Michael Weitz from investor relations opened the call by reading a prepared statement. Leading the call will be Vince McMahon and Chief Financial Officer George Barrios.
Vince said when he looks at WWE’s business he looks at their key drivers – domestic attendance, TV ratings and WWE Network subscriptions. Domestic attendance is up 11%, Raw’s ratings are up 5%, Smackdown’s ratings are up 3% and they have 700,000 WWE Network subscribers. Vince said he considers 700,000 a
strong base to build on and they have different marketing and payment options coming up. He discussed global availability on Tuesday, August 12, 2014 and in the UK by October and Germany a little later. Vince talked about the 10-year agreement in Canada with Rogers Communications. He detailed it was “a little different” as a combination of core programming in conjunction with WWE Network. McMahon said he was pleased with where the company was and their ability to grow.
George Barrios took over the call and announced while they saw a net loss for the quarter, they beat their estimates. He talked about subscribers being satisfied with the WWE Network and discussed aforementioned expansion. Barrios, when discussing new WWE Network programming, mentioned Monday Night War and WWE Rivalries but did not mention Tough Enough.
Barrios went over the numbers, including $19.4 million in WWE Network revenue but a decline in pay-per-view revenue. Rather than trying to recap, I always advise reading them yourself in the official release.
After Barrios crunched the numbers, the call was opened to a question and answer session.
The first caller asked Vince McMahon if they needed more paying options for the WWE Network to attract more subscribers. Vince said that’s one aspect of it but there are several others for attracting subscribers.
The same caller followed-up about the company expanding the WWE Network to 170 countries, as opposed to the 7 planned on the last update. Vince explained that launching the English feed will help them get into various markets quicker.
Another caller asked about the “churn” of WWE Network subscribers, with initial subscriptions not yet expiring. George Barrios said estimates are 4-8% a per month turnover but at this point there’s no renewal churn. Barrios said they have some assumptions on the renewal side and they believe they will fit in the business model they’ve developed. He said they are working on some things to offer more payment options but they haven’t been implemented yet.
Regarding cost savings, Barrios said it’s part of the planning process. He said when you’ve grown as much as they have, they’ve probably introduced some inefficiency. They aren’t giving line items guidance about the savings and refused to give specifics.
George Barrios stated the infrastructure they’ve built — such as customer service — will handle the international expansion. Asked if they’ve noticed a big pop after Raw or if it’s a bump surrounding pay-per-views. Barrios said it’s around the pay-per-view.
A caller asked why WWE chose to go this route in Canada and it seems to be a step away from what they’re doing in the US. Vince said they’re Canadian and they look at things a little different. He doesn’t know if they’re going to do that anywhere else. It could [happen in other markets] when you combine both their core programming and the WWE Network. Barrios wouldn’t discuss the different economics with the Rogers Communications deal. Vince explained it was an offer they couldn’t turn down.
When asked about a price increase, Barrios said they’re looking at different price points but don’t want to comment on that at this time.
Barrios said they’re not going to give out how many subscribers are setup for auto renewal compared to those that have to do it manually. If you signup [for WWE Network] for a 6-month subscription, you’ll be able to do $9.99/month for 6 months or have the option for one upfront payment.
A caller pressed if they’re still targeting 1 million domestic subscribers by the end of 2014, Barrios said if they hit that they’ll be thrilled.
It was asked if Rogers has the right to embed advertisements in the WWE Network stream. Barrios said they plan to offer an authenticated version in Canada so it will have a similar feel that it does here in the US but the advertising capabilities will be built into this.
There was no update on the TV licensing agreement in India. Barrios said they only give guidance on their four major TV agreements but not the others.
WWE Network subscriptions from Rogers Communications in Canada will be counted in the subscription numbers.
Barrios said in a lot of the countries they’re opening up the WWE Network in, they didn’t have pay-per-view capabilities.
The call was closed following the question and answer session.
