From Motley Fool - August 3, 1999
===paste===
In an attempt to give a new meaning to the Wall Street
phrase "underwriting takedown," professional
wrestling promotion machine World Wrestling
Federation (WWF) Entertainment, Inc. filed a
registration statement with the Securities and
Exchange Commission today to raise as much as $172.5
million in a proposed initial public offering.
If all goes according to script, investors will soon be
able to own shares in the company responsible for
adding terms like "smackdown" and "wrestlemania" to
the vernacular and keeping spandex suppliers in
business lo these many years after the fall of big-hair
hard rock bands in the late 1980s.
Besides knowing how to make personalities like Stone
Cold Steve Austin and The Rock universally known to
junior high school boys across the country, the WWF
also knows how to make some serious money. According
to the registration statement, revenues totaled $251
million for the fiscal year ended April 30, doubling the
prior year's results, while earnings increased nearly
seven-fold to $56 million. Gross margin has climbed
from 25% in fiscal 1997 to 42% in fiscal 1999,
underscoring the company's recent success in building
out higher-margin revenue streams such as product
licensing and home video sales.
The revenue streams, like the wrestling characters the
WWF promotes, come in various shapes and sizes. All
told, the company has money flowing in from 200 live
events per year, 9 hours of television programming
each week, approximately 12 pay-per-view offerings
per year, licensing agreements with 85 companies,
home video and music sales, and two magazines with a
combined annual circulation of 5.8 million. The firm
also operates a website at www.wwf.com that
generated 100 million page views and boasted 1.6
million unique visitors in June. Proceeds from the
stock offering are initially being earmarked for
expanded Web offerings, new TV programming ventures,
and updating the firm's TV and post-production
facilities.
As one Foolish fan pointed out in a recent article about
Titan Sports, Inc. (the former name of WWF), a big
reason for the firm's success thus far has been the
violence and decidedly politically incorrect nature of
its always crass, sometimes downright melodramatic
sporting spectacles. By going public, there is a risk
that the bravado that has served the WWF so well as a
private firm could be bodyslammed by profit-obsessed
shareholders. It's also not hard to imagine the
company's shares getting smacked around if fans are
lured away to its main rival, World Championship
Wrestling, which is owned by the deep-pocketed Turner
Broadcasting unit of Time Warner (NYSE: TWX).
In any event, the annual meetings should be a hoot.
By Brian Graney (TMF Panic)
===endpaste===
fool.com
Should we buy the stock?
To quote the current champeen, "Hell yeah!" |
