WWE Reports $8 Million Loss In First Quarter Financial Results For 2014, Attributes Loss To WWE Network, Vince McMahon Comments

Basis of Presentation

During the three months ended March 31, 2014, the Company launched WWE Network, which changed the way that certain content is delivered to our customers. In conjunction with this change, management reevaluated the way it views the business. The launch of WWE Network coupled with the continued convergence within the media landscape, has resulted in a change in the Company’s management reporting to its chief operating decision maker. These changes necessitated a change in the Company’s segment reporting to align with management’s operational view. The Company now classifies its operations into ten reportable segments, which include the following: Network (which includes our pay-per-view business), Television, Home Entertainment and Digital Media, individual segments that comprise the Media Division; Live Events; Licensing, Venue Merchandise, WWEShop, individual segments that comprise the Consumer Products Division; WWE Studios and Corporate and Other.

Comparability of Results

In the prior year quarter, the Company recognized an estimated net positive impact to revenues of $2.0 million and $3.4 million in Operating income related to the transition to a new video game licensee, Take-Two Interactive. Expenses in the prior year first quarter also included a $4.7 million film impairment charge. In order to facilitate an analysis of financial results on a comparable basis, where noted, first quarter 2013 results have been adjusted to exclude these items. (See Schedule of Adjustments in Supplemental Information).

Three Months Ended March 31, 2014 – Results by Region and Business Segment

Revenues of $125.6 million increased 1% versus the prior year quarter as growth in North America was largely offset by lower revenues in international markets. North American revenues increased 4% from the prior year quarter driven primarily by the increased monetization of content as reflected in the Company’s Media division, including revenue from Home Entertainment, Network, and Television, as well as improved performance by WWE Studios. These increases were partially offset by reduced licensing royalties associated with the Company’s video games. Revenues from outside North America decreased 9% driven by the impact of the Company's video game transition and the absence of live events in international markets (versus three events in the prior year quarter).

The following tables reflect net revenues by region and by business segment (in millions):