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WWE, led by CEO Nick Khan after co-CEO Stephanie McMahon resigned, posted revenue in its fourth quarter up 5 percent to $325.3 million, while operating income fell 22 percent to $62.7 million.
Net income for the fourth quarter went down to $38.8 million, against $60.9 million in the same period of 2021. The latest rise in quarterly revenue at the TV wrestling giant was due to higher network revenues for premium live events like Crown Jewel and Extreme Rules, the company said.
Most of the WWE revenue still comes from media rights, with live events contributing $23.8 million during the latest quarter, up from a year-earlier $20.1 million, while consumer products came to $21.8 million, down from a year-earlier $32.6 million.
During the fourth quarter in the media revenue category, content rights fees, or licensing revenue for flagship TV series like Raw and SmackDown, came to $155.2 million, just up from a year-earlier $150.5 million.
The company saw co-founder Vince McMahon recently return to the company’s boardroom as executive chairman, along with two former execs at the company, after McMahon earlier retired amid a misconduct probe led by the board of directors.
The board shuffle amid takeover rumors came as the WWE is pursuing strategic options, including exploring the possibility of a sale. McMahon said he wants to lead any talks about a possible sale or rights negotiations himself.
On Thursday, CEO Khan told analysts during a conference call that Vince McMahon was driving the strategic alternatives process, now in its early stages and with The Raine Group acting as a financial advisor. “We have a unique opportunity to explore a wide range of value maximizing alternatives, both with parties that recognize the value of content and IP like ours, and with parties that value owning the content,” Khan added.
He also insisted any transaction and resulting suitor would have to respect the rights at NBCUniversal’s USA Network and Fox negotiated with WWE, and the wrestling giant would ensure those content licensing rights were respected.
The current deals for Raw on USA Network and SmackDown on Fox are for five years, and Khan said launching a strategic alternatives process in parallel with upcoming exclusive media rights negotiations would allow those incumbent partners to potentially bid to own the WWE content should they choose to do so, while also putting it on its platform, when the current exclusive deals with NBCUniversal and Fox end in 2024.
Khan also told analysts that McMahon had given assurances to the board and top management that he would not remain with WWE after a possible sale if that would increase any takeout price as the wrestling giant returned to being a private company. “It’s all about shareholder value. Obviously he (McMahon) is a shareholder. So it’s not about what role he’ll have. It’s about maximizing that value opportunity,” Khan said.
McMahon retired in July after an investigation into allegations that he had sexual relationships with employees at the company and subsequently paid the women millions of dollars as part of their severance packages.
On the issue of the misconduct probe around Vince McMahon, WWE reiterated that the Special Committee investigation had been completed and that the fourth quarter and full-year 2022 results included “the impact of $2.3 million and $21.7 million, respectively, of expenses related to the investigation.”
Besides the latest bump up in costs related to the investigation to $21.7 million, McMahon has also agreed to repay WWE for “reasonable expenses” related to the investigation costs not covered by insurance policies.
The WWE founder also agreed to pick up the tab for $7.4 million in expenses “reflecting certain payments that Mr. McMahon has agreed to make (including amounts paid and payable in the future). The $7.4 million of payments were or will be paid by Mr. McMahon personally,” WWE said without specifying the nature of the payments.
Company CFO Frank Riddick told analysts that the $7.4 million payment was “related to additional claims that have recently been settled,” without being specific about allegations made against McMahon. He added WWE expected to face additional costs related to misconduct claims against the company founder after the $2.3 million in costs incurred during the most recent fourth quarter.
McMahon founded the company decades ago, and led it alongside his wife Linda McMahon. Stephanie McMahon appeared regularly as a performer before taking on an executive role in recent years, including overseeing marketing, before being elevated to co-CEO.
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