Vince McMahon will step away from World Wrestling Entertainment if it maximizes shareholder value in any future deal, the company told analysts in a call detailing its 2022 financial results Thursday night.
“Yes. Without question,” CEO Nick Khan said when asked directly by an analyst if McMahon would leave WWE in a sale or other transaction, if needed. “He’s declared it to the board. He’s declared it to us in management. It’s all about shareholder value and obviously he’s a shareholder. So it’s not about what role he’ll have, it’s about maximizing that value opportunity.”
The controlling shareholder of WWE, McMahon voted himself back in charge of WWE last month “exploring all strategic alternatives to maximize shareholder value”—Wall Street jargon typically meaning a desire to sell the business to the highest bidder. McMahon wasn’t present for the earnings call, but his motivations on what he may want in a sale has been the topic of some speculation among Wall Street.
Also during the Q&A, Khan said WWE is looking “for a partner that has more than simply deep pockets. So a partner that understands the media business, that’s in the media business, that understands how to further monetize the media business.”
The statement seems to debunk rumors that WWE may sell to a Saudi Arabian fund, and lend better support that one of its broadcast partners or other high-profile streamer or broadcaster is in play. Khan says they are “quite bullish” on the process and the emergence of numerous bidders in both the bidding for upcoming media rights and potential strategic alternative partners.
“The process… is underway but still in the early stages,” Khan said in prepared remarks on the call. “As we said before, there is more interest than ever in owning content and intellectual property. So with the expiration of our domestic media rights in 2024 and the upcoming negotiations for those rights 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 they host on their own platforms.”
In terms of financial performance, WWE reported an 18% gain in annual revenue to nearly $1.3 billion for 2022. WWE’s annual sales hit an all-time high of $1.29 billion, almost $200 million better than 2021. Live events in particular saw a sizeable jump in sales, as a return to full attendance generated $124 million in gate receipts, more than double the prior year. Its consumer products are saw sales rise 33% to $134 million.
Media payments are WWE’s largest revenue generator and rose nearly $100 million over 2021, to $1.03 billion. Management emphasized strong television ratings, including an increase in interest among younger viewers. “Raw saw big gains among young viewers. Raw was up 17% in the 18-to-34 demo year over year,” said Khan on the conference call. “What you’re seeing with Raw is one of the strongest growth stories in all of television.”
Raw is broadcast on Comcast’s USA Network. WWE also said SmackDown, broadcast by Fox, saw record watch times. Overall for the year, the company made net income of $195.6 million, or $2.29 per diluted share, of which it paid out 49 cents in dividends.
Looking ahead, WWE said it expects revenue to grow in 2023, without specifying a top-line figure in its release. Based on the company’s estimate of non-GAAP accounting metrics it presents to investors, overall sales growth this year of about 5% is implied.
Also in the annual results, WWE disclosed it spent more than $21 million investigating sexual harassment accusations again McMahon last year. The charges led to McMahon voluntarily stepping down in July before resuming his position in January. Through ownership of most of a class of supervoting stock, McMahon has ultimate authority on who runs the business and if the publicly traded company will be sold.
Shares of WWE closed down slightly in trading ahead of the results to finish at $83.31, trading around that mark in light post-market trading after the earnings call. Shares are still up 25% year-to-date, driven by the return of McMahon and expectations for a sale of the business.
