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I will be blogging during today's first quarter conference call. Before getting into that, I have to say that in reading the report this morning, it jumped out to me how smart the Network was. With PPVs dropping 10% in the first quarter, and the overall market being tenuous, the Network has been a great idea.
In addition to taking their product in-house, they have found a way to hedge the loss in PPV buys overall. Also, by launching it when they did, it helped pump up the first quarter numbers since they had almost a half million subscribers in the quarter, and thus the income that comes with it.
Also, for them to do around 400,000 PPV buys for WrestleMania is amazing, considering they had 667,000 Network subscribers. As I have said on audio, I don't get why Dish and DirecTV wouldn't want a piece of what is left of the PPV market.
At the open of the call, Vince McMahon put over how this year may be the most domestic buys they have ever done for WrestleMania. Vince said at the start that they are still working on their domestic TV deal and hope to have it finalized in a few weeks. Vince then turned it over to George Barrios to talk the numbers.
George immediately mentioned that at the current 667,000 subscriber base would generate about $80M annually, which is far more than they generate domestically from PPV now. I actually did the same math on an audio a few months ago when I talked about how crazy I think it was for the stock to drop when the subscriber numbers were initially announced.
George then read from the filing, which of course you can do elsewhere on the site.
He also added that they are still in negotiations for the new TV deal and would NOT be answering any questions about that topic today.
Now it's time for the Q and A.
The first question was nothing interesting, other than it costs more to produce WrestleMania.
When asked what they expected subscribers to be for 2015, George said they won't project but they expect to two to three million subscribers eventually. George said that he expects UK, Canada, Hong Kong, Singapore, The Nordics and a few other places in Q4 or the first quarter of next year.
They were asked about subscriber churn and George said they have looked at services like HBO and Netflix, who are around 6 to 8 percent a month, but it's too soon to say.
Vince was asked why they thought they would get 2-3 millions subs, instead of more than that. George answered instead. He said that the number was for domestically. He said that they are just projections. Vince did jump in and say that the number is conservative.
They were asked if they will have to approach different markets out of the US differently. George said he won't comment but they will follow social media. He asked if they will market it differently. Uh Einstein the product is what it is, and markets itself.
They said that there were 720,000 domestic PPV buys from WrestleMania last year, which means that they didn't even lose half of that this year for the show. They said it in response to a guy who did a lot of math, and lost George.
George said that they are evaluating whether and/or when to take advertising on The Network.
When asked if they would consider selling equity in the WWE Network, provided they retained control. George said they are creative and will consider anything if it makes sense, but they place a high value on the WWE Network.
When asked how many subscribers signed up for automatic renewal and George said he is not going to say anything publicly about that.
When asked how talent would get PPV bonuses now, George said we have not commented publicly on that (and he didn't here either!).
When the new TV deal is done, how will it be announced? They wouldn't say!
That was it.
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