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VINCE RESPONDS TO 'CANCEL WWE NETWORK' & RUMBLE FINISH CRITICISM: COMPLETE COVERAGE WWE STOCKHOLDERS CONFERENCE CALL COVERAGE FOR Q4 2014 EARNINGS

By Mike Johnson on 2015-02-12 10:50:36

Welcome to PWInsider.com's coverage of the WWE conference call for the 2014 Quarter Four financial release. 

The call opened with SVP Investor Relations for WWE Michael Weiss welcoming everyone to the call.  He sounded really happy. 

Vince McMahon said the results exceeded their estimations.  He noted they were up for ratings, social media was up 85% from the previous quarter a year ago, Youtube content was 3.9 billion views and made them the number one sports channel for YT.

Vince said they are trying the free preview again for the Network currently but suggested they might not get as many free trial subscriptions this time around.  He noted the new expansions for the WWE Network, including The Middle East, Canada and Great Britain, among others.

He said the WWE Network engagement is 90% in terms of satisfied or better.  The Network is their most important driver going forward.

WWE CFO George Barrios began recapping the earnings release.

The quarter was highlighted by the Network's growth from this time a year ago. The VOD library is now over 2,700 hours of the over 100,000 hours WWE currently has in their library. At the end of December, they were over 800,000 subscribers. They had 240,000 free trial subscribers in November with 80% of those still subscribers in January.

They credited the one million subscribers to the Rumble, free trial subs transferring to paid subs and the UK expansion.

90% of subscribers use the Network at least once a week.

They continue to expect a gradual growth as fans become more aware of the Network, they expand distribution and into new countries and as people become more familiar with the technology.

UK and Ireland was their second largest country for the Network "almost overnight."

The Stone Cold Podcast were two of the most watched specials live in the history of the Network.

They are going to invest in a lot more original content in early 2015, including live specials, talk shows, animation and more.

 

They went to the Q&A portion of the call at this point.

The first caller noted they had a nice rollout of new subscribers for the WWE Network and asked what markets had the best upside and how do they compare to the UK and Ireland.  Barrios declined to make predictions but admitted they were surprised by how quickly fans took to the Network in UK and Ireland.

On free trial months, they aren't making any definitive plans on how often they will do it.  They have some tools they use to protect themselves from people signing up over and over for free and they are strengthening those tools.

In regard to WWE events on PPV, the cable operators set the pricing and they expect to continue to be on the same PPV carriers.

A caller asked if Wrestlemania was going to be $9.99 a month.  Wow, way to actually know what you are talking about.  The same caller then had no idea how the free month worked for the November promotion.  She then said it appeared the Network subs were going to a month to month rate.  Uh, that happened months ago.

The next caller asked what they intended to do to prevent Network subscribers from leaving after Wrestlemania 31.  Barrios said they need to deliver incredible value in the content and the experience and they are working extremely hard on that, including new content they aren't in a position to talk about yet.  Barrios said they are learning a lot, still, day to day.

The caller asked where the most active interest for non-PPV content and where NXT rates in terms of creating subscribers.  Barrios said that when you do something live, it resonates.  He said it's impressive that NXT trends on Twitter when domestically, it's only available on the Network. 

Barrios said they see a big utilization of the VOD Library and with that, you can program your own schedule and lineup.

Barrios was asked to compare the fan base to the UFC/MMA fan base and whether they would want to sign MMA talents to help bridge those bases.  Barrios said they are about multi-generational family viewing and that's fundamentally different from MMA audiences.

The next caller asked what the budget for Network content and feature films will be in 2015. For films, it will be $20-$30 million.  He said their fixed costs for the Network will be in about the same range as 2014.

They noted 70% of the free subscribers for November converted into and remained paid subscribers by January.   They were asked about the hard numbers and the missing aspect was the regular churn of paid subscribers who left during that period.

They were asked why the Network revenue changed for this quarter.  Barrios said they tweaked advertising and promotion and PPV.  Barrios declined to comment on advertising revenues for the Network.

They were asked about viewership on the Network internationally.  Barrios said it depends on the distribution they have in each country and said the Youtube views being 4 billion is a great indicator of how ravenous people are for their content. 

They were asked if they had data on how much of the subscriber growth was based on people understanding what an OTT service was or perhaps their purchase of devices like a Roku.  Barrios said there is room for growth but these things are "well penetrated" in the United States.  Barrios said it takes time for complete awareness of anything, including the WWE Network - including the price, the terms, the content.  He said there is still momentum to be gained as the awareness continues.

They were asked about the Middle East deal.  They don't have hard data for the region.  The deal is similar to the Canada deal and will be less driven by subscribers and more that they are being paid for the content as a licensing deal.

Vince was asked about the Twitter feed for the Cancel WWE Network trends over the Royal Rumble finish.  Vince said it created controversy and that's good by WWE.  It was a gesture from a vocal minority because "Santa Claus didn't come on that PPV."  The babyface didn't win, so that person says they aren't going to watch again, but they are.  Well, a babyface won, just not THE babyface that everyone in Philadelphia wanted, so I guess the ENTIRE ARENA was a vocal minority.

They were asked about the idea of doing a WWE subscription radio station for SiriusXM.  Barrios said they have 100 different ideas they are thinking about and that is something that has been talked about.

They were asked about the WWE Studios films division.   They were asked about taking an impairment on "Occulus."  Barrios said that given their investment, the impairment was what you would expect.  The film did about what they expected.  Of the money they invest, it's over a three year average.

Their tax rate is going to fluctuate depending on what their earnings are.  They expect it to be consistent with what it's been but that will change based on different earnings revenue.

That was it for the call.

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