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While the company’s sports businesses posted gains, the core representation business is feeling the pain of the strikes.
By Alex Weprin
Media & Business Writer
In a pivotal quarter for Endeavor, with its TKO spin-out complete, and with the legacy company now pursuing strategic options for its businesses, the company reported mixed results, with a strong performance from its sports businesses, but with the Hollywood strikes taking its toll on its core WME representation business.
Endeavor reported revenue of $1.34 billion in Q3, and had a net loss of $116 million, with adjusted EBITDA of $311.6 million.
“Our results in the third quarter demonstrate the strength of our diversified portfolio and leading position in sports and entertainment,” said Endeavor CEO Ari Emanuel. “We are making good progress on our TKO integration efforts, setting ticket sales or attendance records at many of our live events, and continuing to benefit from demand for premium content and experiences. Our focus remains on maximizing shareholder value through capital return initiatives including our share repurchase program and dividend payments, as well as our recently announced evaluation of strategic alternatives.”
The representation segment, led by WME, had $385.6 million in revenue for the quarter, down 0.7 percent from last year, owing to the strike impact, but offset by the company’s music and sports representation business, as well as higher results at 160over90.
The strikes took a $40-$50 million toll on Endeavor’s revenue in the quarter, below their primary estimate of $25 million per month. Endeavor’s CFO cited a slower pace of deal cancelations than expected, as well as the outperformance in sports and music.
Emanuel said that the company expects to impact of the strikes to bleed into Q4 and early 2024, though he added that “hopefully the strike ends in the next couple of days.“
He added that if the strike is resolved quickly, production could be back up to full bore in April, though it will continue to use into 2025 as networks and streaming services look to catch up.
The company’s events, experiences and rights segment also saw revenue decline, thanks largely to the sale of IMG Academy in June.
The company’s sports portfolio, meanwhile, continued to grow, with the owned sports properties (including Endeavor’s majority stake in TKO) delivering $479.7 million, up more than 19 percent from last year. Likewise, the new sports data and technology segment had revenue of $124.8 million, up $167.2 percent thanks to the addition of OpenBet.
Endeavor CEO Ari Emanuel said last month that with Endeavor’s stock price not reflecting its real value, the company would be looking into strategic alternatives. Endeavor’s largest shareholder, the private equity firm Silver Lake, subsequently said that it was putting together a proposal to take the company private.
On the call Emanuel reiterated his position that the company was undervalued, and added that they could not comment further until there was news to share.
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