline reflected the timing of results generated by our portfolio of movies that were previously released.
During the period, Dead Man Down generated lower domestic box office receipts than anticipated, resulting in a revised ultimate profit projection for that movie and a $4.7 million impairment charge. As a result, WWE Studios generated a loss of $5.4 million compared to $2.3 million in the prior year period, where the prior year period included a $0.8 million film impairment charge. Excluding the impact of film impairment charges, the WWE Studios' movie portfolio generated a loss of $0.7 million compared to an adjusted loss of $1.5 million in the prior year period.
Unallocated SG&A expense was $62.8 million for the current year period as compared to $56.5 million in the prior year period. The rise in expense was driven by increases in compensation and benefits of $3.4 million, consulting and professional fees of $1.7 million, marketing expenses of $1.1 million, and talent development costs. The increases in these expenses were primarily to support our content related initiatives, including the potential launch of a WWE network, and were partially offset by a $1.1 million reduction in bad debt expense.
Operating Income Before Depreciation and Amortization (OIBDA)
OIBDA was $26.2 million in the current year period as compared to $44.4 million in the prior year period. The decline in OIBDA was primarily due to an $11.0 million reduction in profits from our Pay-Per-View business reflecting increased production costs (and inclusive of the timing and WrestleMania elements described above), a $10.2 million increase in compensation and benefit expenses, a $4.7 million film impairment associated with the release of Dead Man Down, and lower results from Home Entertainment. These items more than offset strong performance in our Live Event business and the growth in the licensing of our content on broadcast and digital platforms. Based on the increased investment and changes in business mix, WWE's OIBDA margin was 9% in the first half of 2013 as compared to 17% in the prior year period. Excluding the impact of film impairments and video game transition, Adjusted OIBDA was $27.5 million in the period as compared to $45.2 million in the prior year period, and the Adjusted OIBDA margin was 10% in the current period as compared to 17% in the prior year period. (See Schedules of Adjustments in Supplemental Information).
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