The company that sensationalizes pain seemed to feel a lot of it in Q2: The bold $9.99 a month streaming video venture that World Wrestling Entertainment launched in February only had 700,000 subscribers at the end of June, it says today. That’s half of the 1.4M that the company said in May it needs to offset lost pay-per-view TV sales, much of it from fans watching online. The growth rate is nothing to brag about. WWE Network only added 33,000 subs in Q2. In April the company boasted that it was “well on its way to reaching its goal of 1 million subscribers by the end of 2014.”
Now it’s bracing for the point in a few weeks — after SummerSlam on August 17 — when initial subs’ six-month commitment expires. SummerSlam “will likely be the biggest draw through the remainder of the year,” Benchmark Co’s Mike Hickey observed yesterday. As a result, “We suspect subscribers will wrestle with the decision to immediately renew their six month subscription.”
So why is the stock up 7.9% today? Some investors believe that WWE’s been beat up enough; even with today’s uptick, shares are down 36% over the last three months. And WWE employees are sharing some of the pain. The company says it will slash its staff by 7%, contributing to a $30M improvement in its cash flow outlook for this year.
The Q2 numbers also weren’t as bad as analysts expected. Revenues at $156.3M, +2.6% from last year, came close to projections for $156.8M. The net loss, at 14.5M vs a $5.2M profit in the period last year, translates into 18 cents a share not including one-time items, beating predictions of a 20 cent loss. TV revenues were up 13% to $43.8M with the second season of Total Divas, which premiered in last year’s Q3.
WWE is optimistic about prospects for WWE Network as it launches August 12 in 170 countries including Australia, France, Mexico, Spain, and Nordic countries — with UK and Germany coming shortly afterward. “That’s pretty significant for us,” CEO Vince McMahon says.