WWE issued a bullish forecast for adjusted operating income in 2021, citing as one of the key factors its new deal to fold the U.S. version of its WWE Network streaming outlet into NBCUniversal’s Peacock.
On Monday, WWE and NBCU announced a multiyear pact to bring WWE Network exclusively to Peacock in the U.S.
Subsequently, WWE announced that it expects to report record 2020 operating income of $209 million and record adjusted operating income of $286 million (up almost 60% from 2019). In addition, WWE said it estimates the company can achieve 2021 adjusted operating income of $270 million to $305 million, citing revenue growth “driven by the impact of the Peacock transaction” as well as the gradual return of ticketed live events and the “escalation of core content rights fees.” Operating income will take a hit from increased personnel and production expenses this year, the company said.
WWE stock dropped 2.7% in early trading Monday on the Peacock news and updated financial guidance.
In mid-March, WWE Network‘s approximately 1.1 million existing U.S. subscribers will be migrated to Peacock Premium, where they’ll continue to get access to WWE Network but will have the option to pay 50% less — $4.99/month vs. $9.99/month — and get full access to the Peacock Premium tier with ads. WWE Network also will be available on the no-ads Peacock Premium Plus plan ($9.99/month).
Financial terms of NBCU’s deal to make Peacock the exclusive U.S. home of WWE Network were not disclosed. Nick Khan, WWE president and chief revenue officer, told Variety in an interview, “We feel great about the financials. Otherwise we wouldn’t have done the deal.” He noted that by shifting WWE Network to Peacock, WWE expects to cut some operating costs for the over-the-top service.
WWE is set to report Q4 and full-year 2020 results on Thursday, Feb. 4, after market close.
The company said it expects COVID-related restrictions that could result in cancellation, postponement or reduced capacity of ticketed live events to continue at least through the first half of 2021. It also anticipates a “significant year-over-year increase in WWE’s expense base” due to the full return of employees from furlough and continued higher expenses associated with the production of its weekly “Raw” and “SmackDown” show at the WWE ThunderDome at Tropicana Field in St. Petersburg, Fla.
Backing out the impact of COVID-19, WWE estimated that the 2021 adjusted operating income guidance range would be 15%-20% higher.
The company provided 2020 and 2021 estimates for adjusted operating income before depreciation and amortization (OIBDA), which excludes depreciation and amortization, stock-based compensation expense, certain impairment charges and other non-recurring material items “that otherwise would impact the comparability of results between periods.” The metric does include depreciation and amortization of expenses directly related to WWE’s revenue-generating operations, including feature film and TV production asset amortization and amortization of costs related to content delivery and tech assets used for the WWE Network.
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