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The following are key quotes from Vince McMahon (WWE Chairman and Chief Executive Officer), Michelle Wilson (co-President), George Barrios (co-President), and Michael Weitz (Senior V.P, Financial Planning & Investor Relations)…
OVERALL PERRORMANCE
-George Barrios on Q3 2018 financial performance of WWE: “During the quarter, we delivered financial results that reflected the continued implementation of our strategy, developing new content and expanding the foundation for deepening our fan engagement.”
CROWN JEWEL
-Barrios on qualifying boasting about increased revenue with the admission that it was a difficult decision to keep Crown Jewel in Saudi Arabia amidst international controversy: “Our projected fourth quarter financial performance would result in full year 2018 adjusted OIBDA of $160 million to $170 million, which would be an all-time record consistent with our previous guidance. Fourth quarter and full year 2018 guidance that I just referenced, predicated on the staging of an event in Riyadh, Saudi Arabia on November 2. As referenced in our earnings release, this was a difficult decision.”
-Barrios on whether to expect Saudi events and Saudi money in 2019: “We’ll give more detail on what events on the guide coming up here in the next quarter call, which will have a lot more granularity on our operating plan. We feel comfortable with the $200 million, so we’ll touch about around – on that.”
-When McMahon was asked to “take us through your thought process in deciding to keep the event [Crown Jewel] on,” McMahon said: “We’re not going to talk a lot about that. It’s a very sensitive subject these days, naturally. And I think our statement pretty much said, all I want to say about that today.” When pressed later on more information on the decision, Weitz said: “I think just the complexity of the situation, as Vince said, we – all our thoughts were encapsulated in the statements we made.”
WWE NETWORK
-Wilson on WWE Network subscription totals: “Average paid subscribers to WWE Network reached nearly 1.7 million, increasing 9% from the prior year quarter.” (There’s still no clarification on whether a “paid subscriber” includes people paying deep discounts that WWE routinely offers ex-subscribers, such as 99 cents for three months, which could change the perception of increases or decreases in these data. Later in the call, Barrios was asked about Average Revenue Per Subscriber being down and he addressed Network content being licensed internationally, but not whether a lot of subscribers listed as “paid” are paying as little as 33 cents a month instead of $9.99.)
-Barrios said regarding Network expectations: “(F)or the fourth quarter 2018, we project average paid subscribers to WWE Network approximately 1.56 million to yield growth of about 8% for the full-year.”
-Wilson on whether WWE Network will become tiered with different pricing and different content options: “My guess is it becomes a 2019 event, not ready to say exactly when though. But yes, we’re getting closer and internally we’re pretty excited about it.”
-Wilson on tracking Network content and the value of adding new content: “So as it relates to in-ring I mean, the great thing as we said since 2014 in launching direct-to-consumer as we have an enormous amount of data that we can look at and we’ve become smarter and smarter in terms of what’s driving more hours viewed on our network. And what we’ve learned is, one, pretty much every minute of content that’s on the network has been viewed by at least one subscriber. So our fans are going deep on the network and they’re going broad. At the same time, when you look at what’s driving a lot of the volume, it is our in-ring content. So whether it’s our pay-per-view event or shows like 205 Live and NXT. What we’ve seen is the show NXT continues to be one of the top performers outside of our pay-per-view events. And again, the more we dig in and we survey our current subscribers as well as prospects, it is the place they want to come for more in-ring. So just when we think we’ve given them every piece of in-ring content imaginable, they tell us that they still want more and the numbers support that.”
-Wilson on the prospects of an all-women’s weekly TV series: “So on the road map to your point on what else are we looking at, we’ve talked about a women’s show. Obviously, the Mae Young Classic is the midst of it, Evolution on Sunday. Again, the logical conclusion would be what is the right point in time where we have an all female show. So obviously, it’s been discussed, nothing formal yet, but that is on the road map as our other in-ring ideas.”
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DIGITAL MEDIA & SOCIAL MEDIA
-Wilson on digital platform consumption: “Through the first nine months of the year, digital video views increased 61% to 22.9 billion. And fans watch more than 840 million hours of content, representing an 81% increase from the nine-month period last year.” (This includes Mixed Match Challenge on Facebook Watch.)
-Wilson when asked about Facebook Watch viewership and monetization: “(The) second season is performing well, both sides are pleased with it. I would say the learning is really, again, how we can move our fan base to that Watch tab and how we could leverage the scale of our following on Facebook. So again, it’s a journey that we are on together, and we continue to learn. As Vince mentioned, the nice thing about WWE, is we’ve been able to create content that works for that platform specifically. So we learned in the first season that the 11-minute episode, if you will, wasn’t quite long enough for the engagement that we were looking for. So we’ve expended that. That was one of the key changes as to drive longer time viewed as we know is the key metric. So we’ve seen that help in terms of expanding the episode length if you will. So more to come.”
-Barrios added that social media engagement success shouldn’t be judged on just direct monetization: “We know for fact that one of the biggest feeders of the funnel for Network subscriber is social and digital. We know it helps on the product side. So to kind of – somehow diminish or put that aside, I guess, everyone can do what they want with that. But for us, the way we think about it is absolutely mission-critical, the indirect monetization.”
-Wilson on social engagement growth and turning that into actual revenue: “(W)e mentioned the number of hours that we’re doing that continues to grow. So it’s a combination of volume and then the compelling nature of what we’re putting out, we just keep getting better at it.Again, on the monetization, I know that you love asking us that question. Again, we continue to see that grow. And as we – the overall market from TV advertising to digital advertising, we continue to see benefits there or so.”
LIVE EVENTS
-Barrios on a drop in attendance: “(A)djusted OIBDA from our live events declined $3.4 million primarily due to a reduction in ticket sales. Average attendance declined 8% in North American events and 18% in international events. Additionally, our international events were impacted by a 13% reduction in average attendance. These changes in average attendance and price were due in part to changes in the mix of venues and territories.”
-When Barrios was asked about declining live event attendance, McMahon jumped in and said: “(W)e know what’s wrong with our live events and it’s somewhat, I don’t want to call it certainly antiquated presentation, but we know how to fix things. If something’s wrong and you don’t know how to fix it, you’re in trouble. We know how to fix that. And we’re reimagining those live events. Very, very shortly you will see a pretty big turnaround I think, in short order.”
-Barrios on international expansion: “(W)e currently expect to finalize our content distribution plans in the UK by year-end 2018 and in India during the first half of 2019.”
-Vince McMahon on the Australian Super Show-down attendance: “We had approximately – we reported 70,000 fans.”
-Michelle Wilson said regarding Super Show-down: “(W)e staged WWE Super Showdown, which was among the most viewed programs to date in 2018.”
THE FUTURE
-Barrios on expanding recruiting and training of potentially future stars: “I think if the model is powerful as we think it can be, our hope is, one day you will have academies throughout the world.”
A full transcript of the entire call is available at SeekingAlpha.com.
The Wade Keller Hotline for VIP members later today will feature my analysis of the above key quotes and newsworthy revelations. VIP MEMBERSHIP INFO
NOW CHECK OUT THIS RELATED STORY: Vince McMahon, WWE deflect Saudi Arabia questions during WWE Third Quarter Financial call
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