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World Wrestling (WWE) Q4 Earnings In-Line, Revenues Beat

World Wrestling Entertainment Inc.WWE reported mixed results for fourth-quarter 2016. The company reported earnings of 10 cents, in line with the Zacks Consensus Estimate but increased 150% year over year.

WWE's revenues of $194.9 million came in above the Zacks Consensus Estimate of $179 million and jumped 17.3% year over year primarily on the back of 22.7% increase in revenue in North America. Further, revenues from outside North America gained 5% buoyed by growth of WWE Network subscribers and due to the performance of Live Events, mainly in the APAC and Latin America.

The number of paid average subscribers increased 14% in third-quarter 2016 to more than 1.41 million. Further, WWE Network is available in the Indian Subcontinent, Germany, Malaysia, Austria, Switzerland and Japan.

Revenues from North America jumped 23% to $141.6 million, while revenues from Europe/Middle East/Africa (EMEA) declined 7.8% to $34.2 million. The Asia Pacific (APAC) and Latin America generated revenues of $13.4 million and $5.7 million, which represent a gain of 21.8% and 111.1%, respectively.

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Management is strengthening and expanding WWE Network through the creation of new content, implementation of programs which will have higher customer attraction and retention power, introduction of new features, expansion of distribution platforms along with foraying into new regions.

Shares of the company were up nearly 5% during the pre-market trading session. Moreover, the stock has gained 9.8% in the past three months, outperforming the Zacks categorized Movie/TV Production/Distribution industry which has gained 7.8%.

Segmental details:

Media Division: Revenues from the company's Media division increased 17% to $125 million, mainly owing to effect of certain television programming, increase in contractual television right fees and also due to growth registered in WWE Network Subscribers. Network revenues were up 7% to $43.7 million and Digital Media revenues climbed 11.8% to $8.5 million.

Moreover, Television and Home Entertainment revenues came in at $68.6 million and $4.2 million, up 23.4% and 61.5%, respectively. Increase in Network revenues were primarily due to advance of 11% in subscription revenues.

Live Events: Revenues from Live Events climbed 17% to $38.6 million driven by 21 additional events which were held during the reported quarter. A total of 103 events took place in the fourth quarter, which includes 75 events in North America and 28 internationally. In the prior-year quarter, there were 82 events in total, including 56 in North America and 26 globally. North-American live event revenues came in at $22.8 million, up 23% year over year. While International live event revenues went up 10% year over year to $15.8 million.

Consumer Product Division: This segment's revenues were up 16% to $27.8 million, primarily due to increase in online sales of merchandise at WWE eCommerce sites.

WWE Studios: This segment reported revenue growth of 33.3% of $2.4 million.

Other Financial Details

WWE ended the quarter with cash and cash equivalents of $212 million, long-term debt of $35.6 million and shareholders' equity of $239.8 million. At the end of the third quarter, the company had free cash flow of $30.9 million compared with a $13.5 million in the year-ago quarter.

First-Quarter 2017 Outlook

For first-quarter 2017, WWE anticipates average paid subscribers of 1.48 million, signifying a year-over-year increase of nearly 15% and 5% sequentially. Adjusted OBIDA is projected in the range of $23-$27 million.

2017 Outlook

Management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. The company is targeting adjusted OIBDA of $100 million, which is nearly 25% up from the 2016. Operating income is likely to be $70 million.

Further, WWE expects contractual rise in television right fees from important distribution agreements and believes that the company will continue to add more WWE Network subscribers but at a lower rate on a year-over-year basis.

Zacks Rank & Key Picks

WWE currently has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering include Gray Television, Inc. GTN , Scripps Networks Interactive, Inc. SNI and Lions Gate Entertainment LGF.A . Gray Television and Scripps Networks Interactive sports a Zacks Rank #1 (Strong Buy) while Lions Gate Entertainment has a Zacks Rank #2 (Buy).You can see the complete list of today's Zacks #1 Rank stocks here .

Gray Television shares have increased more than 49% in the past three months.

Scripps Networks Interactive has a long-term earnings growth rate of 10.8% and its shares have increased nearly 15% in the past three months.

Lions Gate Entertainment has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average estimate of 213.3% and also has an impressive long-term earnings growth rate of 10%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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