​Conference Call Recap – Vince McMahon Calms Investors Down?

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Credit
Prowrestling.net

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

-Weitz read
through the legalities before turning things over to Vince
McMahon.

-Vince said he hoped to give “a great deal of clarity” regarding
where things are from a business standpoint. He noted that he was in London for
Raw. He said the point of the call was to clear up any degree of
misunderstanding and said they pride themselves in transparency.


-Vince
said there was a “somewhat favorable outcome” in television deals. He admitted
they were a bit disappointed in their NBCU deal, but they were able to nearly
double their overall television rights revenue. “A good deal, not what we
wanted,” Vince said regarding the NBCU deal.


-Vince said the core
business is “rock solid.” He said they feel very strong and bullish in the WWE
Network business model. Vince turned it over to Barrios.

-Barrios said
they invested $75 million into the network in 2012 and 2013 and $40 million in
staffing.

-Barrios said they have negotiated television distribution
deals over the last six months and are still doing so in India. “Our analysis
indicated that our content was undervalued in several of our key markets,” he
said. Barrios said that in three out of four markets they were correct. Barrios
walked callers through a release regarding their financial
outlook.


-Barrios said that if WWE Network produces one million
subscribers by the end of 2014, it would yield a 12-month average of 650,000
subscribers for the year. The rate of adoption translates to a 2014 net loss
ranging from $45 to $52 million.


-Barrios walked viewers through a 2015
potential outcome using a 1.5 million subscriber count while stressing that it’s
merely a scenario. He said they expect “a gradual ramp up over time” in network
subscribers. He stressed that opening the network globally and expanding the
platforms and marketing campaigns as keys.

-The opened up the phone lines
for calls.

-A caller asked whether the launch of the network was an issue
in television negotiations and whether they would delay the launch if they had
to do it again. Vince said it was a fair question and he believes it did have an
adverse effect, but waiting until after the negotiations would have delayed the
network by another year.

-A caller asked about the NBCU deal. Barrios
said they will not be greater than five years.

-Barrios said there is a
$60 million cannibalization number in the United States for pay-per-view, and an
additional $20 million worldwide.


-A caller noted that investors are
concerned about the dividend. He asked whether investors can assume the dividend
is safe. Barrios said that if they are successful executing the network strategy
then they have the financial capacity to support the dividend, but that depends
on successful execution.

-The caller noted that AT&T and DirecTV said
they hope to invest in over the top distributors. He asked if WWE has had any
talks about selling their content that way. Vince said he believes everyone will
recognize that over the top distribution is the way of the future. He said there
will be many opportunities that open up for WWE similar to the one mentioned by
the caller.

-A caller was having cell issues and Vince McMahon could not
understand his question (it was nearly impossible to make out). Vince turned it
over to Barrios, but he disappeared from the call as well. “Shit,” McMahon said.
The conference call host put things on hold while they got Barrios back on the
line. There was a few minute delay.


-A caller brought up the turnover
with the network executive that was let go. Barrios said they are very
comfortable with their current management team and would not get into specifics
regarding the decision.

-A caller asked about the subscriber count.
Barrios said they would get into that in their next conference call (on a
quarterly basis).

-They brought back the caller with the bad phone
connection and it flared up again. It was Brad Safalow, the man who was told by
Vince that he could put him in a hammerlock if they failed to double their
television revenue. Safalow resisted any temptation to bring that up and asked
financial related questions.


-A caller said people are a little confused
why total spending at a steady state would be higher during the ramp state. He
mentioned content development as a possibility. Barrios said they are moving to
a subscription business model that they don’t have history in.

-Barrios
said they are learning every day about the business side of the network. He said
people want certainty, but he can’t give it to them. A caller asked about what
type of growth strategy they have for it. Barrios said they are promoters at
their core and they have a team of marketers. He said he didn’t want to let the
cat out of the bag regarding plans. He mentioned his previous announcement of
Tough Enough appearing on the network.

-A caller asked what type of
growth numbers they have to see over the next 12 to 24 months from network
growth. Barrios once again said he couldn’t give an exact number. He said they
need to see it and live it to get a perspective.

-The idea of the holiday
season as a time for network subscriber growth since a lot of kids have to ask
their mom and dad to order the pay-per-view. Barrios said he sees every single
hour of every day as a time for new network subscribers.

-Barrios asked
if there were additional calls. The host said no, then said there was another
caller, then they wrapped up the call without taking the
call.

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