Comparability of Results
In the current year quarter, the Company recorded a $1.6 million adjustment to reduce the carrying value of the old Corporate Aircraft to its estimated fair value in conjunction with the anticipated sale of this asset. OIBDA results for the six months ended June 30, 2013 included a $4.7 million film impairment charge and an approximate $3.4 million positive impact from the transition of the Company's video game to a new licensee in 2013. In order to facilitate an analysis of financial results on a comparable basis, where noted, the Company's results have been adjusted to exclude these items. (See Schedule of Adjustments in Supplemental Information).
Three Months Ended June 30, 2014 - Results by Region and Business Segment
Revenues of $156.3 million increased 3% from the prior year quarter due to growth in North America. North American revenues increased 4% driven primarily by an increase in Media Division revenues as the ramp up in WWE Network subscription revenue was partially offset by lower revenue from the Company's Pay-Per-View, Home Entertainment and Digital Media businesses. Revenues from the Company's Live Events also declined due to the location of WrestleMania and the staging of eleven fewer events in North America. Revenues from outside North America were essentially flat to the prior year quarter.
Media Division
Revenues from the Company's Media division increased 7% to $97.7 million with growth driven by the ramp up of WWE Network and increased television licensing fees. Growth from the Company's Network and Television segments was partially offset by lower Home Entertainment and Digital Media revenue as described below.
* Network revenues, which include revenue generated by WWE Network, pay-per-view and video-on-demand, increased 13% to $43.3 million from $38.2 million in the prior year quarter as the ramp up of subscribers and subscription revenue more than offset a decline in pay-per-view revenue.
* WWE Network generated $19.4 million in subscription revenue based on an average of 665,000 paid subscribers over the quarter at a price of $9.99 per month. WWE Network had 700,000 paid subscribers at June 30, 2014 as compared to approximately 667,000 paid subscribers on April 6, following the broadcast of WrestleMania.
* Network subscription revenue of $19.4 million was partially offset by a $13.2 million decline in pay-per-view revenue. Pay-per-view revenue declined 36% to $23.8 million, driven by an overall 32% decline in buys for the Company's pay-per-view events and a 6% decline in revenue per buy to $22.51. There were four pay-per-view events in the current year quarter as compared to three events in the prior year quarter. On a comparable basis, pay-per-view buys declined 41% reflecting the availability of pay-per-view events in the U.S. on WWE Network and weaker performance in several international markets. Revenue per buy declined 6% reflecting a higher proportion of buys from international markets (43% versus 33% in the prior year quarter).
* Television revenues increased 13% to $43.8 million from $38.7 million in the prior year quarter primarily due to the second season production and monetization of Total Divas and, to a lesser extent, contractual increases for existing programs. Total Divas (Season 1) debuted in the third quarter 2013.
* Home Entertainment net revenues decreased to $5.4 million from $7.1 million in the prior year quarter reflecting a 40% decline in units shipped, which was partially offset by an increase in the average effective price. The decline in unit shipments reflected reduced shipments of WWE's catalog titles, which are typically characterized by lower prices and profit margins than new releases. As a result, new releases comprised approximately 70% of total units shipped as compared to 45% in the prior year quarter. Primarily reflecting this change in product mix, the average effective price increased 27% to $13.49. (On a year-to-date basis, average pricing is essentially flat as compared to the prior year period.)
Read more at http://www.wrestlinginc.com/wi/news/2014/0731/579544/wwe-reports-2014-second-quarter-results/#pR32kZZGkkXj6X8r.99
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