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TKO Delivers Mixed Results in Post-Merger Earnings Debut

TKO, the newly formed holding company for UFC and WWE that is controlled by Endeavor, delivered mixed results in its first post-merger earnings report, reflecting the shakeout from the deal that closed with just 19 days to go in the third quarter.

TKO reported revenue gains of 32% from the year-ago quarter to $449.1 million. Adjusted earnings before interest, taxes, depreciation and amortization grew 26% to $239.7 million. Net income fell to $22 million, from $129.7 million.

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TKO’s first earnings report also came the same day that the company announced a new TV licensing deal for the WWE series “NXT” with the CW Network. The deal is worth an estimated $120 million to WWE over the five-year term.

“Since launching TKO on September 12th, our teams at WWE, UFC, and Endeavor have been focused on
integration and executing our strategy,” said Ariel Emanuel, CEO of TKO and Endeavor. “This includes identifying cost synergies at the high end of the range we guided, bringing events to new international markets including Saudi Arabia and Australia, delivering media rights increases for WWE, and closing the largest global partnership deal ever for UFC with AB InBev. We remain bullish about TKO’s ability to accelerate growth and unlock long-term value for shareholders.”

TKO shares got off to a strong start in the stock’s debut after the merger when it traded at the $100-$105 range. But a week later, investors were underwhelmed by the licensing deal that WWE struck to move one of its signature year-round series, “Smackdown,” from Fox to USA Network starting next year. The stock took a sharp dive and has since been trading in the $80-$85 range. The “NXT” deal news was well received by Wall Streeters, however, as shares climbed in after-hours trading by more than 2%.

UFC had a strong quarter thanks in part to having two additional live events and two additonal TV events this time around than in the year-ago frame. Revenue picked up 17% to $397.5 million. Adjusted EBITDA also climbed 17% to $238.3 million.

The revenue contribution from the WWE for the 19 days covered in the quarter was $51.6 million. For the entire third quarter, WWE saw a 6% decrease in revenue to $287.3 million. WWE pitched in $22 million in adjusted EBITDA. For the full quarter, WWE’s adjusted EBITDA fell 17% to $102 million.

TKO also disclosed that pre-tax results include $67.5 million in merger-related costs.

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