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Live Coverage Of WWE Conference Call To Discuss 2014 Quarter 3 Results

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Vince McMahon and WWE Chief Financial Officer George Barrios hosted a conference call with investors on Thursday morning to discuss the company's 2014 third quarter results. I was on the call on behalf of and compiled the following notes:

Michael Weitz from Investor Relations opened the presentation by reading a prepared statement.

Vince McMahon took over the call and said it was "pretty amazing" how Smackdown ratings were up. He put over SummerSlam's social media ratings beating every program for the week of August 11th, which is pretty remarkable for a pay-per-view. He talked about the 4% increase of WWE Network subscribers and ran through the numbers. McMahon pointed to 90% of WWE Network subscribers accessing the service at least once a week. He said they're certain with engagement and approval rating that $9.99/month with no commitment (like Netflix) is really the way to go.

As far as the United Kingdom is concerned, McMahon said the WWE Network will be available in November. He talked about giving the month of November for free to new subscribers and talked about new programming, simplified pricing and limited advertisements. Vince didn't really veer off what was reported in the official earnings release.

George Barrios took over the call and went over the numbers like only he can.

The call was then opened for a question and answer session.

A caller asked about the feedback they've gotten from people that signed up and didn't renew. Was it a lack of interest in content or fatigue? George Barrios said that 90% [of subscribers] coming once a week on average and 99% coming once a month means they're thrilled with engagement side. He said the gap between the people that order Wrestlemania to the people that order Night of Champions, no longer exists. Barrios said with any subscription service, churn exists. He said they couldn't be happier with content as it continues to grow. Asked about international subscribers, Barrios said they view it as a "soft launch."

The same caller asked about meaningful revenue from limited advertising on the Network. Barrios didn't want to get into too much detail but they haven't adjusted the overall economic model based on advertising.

A caller asked if they signed up in November if they would be counted as a new subscriber. He said he assumes he would be paying at least in December. Barrios said if they converted, they would be a paying subscriber.

A caller wanted to know about the equity impairment of 4 million and the Rogers deal in Canada being totally different from US. George Barrios said from time to time they make investments in businesses they think fit for them and there is good financial return and they feel they can also learn. Barrios said a lot of it is technology but he didn't want to get in specifically as what it was for.

Barrios didn't want to discuss specific subscribers at the country level but said Rogers is the distributor of the WWE Network in Canada. They are currently working on getting more distribution but they only have about 20% right now. Barrios said WWE is excited about the potential for growth in Canada for 80% of the country yet to penetrate.

George said when you look at WWE metrics in the US and Canada, they index pretty much dead on. He said the ramp rate adjusted for the penetration feels not too dissimilar in Canada from that of the US. Barrios said Canada looked kind of like what they expected.

A caller asked about people are watching on the WWE Network. Barrios didn't want to get into specific programs but talked about the linear 24/7 stream and said anything that is live performs the best including what used to be called their pay-per-view events. He said because of their large VOD library, it allows the subscriber to program the Network for themselves, which they think is pretty cool.

The same caller asked about the high churn rate with the high engagement rate. They said they should have a lower churn rate based on the latter. George said the average monthly churn is 8%. He said 4%-8% was their steady state churn rate. Not based on anything about their model but based on other similar services. He said they look pretty good based on that but early on, Netflix's churn could have been as high as in the low teens. Barrios said they should be taken with a little bit of a grain of salt and there is going to be churn with a subscription service.

Weitz closed the call and said investors could reach out to them with any further questions.

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