PWInsider - WWE News, Wrestling News, WWE

 
 

VINCE SAYS WHY THEY ENDED THE FIRST BRAND EXTENSION, BARRIOS COMMENTS ON WHETHER WWE COULD BE SOLD LIKE UFC WAS, WWE ACQUIRES NEW PROPERTY IN STAMFORD: WWE SECOND QUARTER 2016 EARNINGS CALL REPORT

By Mike Johnson on 2016-07-28 11:07:00

Welcome to PWInsider.com's coverage of WWE's 2016 Second Quarter Earnings Report.  On the main page of PWInsider.com, you can also find Dave Scherer's ongoing thoughts on the call!

WWE's Michael Weiss welcomed everyone to the conference call.  Vince McMahon and George Barrios were also present.

Vince said he was pleased with the execution of their strategy.  He was proud of their revenue hitting a new record.  The Network had their highest quarter ever, hitting 1.52 million average paid subscribers. 

Vince discussed the brand extension with Smackdown and Raw having separate rosters.   He said last Tuesday was the best rating for Smackdown ever since it moved to cable from broadcast TV.  He said the brand split is working very well so far.

They had 7.7 billion digital video views up 50% from this time last year and said it showed their popularity beyond just viewership on traditional TV.

Vince also touted the live airings on Raw and Smackdown in China and said they see a lot of growth in that market.

George Barrios began reviewing the material that WWE released this morning.   They are not attributing any of the growth from last year at this time to this quarter to Wrestlemania 32, which landed on this quarter.  They provided separate breakdowns with and without Mania to show the growth even if it didn't happen this quarter.

Revenue was up 17%.

Network revenue was up $7.7 million from this time last year.  They launched in six new countries over the last year.  They had 1.1 million domestic subscribers.  The churn was down to 9% from 12% this time last year.  They will have 300 original hours and 1500 archival hours by the end of the year, increasing the network's library four times from when it launched.

Live events were up $1.2 million due to European events doing well and NXT expanding it's touring schedule.

Licensing was down $2.5 million due to a lower royalty rate for their videogame franchise from this time last year.  They expect the overall rate for the game to be in the area of last year.

None of the changes they made internally had a major impact on their current revenue.

The company has $190 million in debt capacity.

WWE announced they have acquired the buiding that houses their production facility in Stamford, CT and expect that to be completed during the third quarter.  We had reported previously they were working on that and would be taking over the leases of the other businesses housed in the building, acting as the landlord.

They predicted 1.49 million subscribers for the WWE Network in the third quarter of this year.  So, they expect a slight decline with no Wrestlemania.  We will see if the added live events on the Network help offset that.

It's time for the Q&A section!

They were asked about potential expenditures that showed some declines in margin.  Barrios said they are making investments in content and other areas that does cut across the board.

They were asked if they expected any impact from the Olympics possibly taking away from their Network and ad sales.  They said they didn't expect any impact. 

They were asked about the brand extension and what the rationale was in doing it again, how it will effect their cost structure, etc.  Vince said that they have a plethora of talent thanks to Paul Levesque's NXT and the PC.  He said that you can't use all the intellectual property at the same time.  The split allows them to use more of the talents and IP.  He said they did it in the past until they "ran out of talent" but going forward, they won't, thanks to the PC and NXT.  He said it allows them to do more PPVs, more shows and create more revenue.

They were asked how international WWE Network should be looked at going forward as there are no new potential countrty launches outside of China.  They said they don't give international vs. domestic guidance.  He said that other than China, there are no more launches that would impact their growth going forward.

They were asked if the storyline brand extension had resulted in subscriptions driving.  Barrios said that it's too early to see any trends in place.  They are excited about the brand and feel it will drive their business in all areas, but it's too early to see any trends.

They were asked about the economics were for China.  They confirmed it was an exclusive digital deal for that market.  Barrios said that live content has a premium and that is true in China.  They are excited about the deal with PPTV and that they will have Raw and Smackdown airing live in the market.  The previous deal had a 2-3 week delay and they found a great partner in PPTV.

They were also left how much content is left in the archives.  The caller had no idea how deep the library was.  By the end of 2016, they will have 6,000 hours of material on the library.  They have 150,000 hours on the Network and that grows every day.  He said they are going to keep growing the 6,000 hours for most of their lifetime but there's no guarantee all 150,000 hours will ever be available.

They were asked how they are going to measure the success of the brand extension going forward.   Barrios said that when they look at traditional TV, they look at ratings and the total consumption on the paid platform.  It will be hard to separate the live change vs. the extension as they are happening at the same time.  On the Network, they are looking at new additions of subscribers and how they are keeping current subscribers.  In the PPV era, they were just looking at how many paid shows they had.

They were asked about the gift card for the WWE Network.  They see it as another form of payment and they will add other forms of payment over time.

They were asked about the UFC sale and whether the company would look into a sale if they were approached.  Barrios pointed out they were privately held so you have to go with what's in the media.  In regard to a sale, Barrios said they are always willing to listen to a great idea if's the best for their audience and employees.  So, he didn't say no!

Barrios was asked about new technologies.  He said they do 360 video now and have done testing for Virtual Reality.  The ones they "think are real wins for our fans are the ones we adopt."

That was it.

Surprisingly, no one asked about Brock Lesnar and the WWE Wellness Policy, nor did they ask about what WWE got out of allowing UFC to have Brock as a drawing card on UFC 200.  That is pretty surprising.

 

 

If you enjoy PWInsider.com you can check out the AD-FREE PWInsider Elite section, which features exclusive audio updates, news, our critically acclaimed podcasts, interviews and more by clicking here!