Cost-cutting is paying off for World Wrestling Entertainment as the company posted strong earnings gains despite weak revenue growth and falling TV ratings.
For the three months ended Oct. 25, WWE’s revenues increased a meager 4.5% to $94 million. But operating cash flow jumped sevenfold to $28.8 million from $3.5 million a year ago.
Part of the increase was due to an extra pay-per-view event scheduled for the year and the settlement of a lawsuit against an equipment manufacturer in connection with the death of Owen Hart, who died when a harness failed while he was being lowered from a Kansas City, Mo. arena ceiling to the ring below. WWE paid Hart’s family $7 million a year earlier, but received $5.9 million this quarter.
Broadcast ratings for WWE Smackdown! on UPN are down sharply this season. But ratings for Raw! have dipped only a bit and PPV buys have been up. But the big kick is coming from cutting staff.
"Revenue was up, profitability was up substantially," WWE Philip Livingston said during an earnings conference call, according to a transcript from StreetEvents. Com. "The trends in pay-per-view buys and ratings were good. We continue to take advantage of international opportunities for TV rights and more international events; we continue to press on that front, and continue to work on other strategic initiatives."