In
a post for The Miami Herald, author Jim Varsallone commented on the WWE’s current stock
situation and said that the company is not in any financial trouble. Here are
highlights:
On the TV
deal: “WWE did not get the dollar amount investors wanted, but WWE did
increase the amount of money it will receive from NBCUniversal annually for its
television rights. It’s been reported WWE’s new contract with NBC Universal will
net $150 million annually, which is nearly a 70-percent increase from the
previous deal worth $90 million per year. What? The stock dropped. I thought WWE
was losing money. This is a fact and a big one. The company received a
70-percent raise from NBCUniversal.”
On the
WWE stock: “Investors are smart. They will buy low and sell high. The
stock market is about making a profit. Investors hear the company’s numbers, and
some didn’t believe in the product anymore. They sold. Some believed in the
product but wanted to make a quick profit or did not want to lose making money.
They sold. Nothing wrong with either. Buying stock is like playing the ponies.
There is risk. The WWE Network is in its infancy stages. It’s not a sprint, when
building a network and a subscriber base. Important, the network has not gone
international, yet. WWE does a good amount of business internationally. I would
not be surprised if some who sold already purchased it again at the $11 range,
expecting to see the stock rise, once WWE starts to build momentum with the WWE
Network. Mr. McMahon knows the pro wrestling/sports entertainment business. He
has not only survived but succeeded over the long haul — even longer than cable
television mogul Ted Turner.”
On WWE
being financially secure: “A company, any company, is in trouble when
it spends more money than it makes. That’s really the focus, when reading those
who write about the company’s quarterly reports or business endeavors or blogs
or vents or tries to turn opinion into fact. They don’t look at the money WWE
profited but rather compare how much it profited between the years, and if the
company made less profit than it did the prior quarter or year, then they raise
a red flag, when they should be raising a black one (for profit). Now, if any
company continues to spend more than it makes annually, does not profit, then
trouble looms. The first quarter of 2014, WWE reported a $8-million loss because
of the advent of the WWE Network, part of the new venture’s growing pains.
That’s a quarterly loss. The company did not make a profit. Not good. Is there
reason for concern or panic? Not right now. Prior, the company has been
profiting consistently. The report also did not factor the new TV deal with
NBCUniversal which increased WWE revenue about $60-million annually. That’s very
important, and here’s why. Do the math. WWE lost $8-million for the quarter.
There are four quarters in a year. Hypothetical, if WWE continued to lose
$8-million a quarter because of the WWE Network, that’s $32-million loss for the
year. Not good. But factor the new TV deal raise of about $60-million annually.
Take the $60-million gain and subtract the $32-million loss, and you still
profit about $28-million for the year between the two. By the numbers, which
always matter most, WWE is not in trouble financially.
