– WWE issued the following press release on their second quarter 2008 earnings. They will host a conference call with investors at 11:00 a.m. EST this morning. We should have a full recap later.
STAMFORD, Conn.–(BUSINESS WIRE)–World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its second quarter ended June 30, 2008. Revenues totaled $129.7 million as compared to $137.5 million in the prior year quarter. Operating income was $12.0 million as compared to $9.7 million in the prior year quarter. Net income was $7.0 million, or $0.10 per share, as compared to $7.0 million, or $0.10 per share, in the prior year quarter.
Revenue increased 19% for the first six months of the year, with growth coming from across all of the Company’s business units. Operating Income increased 29% to $39.1 million, reflecting the impact of a $15.7 million film impairment charge recorded in the second quarter of 2007. Excluding this charge, operating income declined 15% from the prior year.
In assessing the first half performance, Chief Executive Officer Linda McMahon said, “The Company made important progress in terms of its fundamental operating objectives. We achieved a significant increase in revenue from our international operations, continued the strong growth of our live event, licensing and home video sales, and maintained improved trends in our pay-per-view business.
“However, for the first six months of the year our total operating expenses, on an adjusted basis, grew 27%, exceeding the percentage growth in revenue. Although the rise in expenses broadly supports our top-line growth, the disproportionate growth in expenses is unacceptable. Therefore, we are implementing stronger cost control measures, reassessing our spending and the priority of our investments to drive increases in earnings and margins,” concluded Mrs. McMahon.
Comparability of Results
There are three items that should be highlighted while reviewing the following press release for ease of comparability. The results for our premiere pay-per-view event, WrestleMania®, occurred in Q2 2007 as compared to Q1 in 2008. WrestleMania 23 in the second quarter of 2007 contributed in the aggregate approximately $31.4 million of revenues and $9.7 million of profit contribution ($6.6 million, net of tax). The prior year quarter also included a $15.7 million non-cash film impairment charge related to revised expectations of our feature film “The Condemned”.
Finally, our McMahon’s Million Dollar Mania advertising campaign in the current quarter resulted in a charge of approximately $3.5 million, which was recorded in SG&A. It should be noted that WWE’s principal shareholder and Chairman, Vincent K. McMahon, reimbursed the Company for the prize money awarded to members of the WWE Universe.
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