2007 not a good year for WPT

03/08/2008

Both Q4 and full year 2007 numbers released by World Poker Tour Enterprises this week painted a disappointing picture of losses. In the fourth quarter a net loss of $1.8 million (2006:$1.1 million) was recorded, and at year end 2007 the company's net loss was $9.6 million, compared to net earnings of $7.8 million in 2006.

2007 revenues were around $7.6 million lower than the year before, which CEO and founder Steve Lipscomb attributed to two main factors.

The first is that WPTE delivered a total of only 22 episodes of television programming, as compared to 45 episodes the year before. This was mainly caused by the Travel Channel declining to pick up a second season of the Professional Poker Tour that it had ordered.

The second is that WPTE's 2006 revenue included a $10.2 million pre-tax gain on the sale of PokerTek common stock. There was no such buffer against losses this year.

Lower international television licensing revenues and declining online gaming revenues added to the company's problems, but the losses were at least partially offset by excellent hosting and sponsorship revenues.

Despite the disappointing news, Lipscomb remained optimistic, emphasising a change in strategy begun in 2007. "We have been focused on shifting our business from a traditional media and entertainment company to a multimedia entertainment and gaming company," Lipscomb said, noting the company's partnership with online poker network Cryptologic and its new broadcast and promotion deal with GSN.

One of the most promising new ventures for WPTE is its exclusive 10-year agreement with the China Leisure Sports Adminstration Centre to "promote and grow the sport of Poker in China." (see previous InfoPowa reports). That includes a five-year renewable agreement to sponsor China's first-ever National Traktor Poker Tour, based on a traditional Chinese folk game called Tuo La Ji.

WPTE is betting that its association with China will boost future revenues through sponsorship, television, and online and mobile subscription opportunities. And the ClubWPT venture - a subscription-based online poker club targeting some 60 million poker players in the United States - will have a positive effect, says Lipscomb.

WPTE's marketing strategy for the near future will focus on product improvements, localised content and driving players to its Web site. "With our positive momentum and world-class brand," Lipscomb said, "we are enthusiastic about the prospects for 2008 and beyond."