World Wrestling Entertainment, Inc. (NYSE: WWE) is an integrated media organization and one of the world leaders in entertainment.
The company specializes in organizing wrestling shows, services and products such as wrestler clothing, computer games and more. The company's media products are distributed through its own television channels., paid channels, in digital media and publishing platforms.
About company
In Russia, the company's shares are traded on the St. Petersburg Stock Exchange with 28 March 2019 under the ticker WWE. Now there is a recovery in stock prices after the bottom, achieved in 2020.
WWE TV-PG programming can be seen in over 900 million households worldwide on 28 languages through world-class distribution partners, including NBCUniversal, FOX Sports, BT Sport, Sony India и Rogers.
Wrestling itself is near-sport or even pseudo-sport staged entertainment., nevertheless requiring from the participants of the show significant sports and acrobatic training. Wrestling is popular, mostly, in the Anglo-Saxon states, primarily in the USA, but there are big wrestling shows in other countries too, e.g. Japan and Mexico.
history of the company. The company's predecessor, Capitol Wrestling Corporation, was founded by Jess McMahon and Toots Mondt in 1952.. She was part of the National Wrestling Union, which included several other organizations of a similar profile.
But in 1963, the CWC withdrew from the Union due to a dispute over its holding of the World Heavyweight Championship.. The company created its own World Wrestling Federation - WWWF. In the same year, the new federation held its own match, where Buddy Rogers became the champion.
In 1971, after McMahon's death, management of the company passed to his son Vincent. In its turn, his son Vincent McMahon Jr. in 1979 was the initiator of that, for the father to rename the company to WWF - abbreviation, similar to the name of the World Wildlife Fund.
The following year, McMahon Jr. and his wife Linda started Titan Sports and filed for the WWF trademark.. McMahon Jr. took the group business seriously and in 1983 bought the group's parent company, Capitol Sports, from his father..
In the same year, he made deals with television companies, allowed to show wrestling competitions throughout the United States. In 1984, the popularity of the company grew significantly due to the competition 24 January at Madison Square Garden, where Hulk Hogan became the champion.
The competition was televised to all states., Hogan woke up a celebrity the next morning. It was the start of WrestleMania, which was accompanied by the participation in competitions even of such celebrities of the sports world, like Muhammad Ali.
The following year, Hulk Hogan played the bodyguard of young promising singer Cyndi Lauper in one of the shows - as a result of this performance, they both received a Grammy.. Now and Lauper, and her "bodyguard" knows the whole world, at the same time they were in the competition as "Best New Artists".
Broadcasts of WWF shows are getting more and more scandalous: for example, Wrestler Roddy Piper insulted Cyndi Lauper's music, broke the golden disc, which she presented to wrestler Lou Albano for his participation in her video, and then kicked her in the head. Naturally, it was all staged, but many Americans, not experienced in the intricacies of wrestling, were shocked, especially since Loper was then already well known to the public.
Seeing such a success of events among the audience, McMahon diversifies entertainment more and more, introducing additionally on TV program SummerSlam, Royal Rumble, Survivor.
In 1993, WWF achieved, what did you want: program aired in prime time. But that year she got hit hard: Hulk Hogan left the company, signing to her competitor World Championship Wrestling (WCW). Competition has intensified, since 1995, WCW began to air on Mondays also in prime time immediately after the broadcast of WWF.
In 1997, the company took new promising wrestlers, including the now famous film actor Dwayne Johnson, which, in the transfer of the company, just received the pseudonym "Rock". The optimal choice of participants in the program led to the fact, that Raw's broadcast beat rival Nitro in the ratings even though crowd favorite Hulk Hogan was featured in the latter. Since 1999, the group of companies has a new show Smackdown, in the same year it was listed on the New York Stock Exchange.
WWF finally buys WCW in 2001, becoming the biggest wrestling promoter in the world, having practically lost its competitors and having returned Hulk Hogan to its ranks. But the company took a significant reputational risk the following year., losing a lawsuit, excited by the World Wildlife Fund due to the similarity of names and acronyms. This forces the company to change its name to World Wrestling Entertainment. (WWE).
In the future, the company began to move away from extremely hard content, focusing on family viewing. Instead of Hulk Hogan, the less brutal John Cena comes to the fore. scenes, similar to "beating" Cyndi Lauper, are no longer shown - especially in prime time. Then the face of the company becomes Daniel Bryan. However, the decrease in the violence of fights did not prevent the group of companies from organizing the first women's tournament in the Raw program in 2018, and in prime time.
Composition of the group of companies. The group includes 24 companies. Parent company of World Wrestling Entertainment (WWE) international, while the rest are in US jurisdictions, australia, Of Canada, Japan. In the US, the state of Delaware leads in the number of registered subsidiaries of the group due to its tax relief..
The weak side of the group can be considered a small geographical diversification of the location of subsidiaries. On the other hand, they are located in those countries, where wrestling really has a high popularity. In Russia, for example, restling poorly popular, so opening child structures here would be a failure. Here's the thing., for example, in Germany it wouldn't hurt. Or, for example, in Mexico, where is he super popular.
However, American TV channels are popular in Mexico, on which the company broadcasts its shows due to the relatively high level of English proficiency of Mexicans. But still not that high, how, for example, in Denmark, in Malta, in Iceland, not to mention the almost purely English-speaking Ireland.
Shareholders. The shareholders of the group of companies are investment companies and mutual funds. The proportion of shares, in free circulation, insignificant, what can be considered the weak side of the group. The largest share in the composition of the issuer's shares belongs to the structures of Lindsell Train. This is a positive fact for investors, since this group of companies is quite large, owns shares of such well-known issuers, like Manchester United Football Club and the London Stock Exchange.
Key figures. Group Chief Executive - Third Generation McMahon Dynasty Vincent K. McMahon. He is Chairman of the Board and Chief Executive Officer. It was under him that the company's business became global.. Work for your father's company, founded by his grandfather, he started in 1972. McMahon is an innovator in the cable pay TV industry, he began to apply new technologies when broadcasting his programs in 1985.
McMahon is one of the main "long-livers" of American television. For your achievements in entertainment, television and pay-per-view he was honored with a star on the Hollywood Walk of Fame in 2008. He also received the Promax/BDA Design Award and was inducted into the 2008 Cablefax Hall of Fame..
Since 2017, he has been included in the annual Variety500 list., honoring the most influential business leaders, shaping the media industry. In 2019, Sports Business magazine named McMahon one of the most influential people in the sports business.. For child support activities over the past 30 McMahon was appointed to the National Advisory Council of America for the Make-A-Wish Foundation in 2005..
He also collaborated with the US Army, bringing WWE superstars to the warzones in Iraq and Afghanistan since 2002, to entertain the troops. WWE has been honored with the first ever USO Washington Metro Legacy of Hope Award for its broad support of the military and the USO Care Package program.. In 2006, he received the Secretary of Defense's Commendation Award for moral support to military personnel in Iraq and Afghanistan..
Geography of supplies. The organization of events is mainly concentrated in three North American states. In the third quarter of 2021, a 38 show, while in the rest of the world there are only four.
From coronavirus restrictions event market, organized by a group, suffered about the same as in North America, what's in the rest of the world: in North America there were two in the second quarter, in the rest of the world - zero, in the period from the second quarter of 2020 to the first quarter of 2021 inclusive, they were not at all in any countries.
Before the coronavirus, however, the group's activities in North America and other regions did not have such a striking contrast in the number of events., like last quarter: for example, in the second quarter of 2019 in North America there were 53, in the rest of the world - 23. At the same time, the organization of shows in regions outside of North America is unstable.. This, certainly, weakness of the group, as well as weak geographic diversification of its business.
As of 2021, WWE programming is broadcast to 180 countries on 28 Languages. Geographic media coverage is wide, it should be recognized as a strength of the group, since most of the countries of the world are covered. Language coverage, Alas, rather weak.
What he earns
Wrestling is staged fights, mutated, obviously, from circus french wrestling. Wrestling popularity, maybe, also due to the, that sports "fair" fights sometimes take place on a contractual basis and the outcome of the fight is already predetermined, especially if there are large sums at stake.
In other words, wrestling - a show with the setting of fights without rules with deliberate cruelty, even now, When do fights go into prime time?. Such cruelty, even in theory, cannot be on real, "fair" fights without rules, where are the rules really?.
Wrestling eventually became an American phenomenon, which the public likes to watch after a hard day's work. In Russia, for example, in the domestic version, he did not take root, although viewers liked to watch WWE fights often because of the mocking comments of Nikolai Fomenko. Truth, power competitive "Show of gladiators" gained great popularity, co-hosted by Hulk Hogan.
One of the features of wrestling is the presence of a plot component. Basically it's a fight between good and evil.. This motive, smacking of Manichaean delirium, is one of the dominant in modern pop culture, which causes a lot of criticism of wrestling and accusations of kitsch from professional athletes.
The company's products can be divided into three groups.
media production. These are pay-per-view live streams., including WrestleMania, planned programs and an extensive library video on request. Currently available in over 180 countries. The WWE Network is available through wwe.com, via the WWE Network app on various platforms. In the US, powered by streaming services NBCUniversal and Peacock.
Customers can access the entire WWE and Peacock catalog for 4,99 $ per month. For an ad-free experience, Peacock Premium Plus is available for 9,99 $ per month. Peacock is currently available:
- on Roku platforms;
- on Apple devices, including iPhone, iPad, iPod touch, Apple TV 4K и Apple TV HD;
- across platforms and devices Google, including android, Android TV devices, built-in Chromecast and Chromecast devices;
- on the Microsoft Xbox One family of devices, включая Xbox One S и Xbox One X;
- на Sony PlayStation 4, PlayStation 4 Pro и PlayStation 5;
- on VIZIO SmartCast TVs;
- on LG smart TVs.
Live performances. Sports entertainment brands, included in the group, allow her to host over 500 live events a year in the United States and abroad. The group has almost 300 recognized stars and emerging wrestling fighters at their disposal., employed under exclusive contracts, ranging from multi-year guaranteed contracts with recognized superstars to contracts for development in education.
Consumer Products. The WWE Worldwide Licensing Program builds partnerships with companies around the world with companies around the world to create products with its insignia and logos, copyrighted, characters, including toys, video games, clothes, household items, collectibles, sporting goods, Books and much more.
WWE licensed products, created by its 150 licensees in over 100 countries, available in all major global retail chains, including walmart, Target, Amazon, GameStop, Walgreens, Barnes & Noble, Hot Topic, Asda и Smyths.
Mattel has been WWE's Global Toy Development Partner since 2010., which sells a franchise to use WWE symbols in the production of figure skating accessories. WWE is the best-selling fighting video game franchise in console history with over 95 millions of devices sold and a leading mobile gaming brand with 150 million downloads in its gaming portfolio.
One of the directions of the consumer goods line is book publishing. Since 1999, WWE Books has placed 25 titles on the New York Times bestseller list, including WWE 50 by DK and WWE Encyclopedia. WWE Publishing List Includes Superstar Biographies, historical guides, children's books, books with stickers, coloring books and activity books, comics and more.
The group's work in the music industry includes partnerships with artists in programming, live music show, as well as original Superstar and WWE theme songs, available worldwide on digital platforms.
WWE has partnerships with a range of artists, including Cardi B, Bad Bunny, AC/DC, Ozzy Osbourne, The Weeknd, Metallica, Pitbull, Diddy, Little Mix, Kid Rock, Joan Jett, Florida Georgia Line, Wisa Khalifa, Imagine Dragons и Fifth Harmony.
WWE recently extended a 20+ year contract with iconic Australian rock band AC/DC., renewing Are You Ready as the official SmackDown theme song for another year.
Contrary to logical expectations, live performances, on which WWE gained worldwide fame, not her main source of income. Media industry dominates operating revenue, on which more and more emphasis has been placed in recent years.
On the other hand, live performances in the third quarter showed a phenomenal increase in operating revenue compared to the same period of the previous year, due to the partial lifting or relaxation of pandemic restrictions.
The growth of the dominant media industry was insignificant, what can be considered the weak side of the group. Apparently, this is related to, that the situation with the transfer of the population in many countries to “remote work” and self-isolation does not change much: the peak of people's enthusiasm for television programs last year has already been reached. And if there will be a change in dynamics, only in the direction of downward.
IN 9 months of 2021, the structure of operating revenue by segments was similar, although the media dominated even more. The most significant growth was in the live entertainment segment, but still not like that, as in the third quarter. This can be explained by the, that the same period of 2020 included the first quarter, when pandemic restrictions were not yet in place.
Structure of operating revenue by segments in 3 quarter, in million dollars
| 3к2020 | 3к2021 | share | The change | |
|---|---|---|---|---|
| Media | 201 | 202,70 | 79,24% | 0,85% |
| Live performances | 0,70 | 28 | 10,95% | 3900% |
| Consumer Products | 19,90 | 25,10 | 9,81% | 26,13% |
Structure of operating revenue by segments for 9 Months
| 9м2020 | 9м2021 | share | The change | |
|---|---|---|---|---|
| Media | 657,7 | 678,6 | 86,46% | 3,18% |
| Live performances | 19,2 | 37,7 | 4,80% | 96,35% |
| Consumer Products | 59,1 | 68,6 | 8,74% | 16,07% |
Financial indicators
In the third quarter of 2021, against the background of growth in revenue and operating profit, all results were negative. Indicators for 9 months of 2021, compared to the same period of the previous year, also turned out to be negative.
The company attributed the increase in revenue mainly to the increase in ticket sales for the show.. Increasing content fees from distributing the company's flagship programs, Raw и SmackDown, was partially offset by lower network revenues.
This was due to the timing of recognizing royalties for content at Peacock.. The decrease in net profit can be associated with the timing of fundraising, related to large-scale international events in the second quarter of 2021. The company is not inclined to associate this with an increase in capital expenditures..
Financial performance for 3 neighborhood, US dollars
| 3к2020 | 3к2021 | Growth | |
|---|---|---|---|
| Revenue, million | 221,60 | 255,80 | 15,43% |
| Operating profit, million | 63,40 | 64 | 0,95% |
| Profit before tax, million | 61,20 | 55,80 | −8,82% |
| Net profit, million | 48,20 | 43,50 | −9,75% |
| Basic earnings per share | 0,62 | 0,57 | −8,06% |
| Diluted earnings per share | 0,57 | 0,52 | −8,77% |
Financial performance for 9 Months, US dollars
| 9м2020 | 9м2021 | Growth | |
|---|---|---|---|
| Revenue, million | 736 | 784,90 | 6,64% |
| Operating profit, million | 172,40 | 175,40 | 1,74% |
| Profit before tax, million | 151 | 150,60 | −0,26% |
| Net profit, million | 118,20 | 116,50 | −1,44% |
| Basic earnings per share | 1,53 | 1,52 | −0,65% |
| Diluted earnings per share | 1,40 | 1,37 | −2,14% |
Plans and prospects
The company launches a new program, linking WWE to collegiate athletics. This will be implemented as part of the pioneering NIL program. WWE has developed a comprehensive program to recruit and develop potential future superstars. Dubbed Next in Line, the program aims to improve the development of wrestling fighters from various sports colleges.
A program with the participation of students of sports universities is launched: twins Cavinder and AJ Ferrari. Besides, will participate in battles 15 college athletes, who will be among the first, who will take part in the newly created NIL program. Athletes from 13 universities. Beyond the USA, Canada and Nigeria will also participate in the program. The program for athletes from higher education institutions was opened 1 July 2021.
New WWE fighters include Heath Row, Drake Maverick, John Morrison, Pan Knox. At the same time, in the third quarter, they were fired 18 other fighters. Morrison was not given a clear storyline for a long time, but now his roles have expanded. At the same time, the group of companies planned the dismissal of Heath Row, so his fate is in question.
It is also planned to fire Reiner after, how did his confrontation with another fighter, Elias, end, and after, how he tweeted criticism of the group of companies. Brock Lesnar returns to SmackDown. Lesnar was previously suspended after an unsuccessful fight. He was issued a so-called plot fine..
Risks
There are two risks.
The risk of further continuation of the coronavirus pandemic. Any lockdowns and other restrictions reduce the possibilities of organizing a show to almost nothing, although they increase the demand for viewing broadcasts of these shows. The company's by-products may also experience a further decline in sales due to transport and logistics restrictions..
Reputational risk. If in the US wrestling is equated with sports and is considered one of the most popular television entertainment, then in other countries the attitude towards him is ambiguous. The main competition for wrestling is mixed martial arts.. Mixed martial artists believe, that wrestling is pseudo-sport.
conclusions
There are very significant risks for the shares of the group of companies. They are related to the pandemic situation., so it is with that, that far from all countries of the world wrestling is popular, plus its specificity causes very serious criticism.
Nevertheless, the significant penetration of the group of companies into the media market and its geographical expansion suggests that, that the resumption of growth of shares is quite justified. The best solution for investors would be to track the performance of a group of companies against the backdrop of the coronavirus situation, while, that the situation with wrestling competition with mixed martial arts is stable.
