World Wrestling Entertainment, Inc. (NYSE:WWE) today announced financial results for its second quarter ended June 30, 2008. Revenues totaled $129.7 million as compared to $137.5 million in the prior year quarter. Operating income was $12.0 million as compared to $9.7 million in the prior year quarter. Net income was $7.0 million, or $0.10 per share, as compared to $7.0 million, or $0.10 per share, in the prior year quarter.

Revenue increased 19% for the first six months of the year, with growth coming from across all of the Company’s business units. Operating Income increased 29% to $39.1 million, reflecting the impact of a $15.7 million film impairment charge recorded in the second quarter of 2007. Excluding this charge, operating income declined 15% from the prior year.

In assessing the first half performance, Chief Executive Officer Linda McMahon said, “The Company made important progress in terms of its fundamental operating objectives. We achieved a significant increase in revenue from our international operations, continued the strong growth of our live event, licensing and home video sales, and maintained improved trends in our pay-per-view business.

“However, for the first six months of the year our total operating expenses, on an adjusted basis, grew 27%, exceeding the percentage growth in revenue. Although the rise in expenses broadly supports our top-line growth, the disproportionate growth in expenses is unacceptable. Therefore, we are implementing stronger cost control measures, reassessing our spending and the priority of our investments to drive increases in earnings and margins,” concluded Mrs. McMahon.

Comparability of Results

There are three items that should be highlighted while reviewing the following press release for ease of comparability. The results for our premiere pay-per-view event, WrestleMania®, occurred in Q2 2007 as compared to Q1 in 2008. WrestleMania 23 in the second quarter of 2007 contributed in the aggregate approximately $31.4 million of revenues and $9.7 million of profit contribution ($6.6 million, net of tax). The prior year quarter also included a $15.7 million non-cash film impairment charge related to revised expectations of our feature film “The Condemned”. Finally, our McMahon’s Million Dollar Mania advertising campaign in the current quarter resulted in a charge of approximately $3.5 million, which was recorded in SG&A. It should be noted that WWE’s principal shareholder and Chairman, Vincent K. McMahon, reimbursed the Company for the prize money awarded to members of the WWE Universe.

Results By Business Segment

The following charts reflect net revenues by segment and by geographical region for the three months ended June 30, 2008 and June 30, 2007. (Dollars in millions)

*Emerging Markets is defined by management as operations in Latin America and China

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were $86.8 million for the current quarter as compared to $102.9 million in the prior year quarter. Included in the prior year revenue was $31.4 million relating to WrestleMania 23.

• Live Event revenues were $35.3 million as compared to $30.1 million in the prior year quarter, primarily due to the strength of our international events. The prior year quarter included $5.4 million of revenue for WrestleMania 23.
• There were 83 events, including 31 international events, during the current quarter as compared to 84 events, including 26 international events, in the prior year quarter.
• International events revenue increased by approximately $9.2 million, based on two highly successful tours in Europe and Australia during the current quarter. Average international attendance was approximately 9,100 in the quarter as compared to 6,000 in the prior year quarter.
• North American events were approximately $4.0 million lower in the current quarter due to the timing of our WrestleMania event. The average ticket price for North American events was approximately $40.00 in the current quarter as compared to $46.00 in the prior year quarter. Average North American attendance was approximately 6,900 in the current quarter and the prior year quarter. Excluding the impact of WrestleMania in the prior year, the average North American ticket price was approximately $39.00 and average attendance was 5,800.
• Pay-Per-View revenues were $17.9 million as compared to $39.8 million in the prior year quarter. There were four pay-per-view events produced in the current year as compared to five events in the prior year. WrestleMania 23 in 2007 generated approximately 1.2 million buys and $24.6 million in revenue in the prior year quarter.

The details for the number of buys (in 000s) are as follows:

• WrestleMania XXIV in 2008 generated approximately 1.1 million buys and $23.8 million in revenue during our first quarter.
• Excluding WrestleMania, the buys for the four pay-per-view events held in the second quarter of both 2007 and 2008 increased by 6%.
• Our pay-per-view event historically named Vengeance was re-branded Night of Champions in 2008.
• Venue Merchandise revenues were $5.2 million as compared to $5.4 million in the prior year quarter, as per capita spending by our fans decreased by approximately $2.00 to $10.85 in the current quarter, reflecting $1.4 million of revenue for WrestleMania 23 in the prior year quarter. Partially offsetting this decline was an increase from venue merchandise sales at our international events.
• Television Rights Fees revenues were $24.7 million as compared to $23.9 million in the prior year quarter. This increase is primarily due to contractual increases in international rights fees.
• WWE 24/7® On Demand revenues were $1.8 million as compared to $1.3 million in the prior year quarter. The increase in revenues reflects the growth in the number of subscribers for our video-on-demand program.

Consumer Products

Revenues from our Consumer Products businesses were $32.4 million versus $26.4 million in the prior year quarter, representing a 22% increase.

• Home Video net revenues were $18.5 million as compared to $14.8 million in the prior year quarter. We shipped over 305,000 DVD units of WrestleMania XXIV, which represented our best selling title in the current quarter, which approximates the units shipped in the prior year for WrestleMania 23. In addition, we shipped a combined 300,000 DVD units for the two releases of The Rock®: The Most Electrifying Man in Sports Entertainment and Twist of Fate: The Matt and Jeff Hardy™ Story in the current quarter.
• Licensing revenues were $9.0 million as compared to $7.7 million in the prior year quarter, primarily reflecting increases in videogame related sales as our successful SmackDown® vs. Raw® 2008 title was available on additional video game platforms.
• Magazine publishing net revenues were $4.3 million as compared to $3.7 million in the prior year quarter, representing a 16% increase. In the current quarter we launched our new WWE® Kids magazine, a bi-monthly publication for the younger WWE fans 6 – 14 years old. The current year quarter includes the impact of two issues of WWE Kids and one additional special issue as compared to the prior year.

Digital Media

Revenues from our Digital Media related businesses were $7.9 million as compared to $8.2 million in the prior year, representing a 4% decrease.

• WWE.com revenues were $4.0 million as compared to $4.6 million in the prior year quarter, reflecting less revenue from wireless content and lower pay-per-view webcasts and sales of online advertising, partially due to the timing of WrestleMania.
• WWEShop revenues were $3.9 million as compared to $3.6 million in the prior year quarter, due to a 4% increase in the number of orders processed during the current quarter and a 4% increase in the average revenue per order to $53.18.

WWE Studios (formerly WWE Films)

We recorded revenue of $2.6 million in the current quarter related to our three theatrical releases. There was no revenue recorded in the prior year quarter. As previously disclosed, we recorded a $15.7 million asset impairment for “The Condemned” in the prior year quarter.

Profit Contribution (Net revenues less cost of revenues)

Profit contribution was $53.3 million in the current quarter as compared to $37.0 million in the prior year quarter, and the profit contribution margin was approximately 41% as compared to 27% in the prior year. Excluding the impact of the $15.7 million feature film asset impairment discussed above, the profit contribution margin in the prior year quarter would have been 38%. Pay-per-view margins were higher in Q2 2008 as the prior year included the staging costs of producing WrestleMania 23 in a large stadium. Television gross profit contribution declined in 2008 based on the additional costs associated with broadcasting in High Definition and increased costs associated with a new set utilized for our televised events.

Selling, general and administrative expenses

SG&A expenses were $37.6 million for the current quarter as compared to $25.0 million in the prior year quarter. The increase in the current year was driven by several significant initiatives. McMahon’s Million Dollar Mania resulted in an incremental $3.5 million of SG&A expense. As previously mentioned, the Company’s Chairman reimbursed the Company for a significant portion of these costs, net of the anticipated tax benefit. Legal and professional fees increased $2.4 million due to increased litigation costs in the current year and the absence of a $0.9 positive settlement received in the prior year quarter. Staff related costs have increased due in part to our international expansion efforts.

EBITDA

EBITDA for the current quarter was approximately $15.7, as compared to $12.0 million in the prior year. Excluding the impact of the film impairment charge and WrestleMania in the prior year quarter, EBITDA would have been $18.0 million.

Investment and Other Income (Expense)

The decline in investment income in the current quarter reflects lower short-term interest rates. Our other income (expense), net line item reflects our quarterly revaluation of warrants held by WWE for a licensee.

Effective tax rate

In the current quarter the effective tax rate was 40% as compared to 37% in the prior year quarter. The current year rate includes the accrual of additional FIN 48 liabilities.

Summary Results for the Six Months Ended

Total revenues through the six months ended June 30, 2008 were $292.3 million as compared to $244.9 million in the prior year period. Operating income for the current period was $39.1 million versus $30.3 million in the prior year period. Net income was $26.6 million, or $0.36 per share, as compared to $22.2 million, or $0.31 per share, in the prior year period. As discussed above, the prior year results reflect the $15.7 million asset impairment for “The Condemned”.

Excluding the effect of impairment charge discussed above, operating income would have been $46.0 million and net income would have been $32.2 million, or $0.45 per share, in the prior year period.

The following charts reflect net revenues by segment and by geographical region for the six months ended June 30, 2008 and June 30, 2007. (Dollars in millions)

*Emerging Markets is defined by management as operations in Latin America and China

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were $186.6 million for the current period as compared to $165.9 million in the prior year, an increase of 12%.

Consumer Products

Revenues from our Consumer Products businesses were $75.8 million versus $63.8 million in the prior year, an increase of 19%.