Vince McMahon and members of senior management served as the hosts of a conference call pertaining to the 2017 third quarter financial report that was released on October 26, 2017. The following are the highlights of the call. Refresh the page for the latest updates.
-The call is hosted by WWE Chairman Vince McMahon, WWE Chief Strategy and Financial Officer George Barrios, and Chief Revenue and Marketing Officer Michelle Wilson, and and WWE Investor Relations Michael Weitz. Weitz read through the legalities and turned the call over to Vince.
-Vince spoke about the network growth being within their guidance and launching on PPTV in China. Vince also spoke about signing their first female talents from the Middle East and India. He laughed as he asked someone else (I believe it was Paul Levesque) to pronounce their names.
-Barrios read through the financial report, which can be viewed on the WWE Corporate website. Wilson also checked in and read through some of the highlights. She noted a 29 percent increase in global sponsorship revenue within the first nine months of the year.
-Barrios noted that projected 1.47 million average paid WWE Network subscriber count in the fourth quarter and noted that the projection is plus or minus two percent. Barrios updated the projected OIBDA to $112 million for the year, up from the previous projection of $108 million. He said they are projecting $115 million for 2018.
-Barrios noted that the Raw and Smackdown deals with USA Network expire in 2019. He said they expect to announce their U.S. distribution plan within May 2018 to September 2018.
-They opened the lines for questions.
-The first caller asked if they are in an exclusive negotiation period with USA Network and when they can begin talking with third parties. Barrios said they are not getting into the mechanics. The caller asked about splitting up the content between TV and diigital. Barrios said they will tailor the approach market by market.
-The next caller asked about games. Barrios said they work with 2K on the core game. He also spoke about how well the WWE SuperCard game did.
-Wilson spoke about how they are attracting blue chip advertisers that they were not reaching in the past. She spoke about how they have over 200 advertisers on USA Network now.
-The next caller asked about whether there is a concern over live sports ratings dropping and how that affects them. Barrios said they still believe in the pay TV platform. He said they will see what the market is like next year. “Nobody likes to see the ratings go down,” but he said Raw and Smackdown have proven to be powerful when it comes to engagement.
-The next caller asked about the possibility of tiering on WWE Network and noted that the over the top competition is increasing monthly. He also asked about WWE UK. Barrios said that WWE is not a general entertainment network competing with Netflix or HBO. He said the network super serves their most passionate fans. He spoke about localizing content. He said that the network probably has multiple tiers when he spoke of what the network will look like two years from now. Wilson said they are providing their network specials (pay-per-views) in eight different languages as they air live.
-The caller asked about the international licensing deal that they signed last quarter and whether it’s led to any new days. Wilson said they signed it last quarter and there’s nothing to report yet, but they have secured a lot of meetings with brands based in the United States that are international brands. They did not address the UK question.
-The next caller asked about transitioning free users to paid subscribers. Barrios said the network gets 27 percent of their subscribers from outside the United States. He spoke about localizing India, Latin America, and the Middle East and how that can drive growth. He said the key will be localization of content and commerce. Wilson said that from a marketing perspective, they are not directly using their data as well as they could, but the infrastructure they are building will help them drive more one-to-one marketing.
-The next caller asked for an update on the launch of WWE Network in China in August and what returns they’ve had thus far, and the long-term opportunities in China. Wilson said it’s really too early to tell and it’s “definitely a long play in that market.” She said they and their partners have been pleased by the number of subscribers thus far. She said they have a team on the ground on the digital and social media front.
-The next caller brought up the television rights fees negotiations and asked if there is another way to determine the fair value. Barrios said they feel the ultimate metric is time. “We are competing for time and attention,” he said.
-Vince was asked why they didn’t localize content 15 years ago and whether it’s the WWE Network that allows them to monetize the approach. Barrios answered rather than Vince and spoke about how things have changed during that time. Vince joked that he did a good job of answering the question (Barrios answered it).
-The caller asked about adding a lot of women to the roster. Barrios said they are getting the same kind of traction from the women that they get from the male wrestlers.
-The caller noted that there were 70 hours of new content within the quarter and whether that’s taxing their production facilities. Barrios said they will move 500 hours or so of content from their library each quarter along with their new content, which he said has been consistent. Barrios said they have a great and growing team. Barrios said the WWE Performance Center has been a home run for providing an infrastructure for new talent. He said there is an opportunity to grow that and they are thinking about it. He thinks there is an opportunity to increase their talent base around the world.
-The caller said she believes they could be doing more internationally. Barrios said they are about halfway to three million subscribers and compared it to Netflix’s goals for subscribers.
-The next caller brought up how quickly women’s wrestling his growing in the United States. He said the company has had a gradual progression in building their female roster and noted that it seems to be growing. Barrios spoke about Paul Levesque joining the management team and laying out his strategies. Barrios said all of WWE’s successes have been organic that smart small and build. He said that in 10 years they will look back on how the WWE Performance Center started in Orlando and grew around the world.
-Wilson noted that 35 percent of the roster is made up of female talent and it’s grown in recent years. She said they look at the data that shows the female talent are resonating with their fanbase. She said all the feedback on when the women work or have a main event match is very positive. She noted that the Mae Young Classic viewership was similar to their other tournaments.
-The next caller asked about their investment in e-sports and Barrios addressed it by speaking about how they make strategic investments. This concluded the call.
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