If you want to analyze the company as a whole, you have to break down its revenue streams first, then analyze expenses.
Revenue:
WWE makes money through its television contract with UPN and TNN. This is static income that comes in through the life of the contract. The main goal for WWE here is to post exceptional ratings and bring in advertising revenue for the host networks, providing the company with increased leverage to demand a higher price for its programming once the contract is up. Look at WWE's squabble with the USA Network a few years ago when ratings were high - the company wanted a fat contract that TNN finally agreed to. When ratings are down (such as now), there's less money to be made in tv deals, since WWE isn't bringing home the bacon.
Poor television ratings are usually solid portents of PPV buyrates - if people aren't tuning in for the free programming, chances are they aren't going to shell out $40 a month to watch a pay-per-view.
Hence, two major sources of income for WWE are generated directly through its television product, which is directly affected (or at least measured) by ratings. When ratings are down, the company isn't going to be able to deliver on its quarterly earnings, unless ...
another major source of revenue, merchandising, can pave the road. While merchandise isn't directly linked to ratings (people may dole out cash for a cool t-shirt or something retro for reasons other than the current product), it is certainly indirectly affected by the success of the televised programming, since the programming provides the characters and the angles that generate catchphrases or character heat that get people to buy the products.
finally, you have live attendance gates. These can generate a solid amount of income, but only if people show up - when WWE was in its heyday in the late 90s, it saw a large amount of income from House Shows as well as televised events. Obviously, the house show attendance has been collapsing lately, so that revenue stream is suffering.
Additionally, and perhaps the focus of my post, WWE has sought to branch out as a company in various ventures to raise additional revenue, such as WWE NY and, of course, the XFL. Both caused to company to hemorrage cash.
So there you have the revenue - television contracts, PPV buyrates, merchandise, live attendance gates, and extraneous financial ventures. It doesn't take a genius to figure out that since the quality of the programming has been terrible, all of these figures are going to be on the downside. Furthermore, thanks to Vince's idiotic schemes to make WWE into a media conglomerate (the extra shows, the XFL, etc.), WWE has been blowing cash on "calculated risks" that have turned investors off to its long-term potential.
Now, as far as expenses go, WWE has to deal with a considerable amount of overhead when you consider the costs of maintaining and producing the televised shows - you need a huge support staff on hand to run the cameras, pyro, lights, costumes - not to mention the other behind the scenes employees necessary to put on a good show. Tack this on to wrestler salaries, which have been skyrocketing as WWE has tried to pull in older stars to boost ratings, and you can start to see a pattern forming here.
So, Johnny, to answer your question - WWE's stock is a miserable buy at the moment simply b/c the company isn't making much money. Ratings are down, salaries are up (since older "former draws" now have leverage in contract negotiations (read: Goldberg)). The company has made some stupid ventures to try and expand into media as a whole, and has paid dearly for it. As RAW and Smackdown have stopped selling out, there is a harsh reality approaching the company which is going to force continued downsizing of staff members (of course, the creative team will remain intact ... can't get rid of those amazing writers.)
In the end, WWE is entertainment. It has to put butts in the seats by putting out programming that people want to watch -once that core product has been established, the ancillary revenue streams from merchandise and whatnot will come. So if you want to blame someone for the WWE's failure, you can honestly blame the creative PROCESS. This process includes the writers, the wrestlers who influence them, and the management that cuts the checks for all involved (and tinkers w/the product as well). Wrestling makes money first and foremost through compelling characters w/interesting angles buttressed by quality matwork. Until that formula can be perfected (perhaps elevating some new talent that the current fanbase has yet to be fully exposed to), the company is going to continue to watch its expenses accumulate while income deteriorates.
Sorry about the length, btw - there's a lot to be said here, however, and I've only scratched the surface. A real nuts and bolts discussion would require me poring over WWE's annual report, which I do not have the time to do at the moment
