WWE Chairman and CEO Vince McMahon, Co-President George Barrios, Co-President Michelle Wilson and SVP Financial Planning & Investor Relations Michael Weitz are hosting a Fourth Quarter 2018 earnings call today from WWE headquarters in Stamford. You can check out coverage of this morning’s press release at this link. Below are highlights from the call:
Weitz opened the call by welcoming everyone and introducing McMahon, Barrios and Wilson. Weitz went over the basics of the call, then turned it over to Vince. Vince touted record revenue and profits for the year, which he said shows they know what they’re doing. He touted international revenue surpassing $300 million for the first time. He reminded everyone that the new TV deals kick in this year, noting that these deals will help them achieve more growth because the marketing push behind them will be “exponential.” Vince also touted special events such as Greatest Royal Rumble and Super Show-Down, which was their biggest international audience in more than 20 years. He also touted Miz & Mrs. on the USA Network, the 8th season of Total Divas and the 3rd season of Total Bellas. Vince also touted the success of the Evolution pay-per-view and Mixed Match Challenge on Facebook Watch. Vince said their strategy continues to transform WWE. Barrios took over and touted record revenues for the fifth year in a row. He went over some of the numbers from the press release, as did Wilson.
Barrios noted that Crown Jewel and Super Show-Down helped push the record revenue. Wilson touted WWE Network programming such as Crown Jewel, Evolution, Super Show-Down and WWE NXT and NXT UK, which are among the most-viewed on the Network. They look to expand their production facilities to increase more localized international content. Wilson noted that the WWE Custom Tees website has been a hit and they will be expanding it internationally soon. They continue to create new mobile games, which is a strong business for them. They also touted how their Mattel action figure line is the #1 in the United States. Barrios also said they are focused on investing in talent, creating more content, digitizing content, furthering their global footprint, and creating the next iteration of the WWE Network, which is the rumored tiered version.
Barrios also revealed that they will no longer issue a release or host an earnings call the day after WrestleMania events, because it is so close to the quarterly announcement. That’s it for the first part of the call. It’s time for the Q&A now.
One caller asked about Mixed Match Challenge. Wilson said Mixed Match Challenge was a great learning experience in driving viewership on Facebook Watch. They learned a lot about how to produce short-form content for Facebook. She called it a great learning experiment but it sounds like MMC could be done. They were asked about the “UK process” as they were hoping to have an agreement done by the end of 2018 but it hasn’t happened. They hope to have that deal done by the middle of 2019. They continue to focus on the UK, the Middle East and Latin America as key markets. Barrios would not comment on potential shows happening later this year in Saudi Arabia under the 10 year deal. They were also asked about a possible third hour of SmackDown and a 6th hour of live content each week. Barrios said live content is valuable but they have to put that extra live hour of content where it works best, be it paid TV, direct to consumer, or elsewhere. They are evaluating options with another live hour of content and will “let everyone know” when they decide.
They were asked about a new wrestling promotion launching, likely All Elite Wrestling, and if they are seeing higher costs with talent because of that. Barrios said it’s too early to tell and he didn’t want to talk specifics. Barrios did say WWE believes they are the premiere global organization and they have the greatest wrestlers in the world with a solid in-ring platform.
They were asked about more international Performance Centers opening in the future. Barrios revealed that Vince said in a recent meeting that WWE’s ability to produce general localized content in other markets in the next 5-10 years could become as important as bringing RAW/SmackDown to those markets. Barrios said the new UK PC is a “light scale” of the PC in Orlando, and their strategy is to start off small and learn from that, then produce. They were asked about possibly putting some NXT content on Fox. Barrios said 70% of the 2018 revenue was media-related, and said two big things have happened in the past 10 years – WWE became a media company, and monetization started coming across multiple platforms. The question for everything they do, including NXT, is where is the best place for that content, where are fans consuming it, then direct & indirect monetization. Those factors go into content decisions, including with NXT. They are open to ideas. Barrios said NXT is the second most-valuable unit in their bundle next to pay-per-view events. He touted how Takeover events trend worldwide on social media. Wilson brought up how Halftime Heat trended worldwide and beat out some of the top advertisers during the Super Bowl.
Vince was asked about big names like AT&T and Disney entering the streaming world, and if any of these services could have an impact on WWE. Vince said there’s nothing in the world like WWE and they are a very unique form of content that you can’t get elsewhere. Vince said that’s the tremendous advantage they have over everyone else. The WWE Network is an extension of what they do, and they can fit their content into so many different things but they stand strong as an island with a unique product. Wilson said regular feedback from subscribers makes them feel good about what they offer compared to what other streaming companies offer.
A caller asked Vince about RAW Women’s Champion Ronda Rousey and how she was an experiment, and if she leaves, if that will damage WWE. Vince praised Rousey as an athlete and a human being for how fast she’s adapted to WWE. He called her one of the brightest people WWE has ever done business with. He said Rousey coming in gave WWE more visibility. It wasn’t just about using Ronda and her brand, they got a different Rousey and she has become part of the WWE brand. Rousey is also helping them make talent. Vince said the Rondas will come and go from WWE but as long as they know those dates, they can plan around it. Vince said their performers are not cartoons, they get hurt. He pointed to the long list of recent injuries, including Roman Reigns being out of action with the leukemia battle. Vince also mentioned John Cena’s absence and how they expected to have him around more than they did, but he’s busy making more movies these days. Vince named several Superstars that have been injured and commented on how they’re good at improvising during filming the storylines. He said when talents get hurt, you have to change plans and that leads to stories not being as good as what was originally planned. He blamed some of the TV ratings and live attendance drops on injuries, noting that it’s one of the things they can’t control, unfortunately.
They were asked about the “next iteration of the WWE Network” that has been teased, the rumored tiered version. Barrios said they do have a big reveal planned but he wouldn’t go into specifics. They wont roll-out everything at once but this is something they are very excited about. That’s it for the Q&A and the call.