As Dave Meltzer wrote in the August 10, 2015 Wrestling Observer newsletter: (subscription required)
"In case there were any questions, next year's WrestleMania is going to be on the network. They could make more money with it as a PPV exclusive but the bad blood they'd get from the customer base would be a disaster because the feeling is they've promised all PPVs going forward, including Mania, on the network. The production trucks got their WrestleMania 32 promo skins and it was pushed prominently as being live on the network."I wanted to get at was big of a difference would WrestleMania 32 make for WWE's profits if they had decided to change course and only put WM32 on pay-per-view (exclusive or hypothetically offered it ala cart via the WWE Network for $30+).
I'll do my best to cite all of my sources since there's a lot of misinformation out there on the web and want to thoroughly document my assumptions. My primary source is WWE's own financial filings, particularly when WrestleMania moves a quarter because they do a pro-forma which explains the impact and it's easy to isolate the WrestleMania PPV revenue number.
Pay-per-view Revenue from WrestleMania as recorded by WWE in that quarter
WM2007: $24.6M PPV revenue (source: 5/8/08 10-Q) - 1,250k worldwide buys / 825k North American Buys ($49.95 domestic PPV price, see 4/6/09 WON)
WM2008: $23.8M PPV revenue (source: 5/8/08 10-Q) - 1,041k worldwide buys / 697k North American Buys ($54.95 domestic PPV price, see 2/23/11 WON)
WM2009: $21.0M PPV revenue (source: 8/9/10 10-Q) - 975k worldwide buys / 605k North American Buys ($54.95 domestic PPV price, see 3/5/12 WON)
WM2010: $19.0M PPV revenue (source: 8/5/11 10-Q) - 885k worldwide buys / 495k North American Buys ($54.95 domestic PPV price, see 3/19/13 WON)
WM2011: $24.2M PPV revenue (source: 8/5/11 10-Q) - 1,124k worldwide buys / 679k North American Buys ($54.95 domestic PPV price, see 3/3/14 WON)
WM2012: $27.85M PPV revenue (approximated based on the information in 8/7/12 10-Q) - 1,219k worldwide buys / 715k North American Buys ($54.95 PPV price, see 8/11/14 WON)
WM2013: $27.0M PPV revenue (approximated based on the information in 8/1/13 8-K) - 1,104k worldwide buys / 662k North American Buys ($59.95 PPV price + HD upgrades, see 5/11/15 WON)
WM2014: $17.8M PPV revenue (source: 7/30/15 8-K) - 684k worldwide PPV buys / 420k North American PPV Buys ($59.95 PPV price + HD upgrades, see 5/11/15 WON)
WM2015: $4.9M PPV revenue (source: 4/30/15 8-K) - 259k worldwide PPV buys / 104k North American Buys ($59.95 PPV price + HD upgrades, see 2/23/15 WON)
All of these PPV revenue numbers (except 2012 & 2013) come directly from SEC documents that WWE filed where the company provided a specific pay-per-view revenue number for the WrestleMania event. It's important to note that this only includes the revenue which WWE recorded in that quarter which is usually a little lower than the final numbers (which is what Dave is reporting). Buys that were reported later show up as "prior period buys" in the subsequent quarters so there usually a trailing PPV revenue impact on the following quarter.
Let's look at the Network division (WWE Network + PPV + Video-on-demand) revenue/OIBDA for the past ten quarters:
Latest WWE Trending Schedule
Total Network Revenue/OIBDA in the Media Division
2013 Q1: $16.0M ($15.1M in PPV + $0.9M in VOD) / $5.0M in OIBDA
2013 Q2: $38.2M ($37.0M in PPV + $1.2M in VOD) / $8.2M in OIBDA
2013 Q3: $15.5M ($15.5M in PPV + $1.0M in VOD) / $7.4M in OIBDA
2013 Q4: $16.6M ($15.7M in PPV + $0.9M in VOD) / $7.3M in OIBDA
FY 2013: $86.3M ($82.5M in PPV + $3.8M in VOD) / $27.9M in OIBDA
2014 Q1: $18.4M ($13.8M in PPV + $0.2M in VOD + $4.4M in WWE Network) / -$3.6M in OIBDA
2014 Q2: $43.3M ($23.8M in PPV + $0.1M in VOD + $19.4M in WWE Network) / -$7.3M in OIBDA
2014 Q3: $26.1M ($3.7M in PPV + $22.4M in WWE Network) / $2.3M in OIBDA
2014 Q4: $27.2M ($3.9M in PPV + $23.3M in WWE Network) / $6.8M in OIBDA
FY 2014: $115.0M ($45.2M in PPV + $0.3M in VOD + $69.5M in WWE Network) / -$1.8M in OIBDA
2014 Q2: $43.3M ($23.8M in PPV + $0.1M in VOD + $19.4M in WWE Network) / -$7.3M in OIBDA
2014 Q3: $26.1M ($3.7M in PPV + $22.4M in WWE Network) / $2.3M in OIBDA
2014 Q4: $27.2M ($3.9M in PPV + $23.3M in WWE Network) / $6.8M in OIBDA
FY 2014: $115.0M ($45.2M in PPV + $0.3M in VOD + $69.5M in WWE Network) / -$1.8M in OIBDA
2015 Q1: $37.6M ($9.0M in PPV + $28.6M in WWE Network) / -$1.5M in OIBDA
2015 Q2: $40.1M ($3.5M in PPV + $36.6M in WWE NetworK) / $17.2M in OIBDA
To compare, first half of 2013/2014/2015:
2013 Q1+Q2 = $54.2M ($52.1M in PPV + $2.1M in VOD) / $13.2M in OIBDA (implied "cost" is $41.0M)
2014 Q1+Q2 = $61.7M ($37.6M in PPV + $0.3M in VOD + $23.8M in WWE Network) / -$10.9M in OIBDA (implied "cost" is $72.6M)
2015 Q1+Q2 = $77.7M ($12.5M in PPV + $65.2M in WWE Network) / $15.7M in OIBDA (implied "cost" is $62.0M)
In general, this puts the "cost" for the Network division (PPV+WWE Network) for a non-WM qtr around $23M. The "cost" for a WM qtr is higher (it was $50M in 2014 and $40M in 2015). I'll take the higher end because I'll assume that high-value wrestlers (such as The Rock) are performing. Still, that's large variance, and this $10M delta matters. I will assume that first half of 2016 would cost around $70M for the Network division (PPV+WWE Network).
Steady State (WrestleMania 32 is on WWE Network)
January 2016: 1.40M WWE Network subscribers = $14.0M (Royal Rumble has interest); $2.4M in PPV revenue
February 2016: 1.30M WWE Network subscribers = $13.0M (Fastlane again); $750k in PPV revenue
March 2016: 1.40M WWE Network subscribers = $14.0M (interest returning for WrestleMania); no PPV event - assume about $150k from prior events
April 2016: 1.60M WWE Network subscribers = $16.0M (WrestleMania held at beginning of April); $5.5M in WM PPV revenue + $750k in PPV revenue
May 2016: 1.30M WWE Network subscribers = $13.0M (drop-off after WrestleMania); $700k in PPV revenue
June 2016: 1.25M WWE Network subscribers = $12.5M (leveling off); $750k in PPV revenue
H1'16: $82.4M in WWE Network Revenue (+26% vs prior half year) + $11M in PPV revenue (-12% vs prior half year) = $93.4M / $23.4M in OIBDA
Alternative State (WrestleMania 32 is a PPV exclusive)
January 2016: 1.35M WWE Network subscribers = $13.5M (Royal Rumble has interest); $2.4M in PPV revenue
February 2016: 1.25M WWE Network subscribers = $12.5M (Fastlane again); $750k in PPV revenue
March 2016: 1.20M WWE Network subscribers = $12.0M (subscribers are dropping); no PPV event - assume about $150k from prior events
April 2016: 800k WWE Network subscribers = $8.0M (WrestleMania is only available on PPV); $25M in WM PPV revenue (about 925k worldwide buys) + $750k in PPV revenue
May 2016: 900k WWE Network subscribers = $9.0M (subscribers can watch WM32 on PPV - brief bump); $700k in PPV revenue
June 2016: 800k WWE Network subscribers = $8.0M (leveling off); $750k in PPV revenue
H1'16: 62.9M in WWE Network Revenue (-4% vs prior half year) + $28.5M in PPV revenue (+128% vs prior half year) = $93.4M / $23.4M in OIBDA
Again, there's a lot of assumptions. I figured that it would still cost $70M to run the WWE Network for 6 months even if average subscribership dropped from 1.375M in H1'16 to 1.05M in H1'16. One of the reasons that the WWE Network costs $20M-$30M more than prior years is because WWE is spending so much on "programming". I figured that they would only lose about 50,000 subscribers off the base for January-February if they weren't going to offer WM on PPV in April. I figured that WWE could get almost a million wordwide buys for their PPV and generate well north of $20M for their share of revenue from the event (they made $18M in 2014 when they were competing with the WWE Network and $27M in 2013 between $60 pricetag and HD buys). I figured that WWE would get a post-WM bump as people came back to see the replays of WM. I figured that the steady state of year-round subscribers if you don't offer a lucrative carrot like live WrestleMania is 800k-900k people. As you can see, there's a lot of moving parts.
2015 Q2: $40.1M ($3.5M in PPV + $36.6M in WWE NetworK) / $17.2M in OIBDA
To compare, first half of 2013/2014/2015:
2013 Q1+Q2 = $54.2M ($52.1M in PPV + $2.1M in VOD) / $13.2M in OIBDA (implied "cost" is $41.0M)
2014 Q1+Q2 = $61.7M ($37.6M in PPV + $0.3M in VOD + $23.8M in WWE Network) / -$10.9M in OIBDA (implied "cost" is $72.6M)
2015 Q1+Q2 = $77.7M ($12.5M in PPV + $65.2M in WWE Network) / $15.7M in OIBDA (implied "cost" is $62.0M)
In general, this puts the "cost" for the Network division (PPV+WWE Network) for a non-WM qtr around $23M. The "cost" for a WM qtr is higher (it was $50M in 2014 and $40M in 2015). I'll take the higher end because I'll assume that high-value wrestlers (such as The Rock) are performing. Still, that's large variance, and this $10M delta matters. I will assume that first half of 2016 would cost around $70M for the Network division (PPV+WWE Network).
Steady State (WrestleMania 32 is on WWE Network)
January 2016: 1.40M WWE Network subscribers = $14.0M (Royal Rumble has interest); $2.4M in PPV revenue
February 2016: 1.30M WWE Network subscribers = $13.0M (Fastlane again); $750k in PPV revenue
March 2016: 1.40M WWE Network subscribers = $14.0M (interest returning for WrestleMania); no PPV event - assume about $150k from prior events
April 2016: 1.60M WWE Network subscribers = $16.0M (WrestleMania held at beginning of April); $5.5M in WM PPV revenue + $750k in PPV revenue
May 2016: 1.30M WWE Network subscribers = $13.0M (drop-off after WrestleMania); $700k in PPV revenue
June 2016: 1.25M WWE Network subscribers = $12.5M (leveling off); $750k in PPV revenue
H1'16: $82.4M in WWE Network Revenue (+26% vs prior half year) + $11M in PPV revenue (-12% vs prior half year) = $93.4M / $23.4M in OIBDA
Alternative State (WrestleMania 32 is a PPV exclusive)
January 2016: 1.35M WWE Network subscribers = $13.5M (Royal Rumble has interest); $2.4M in PPV revenue
February 2016: 1.25M WWE Network subscribers = $12.5M (Fastlane again); $750k in PPV revenue
March 2016: 1.20M WWE Network subscribers = $12.0M (subscribers are dropping); no PPV event - assume about $150k from prior events
April 2016: 800k WWE Network subscribers = $8.0M (WrestleMania is only available on PPV); $25M in WM PPV revenue (about 925k worldwide buys) + $750k in PPV revenue
May 2016: 900k WWE Network subscribers = $9.0M (subscribers can watch WM32 on PPV - brief bump); $700k in PPV revenue
June 2016: 800k WWE Network subscribers = $8.0M (leveling off); $750k in PPV revenue
H1'16: 62.9M in WWE Network Revenue (-4% vs prior half year) + $28.5M in PPV revenue (+128% vs prior half year) = $93.4M / $23.4M in OIBDA
Again, there's a lot of assumptions. I figured that it would still cost $70M to run the WWE Network for 6 months even if average subscribership dropped from 1.375M in H1'16 to 1.05M in H1'16. One of the reasons that the WWE Network costs $20M-$30M more than prior years is because WWE is spending so much on "programming". I figured that they would only lose about 50,000 subscribers off the base for January-February if they weren't going to offer WM on PPV in April. I figured that WWE could get almost a million wordwide buys for their PPV and generate well north of $20M for their share of revenue from the event (they made $18M in 2014 when they were competing with the WWE Network and $27M in 2013 between $60 pricetag and HD buys). I figured that WWE would get a post-WM bump as people came back to see the replays of WM. I figured that the steady state of year-round subscribers if you don't offer a lucrative carrot like live WrestleMania is 800k-900k people. As you can see, there's a lot of moving parts.
WWE loves to give assumptions for overall company OIBDA based on the WWE Network subscribers numbers but doesn't ever provide direct Network segment OIBDA based on subscriber numbers. What do you think?
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