Welcome to PWInsider.com’s ongoing coverage of WWE’s first quarter 2019 earnings conference call
Michael Weiss, Vince McMahon, George Barrios and Michelle Wilson are present.
Vince McMahon said he wanted to address a number of things today. Wrestlemania was "spectacular, etcetera." He said the Royal Rumble was an excellent show. They are doing some documentaries they've never done before with A&E. They have studio shows coming on FS1. They have all sorts of reality shows coming. But, when you look at this quarter, they had 15 top and mid-card talents out. When talents are out, you don't have storylines and things cascade. They have those talents back and they have new talents. They made new talents while the others were out. They have hired new people for the writing team that will have help them on TV and creative. They have a new team working on live events and that will turn things around there. In the latter part of September, they are going to have a whole new metamorphosis. The promotion they will have in FOX will be like something they've never seen before and that's going to be a rising tide that they really are looking forward to and it will carry them on through the end of the year. He said in September, it will be a whole new beginning.
They noted the FOX debut marks the first time WWE will be available live, 52 weeks a year, on such a major broadcast platform.
Their digital media revenue was down in part due to softer advertising rates on YouTube.
WWE Network will launch a "new platform" later this year in conjunction with Endeavor.
The FOX Sports 1 studio show will debut this Fall.
The most seen content on the WWE Network were PPVs, in-ring events and original series including NXT Takeover, Halftime Heat and WWE Chronicles.
They praised the success of Royal Rumble, Wrestlemania and their international tryout in India.
They had lower merchandise sales at live events due to lower live event attendance.
They touted new relationships with Roadblocks and New Era for licensing.
Barrios recounted everything from the earnings release and they opened the lines for questions.
They were asked about the engagement metrics and how they can be confident about a rebound when talents like Ronda Rousey is leaving. They believe their numbers being down is related to the talents being all out at the same time and they saw the trends drop at the same time talent disappeared. The broad historical context is they have a 35-year history in creating talent and they have a success in creating the next generation of talent. They have done it in the past and they
Vince said Ronda did an extraordinary job in bringing up the women’s division, which headlined Wrestlemania and to make the talents have more of a spotlight. They knew when she was leaving per her contract but she did a great, extraordinary job. The goal was to get the women’s division to the next level and that was accomplished. Vince praised her work ethic.
They declined on any talent contract discussions.
They also declined to comment on their “major international show.”
They were asked about a big picture idea of what’s causing the WWE Network subscriber churn and pressure and whether the reboot of the Network will help the subscriber front Barrios said talent is the core of what they do and when it goes great, the company excels. They had issues and it had a cascading effect. What happens in a month trickles down afterward.
They have been working on the design and the build on the new WWE Network later this year. It will create the underpinnings of what they can do to re-accelerate growth going past 2019. They declined to give a date for the relaunch but it will happen later this year.
They were asked if the quarters will realign with the new TV deals kicking in at the end of the year. They began making investments at the end of last year so those costs are being seen now. It's too early to talk 2020 but their expectations of growth over the rest of 2019 will show the direction they expect to be in. They have to decide how much growth and profitability do they re-invest in the company and that's something they work on daily.
On the FOX move, they were asked what they expect on viewership and how the promotion for its debut could help them overall. They have a 33% increase on homes from USA Network. Barrios believes FOX’s plan to promote them will over-deliver and that will lead to a rising tide for their partners on USA Network as well. The numbers they do know are in WWE’s favor.
They were asked about the UK development process, its viewership levels and whether the series will go live. Vince McMahon brought Triple H on. He said it's been very successful and has been one of their most watched series on the WWE Network. When you see the relaunch, you'll see it grow into a touring brand with Takeover specials. The social media exposure is massive for that brand. The show is seen globally. Taking the UK series and feeding it into the global WWE pipeline helps the overall talent pipeline as well, as does the UK Performance Center.
On Smackdown on FOX, they were asked if FOX is going to position the series differently for advertisers and fans vs. how the series has been presented on the USA Network. Wilson said they've already fully embraced WWE as a partner with their key advertisers and pre-Upfront events. It's important to remember USA Network as a general entertainment network. They believe FOX will lean into the sports aspect of what WWE does and will present them to their advertising base with a slight tweak. They will promoted through NFL, Major League Baseball and NASCAR broadcasts on FOX. She too said it will be a rising tide.
They will be part of both the USA Network and FOX upfronts on 5/13 in NYC.
They were asked about another Saudi Arabia event, they said they were going to stay away from guidance of the second quarter of 2019. They declined to discuss the Saudi show later on in the call as well.
They were asked about the idea of talents aging or audiences being tired of them. They were asked how the company recognizes its time to build a new main event character. Triple H said there's no exact timing on what it takes. They don't bring in Superstars, they create them. They constantly bring in talents. Kofi Kingston stepped into a role this year and became WWE Champion due to absences. Now, when the talents return, it's a rising tide. They've had 15 people come up this year from their talent development system. 80% of the roster right now came through the developmental system. They have a decades-long track record in creating icons over generations.
It was noted the company has been forthright about the talent issues, but the licensees have been down as well. Barrios said it's hard to "parse at that level." They've had a bend at the curve at the same time on different levels, which were "sudden and abrupt." They think it was a unique moment in time. There may have been larger "Macro factors" but they believe it was talent driven.
They were asked how long of a drag there is in fan engagement after talents come back. Barrios said it's a little hard to track over a length of time. It wasn't talent absences but the magnitude of it all happening at the same time. Something similar happened in the summer of 2010 but they didn't have 70% of their revenue coming from media and they also didn't have the deep metrics they have access to now. Then, it took 6-9 months to turn around.
When asked about a potential third hour of Smackdown, Barrios said they have always monetized six hours of content and they plan to keep “monetizing, in some way, shape of form, six hours of content.” He didn't say yes or no to a third Smackdown hour!
They declined to comment on big events for the second quarter, but mentioned the annual European tour falls there.
That was it for the questions.
They thanked everyone for calling in. That's all, folks!
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