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Welcome to PWInsider.com's ongoing coverage of World Wrestling Entertainment's conference call discussing their second quarter of 2020 earnings!
Michael Weiss welcomed everyone to the call. Vince McMahon and Frank Riddick will be leading the call.
Vince thanked everyone for joining them. He said they were in a challenging environment. Despite it, they took advantage of the situation to create Wrestlemania week viewership records, which were up 20% from last year. They launched the free version of the WWE Network and converted viewers into subscribers. They had a 6% increase from last year. They are constantly strengthening their leadership team and have brought in a new CFO as of 8/4. He thanked Frank Riddick for stepping in to help.
They recapped the numbers released this afternoon from their earnings release. Revenue declined 45%.
They put over their Quest for Lost Treasures which is coming soon from A&E as well as a sixth season for Total Bellas.
They created 600 hours of content for the quarter.
They moved the TV production to their Performance Center.
Ratings have been down 19% for Raw and 15% Smackdown due to COVID-19. Despite the challenging environment, Raw and NXT were the first and third highest rated programs on USA Network. Their digital views were up 10 and they would have been higher if they didn't have to geoblock content in India as part of their TV agreement there.
Wrestlemania 36 set viewership records and the highest level of subscriber levels in the company's history.
WWE Network Paid subscribers were up 6% for the quarter. The average paid subscribers declined to 1.66 million.
They are moving forward with new advertising capabilities for the Network as well as local, international pricing.
They are still working on a "transformative" deal for the Network but with COVID-19, there's no timeline.
Live events were 76 fewer than the same quarter last year due to COVID-19. They held zero live events this quarter and they intend to return to live events "as soon as we safely can."
They praised the company's licensing, especially replica championship belts and video games. They touted the launch of WWE 2K Battlegrounds.
They will continue to adapt their business to the current environment and are evaluating everything they can going forward.
They are not giving guidance on their expected business earnings due to COVID-19 but expect to resume down the line.
Q&A begins!
Guggenheim Securities asked about the ratings being soft and how concerned Vince McMahon was about them and what's the strategy on turning them around short and long-term. McMahon said that more than any other sport, the audience is interactive and a big part of their presentation, dating back to the days of cheering and booing. The audience interaction or lack thereof is important for the ratings. They are working on creating new characters and more content that will show their personalities outside of the ring. So, it was the usual response.
They were asked about the cost-cutting. They will continue to be disciplined going forward. They expect when they move forward with live events, there will be a cost increase with a post-COVID world. They have identified some things that are short-term savings that might turn into longer-term savings. They are looking for the long-term future but they are still figuring out the COVID-19 situation will play into their future.
Morgan Stanley asked them about the WWE Network in terms of investing and improving the Network product, mentioning international content and tiers. They are still investing in content, praising Last Ride and Ruthless Aggression. They have localized price and currency in a few markets and they are moving forward on advertising and figuring out the economic value and user experiences.
They were asked about whether there would be a Saudi Arabia event later this year. McMahon said a decision hasn't been made yet but given where the world is, with the economy, he would "doubt it."
They were asked about reaction for the free tier launch of the WWE Network and when they expect to go into alternative pricing and advertising. On pricing, they have done it in a few markets already. The build the ad tech capability now and they are making their plans. The early free version reaction has been outstanding. They working on plans to transform those free users into paid subscribers. They declined to provide specific data stats.
They were asked about the current rights for the Indian market changed. They are under a new contract this quarter, but it did not have a period to period change.
They were asked about the stock buyback being suspended and that they may resume it. They said they may resume because based on their evaluation is that it may be a good opportunity. They may not move forward. It all depends on the business environment as the year moves forward.
They were asked why they had an increase in paid subs at the same time they launched the free service. They said they had some smart marketing and that there was programming on ESPN and FS1 that pointed viewers back to the Network. They also pointed out the cinematic matches and The Undertaker documentary. There's been an increase as well post-COVID.
They were asked about social media numbers falling. Part of it is due to their SONY deal, which requires them to geoblock content in those markets. They can't break down what's driving viewership at the moment in terms of splitting the percentages.
McMahon said they have not hurt themselves shifting from the 30 days free on the Network to the free tier.
They were asked about cord-cutting and the ratings being softer. They were asked what stand out to potential licensors for the WWE Network. They continue to invest in the Network by developing compelling content. They feel WWE's product is appealing to outlets like Disney, HBO Max, etc. and the content would be valuable to one of those streaming services.
They were asked why AEW and NXT have bounced back better from the "COVID-19 shock" vs. Raw and Smackdown. McMahon said it's something that's new. They are trying to make Raw and Smackdown feel more youthful. You always have to constantly build new characters.
McMahon was asked why Paul Heyman was fired and why they eliminated Vince said he did a good job in terms of creativity and that was it.
McMahon was asked if Triple H would help Raw or Smackdown in an elevated role. Vince said it's all hands on deck. He helps.
They were asked about the role of the new CFO and whether she's going to have the George Barrios/Michelle Wilson type role of just be a traditional CFO. Riddick said she would have a broad role, including strategies.
They were asked about what the timing will be to recapture the lost audience. McMahon said it takes months but the key here is to be in front of an audience. They are the third person in the ring, so to speak. He said they shoot the audience more than any other sport. He would like to feel it's months away.
They were asked about expenses. Shooting at the PC cut costs. They continue to invest in content. They have slowed down on Performance Center development in international markets but they are no longer touring.
They were asked about their acquisition of EVOLVE Wrestling. They never announced it. We reported it. Riddick said it was a very small-sized investment.
They were asked if they would have any interim ideas out there in case they can't tour with a live audience. They go through all sorts of ideas constantly.
They were asked if they expect live events to be a drag on their finances when they return. It will all depend on the size of the venues, whether the audience wants to return, the level of merchandise and ticket sales, etc. It's possible it could be a drag. They believe it will be a phased approach to returning to live events and touring. It certainly won't be what it was like pre-COVID.
That was it for the call today.
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