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World Wrestling (WWE) Rides on Subscriber Gain, TV Right Fees

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World Wrestling Entertainment, Inc.WWE focus on increasing original content production, localization, subscriber growth, rise in TV rights fees and strategic initiatives bode well for the stock. Further, these factors have helped the stock to register a solid gain of 54.1% in the past three months, outperforming the industry 's growth of 38.3%. Stocks such as News Corporation NWSA , Twenty-First Century Fox, Inc. FOXA and Lions Gate Entertainment Corp. LGF.A , which belong to the same industry, have also witnessed upsides of 26.4%, 39.7% and 20.1%, respectively. Let's delve deeper.

Driving Factors

We believe WWE will continue to report record revenue growth as it has not only extended previous deal with different companies but also signed agreement with new service provider for airing its flagship program Raw and SmackDown in different countries. The strong relationship between WWE and Groupe AB is set to continue into the 18th year with both companies extending the partnership.

In the long haul, the company will continue banking on WWE's content distribution agreement. Recently, the company stated that distribution agreement, which generated a large chunk of television rights revenues, will expire in 2019 in some regions. Licensing of Raw and SmackDown in the United States will terminate in Sep 30, 2019, while in UK and India it will expire on Dec 31, 2019. The company is looking to renew the distribution agreement in these regions somewhere between May 2018 and first-half 2019.

Further, in an effort to augment revenues this Zacks Rank #3 (Hold) company has reached an agreement with sports marketing agency Lagardère Sports, which will facilitate it to acquire international sponsorship. Per the agreement, Lagardère Sports will help in building partnership portfolio through its sponsorship proficiency and global sales channel in all international regions, excluding China. We believe with increasing subscription based video streaming services WWE Network through its vast presence in over 180 countries will aid top-line growth. For 2018, management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. The company anticipates adjusted OIBDA of at least $115 million.

Hurdles

WWE which distributes home entertainment content in both physical (DVD and Blu-Ray) as well as digital formats has been witnessing decline in revenues. In 2016, home entertainment net revenues came in at $13.1 million in comparison with $13.4 million and $27.3 million in 2015 and 2014, respectively. Further, the trend continued in the first, second and third quarters of 2017, with home entertainment revenues declining 27%, 3.2% and 8%, respectively. The decline in home entertainment revenues can primarily be attributed to steady shift by consumers to digital formats, downloaded or streamed over the Internet.

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World Wrestling Entertainment, Inc. (WWE): Free Stock Analysis Report

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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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