The Miami Herald Claims The WWE Is Not In Financial Trouble In New Report
Posted by Joseph Lee on 05.23.2014
Another take on the story...
In a post for The Miami Herald, author Jim Varsallone commented on the WWE's current stock situation and said that the company is not in any financial trouble. Here are highlights:
On the TV deal: "WWE did not get the dollar amount investors wanted, but WWE did increase the amount of money it will receive from NBCUniversal annually for its television rights. It's been reported WWE's new contract with NBC Universal will net $150 million annually, which is nearly a 70-percent increase from the previous deal worth $90 million per year. What? The stock dropped. I thought WWE was losing money. This is a fact and a big one. The company received a 70-percent raise from NBCUniversal."
On the WWE stock: "Investors are smart. They will buy low and sell high. The stock market is about making a profit. Investors hear the company's numbers, and some didn't believe in the product anymore. They sold. Some believed in the product but wanted to make a quick profit or did not want to lose making money. They sold. Nothing wrong with either. Buying stock is like playing the ponies. There is risk. The WWE Network is in its infancy stages. It's not a sprint, when building a network and a subscriber base. Important, the network has not gone international, yet. WWE does a good amount of business internationally. I would not be surprised if some who sold already purchased it again at the $11 range, expecting to see the stock rise, once WWE starts to build momentum with the WWE Network. Mr. McMahon knows the pro wrestling/sports entertainment business. He has not only survived but succeeded over the long haul -- even longer than cable television mogul Ted Turner."
On WWE being financially secure: "A company, any company, is in trouble when it spends more money than it makes. That's really the focus, when reading those who write about the company's quarterly reports or business endeavors or blogs or vents or tries to turn opinion into fact. They don't look at the money WWE profited but rather compare how much it profited between the years, and if the company made less profit than it did the prior quarter or year, then they raise a red flag, when they should be raising a black one (for profit). Now, if any company continues to spend more than it makes annually, does not profit, then trouble looms. The first quarter of 2014, WWE reported a $8-million loss because of the advent of the WWE Network, part of the new venture's growing pains. That's a quarterly loss. The company did not make a profit. Not good. Is there reason for concern or panic? Not right now. Prior, the company has been profiting consistently. The report also did not factor the new TV deal with NBCUniversal which increased WWE revenue about $60-million annually. That's very important, and here's why. Do the math. WWE lost $8-million for the quarter. There are four quarters in a year. Hypothetical, if WWE continued to lose $8-million a quarter because of the WWE Network, that's $32-million loss for the year. Not good. But factor the new TV deal raise of about $60-million annually. Take the $60-million gain and subtract the $32-million loss, and you still profit about $28-million for the year between the two. By the numbers, which always matter most, WWE is not in trouble financially.