Vince McMahon and George Barrios held a call with WWE investors on Thursday morning to discuss the company's 2014 first quarter earnings. I was on the call on behalf of WrestlingNewsWorld.com and filed the following recap:
Michael Weitz from investor relations opened the call by reading a prepared statement. He introduced Vince McMahon.
Vince talked about live event performance being flat and talked about the launch of WWE Network. He said Wrestlemania 30 looks "pretty darn good" as does the WWE Network. He touched on the number of Wrestlemania buys, saying he believes it's the highest number the show has ever done. Vince said they're in the middle of negotiations with their TV licensing agreement in India. He said they'll be announcing their TV licensing agreement in the US in the next several weeks. Vince touched on some other points, including the new WWE Studios projects. He handed the call over to George Barrios.
Barrios reiterated the company is on track for 1 million WWE Network subscribers by the end of 2014 and 2-3 million at a steady state. He said they plan to attract new subscribers through a five point plan. That plan is...
- Create new content - WWE Tough Enough was mentioned as a show joining WWE Network
- Entering new geographies
- Expanding distribution
- New features - A bookmark tool was explained, where the subscriber will be able to bookmark where they're watching and return later as well as a playlist feature
- High impact marketing plan
Barrios announced $4.4 million in WWE Network subscription revenue by quarter end.
It was noted that video game royalties were down due to the company's new agreement with Take-Two Interactive, including a staggered royalty agreement.
George Barrios said due to ongoing negotiations, they will not be answering any questions about the status of new TV licensing agreements in the United States or India.
WWE plans on reporting Network subscribers on a quarterly basis.
The call was then opened for a question and answer session with investors.
The caller wants to know if quarter two is going to be a short-term peak. Barrios said from a fixed cost perspective, they're close to a steady state with the WWE Network. A big change, and it's in the WWE Network segment, is in the production cost of Wrestlemania.
The caller asks for a range for WWE Network subscribers in 2015. George Barrios reiterated 2-3 million subscribers at a steady state but they had not put a timeframe on that. He reiterated phase one international countries for WWE Network's launch, set for the end of 2014 or beginning of 2015.
The 2-3 million steady subscriber state for the WWE Network is domestically. The opportunity in phase one international countries is 500,000-750,000 subscribers at steady state. Vince McMahon said the 2-3 million subscriber number is "conservative."
Some number crunching is done about WWE Network subscribers, with Barrios stating 400,000 subscribers is the break-even point for WWE Network without the cannibalization of pay-per-view. It was mentioned that Wrestlemania 29 did 720,000 domestic buys last year.
Barrios said they know DirecTV is not carrying Extreme Rules and they do not know who is and who isn't carrying their pay-per-views going forward. It's stated that if you call Dish Network customer support about WWE pay-per-views, they're pointing customers to the WWE Network.
It's stated that WWE Legends' House is doing very well and they had a national publication call it "must-watch TV."
New original programming coming to WWE Network is as follows:
- WWE Countdown Season 2
- Monday Night War
- WWE Tough Enough
It's asked if WWE would ever consider selling equity in the WWE Network to a third party such as NBCU or Viacom as long as they maintained majority control. George Barrios said they're created enough people where they won't push anything off the table as long as it makes business sense. However, he noted they're putting a very high value on the WWE Network.
Barrios said they'll give more guidance regarding their new TV licensing deals when it's appropriate but refused to discuss any specifics what-so-ever.