WWE Financials: Company Take on Ending THQ Relationship
– WWE released their Fourth Quarter and Full Year financials today. Here is WWE’s take on the termination of the THQ agreement and the new agreement with Take-Two…
On December 19, 2012, our video game licensee THQ Inc. (“THQ”) declared bankruptcy. As a result, the Company reserved $1.7 million as bad debt for amounts that were due the Company from THQ at December 31, 2012. The amounts reserved primarily related to sponsorship agreements and various services WWE provided to THQ in support of WWE ’13. In connection with the termination of our license agreement with THQ, the Company will recognize approximately $8.0 million of revenue during the first quarter of 2013 relating to the unrecognized portion of an advance received when the Company entered into the license agreement with THQ in 2009. Additionally, upon termination of the agreement with THQ, the Company entered into a multi-year agreement with Take-Two Interactive Software, Inc. (Take-Two) to be the Company’s video game licensee. As a result of THQ’s bankruptcy, the Company will not collect royalties due in the first quarter. The Company has estimated the amount of this economic loss at between $4.0 million to $5.0 million, and does not believe that this loss will have a material adverse effect on the Company’s business, financial condition or results of operations.
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