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They opened the call pointing out that they’ve had some changes in how they report earning, partially because of the launch of the WWE Network. Interesting to note that all PPV business now falls under the Network’s umbrella within the company.
Vince welcomed everyone. He said that their TV ratings and live events were flat and they made less on licensing due to the videogame situation over the last year. He pushed the WWE Network subscribers being over 667,000 subbers plus 400,000 PPV buys domestic. He said it was the best that Wrestlemania has ever done that he can recall. He praised the reviews for the Network and said that they are confident they will hit one million subscribers.
Vince pushed that Xbox 1 just launched for the Network and Amazon Fire and Smart TVs will follow shortly.
He said they continue to negotiate India and domestic deals and hope to have those sealed shortly. He praised the new German TV deals and the launch of Slam City. He said they have renewed relationships with General-Mills and Pepsi and said the WWE Studios’ releases of the Scooby Doo and the Oculus horror film are within what they expected.
George Barrios reviewed the number that we have on the site. They will make $80 million over the next year over the 667,000 subscribers, $30 million more than that they would have made off the traditional PPV business model. They expected millions of subscribers as they launch internationally over time.
Monday Night War, a Tough Enough revival and a “second season†of WWE Countdown is coming.
They will be adding a lot of bookmarking and other features to the Network.
The Network had generated over $4 million this quarter with just 440,000 subscribers. So another 220,000 signed by by Mania.
PPV revenue was down 9% due to weaker performances internationally for The Royal Rumble and Elimination Chamber.
TV revenue raised due to the second season of Total Divas and an additional episode of Raw that fell under this quarter as well as new contractual deals.
The Studios area did very well on the strength of the Halle Berry film “The Call.†They are expected to make far more than WWE has invested in them going forward. They really have turned that department around.
He noted they would be getting quarterly royalties from Take-Two on the WWE videogame franchise going forward as opposed to one lump sum as they did under THQ.
They have $90 million line of credit.
They said they would not take any questions about the status of their TV negotiations. So, there went the number one question on everyone’s list!
They intend to announce Network subscriber numbers quarterly.
They opened the floor for questions.
They were asked about giving revenue guidance for the second quarter. They said they are not going to give official guidance but they expect it to be similar to last year. They said that the costs going forward for the Network are the marketing and customer service but the fixed costs are already there. The biggest cost for the Network in the next quarter will be the Wrestlemania production costs as it falls under their category now. The marketing costs won’t show a seasonal impact but the Wrestlemania production costs will be seen in the second quarter.
They were asked about their expectations for Network subscribers for 2015. They declined but they hope for 2-3 million total without a timestamp.
They were asked about international rollout of the Network. They said by early 2015 they will be in UK, Hong Kong, Canada, Singapore and The Nordics. They require about 250,000 subscribers to break even on that expansion but don’t have a timeframe for that.
They’ve studied HBO Go and Netflix as their model for the Network and feel they need a good six months to decide how they are going. He described it as “lumpy†day to day.
They were asked how they come up with the 2-3 million level of subscriptions and why not a bigger number globally. They said the numbers they are public with are domestic only. They feel the internationally they can have 500,000-750,000 subscribers “at a steady state†based on their primary research. Vince admitted their numbers are conservative.
They were asked about the operational nuances of launching internationally vs. the original domestic launch. Barrios said they are still working through everything and learning so they won’t go into detail. He said that half of their 3 million social media followers are outside the United States and they want it as soon as they can get it. They hope to have some news in the weeks ahead.
The numbers they show as their break-even for the Network are factored with the idea that they will do zero PPVs going forward. So, the PPV purchases don’t relate to the finances of the Network’s success rate on paper.
Wrestlemania 29 did 720,000 buys last year, so they only lost about half of the buys with the Network launch.
Barrios admitted that they don’t know who will and won’t carry their PPVs going forward. He noted that when people call The Dish Network about PPVs, they are being referred to the WWE Network.
They were asked about using advertising for revenue on the Network. They haven’t spoken publicly about it but they are looking into while taking their customers into mind.
They were asked about what they planned to spend on non-wrestling content for the Network. Barrios said they won’t talk specifically or the costs for non-in-ring show. Legends House was been their number one and number two show since it’s launch and they’ve gotten national media from it. He said that shows that are first developed, they are capitalized and given first air on the Network. They sounded like they were reserving the right to syndicate the shows elsewhere down the line after their Network run. He said they know the value of original programming and they are going to invest in that.
When asked how investors should look at WWE, Barrios said that all of the different metrics show some value. He said the launch of the Network was a big day because it was a significant pivot for their business model. He said they are going global with it quickly and they can have some long-term goals they want to hit if they are successful.
They were asked if they were willing to selling equity in the Network to someone wanting to buy a minority stake, Barrios said they would consider anything if it makes business sense but “we have a high value we are placing on the WWE Network.â€
They were asked if the company is at a “steady state†level now. Barrios said there will be more investment internationally with the growth of the WWE Network.
On subscribers who signed up for automatic renewals for the Network, they aren’t going to discuss publicly but they had no frame of reference for it.
Regarding talent related costs, they have remained unchanged. They declined to comment publicly on how talent salaries will change with PPV royalties changing now that the Network launched.
They were asked what their plans were once they announce their new domestic deal. Barrios said they would offer more guidance when it’s appropriate.
They were asked if there would be revenue sharing with Amazon and Xbox 1 similar to how Apple handles the Network. Barrios said they aren’t going to comment on that.
That was it for questions. They thanked everyone for their time.
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