Sports entertainment powerhouse WWE reported its second-quarter earnings on Tuesday following several delays due to the discovery of what it had recently said were $19.6 million in previously unrecorded expenses paid by former chairman and CEO Vince McMahon between 2006 and 2022.
WWE also said in filings made late Monday and early on Tuesday that an investigation into McMahon and another ex-executive was “substantially complete” and repeated the $19.6 million figure for previously unrecorded expenses.
It also detailed $1.7 million in second-quarter costs associated with the probe, adding: “While we currently anticipate spending approximately $10 million during the remainder of the year related to this investigation, the related costs could exceed this estimate.”
The company said on its earnings conference call that the $1.7 million was paid by McMahon, adding that he had also agreed to pay “additional reasonable expenses of the investigation not covered by insurance.”
As a result of the probe, the company restated past financial reports after in a recent regulatory filing saying that it had “determined that such amounts should have been recorded as expenses in each of the periods in which they became probable and estimable.” It said at the time that the amount in unrecorded expenses was not material in any individual period, in which they arose, but that the aggregate amount would be if recorded entirely in the second quarter of 2022. WWE also emphasized at the time that all of the underlying unrecorded expenses “were or will be paid by Mr. McMahon personally.”
A special committee of independent members of the WWE board has been conducting the investigation into the alleged misconduct. In a recent regulatory filing, WWE said it “has also received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters.”
WWE is now led by McMahon’s daughter Stephanie McMahon as chairwoman and co-CEO and Nick Khan as co-CEO. Stephanie McMahon’s husband Paul Levesque, the retired wrestler known as HHH, is now in charge of WWE’s creative.
On the earnings call, Stephanie McMahon called her father “a true founder and entrepreneur,” adding that “he built the foundation that WWE stands on, and prepared us for the future.”
But she also noted that while McMahon is no longer an executive at the company, his presence is still being felt.
“Vince McMahon is still very much the controlling shareholder, he still has his eyes on maximizing the business in terms of what is best for shareholders,” Stephanie said, when asked a question hinting at interest in a potential sale of the company. “We will properly evaluate any opportunity that comes our way with that in mind.”
The company reported strong Q2 results on Tuesday, with total revenue of $328.2 million, up from $265.6 million a year earlier. Live events were up substantially as pent-up demand from the COVID pandemic was on full display, but media rights remained the biggest source of revenue.
Nick Khan told analysts that the company was preparing to begin its next round of rights negotiations, and that it expected streaming companies like Netflix, Amazon and Apple to be interested in their programming, in addition to traditional media companies. That demand will only increase with Netflix’s ad tier.
“There is no type of programing more valuable to sponsors than live,” Khan said.
