Endeavor Swings To Q3 Loss On Sports Marketing Investment, Endeavor Content Stake; UFC Revenue, Profit Jumps

Endeavor swung to the red last quarter with a $12.5-million loss stemming not from its core businesses but a minority investment in struggling college sports marketing film Learfield, and its remaining 20% interest in Endeavor Content.

Endeavor sold the bulk of Endeavor Content back in January to Korea’s CJ ENM, keeping 20% of scripted business, the non-scripted portion and some documentary and film sales and financing consulting services. 

The company run by CEO Ari Emanuel posted a $63 million profit in the year-earlier quarter.

Learfield IMG College is a big collegiate sports marketing film with Endeavor and Silver Lake among its investors.

The total impairments, for $84.5 million net of tax, included write-downs, and resulted in an EPS loss of 4 cents a share vs a positive 16 cents the year before.

Endeavor’s revenue eased to $1.22 million from $1.39 million but in line with forecasts.

The company’s Owned Sports Properties division, led by UFC, saw revenue jump 39% to $402 million driven by higher media rights fees and live event, partnership, consumer product and licensing revenues, as well as an additional pay-per-view event and more events with live audiences. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew 45% to $196 million.

Events, Experiences & Rights saw flattish sales at $440.6 million (down 1%) on some media rights deals for events that don’t occur annually including the Ryder Cup, the UEFA Euro Championship and the CONCACAF World Cup qualifying games, plus the timing of events some of which were earlier in 2022 than the prior year. It cited growth from Wimbledon, Frieze Seoul, the Aer Lingus Classic and music events. Adjusted EBITDA was $49.7 million, down 42% on timing of events, insurance payments the year before and higher personnel costs.

Representation revenue of $388 million for the quarter was down 42% but largely because last year’s number included $334 million in sales from Endeavor Content. Excluding that, revenue rose 17%. The company noted strong demand for talent, including the ongoing recovery of music and comedy touring, and increased corporate brand spending.

EBITDA of $133 million was down 6%. The prior year included $26.5 million from Endeavor Content.

“Our business performed well in the quarter despite a turbulent macroeconomic environment,” said Emanuel. “Given our unique positioning relative to a set of highly resilient secular industry trends across premium sports and entertainment content and live events, we remain confident in our ability to continue delivering on our long-term growth strategy while also being good stewards of capital.”

The company said total debt stood at $5.427 billion at the end of Sept., down from $5.684 billion at June 30. It paid down $250 million last quarter and plans to do the same in the current fourth quarter.

Cash and cash equivalents totaled $970.8 million in Sept. and $1.8 billion in June.

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