WWE 2011 Earnings: McMahon Grilled by Investors, Foundation Remains Shaken

WWE's fourth quarter and 2011 earnings were released this past Thursday.  As is the case with all non-WrestleMania quarters, the news was less than stellar to say the least.

Fourth quarter net income? In the red. Pay-per-view buys? Deficient. WWE Network? A seemingly ambiguous mess. WWE Studios? Well, let's not even go there.  

WWE's latest squirm-fest was not unlike previous quarterly reports where WWE's annual business is driven by WrestleMania while other aspects continue to lag. But there was a certain air of impatience among the at-times clueless investors in regards to the WWE's major side ventures as of late.

The story of the conference call was the McMahon and WWE Chief Financial Officer George Barrios dancing around a parade of anxious questions about the aforementioned WWE Network. 

Once thought to have been set for an April 1st launch to coincide with WrestleMania XXVIII, the impending launch of the WWE Network has since been put on hold with concern mounting as evidenced by the continuously declining price of WWE's stock. 

McMahon wasn't exactly graceful in fielding said questions as the chairman was non-committal about an exact launch date and made the launch seem like it was more distant with every cryptic response. 

And while much of the WWE's loss of approximately $8 million was due to impairment charges and startup costs for their two big undertakings (WWE Studios, WWE Network), the impending launch—or lack thereof—or WWE Network seems to be the least of WWE's problems. 

WWE's pay-per-view business continued to struggle in the fourth quarter of 2011, with only Survivor Series seeing an increase in pay-per-view buys from 2010. Mind you, this was the same Survivor Series featuring The Rock's first match in eight years that was considered a colossal disappointment as it only garnished 281,000 buys. 

It's been obvious for a while that the WWE's struggling pay-per-view business needs an overhaul of sorts. With the saturation of content (13 pay-per-views in 2011), gimmicks and the always-dangerous rise of piracy, the WWE just isn't convincing viewers to pony up the dough for their pay-per-view offerings with the four-plus hours of weekly TV they're afforded.

WWE Studios is simply another story as that entity seems to be the business equivalent to wounded prey in the wild waiting to get got. 

And while the WWE's recent announcement of a three-year distribution deal with FOX is a step in the right direction, this outfit stands to be doomed by the very three letters that gave it life. "WWE Movie" has a similar effect on viewing audiences as "Nick Cannon hosts..."  

The silver lining in all this, if there is one, is that the WWE remains in rebuilding mode and should their hoards of impairment charges and cash outlay towards subsidiary divisions actually pay off, it will be a surefire game-changer for the WWE's business.

Game-changer or not, it will be the WWE's answer to wrestling-related business moving forward that will be the start of any possible financial turnaround for the sports entertainment giant.    

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