WWE held its 2019 fourth quarter earnings conference call on Thursday that featured WWE Chairman & CEO Vince McMahon, SVP Financial Planning & Investor Relations Michael Weiss and acting WWE CFO Frank A. Riddick III. Here are the highlights:
– The conference call opens with a welcome to everyone on the call.
– Vince stated about the management transition that alludes to George Barrios and Michelle Wilson’s exit, “Announced a management transition that did not reflect a change in strategy…The decision was based on different views on execution and areas of focus” McMahon praised them for their work but noted that WWE wouldn’t miss a beat without them.
– He added that they will have an “evaluation of strategic alternatives” to consumer products. “We are changing the WWE culture to be more collaborative and inclusive…”
– Vince says of WWE Network “strategic alternatives” that “which could be implemented quite frankly in the next quarter.” He added that he’s more confident than ever about their future.
– Riddick ran through the media content and brought up their strategy with SmackDown on FOX, Raw and NXT on USA Network. WWE predicts an increase to 1.47 million WWE Network subs for Q1 2020. WWE is also looking at alternative strategic options for the Network.
– Riddick ran through the revenue numbers. Revenues increased 18% to $322.8 million from the prior year quarter as increased revenue in the Media segment. Operating Income increased 87% to $99.8 million driven by increased profits from the Media segment. Media revenues increased 29% to a quarterly record of $264.6 million. WWE Network’s average paid subscribers decreased 10% to approximately 1.42 million. The prior quarter it was 1.51. The decrease in live event revenue was caused by no Super ShowDown in Australia. Media was hurt with poor 2K20 sales
– This was when they opened the call up for questions.
– When asked about their TV deal in India, they have an existing deal but the uncertainty is when a new deal will be put into place. They already have TV rights in guidance.
– When asked whether the WWE Network is a business that they can sell to a potential partner such as ESPN for ESPN+, McMahon stated, “We have a lot of options. We continue on with a free and enhanced paid tier. Right now is no more better time than to exercise the selling of our rights. All the majors are really clamoring for our content.”
– Vince made it clear that the XFL is separate from WWE with 400 employees.
– A question regarding the potential of pulling NXT off the network. Vince said the Network is “the most premium” content. He says WWE Network is their premium option, but TV is another way to capitalize on the Network.
– A question about putting ads on the Network, McMahon noted that they’re considering it if the Network stays as is. McMahon added that there is a very strong interest in OTT. If a deal is made then they would be announcing that in the first quarter. “That’s how far we are”
– McMahon was asked about spending more on talent and production cost, he thinks doing so is paramount. He sees growth in ratings and noted how previous quarters that were down had talent injury. He said that they think they’re exactly where they want heading into WrestleMania.
– More questions of the WWE Network moving to a potential other OTT platform was brought up. McMahon stated, “When you’re playing with some of the majors it depends on negotiation. if we could keep it [WWE Network], absolutely. Nothing is a must-have. We’ll deal with what’s available. If any one of these deals takes place, it’s gonna be a big deal. It’s gonna transformative.”
They said that they don’t comment on what the profitability of the WWE Network is
– How has the free tier for WWE Network performed? Riddick said, “It was launched in December and it’s too early to say what the results are. We’ll continue to analyze. When we feel like we have good data, we’ll put that out there.” McMahon added, “Again, it was a soft launch.”
– A question about the concerns with McMahon involved in XFL. McMahon noted that there is no investment by WWE in the XFL. Riddick added there’s no plan to put the XFL back into WWE.
– A caller asked about AEW competition and AEW producing more edgier content and whether it has changed their point of view. Vince said, “AEW has not changed our content at all. We don’t need more edgy content. PG. One of the few programs out there that really is PG. As far as NXT, we’re competing. NXT is competing on Wednesday night and doing extremely well.”
– McMahon was asked about the management turnover and how that has impacted his role. He said he’ll have a few more direct reports now. “I have pretty broad shoulders and I can handle a lot.”
– Regarding WWE’s company structure, McMahon noted, “In terms of reimagining our culture in the way we do business, it’s going to be very inclusive. Attracting world class individuals to our company. I mean who wouldn’t want to work for WWE? I mean come on… It won’t take us long to implement all that.”
– A caller wanted to know more about the disagreements on strategy with McMahon, Barrios, and Wilson. Vince stated, “A lot of it was execution. Focus as well. Reallocation of resources. The way we do business, it’s going to be different. And more successful as well.”
