World Wrestling Entertainment 4Q profit falls 35 percent on drop in TV ad revenue

(AP) World Wrestling Entertainment Inc. said Tuesday its fourth-quarter profit fell 35 percent, hurt by lower revenue from live and televised entertainment and a steep drop in television advertising revenue.

For the quarter ended April 30, the company reported net income of $10.6 million, or 15 cents per share, compared with profits of $16.1 million, or 23 cents per share, a year ago. Revenue declined to $114.3 million from $118.3 million in the year earlier period.

Wall Street had forecast a profit of 13 cents per share, the average estimate of six analysts surveyed by Thomson Financial, on projected sales of $114.3 million.

"The earnings for the quarter were just as expected, but these guys really had to fight to get there," said Dennis McAlpine, managing director of McAlpine Associates in Scarsdale, N.Y. "They're fighting hard for every nickel they get."

Shares of World Wrestling fell 77 cents, or 4.5 percent, to close at $16.23 Tuesday on the New York Stock Exchange. The stock has traded between $9.98 and $18.54 over the past year.

Live and televised entertainment revenue fell 10 percent to $92.3 million, due to the absence of domestic cable advertising revenue. Television advertising revenue slid 82 percent to $2.2 million after a change in the company's distribution agreement with USA Network.

For May to December 2006, World Wrestling projected net income would be about even with the $30 million, or 43 cents per share, from continuing operations it reported in the comparable eight-month period in 2005.

McAlpine said he was disappointed by the outlook and expressed concerns with profit margins for pay-per-view events. He said the company is introducing new characters in an effort to replace former stars such as "The Rock."

"It's a cyclical business," McAlpine said. "They're going to get some stars out of this eventually."

Michael Kelman, a media analyst with Susquehanna Financial Group in Bala Cynwyd, Pa., said there might be confusion over the outlook because the company is switching from a fiscal to a calendar year to report earnings.

"They're continuing to invest in the business," Kelman said. "I think the company is continuing to move in the right direction."