Endeavor Q4 2023 Results Dented by Write-Offs, WWE-Related Legal and Restructuring Costs; Execs Decline to Take Analyst Questions, Citing Ongoing Strategic Review

Endeavor’s fourth-quarter results reflected the company’s growth in sports through the acquisition of WWE last September, but its bottom line was hit by nearly $30 million in legal and restructuring costs and $47 million in write-offs from its Events, Experiences and Rights division.

Last year Endeavor also paid out $101 million in advisory fees and bonuses related to the WWE merger with Endeavor’s UFC as well as the sale of its IMG Academy business.

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CEO Ari Emanuel faces questions about Endeavor’s long-term strategic plan and fate as a public entity — but on the Q4 earnings call, he and CFO Jason Lublin declined to take questions from Wall Street analysts, with the company citing its ongoing “strategic review.” The call lasted some 20 minutes as Emanuel and Lublin rehashed the points in Endeavor’s earnings release; Lublin said the company is not providing 2024 financial guidance because of its review of strategic alternatives.

In October, less than three years after Endeavor went public in April 2021, Emanuel initiated a strategic review of its assets to consider options for the future. At the same time, Endeavor’s longtime private equity partner, Silver Lake, has vowed to field a proposal that would take Endeavor private again. Endeavor’s shares are up 5% for the year to date (closing Monday at $24.44 per share) but down 11% since the stock’s debut.

In a prepared statement with the earnings release, Emanuel said, “We remain focused on maximizing shareholder value through quarterly dividend payments and our evaluation of strategic alternatives.”

On Wednesday, Endeavor reported full-year revenue of $5.96 billion, up from $5.26 billion in 2022, and adjusted earnings before interest, taxes, depreciation and amortization of $1.21 billion. Net income came in at $557.5 million. For Q4, Endeavor, which now incorporates UFC and WWE through the company’s majority interest in the newly formed TKO Group Holdings, delivered revenue of $1.58 billion and adjusted EBITDA of $292.8 million, up from $239.6 million in Q4 2022. Endeavor’s year-end quarter finished with a net loss of $29.3 million.

The Q4 numbers revealed that Endeavor paid out $20 million for an antitrust settlement; TKO, in its 10-K filing Tuesday, disclosed that the $20 million payment was to settle a 2022 lawsuit filed against WWE by MLW Media alleging that WWE interfered with MLW’s contractual relationship with certain media platforms and engaged in other anticompetitive and unfair business practices. The case was dismissed with prejudice on Dec. 26, per the 10-K filing.

In addition, Endeavor took a $47 million write-off in its Events, Experiences and Rights division that houses its On Location hospitality business and other event properties; the company didn’t detail what the write-offs expenses were for. Endeavor also recorded $9 million in restructuring costs for the quarter and $40 million for the year, inclusive of one-off WWE-related restructuring costs.

The 2023 actor and writer strikes that stretched from May to November took a toll on Endeavor’s Representation segment, home to WME and IMG as well as the 160over90 branding agency. Adjusted EBITDA for the segment was $103.4 million for the quarter, down 16.5% from Q4 2022. For the year, adjusted EBITDA totaled $391.1 million, down 17%.

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