What Is The Future Of Domestic WWE PPV?

First, we€™ll start with a €œbaseline€ for 2014 PPV buys. This will be the three-year average of PPV buys for each event. This represents the hypothetical world where WWE has full PPV distribution and there is no cannibalization from the WWE Network. Next, we have to decide what percentage of domestic and what percentage of international buys we expect will stick around for the rest of 2014. We only have a few datapoints that can extrapolate from: a) Assume that Satellite Providers (about 35% of typical PPV buys) are not available b) Based on the €œnearly 400,000 US homes€ number from Wrestlemania 30, we€™ll assume that at least one-third of the domestic US PPV audience will definitely not be purchasing traditional PPVs. That suggests that about we should expect no more than 43% (65%*66%) of the domestic PPV buys to stick around. Furthermore, it€™s reasonable to suggest that more casual fans (who are less likely to be WWE Network subscribers) are far more likely to buy A-level PPVs (Royal Rumble, Summer Slam and especially Wrestlemania) as opposed to be B-level PPVs. So, I believe we should only expect about 25% of the baseline PPVs for B-level PPVs and no more than 45% for A-level PPVs. (Of course, if Dish Network and/or DirecTV decide to rejoin the party, the math changes.) We€™ll also assume that Canadian viewers (where the WWE Network has not yet officially launched) represent about 10% of the baseline orders. Also, we€™ll leave international PPV mostly unchanged €“ just assuming a small 5% drop in non-North American PPV orders. Q1 2014 Royal Rumble 2014 (1/26/2014) - 285k NA buys, 160k outside NA buys Elimination Chamber 2014 (2/23/2014) - 156k NA buys, 47k outside NA buys Estimated Q1 revenue: $13.3M Q2 2014 WrestleMania XXX (4/6/2014): 400,000 US homes + 66,000 Canadian homes + 440,483 non-NA homes Extreme Rules 2014 (5/4/2014): 47,100 NA homes + 104,000 non-NA homes Payback 2014 (6/1/2014): 33,800 NA homes + 80,000 non-NA homes Money in the Bank 2014 (6/29/2014 ): 42,700 NA homes + 75,000 non-NA homes Estimated Q2 revenue: $25.9M Q3 2014 Battleground 2014 (7/20/2014): 50,100 NA homes + 65,000 non-NA homes SummerSlam 2014 (8/17/2014 ): 113,800 NA homes + 111,000 non-NA homes Night of Champions 2014 (9/21/2014): 37,800 NA homes + 79,000 non-NA homes Estimated Q3 revenue: $8.6M Q4 2014 Hell in a Cell 2014 (10/26/2014): 44,900 NA homes + 73,000 non-NA homes Survivor Series 2014 (11/23/2014): 46,400 NA homes + 97,000 non-NA homes TLC 2014 (12/14/2014): 36,500 NA homes + 72,000 non-NA homes Estimated Q4 revenue: $6.8MEstimated 2014 PPV Revenue: $13.30M + $25.91M + $8.62M + $6.76M = $54.59M That would be down about 33% from 2013. Click "next" below for the final part of our analysis...