On Thursday afternoon, WWE reported their Q2 Financial Earnings and also held a conference call.
Vince McMahon, Stephanie McMahon, Nick Khan and others were all on the call. During the Q&A session, one of the investors directly asked Vince McMahon about AEW making significant roster investments and their viewership rising and wanted to know if he saw them as a competitor and does he expect to make additional investments to counter them? Vince noted that he does not see it as a “rising tides lift all boats” situation like the Monday Night Wars, which was different. Vince said Ted Turner was a different situation and they came after them. He said AEW “is where they are” and he doesn’t know what their plans are. Vince said he doesn’t consider them competition in the way WCW was, “not anywhere near that,” Vince continued, saying, “I’m not so sure what their [AEW’s] investments are as far as their talent is concerned, but perhaps we can give them some more.” What exactly he means by that comment is unknown. More releases on the way? More competition?
You can check out some additional highlights from the call below:
* After the usual introduction with the legal disclosures from Michael Weiss, the call is turned over to Vince McMahon. He cites “solid results” and high demand for live event tickets, with strong advances for shows including SummerSlam and an increase in ratings since live events returned. He notes that they have improved profitability and passed it onto Nick Khan.
* Nick Khan talks about how in the last earnings call they discussed earlier this year how the NBA, NFL and the like saw increase their media rights fees despite lower overall ratings. He says that the same happened in the second quarter with companies, as well as private equities investing in sports teams. He runs through them and points out how it’s evidence that the marketplace has a lot of opportunity for growth, highlighting soccer media rights increases and investments in Premier League teams due to the demand in media rights for live sports. He notes that they renewed their deal in Australia with FoxTel and got an increase for package rights, and says they’re encouraged by their trends as they expand WWE Network content overseas.
* Khan mentioned again that ratings were up since live shows began, and said that four months into their Peacock deal they’re seeing a big increase. Backlash was up 26% in viewership, Hell in a Cell was up 25% and Money in the Bank was up 46% from their prior year performance, and up considerably from pre-pandemic numbers.
* He touches on the return to live event touring and its return on Smackdown. He says it was “not a return to live events,” citing the ThunderDome, but a return to touring. He says that Jult 16th’s Smackdown was sold out and the highest grossing non-PPV event in Houston for WWE history. with merchandise sales up 50%. Money in the Bank was sold out and the highest-grossing non-WM in WWE history in the Dallas area, with 100% merchandise increase from the last show in the area. And Raw in Dallas was their highest attendance in Dallas in over three years, with merch up almost 50%. Smackdown on Friday from Cleveland was the highest non-PPV date in WWE history in the city. He also cites Rolling Loud and its big audience, with strong merch sales, and says their house show in Pittsburch was the highest grossing non-televised event in Pittsburgh history, and same with Lousville the next night. Raw in Kansas City was their highest-gorssing non-PPV there in 15 years, with merch sales up 50%.
* Khan hypes up Summerslam taking place in Las Vegas on Saturday, August 21st, which will be the biggest gate for a non-WM ever, and points out the New Year’s PPV announced at Rolling Loud, which will not be up against college football the way it would be in most years. The rest of the calendar will be announced shortly.
* Khan talks about their sponsorships and sats Stephanie McMahon have brought in 20 new and existing sponsors this year, while still looking for more brands to promote themselves. He mentions the TikTok Summerslam ring announcer contest, which has garnered 9 million views and thousands of submissions.
* Khan said that they will be doing another NFT drop for SummerSlam with John Cena.
* Finally, Khan mentioned the upcoming The United States vs. Vince McMahon project with Blumhouse Productions, which they’re excited for.
* Stephanie takes over and says it’s an exciting time for their business and that while they don’t know what the future holds, they’re positioned well with the return to live event touring in terms of fan engagement and financial performance. She notes that she and Triple H greeted fans outside before the first show and it felt like a “giant family reunion.” She said that Cena’s return has helped business pick up and talks about how FOX and NBCU supported their returns with different campaigns and says they upgraded the production for their entrances, along with different augmented reality, while the costs remain par with their 2019 expenses.
* Stephanie touts the increase in viewers since they returned to live events and talks about how TV viewership has been stable throughout the quarter with modest increases for both and big spikes in the demo since fans returned. She noted that digital video views have also increased including a 3x increase in FB hours and 2x increase in views. They also saw their WWE Biography specials increase A&E’s Sunday night performance by 90% in the demo and 21% in viewership, and talked baout how they’re making a positive impact for their partners.
* She said that brands are looking for unique ways to engage with their customers, and WWE is perfectly positioned to that with customized content experiences. She referenced the “zombie invasion” at backlash to hype Army of the Dead and said the results speak for themselves, with 25 million content views across digital and social 3 of the 14 trending topics that night directly tied to the integration. She also points out that Army of the Dead is one of the most watched Netflix originals ever.
* She then talked about launching the WWE Championship Credit Card and talked about their deal with Pure Life Water, as well as working with Tiffany Haddish, who will host the SummerSlam After-Party in support of her foundation. She referenced the Community Impact Report they released and the positive impressions they’ve put on their community partners, and said that they’re well positioned to continue to grow the brand and service their audience.
* Kristina Salen took over and began to run down the financial performances vs. the year ago. She said that it was solid financial results with total revenue up 19% reflecting increased monetization across platforms. Adjusted OIBDA declined 7% mostly due to higher TV production costs for ThunderDome and WrestleMania. It was also adjusted by increased personnel expenses as furloughed employees returned. She notes how they consolidated their media team and and said the “related severance expense” was $8.1 million.
* Salen noted Media adjusted OIBDA was down 5% due to increased production expenses and says they they produced a significant amount of content despite the challenges, and talks about the move of ThunderDome to Yuengling Center. They expect that production expenses for Smackdown and Raw will continue to decline and put over the production team for their work.
* The live event adjusted OIBDA was up due to WrestleMania considering they had no live events, and are thrilled by the return of live events. Ticket revenue is expected to be at least on par with 2019 due to heightened consumer demand and more.
* Their consumer products division had a 4% or $0.3 million, primarily due to changes in product mix and to a lesser extent an increase in revenue. They had a slight drop in online sales but points out that the big rise of e-commerce last year due to lack of live events was a reason for the slight drop. She highlights the new pick-up app which allows them to expand their sales volume.
* The Q&A portion began, and the first question asked Khan about the rise in media rights for soccer and how they view WWE as similar in value. Khan said soccer is the #1 sport globally and they see the global positives not equal to soccer, but appealing to many different counties in the same way. He says there’s an increasing audience now and they will benefit.
* Asked about new international events they have plans for, Salen said that they haven’t released the number of total events they expect for 2021 specifically, but said the their guidance does include a large scale of international events, and are forecasting them to be in the range of what they did for the second half of 2019, with 35 events on sale through the end of September and more to be announced shortly.
* Asked about the opportunities are for the next two to three years regarding increased sponsorships, Stephanie said that they’re already seeing tracking of a potential for significant upside to their growth. It’s hard to give projections, but they have the opportunity now to more fully engage with Peacock as well as digital and social. They look to see a continued positive trend.
* Asked about an update on Middle East TV rights, Khan said that he, McMahon and others are “still deep into it” and remain optimistic. They hope to have good news shortly.
* Asked about “out of ring TV production plans” and how much they are looking to do, if they’re pre-selling and if they’re looking at them as profit setters and not just promotional tools. Khan said the answer was “yes to all of that” regarding the goal: profit setter, promotional, brand extension. He points out the increase in ratings on A&E and said more is coming, both in an unscripted and scripted capacity.
* Asked about the new Headquarters, Salen said the budget hasn’t changed. They hope to be there by late 2022 and are still intending to sell the three buildings they currently own when they move in.
* Asked when they expect to see real growth in sponsorship, Stephanie says that the return to live events will definitely help with the energy and excitement, but emphasizes that they have seen significant increases across the business and expect to see more of that.
* Vince was asked about how AEW is making significant roster investments and have gained in viewership; does he see them as a competitor and does he expect to make additional investment to counter them? Vince said he does not see it as a “rising tides lift all boats” situation like the Monday Night Wars, which was different. Vince said Ted Turner was a different situation and they came after them. He said AEW “is where they are” and he doesn’t know what their plans are. He doesn’t consider them competition in the way WCW was, “not anywhere near that,” Vince continued, saying, “I’m not so sure what [AEW’s] investments are as far as their talent is concerned, but perhaps we can give them some more.” What exactly he means by that comment is unknown. More competition? More talent?
* Khan added what he’s said regularly, which is that everyone is their competition whether Netflix or anyone else. They’re looking straight ahead and not at the competition.
* The next question asked about the production efficiencies and live event profitability, and if the lack of an increase in guidance is a revenue issue. He also asked if they can start to talk about margins soon. Salen said that long-term earnings power, as they move into Q4 they will see the full power of their TV efficiencies which they expect to continue. From a guidance perspective it’s just about where they are right now in terms of pandemic recovery. She says they’ve been ahead of expectations and hopeful that will continue.
* Asked about the recent internal changes and how they should think about media optics moving ahead, Salen talked about how their media department consolidation was to eliminate redundancies and they made the changes deep into Q2, so will see the effect of that in Q3. She expects continued sequential improvements.
* The next question asked about global opportunities and the evolution of combat sports, if there will be a lot of mergers and the like, plus Peacock coming to Sky. Khan said that Univision’s buying of Combate is not a sign of continuing trends and said that regarding Peacock’s expansion, they’re at a good moment in time that all US media conglomerates are set to go international soon. He said that they are already well positioned for that due to their existing infractructure regarding international production.
* Asked if the guidance assumes a large scale international event, Salen confirmed that.
* Khan was asked about the next big-step revenue increase similar to the media rights renegotiation a couple years ago. He said international media rights, sponsorship, and scripted & unscripted TV.
* That ended the call.
(h/t – Jeremy Thomas)
