World Wrestling Entertainment, facing increased investor pressure amid falling TV ratings, blamed its ongoing viewership challenges on the lack of in-person audiences for its events.
The company, reporting its second-quarter earnings for 2020, said ratings for key programs Raw and Smackdown are down 19 per cent and 15 per cent, respectively, since the Covid-19 pandemic hit the United States in earnest in mid-March.
Since then, WWE has staged events in a controlled environment without attending fans from its WWE Performance Center in Florida. But that shift to the empty venue, the company argues, translates to a materially different television product.
“As far as ratings are concerned, more than any other sports, surely our audience is a part of the program,” said Vince McMahon, WWE chairman and chief executive. “Audience interaction that always is the plus, and it goes all the way back to the origination of the genre. The audience is integral to our success and our television ratings because of the interaction or lack thereof.”
The WWE’s TV ratings challenges differ markedly from the major US team sports that consistently have posted double-digit percentage increases in audiences in their returns to play amid the pandemic, most recent among them being Major League Baseball.
McMahon, however, said WWE can and will do more to develop more engaging storylines for its characters both in and out of the ring.
“I think that we can have more compelling characters, better storylines, new characters coming into where we are right now and more of content that’s necessarily in the ring, but yet one that focuses on their personalities and their story outside the ring,” McMahon said.
McMahon said WWE hopes to have events with live audiences within a matter of months, though the company is certainly not in control of that timeline as virus rates continue to surge in many part of the United States, including Florida.
“The key here is to be in front of an audience and that’s the main thing,” he said. “Certainly, getting in front of an audience, they are a like a third person in the ring, so to speak, and right away, you get action and reaction. You are able to shoot the audience and we should be shooting the audience a lot more than any other sport, because they are such an integral part of what we do, so I would like to think it’s months away.”
WWE for the quarter reported $223.4m in revenue, down 17 per cent from the comparable period a year ago. Operating income was $55.7m, more than triple the $17.1m from the second quarter last year. WWE cited ongoing “cost savings,” which included furloughs and pay cuts during the quarter, as a key instrument in the improved financial performance.
“We have learned a lot through the Covid process, and I think the Covid events and the process we have used to analyze the business will likely turn into permanent cost savings or differences in the way that we operate,” said Frank Riddick, WWE’s interim chief financial officer who is passing the duties of that role to Kristina Salen.
WWE also reported a 1.5 per cent decline in average paid subscribers in the WWE Network to 1.66m after the company during the quarter debuted a free version of the product.
“The initial results on the free version are promising, and the strategy is just encouraging sampling of the content and the [key performance indicators] we are looking at are active users and how we convert those active users to the paid service,” said Jayar Donlan, executive vice president of WWE’s advanced media group.