WWE Business Outlook Maintains Potential for Significant Earnings Growth
WWE (WWE) today announced that it has reached a multi-year agreement in principle with NBCU for the renewed U.S. licensing of WWE's flagship programs and ratings juggernauts Raw and SmackDown. Given the anticipated increase in television rights, and with successful WWE Network subscriber growth, WWE management continues to believe that the Company can achieve significant earnings growth, potentially doubling or tripling 2012 OIBDA1 results to a range of $125 million to $190 million by 2015.
"We continue to achieve significant increases in the value of our largest television agreements, a key component of our business plan" stated Vince McMahon, Chairman and Chief Executive Officer. "The rising value of our content coupled with the global expansion of WWE Network will provide the foundation for long-term growth that continues to transform our business over the coming years."
"With the favorable renegotiation of our largest television agreements, WWE transitions to a subscription-based business model for future growth," added George Barrios, Chief Strategy & Financial Officer. "Successful execution of our WWE Network strategy could significantly raise the Company's earnings profile and better reflect WWE's tremendous global appeal and brand strength. With such execution, the Company anticipates sufficient financial resources, including debt capacity, to fund growth, support ongoing business requirements and maintain its current dividend."
Renewal of Key Television Agreements
Over the past six months, the Company has negotiated television distribution agreements in the U.S., U.K. and Thailand, and is in the midst of discussions regarding the distribution of WWE content in India. The Company estimates that it will increase the average annual value of these key television agreements to approximately $200 million, representing an increase of more than $90 million, that is nearly three times (3x) the increase achieved in the previous round of negotiations.
Management believes that the new agreements more fully reflect the value of WWE content, including significant first-run hours, a passionate and loyal fan base, and 90% "live plus same day" viewership, in the U.S., which makes WWE content, like sports, "DVR-proof." The Company plans to capitalize on the value of WWE content to drive further increases in value in other international markets.
The Global Expansion of WWE Network
The Company's consumer research indicates a high proportion of U.S. and international broadband users have an affinity for WWE content. This research indicates that in the U.S. and certain international markets, approximately 50% of broadband households have an affinity for WWE content, representing 77 million homes (WWE Homes) in these markets. The Company's research also indicates that based on an overall take-rate of 3% to 5% of WWE homes in these markets, between 2.5 million and 3.8 million subscribers could subscribe to the WWE Network in these U.S. and international markets at a "steady state" (when the ramp-up of subscribers has been completed and subscriber levels are relatively stable), representing a sizable economic opportunity.
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