WWE held their third quarter 2017 earnings conference call on Thursday that featured Michael Weitz (Investor Relations), George Barrios (Chief Financial Officer) and Vince McMahon (CEO & Chairman). Here are the highlights.
— The conference call opens with Weitz welcoming everyone to the call and runs through the earnings.
— McMahon got on the call and stated that the WWE Network averaged 1.52 million subscribers. He went on to say that they are looking for significant growth in China with the network launching there. OIBDA is at an all-time high right now. “We launched WWE Network in China with partners PPTV Successful launch Looking forward to a great deal of growth there in months.” He brought up in WWE signing talent from India and had Triple H reveal their names. He could only think of one.
— Barrios started going through the financial highlights. Revenue was up to $186.4 million up 14% from quarter 3 of last year. Operating income was 85% from quarter 3 of 2016. He noted that the WWE Network subscriber count was in line with their expectations. He listed the new programs on the streaming service including the Mae Young Classic. As of September 30, WWE held $260M in cash and short-term investments and had $100 million in debt capacity under the Company’s revolving credit facility.
— Michelle Wilson is on the call and recapped programs on the WWE Network. They launched WWE Saturday Night, a localized weekly TV show in Mexico and Central America. Produced in Spanish with Fox Sports Mexico. They had a 29% increase in global sponsorship revenue in first nine months of 2017. Digital engagement continued to grow with video views up 23% to 14.2B and social media followers up 17% to over 825M. “We’re on a path to reach 20 billion video views by year-end.”
— Barrios on now. For the fourth quarter, project average paid subscribers to WWE Network of 1.47 million, plus or minus 2%. An estimated fourth quarter 2017 Adjusted OIBDA 1 of approximately $31 million to $35 million, with continued growth from increased TV rights fees and network subscription and favorable changes in the fixed cost base. For the full year 2017, project average paid subscribers to WWE Network of 1.53 million (representing year-over-year growth of 8%). In 2018, WWE expects to achieve another year of record revenue and have targeted Adjusted OIBDA 1 of at least $115 million, representing another all-time record. WWE is expecting to announce new United States TV deal between May and September of next year as their deal with the USA Network expires on September 30th, 2019.
— Weitz opened the call up for questions. When asked about exclusive negotiations with the USA Network, Barrios wouldn’t comment on that and that an announcement would come next year. “We’re not going to talk about mechanics of the agreement. Small cohort around the world.” WWE will take digital into account for a possible deal to air their content (Raw and SmackDown). “We’re always balancing where content goes and trying to get to one of four key objectives.”
— On which department that they are declining in, he noted that its Home Entertainment (DVD releases). “We had a really good performance, especially with SuperCard. We’re excited in mobile game space and about having a broader portfolio.”
— When asked about getting new advertisers, Wilson named various new sponsors. “We’ve gone from 100 to almost 200 advertisers. Those 70 have been incremental. Literally, those are 100-whatever to almost 200. To add color on verticals- in the past, WWE was reliant on theatrical studios & games. We’re starting to add brands like Nationwide, Pfizer, Kraft, Toyota. We’re feeling good about the progress we’ve made on that front.
— On losing ratings and how it affects business, Barrios brought up how well they are doing on social media. He said that they don’t like seeing ratings go down but in India, they are increasing. “We think bundles will exist. There may be different bundlers, but we think bundles will exist. We still believe in pay TV platform. We think bundles will exist. Raw & Smackdown have been proven strong tools of engagement.”
— On increasing subscribers for the WWE Network, WWE Network is not a general entertainment network competing with other general entertainment networks like Netflix or Amazon VIdeo. We seek to super-serve our passionate fans.” Michelle adds that they’re already doing 8 languages for some live content (i.e., PPVs).
— Laura Martin questions Vince on international business. Barrios answers instead. “There was limited inventory & limited partners. Today we can get a piece of content into any broadband home.” Vince just chimed in after George answered, “I did a good job answering huh?”
This wraps up the call.
