Tonight in Unpacks: During TKO Group's Q3 earnings call, President and COO Mark Shapiro was emphatic that it was done acquiring assets from Endeavor.
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TKO Group ‘won’t explore’ more Endeavor assets as Q3 revenue hits $681 million
On the heels of TKO Group Holdings announcing that it will acquire Professional Bull Riders, On Location and IMG from Endeavor Group Holdings for $3.25 billion, TKO President and COO Mark Shapiro was emphatic that TKO will not consider the acquisition of any further Endeavor assets.
“We won’t sign an NDA. We won’t explore. We won’t read materials -- nothing whatsoever,” Shapiro said. Endeavor is exploring the sale of sports assets including OpenBet, tennis' Miami Open and Madrid Open, part of an anticipated sell-off as private equity giant Silver Lake takes Endeavor private. Shapiro noted that Ari Emanuel, TKO’s CEO, may bid on some of the Endeavor assets in a purely personal capacity.
Shapiro made his comments during TKO’s Q3 earnings call on Wednesday evening. TKO, the parent company of UFC and WWE, reported revenue of $681 million and net income of $58 million for the three months through September. TKO’s revenue was split almost evenly between UFC ($355 million) and WWE ($326 million).
Fewer events lead to revenue drop for UFC
UFC’s Q3 revenue of $355 million was down 11% from the same period last year, largely the result of reduced media rights and content revenue, which fell 19% to $216 million. That drop-off was largely the result of a less active event calendar, with one fewer numbered event and two fewer Fight Nights versus the same period in 2023. The drop in media revenue was partially offset by a $10 million (16%) increase in sponsorships, thanks in part to record sponsor revenue from UFC 306 , the first to ever have a title sponsor (Riyadh Season).Shapiro downplayed UFC CEO Dana White’s recent comments about the promotion potentially getting into boxing , telling shareholders on Wednesday that a formal strategy is not yet in place. However, Shapiro also noted the fragmented sport of boxing offers a “growth opportunity,” though the company likely won’t pursue the acquisition of any existing boxing properties.
International gains for WWE
Year-over-year comparisons for TKO are complicated by the parent company’s merger of UFC and WWE that closed in September 2023, so the company’s financial performance in last year’s third quarter only partially reflects the inclusion of WWE’s business. WWE’s quarterly revenue of $326 million represents a 14% year-over-year increase when compared to the promotion’s combined -- that is, both pre- and post-TKO merger -- revenue from the same period last year. Emanuel on Wednesday highlighted WWE’s growing momentum overseas -- it held 18 international events in Q3 2024, versus 11 such events in the same period last year -- and said that WWE "Raw" moving to Netflix in January will provide a further global push.Shapiro noted that TKO is still combining UFC and WWE, not to mention will soon fold in PBR, and suggested shareholders could “expect more margin accretion” thanks to greater cost efficiencies and joint sponsorships across the owned properties.
TKO is in the process of refinancing its credit facility, including a new seven-year, $2.75 billion term loan and five-year, $205 million revolver, which is expected to close before the end of the year.
