WWE Q3 Call: AEW Challenge, Bischoff’s Dismissal, NXT Touring Schedule, more

Here’s a recap of today’s conference call with WWE Presidents Michelle Wilson & George Barrios as they addressed questions from investors:

Michael Weiss welcomed everyone to the call.

They stated the delay of a new deal in the MENA region hurt their overall numbers this quarter. They are working on getting the deal done.

They stated the domestic TV ratings have improved. They touted Smackdown and Raw having lower declines.

They noted Smackdown’s audience was 150% higher over the last few weeks vs. previous programming on FOX the month before.

The WWE Network drop was due to lower subscriber numbers earlier this year, which they had talked about previously.

They touted the improvements made to the WWE Network.

They talked about the expansion of WWE NXT on USA Network, describing it was their latest licensed series.

They promoted the WWE Backstage series, their After the Bell podcast and the forthcoming Rumble animated film partnership with Paramount.

Live events was down $3.1 million due to lower attendance in North America. They had fewer events, but stated that had little impact on the numbers.

They admitted the response to the WWE 2K20 video game reaction was “mixed” but believe in the company’s ability to continue to develop their new game engine for the future.

They expect additional growth in India and China. The company is well positioned to take advantage of changes in the entertainment world, such as the continued growth of digital and their ability to reach a global audience.

They expect rights fees to increase in the years to come and that will give them a large revenue stream with “low volatility.”

They began taking questions.

They expected their MENA deal would have been completed earlier in the quarter but it hasn’t happened. They’ve also brought forward some new investments in terms of creation of their content, including production of events, signing and retaining talents and more.

They were asked if NXT would remain on Full Sail University and what it moving to the USA Network means to the WWE Network. Barrios said the long term strategy is to create another core, flagship property in the United States’ paid TV ecosystem. They thought the opportunity was worth some of the risk of the Network. The turnaround between the USA Network broadcast and then its Network debut (24 hours) is valuable to subscribers. They wanted to create another strong brand alongside Raw and Smackdown. He did not address Full Sail.

They were asked if there have been any changes to the company’s 2020 expectations of expenses. There are always changes but nothing massive. They made some investments earlier in order to accelerate some moves but there were no real changes to year over year plans.

They declined to comment on a potential timeline for the MENA deal. Discussions are ongoing. They are trying to find common ground. They are still pursuing an India deal. They were asked if there were any :specific bottlenecks” that took these deals longer to get done. Barrios said they believe they will have their Indian distribution plan set by the end of 2019.

They don’t think the bundling of streaming services and lower price ranges will have any bearing on the future pricing of the WWE Network, feeling they are aiming for a certain audience that wants the content. The big events are still the primary driver of the Network plus they are doing 200 original hours beyond the PPVs. They are really excited about the product and the value of it. As they move forward, they believe a tiered system will assist them plus the future free tier plans, localization of content, etc. They feel good about the future. The way the math works, because Wrestlemania is such a big push for their service, they are down year over year.

They were asked if the model for two events a year in Saudi Arabia will remain. They said there are elements for 2020 still open so they can’t comment on that.

Barrios was asked about a line in the earnings release, specifically if that meant there were no assurances about the current deal with the government. Barrios said they thought the MENA deal would be done but it’s not yet.

They were asked if Crown Jewel is more expensive than before because of Tyson Fury and Cain Velasquez being brought in, They declined to comment on that but said they made some additional investments in talent earlier than scheduled this year.

They were asked how the FOX deal has cascaded over to them. Michelle Wilson brought up all the cross-promotion FOX did building up to their debut and noted they were promoted during the Wiorld Series. That leads to sponsors who want to work with them. She said FOX and NBC had great upfront presentations built for them. FOX is bundling them with their other sports properties and that brought new advertisers who have never worked with them before. The FOX deal will bring them entities they have never worked with before and they are confident about that.

They declined to discuss the economics of the NXT TV deal, noting they were doing this “for the long term.” That sounded to me, like they took a small deal in order to position it as more valuable down the line.

They are focused on 2020 and the value of their content in 2024-2025. They believe sponsorship and their content will be drivers for their growth. Their international deals take time and can’t be measured in short periods. He said the NBA deal in China took 20 years to grow and his guess is some of those early years were at a loss. They are focused on the next few years as well as long term and trying to make the right trade-offs.

They were asked about worries in their engagement trends and whether that led to making investments earlier back into the company. Barrios said the engagement is not where they wanted it to be, but they continue to invest in their content for the long-term growth of the company.

They were asked about the uncertainty of the next year driving a potential buy-back of stock in 2020. They didn’t want to get into that for a number of issues.

They were asked about Eric Bischoff’s firing and how involved Paul Heyman is on the creative of Raw now. They declined to comment on either, instead speaking about the structure they built to allow Vince McMahon to be more “targeted” in how he deals with creative.

The United States remains their largest market. They view China and India are big emerging markets.

They were asked about AEW has had any impact on the company, whether it be TV ratings, talent cost, etc. Barrios said the live content ecosystem is competitive. Everyone from NFL on down is a competitor to some degree. They feel good about their history and ability to engage the audience. There is a lot of competition for eyeballs and they take them seriously.

Is AEW causing the cost of talent to rise? It was noted that Chris Jericho went there and whether the company worries about losing other talents there. Barrios said they have a creative side, talent and production are the three sides of investing. On all three fronts, the costs are higher. They don’t want to get into influences on that cost. Historically, as the company has done better, the talent has done better and that’s a win/win and that’s a good model they expect to continue. As far as individual talents making choices, everyone has a decision to make. He touted everything they do to put a spotlight on talents across the world and he “would imagine” that when you think about who to “align with” all those things are important.

Credit: pwinsider.com

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