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Welcome to PWInsider.com's coverage of the WWE Third Quarter 2014 Earnings Call. Coverage will begin momentarily.
Michael Weiss welcomed everyone to the call. Vince McMahon and George Barrios are also on the call. Vince said that the results exceeded the guidance and analysts' expectations.
Vince said Raw ratings are up 3% and Smackdown was up 2%, which he said it amazing. He said that Summerslam's Nielsen social media numbers were huge. They have a 71% increase in WWE Network subscribers compared to the previous quarter.
Vince noted they changed the pricing of the Network to remove the commitment because it was the "way to go."
The Network has some "remaining big" countries they are going after in 2015. They are "making the move" in the UK in November.
Vince pushed the month of November being free, comparing it to services like Hulu Plus giving away a month. He noted they would have limited advertising on the Network.
George Barrios ran down the numbers from the release. We have those on the main page of the site.
While discussing the international roll-out of the Network, george Barrios noted that they will get the U.S. version and eventually they will localize it in the native languages.
WWE Network revenue was up 68% from this time last year (Network revenue last year would have been PPV). They pushed all the increased viewership of WWE PPV events. They will continue to invest in programming and technology for the Network.
Licensing was up due to a higher-royalty rate for the WWE videogame with 2K. I wonder if that will mean the royalties for the talents will go up this year.
Live events were down due to fewer events in international markets. Average attendance internationally was up 15%. North American events had a 7% decline in attendance.
As of 9/30, the company has $69 million in cash and investments. They have a credit limit of $150 million.
In October, they received a $50 million advance for a new TV deal that is not reported in this quarter but will be recognized over the term of that deal. They didn't identify the deal.
They pushed the long-term of the Network as a way to help them grow. Well, if they can get people to sign up.
They talked about the TV rights and noted they have locked in key deals in the United States, India and other countries and the new deals will show a "significant" increase in those revenues in 2015. TV revenue will go to $235 million a year by 2018. WWE has experienced a $40 million growth in just the last year.
They went into the Q&A portion.
Barrios was asked about some of the numbers. Barrios said some of the initiatives they put into place to cost-cut went better than expected. They said moving forward, they will be some motion forward.
They were asked about feedback they've received from Network subscribers who have "disconnected" and what the company is doing going forward to help prevent that. Barrios said they are thrilled with how they engage the audience and that the viewership for PPVs are more equal for secondary shows compared to the major shows. He said the VOD drives the majority of the non-PPV viewership. That material becomes more valuable as they add more.
When asked about international subscribers, Barrios said the ramp rate internationally was always expected to be slower than in the U.S.
They were asked about TV revenues, Barrios said they only give overall guidance. He said they have contractual revenue growth of $105 million in major markets over the next several years.
When asked about the free month in November, those who maintain the subscriptions will be counted as new subscribers for the next quarter. So, it sounds like you can sign up for November and cancel before you are charged in December.
They were asked about balances of international and domestic subscriptions, they said it's too early to predict and they really are only in the 8th month of operating the Network.
They were asked about an Equity investment that wasn't broken down in the Earnings that was recorded as an impairment. Barrios said sometimes they make investments in companies. They didn't want to mention which investment it was, but changes made in the company made WWE decide they didn't want to continue to be involved going forward.
They said Rogers Communication was working on getting other distributors in Canada for the Network. They currently only have 20% clearances in Canada, so they have a lot of ways to go.
The new TV deals are "not longer than" five years.
They were asked how the penetration amongst Rogers vs. U.S. subscribers compare. Barrios said the ramp rate doesn't feel too disimilar to the United States, although the U.S. had Wrestlemania to push subscriptions.
They were asked about what percentage of subscribers were watching specific programming. Barrios didn't want to get into that but said the best performing shows were the live shows that were formerly on PPV and said, "Live works."
Barrios said that the VOD library allows them to program to a broad fan base allowing you to watch and view what you want to see, whether it's older material from when you were a kid or a show that you like that you want to binge watch. It allows the viewer to program for themselves. If that's the case, they really need to get a lot more older material out there, since the number one complaint I hear is not enough ECW, NWA, World Class, WWE house shows, etc.
They were asked if creative is the reason for subscribers leaving. Barrios claimed churn is 8% and they expected 4-8% and that's just part of a subscription driven business. They didn't address creative at all.
That was pretty much it.
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