WWE News: 2/28 Vince McMahon conference call coverage: WWE Network details, no launch date announced

Feb 28, 2013 - 10:00 AM

Vince McMahon and members of senior management served as the hosts of a conference call pertaining to the fourth quarter and full 2012 financial report that was released on February 28, 2013. The following are the highlights of the call.

-The call was hosted by WWE Chairman Vince McMahon, WWE CFO George Barrios, and WWE Investor Relations Michael Weitz.

-Vince touted pay-per-view, social media, and action figures success amongst other things to start the conference call. He also noted that their Rolling Stones pay-per-view production opened a lot of doors. Vince touted the new video game partnership with Take-Two Interactive.

-From a business outlook standpoint, Vince said 2013 will likely be flat and said they will explain why throughout the call. He also mentioned the WWE Network and seemed a bit frustrated by how long the process has taken.

-Barrios took over the call and ran through the notable aspects of the financial report. It was noted at one point that they intend to spend more on creative. He also noted that pay-per-view revenue was down compared to the previous year due to the removal of one pay-per-view. He noted that with the comparable events, revenue was actually up due to the pricing even though the actual number of buys were down.

-WWE Network related costs reached $8.2 million in 2012. Three key areas mentioned by Barrios are talent development, the creation of content, and marketing strategies.

-Barrios said that in the United States specifically, they believe a pay model/subscription network is the way to go. Their estimates are two to four million steady subscribers for the network. He said the pay-per-views would still be offered in a la carte form while also on the network. WrestleMania would remain a pay-per-view exclusive event. He mentioned a price point between $12.99 and $14.99 and the added revenue that would bring in.

-Barrios said that "if the network is launched within the year" while discussing the expenses associated with a network launch.

-Barrios noted that they will be replacing the corporate jet and selling the current jet. He wrapped up the presentation portion of the call and then it was opened up for phone calls.

-A caller asked if WWE intends to bring Raw and Smackdown onto their network. Barrios said they feel comfortable about having broad distribution in the U.S. in addition to the network. Vince said it's also important to have a broad base so they push viewers to the network.

-The caller asked for the likelihood of the WWE Network launching in 2013. Barrios said they got out of the prognostication business. "We feel good, we're optimistic, but we're going to get out of predicting dates," Barrios said.

-The caller mentioned the cannibalization of pay-per-view buys absorbed by the network airing pay-per-views. Barrios stressed that WrestleMania would remain on pay-per-view and that does over one million buys and accounts for roughly half of their pay-per-view revenue. Vince added that people who can't afford "that huge monthly" pay-per-view bill may be more likely to purchase the network at the more affordable rate.

-Barrios raved about how Take Two "blew us away" regarding their plans to get the games on as many platforms as possible.

-A caller asked if it's critical that the network be PG all the time and mentioned that older viewers may enjoy edgier content. Vince said they have that ability, just as they do on home video.

-A caller mentioned the possibility of friction with pay-per-view distributors if they shift to the network. He asked if they have the ability to shift it today. Barrios said they currently have the ability to use other platforms to distribute pay-per-views as long as the price point is the same.

-A caller asked what the benchmarks are for determining when the network will be at a steady state. Barrios said they need roughly one million subscribers to break even on the network. He said they feel they will have a pretty good idea within six months to a year to determine whether the steady state. He said the elements are getting carriage and subscriber ramp up. He said within six to 12 months of the launch they would have a good idea whether the network is worth going forward with.

-Weitz closed out the conference call.

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