WWE held their second quarter 2019 earnings conference call on Thursday that featured Michelle Wilson (Investor Relations), George Barrios (Chief Financial Officer), and Vince McMahon (CEO and Chairman). Here are the highlights:
– The conference call opens with a welcome to everyone on the call.
– McMahon got on the call and stated that they had new TV deals in the UK, Latin America, and China. He brought up Paul Heyman and Eric Bischoff taking over as Executive Directors of Raw and SmackDown. By doing this, this allows him to have more time with developing new talent and storylines. It “allows me to not have to get in the weeds as much as in the past.”
He said that WWE is excited about their future and new TV deal with Fox by being in more homes. Vince added that they feel that this is a new kickoff for them.
– Barrios started going through the financial highlights. Revenues declined 5% to $268.9 million from $281.6 million in the prior-year quarter with lower revenue. WWE Network averaged 1.69 million paid subscribers. For the third quarter 2019, the company projects average paid subscribers of approximately 1.53 million.
He also ran down the TV ratings. Barrios believes the improvements from April to June have to do with talent getting healthy and storylines coming out of WrestleMania. Raw was down 21% in April, but only down 11% in June from the prior-year quarter.
Barrios noted that WWE’s TV ratings decline have been worse than the top 25 cable networks throughout 2019. Barrios noted that WWE is no longer looking to reach a record number of WWE Network subscribers this year.
– Wilson ran through the media content and brought up their strategy with international TV distribution in UK, Latin America, and China. She touted creating new content on traditional TV platforms such as Miz & Mrs. as well as Total Divas being renewed. Wilson noted their weekly in-studio show on FS1 later this year. Live events were down by 7% and blamed them on declining attendance and holding six few international shows. WWE consumer products were down 13% from the prior-year quarter.
– Barrios noted that they expect strong fourth quarter earnings with the new United States TV deals and Saudi Arabia event. WWE is still targeting 1 billion in revenue this year. Mentions that deal with Saudi is in principle and is nonbinding.
– This was when they opened the call up for questions.
– Regarding the TV deal and event in Saudi Arabia later this, they assume that with a combination of these agreements will net them big revenue. Barrios notes there’s a possibility of a $10 million “downside” that depends on engagement metrics.
– Barrios is asked about the India TV deal that is up for renewal, which Barrios declines to get into detail about ongoing discussions.
– Heyman and Bischoff were brought up regarding their involvement now. McMahon said that he can no longer be in the weeds and praised them for their experience in the business. “It allows me to have a broader overview.” McMahon says that they will have a lot of latitude with their respective brands.
– Barrios was asked about the relaunch of the WWE Network, he noted that the tiers are coming within this year and more foreign languages would be introduced over the next 12 months. The first tier will be free while the second tier will be premium.
– The Variety article criticizing the WWE product was brought up and moving in the wrong direction. McMahon stated that they have turned the corner with Heyman and Bischoff coming in. They have spent more time on storylines and talent and it’s a combo of a lot of things coming together. He calls it a “relaunch of content.”
– WWE’s product was brought up again and becoming edgier. McMahon says WWE content “will be a bit edgier” while fitting in the PG environment. They will have better storylines. McMahon stated that WWE won’t go back to the Attitude Era with having blood and guts perhaps as is being done by a new potential competitor. They won’t go back to that “crap that they graduated from.” Calls it a “more sophisticated product.”
– Barrios avoids a question when asked about NXT potentially moving to Fox Sports by talking about creating new content.
– Wilson said WWE is extremely excited about the Fox partnership because they’re already promoting SmackDown. It will be dialed up significantly in September. FOX put together one of the strongest promotional efforts for them that she’s seen. FOX will promote WWE in programming organically. McMahon noted that the USA Network is looking to increase their promotional efforts for Raw with the FOX partnership coming up.
– McMahon was asked about the decline in TV ratings and attendance in the second quarter after blaming talent, who have since returned, being absent in the first quarter as well as if investing in writers is the answer to the problem.
Vince said that competition is good for everyone but hopes that their competition won’t be going forward with blood and guts. “I can’t speak for TNT but I can’t imagine they’d put up with that, but nonetheless.” Vince said that bringing in new people is good and that it’s not one man’s vision anymore. He brought up how social and digital platforms are the new metrics they look at.
– This wraps up the call.
