WWE Says Outlook Keeps Potential for Significant Earnings Growth

WWE (NYSE: WWE) today announced that it has reached a multi-year agreement inprinciple with NBCU for the renewed U.S. licensing of WWE's flagship programsand ratings juggernauts Raw and SmackDown. Given the anticipated increase intelevision rights, and with successful WWE Network subscriber growth, WWEmanagement continues to believe that the Company can achieve significantearnings growth, potentially doubling or tripling 2012 OIBDA^1 results to arange of $125 million to $190 million by 2015.^2“We continue to achieve significant increases in the value of our largesttelevision agreements, a key component of our business plan” stated VinceMcMahon, Chairman and Chief Executive Officer. “The rising value of ourcontent coupled with the global expansion of WWE Network will provide thefoundation for long-term growth that continues to transform our business overthe coming years.”“With the favorable renegotiation of our largest television agreements, WWEtransitions to a subscription-based business model for future growth,” addedGeorge Barrios, Chief Strategy & Financial Officer. “Successful execution ofour WWE Network strategy could significantly raise the Company's earningsprofile and better reflect WWE's tremendous global appeal and brand strength.With such execution, the Company anticipates sufficient financial resources,including debt capacity, to fund growth, support ongoing business requirementsand maintain its current dividend.”Renewal of Key Television AgreementsOver the past six months, the Company has negotiated television distributionagreements in the U.S., U.K. and Thailand, and is in the midst of discussionsregarding the distribution of WWE content in India.^3 The Company estimatesthat it will increase the average annual value of these key televisionagreements to approximately $200 million, representing an increase of morethan $90 million, that is nearly three times (3x) the increase achieved in theprevious round of negotiations.Management believes that the new agreements more fully reflect the value ofWWE content, including significant first-run hours, a passionate and loyal fanbase, and 90% “live plus same day” viewership, in the U.S., which makes WWEcontent, like sports, “DVR-proof.” The Company plans to capitalize on thevalue of WWE content to drive further increases in value in otherinternational markets.The Global Expansion of WWE NetworkThe Company's consumer research indicates a high proportion of U.S. andinternational broadband users have an affinity for WWE content.^4 Thisresearch indicates that in the U.S. and certain international markets^5,approximately 50% of broadband households have an affinity for WWE content,representing 77 million homes (WWE Homes) in these markets. The Company'sresearch also indicates that based on an overall take-rate of 3% to 5% of WWEhomes in these markets, between 2.5 million and 3.8 million subscribers couldsubscribe to the WWE Network in these U.S. and international markets at a“steady state” (when the ramp-up of subscribers has been completed andsubscriber levels are relatively stable), representing a sizable economicopportunity.^6At a retail price per month of up to $9.99, this would represent estimatedincremental OIBDA, net of potential pay-per-view cannibalization, between $50million and $180 million.^7 Managing subscriber growth contains significantexecution risk and actual results could vary materially from this range basedon, among other factors, the rate of subscriber adoption and churn rates, aswell as changes in pricing, promotion levels and distribution terms.^2As shown below, the Company estimates that the WWE Network, on a global basis,will require 1.3 million to 1.4 million subscribers at “steady state” for theWWE Network's incremental OIBDA to offset the complete cannibalization of theCompany's Pay-Per-View and SVOD businesses. At 1.3 million to 1.4 millionsubscribers, the Company's Network segment, which includes the results ofWWE's Network, Pay-Per-View and SVOD businesses, would generate OIBDA resultsof $40 million, (+/- 10%), which is on par with the OIBDA profits generated bythe Company's Pay-Per-View and SVOD businesses in 2012.^8WWE Business Outlook for 2014 and 2015The rate of subscriber adoption is a critical determinant of the Company'sprojected future financial performance. If WWE Network achieves approximatelyone million subscribers by year-end 2014, it would yield a 12-month average of650,000 subscribers for the year.^9 This rate of adoption in 2014 translatesto an estimated 2014 OIBDA loss ranging from $35 million to $45 million, and a2014 Net loss ranging from $45 million to $52 million.If WWE Network achieves an average of 2 million to 2.5 million subscribers for2015, the Company's 2015 OIBDA is expected to range from $125 million to $200million, and 2015 Net income expected to range from $57 million to $105million. Actual subscriber levels and financial performance could varymaterially based on various factors.^2The table below outlines a range of potential outcomes for the Company in both2014 and 2015.WWE 2014 Potential       WWE Network 2014 Average Subscibers^9Outcomes 500   575   650   825   1,000   ($65) - ($55) ($45) ($25) ($10)OIBDA ($55) - - - - $0 ($45) ($35) ($15)Dep. and Amort. (25) (25) (25) (25) (25)Operating ($90) - ($80) ($70) ($50) ($35)Income/(Loss) ($80) - - - - ($70) ($60) ($40) ($25)Other 28 - 25 23 - 18 - 13 - 8 - 5Income/(Expense)^10 20 15 10 ($62) - ($57) ($52) ($37) ($27)Net Income/(Loss)         ($55)   -   -   -   - ($50) ($45) ($30) ($20)    WWE 2015 Potential WWE Network 2015 Average SubscribersOutcomes 2012 500 1,000 1,500 2,000 2,500  OIBDA $63 ($40) - $15 - $70 - $125 - $180 - ($20) $35 $90 $145 $200Dep. and Amort. ($20) (30) (30) (30) (30) (30)Operating $43 ($70) - ($15) $40 - $95 - $150 -Income/(Loss) ($50) - $5 $60 $115 $170Other ($12) 17 - 10 2 - (18) - (38) - (58) -Income/(Expense)^10 (5) (25) (45) (65)Net Income/ (Loss)     $31   ($53) -   ($13)   $22 -   $57 -   $92 - ($40) - $0 $35 $70 $105  Notes:  WWE defines OIBDA as operating income before depreciation and amortization, excluding feature film and television production asset amortization and impairments. OIBDA is a non-GAAP financial measure and may be different than similarly-titled non-GAAP financial measures used by other companies. A limitation of OIBDA is that it excludes depreciation and amortization, which represents the periodic charge for1   certain fixed assets and intangible assets used in generating revenues for the Company's business. OIBDA should not be regarded as an alternative to operating income or net income as an indicator of operating performance, or to the statement of cash flows as a measure of liquidity, nor should it be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP financial measure to OIBDA.   Potential 2015 OIBDA ranging from $125 million to $190 million corresponds to operating income ranging from $95 million to $160 million, (where the difference between OIBDA and Operating Income is depreciation and amortization).   WWE will face a variety of risks associated with the creation and2 maintenance of WWE Network. These risks are outlined in the Company's Form 10-K filing with the SEC.   “Key content agreements” as used herein reflect television distribution3 agreements in the U.K. and Thailand, an agreement in principle in the U.S., and an estimate for India.  “Prior” deals refer to multi-year television distribution agreements that were effective in key countries through 2009 or all or part of 2010.  “Current” deals refer to multi-year television distribution agreements that were effective in key countries through 2013 or all or part of 2014.  “New” deals refer to multi-year television distribution agreements that became or will become effective in key countries in 2014 or early 2015.  Estimates of WWE fan households are based on our consumer research4 performed by a third party, which surveyed a representative sample of U.S. and international respondents.   These international markets consist of the United Kingdom, Canada,5 Australia, New Zealand, Singapore, Hong Kong and the Nordics. The Company expects to launch WWE Network in these markets by the end of 2014.   WWE cannot provide any assurances regarding the length of time, if at6 all, that it would take to reach the level of subscribers characterized by a “steady state” with full distribution or to surpass a break-even level of subscribers.   This potential range of incremental OIBDA results for the WWE Network at steady state with 2.5 million to 3.8 million subscribers corresponds to7 incremental operating income of approximately $30 million, and $165 million, respectively (where the difference between OIBDA and Operating Income is network-related depreciation and amortization).   The Company changed its business segment reporting and introduced a “Network” segment with the publication of its first quarter, 20148 earnings results. The Network segment includes the results of the WWE Network as well as the Company's pay-per-view and former SVOD businesses. Results for the Company's Network segment in 2012 can be found in the Company's historical trending schedules at corporate.wwe.com.   Average subscribers shown for 2014 represent the mean level of9 subscribers over the 12 months of 2014. WWE Network launched in the U.S. on February 24, 2014.   Other Income/(Expense) includes incudes interest and other expense (as10 reflected in “other income and expense, net” on the Company's income statement) as well as the provision (benefit) for income taxes.About WWEWWE, a publicly traded company (NYSE: WWE), is an integrated mediaorganization and recognized leader in global entertainment. The companyconsists of a portfolio of businesses that create and deliver original content52 weeks a year to a global audience. WWE is committed to family friendlyentertainment on its television programming, pay-per-view, digital media andpublishing platforms. WWE programming is broadcast in more than 150 countriesand 30 languages and reaches more than 650 million homes worldwide. Thecompany is headquartered in Stamford, Conn., with offices in New York, LosAngeles, London, Miami, Mexico City, Mumbai, Shanghai, Singapore, Munich andTokyo.Additional information on WWE (NYSE: WWE) can be found at wwe.com andcorporate.wwe.com. For information on our global activities, go tohttp://www.wwe.com/worldwide/.Trademarks: All WWE programming, talent names, images, likenesses, slogans,wrestling moves, trademarks, logos and copyrights are the exclusive propertyof WWE and its subsidiaries. All other trademarks, logos and copyrights arethe property of their respective owners.Forward-Looking Statements: This press release contains forward-lookingstatements pursuant to the safe harbor provisions of the Securities LitigationReform Act of 1995, which are subject to various risks and uncertainties.These risks and uncertainties include, without limitation, risks relating toentering into, maintaining and renewing key agreements, including televisionand pay-per-view programming and our new network distribution agreements;risks relating to the launch and maintenance of our new network; the need forcontinually developing creative and entertaining programming; the continuedimportance of key performers and the services of Vincent McMahon; theconditions of the markets in which we compete and acceptance of the Company'sbrands, media and merchandise within those markets; uncertainties relating toregulatory matters; risks resulting from the highly competitive and fragmentednature of our markets; uncertainties associated with international markets;the importance of protecting our intellectual property and complying with theintellectual property rights of others; the risk of accidents or injuriesduring our physically demanding events; risks associated with producing andtravelling to and from our large live events, both domestically andinternationally; risks relating to our film business; risks relating to newbusinesses and strategic investments; risks relating to our computer systemsand online operations; risks relating to general economic conditions and ourexposure to bad debt risk; risks relating to litigation; risks relating tomarket expectations for our financial performance; risks relating to ourrevolving credit facility specifically and capital markets more generally;risks relating to the large number of shares of common stock controlled bymembers of the McMahon family and the possibility of the sale of their stockby the McMahons or the perception of the possibility of such sales; therelatively small public float of our stock; and other risks and factors setforth from time to time in Company filings with the Securities and ExchangeCommission. Actual results could differ materially from those currentlyexpected or anticipated. In addition, our dividend is dependent on a number offactors, including, among other things, our liquidity and historical andprojected cash flow, strategic plan (including alternative uses of capital),our financial results and condition, contractual and legal restrictions on thepayment of dividends, general economic and competitive conditions and suchother factors as our Board of Directors may consider relevant.