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Friday, January 27, 2023

WWE Q1 Earnings Call: Nick Khan Touts WrestleMania Success, Original Programming Plans – 411mania.com

WWE had their Q1 Financial Results call on Thursday with Vince and Stephanie McMahon, Nick Khan and Frank Riddick discussing their performance, the success of WrestleMania 38, their original programming plans and more. You can see a recap below:
* Vince starts the call and thanks everyone, talking about how they followed a record 2021 performance with a strong start for this past quarter. He notes that it was a “stupendous” WrestleMania in addition to other successful live events, and hypes the new deal for original content with A&E. He says they’re pleased with how the business is performing and believes their creativity will allow them to bring value to their shareholders.
* Nick Khan takes over and starts with looking at WrestleMania, calling it the most viewed event in company history both domestically and globally. He credits their partnership with Peacock as helping that. He says in 2021, WrestleMania’s first year in Peacock, there was a 15% boost in viewers and 2022 saw a 61% increase from 2021 and doubled their viewership for WrestleMania weekend overall.
* Khan says that nearly 1/3rd of Peacock accounts viewed WWE content on WrestleMania weekend and that it was only behind the Super Bowl for Peacock viewing records. He talks about Peacock increasing its paid subs by 40% and they are confident the viewership will continue to grow.
56 million WM viewers in India via Sony Sports Network and a 54% global viewer increase from 2021. He says WM 38 was the most attended and highest-grossing with 156,000 fans. Their goal next year is to increase that number further.
* Khan talks about expanding the WWE Superstore for five days at AXXESS and talks up the interactive exhibits, saying they drove the highest WM merchandise sales in history.
* Beyond WrestleMania, they found new revenue streams. Khan highlighted their deal with MBC for Middle East/North Africa and promotes MBC as a leader in the area, and they expect to see increases in the MENA deal. He also talks up Elimination Chamber which had a 41% increase domestically and 32% internationally from their last international event. Another Saudi event is confirmed for this year.
* Khan then moves to the Cardiff event in September, the first UK stadium event in 30 years. He says there were over 85,000 pre-registrations for tickets which surpassed their own expectations. They expect tickets to go quickly once they go on sale and according to booking.com, 95% of hotel rooms are already booked.
* He goes on to praise their work with their existing lines of business and talks about their partnership with On Location as their first third-party Hospitality provider for their Premium Live Events and talk about how they will be designing individual experiences around all domestic PPVs starting with Hell in a Cell. Look for more of those for upcoming events. He also talks about their partnership with Fanatics for merchandise and expects there to be more new merchandise to come.
* Moving onto their original programming, Khan talks about how they are working with A&E for 35 new episodes of Biography and 24 new episodes of Most Wanted Treasures. In addition, the new WWE Rivals show will consist of more than 20 episodes. They will also do post-shows for certain Biography with reactions. It will be 130 new hours of programming overall and have more to share soon.
* Talking about the next rights cycle, Khan said they expects more buyers and interest for their next renewal. He pointed out how Netflix’s shift shows they’re willing to shift their attention and they think it will be a matter of time before they change their mindset and goes in on live programming. He also talked about how AppleTV+ began exploring sports rights and have gone after the NHL, and landing a series of MLB games for Friday nights. The NFL Sunday ticket will be an indicator of what’s next. He also talks about Amazon’s Prime video getting Thursday nights for the NFL season. He pointed out how it’s all a sign that traditional companies will be moving toward a pursuit of live programming and mentioned Disney+ and Hulu’s first live events as of late.
* Stephanie McMahon then took over and talked up WrestleMania’s digital success. She talked about how the show beat the Super Bowl via digital and social media with 2.2 billion impressions, 1.1 billion video views, 87 million engagements, and 13.1 million video watch hours. They also had record sponsorship at $10 million, a 50% increase and 47% increase from their previous record. She praises the partners in Snickers and 2K and talks about their ad revenue being up 34% year over year. She talks about the new partners and says more brands are looking for meaningful integrations.
* Talking about WWE 2K22, Stephanie said they took a year off and worked with Take-Two, earning back their trust with a game that exceeded expectations. She says it had the best review scores in history and has 5.6 million views on Twitch to date. She praises the mobile work and says they will be details in a role playing space soon. She said that they will continue to evaluate the Metaverse and plan for it.
* Stephanie talks about how 80% of WWE”s audience self-identifies as gamers and says they’re also targeting the next gen of WWE stars with the NIL Class. She says the second NIL Class will be announced soon.
* She then moves onto celebrity involvement, talking about the success of Logan Paul at WrestleMania and the promotion work done by Undertaker, Roman Reigns, Ronda Rousey, and more. She talks about how WWE showed up at the NFL Draft to announce teams’ draft pics and say they feel confident about WWE’s ability to grow their brand and audience which should mean more revenue opportunities.
* CFO Frank Riddick then takes over to look at the financials, which he goes over (you can see those here).
* The Q&A then starts. The first question is about resolving convert shares and what the right amount of leverage is for the business, with an additional question about bundling renewal for Peacock with Raw and Smackdown rights. Riddick says they’re analyzing their strategy for the convert and says they do believe that given their cash flow and liquidity, they can accommodate a slight increase in leverage but aren’t giving indications yet.
Khan says bundling can be a powerful tool and they have a strong relationship with Fox, so they’ll talk with their incumbents (NBCU and FOX) and see what makes the most sense from there.
* The next questions are for Khan regarding India, and asks if there’s additional information on ratings or engagement there, and chances for an Indian stadium event. Khan jokes about it being an “eight-part question” and says that a year or so ago, they did an India-exclusive event that did 25 million viewers. He noted the Indian talent are not big names yet but notes the numbers out of there are significant and it’s a huge market for them. He says they’re always looking for locations and Cardiff was the right spot for the latest one, and they’re looking at where else that will work. Regarding renewal, everyone is waiting to see how the rights to cricket shake out and they’ll know more after that.
* Next questioner asked if Peacock’s success is bringing more people to the table for streaming deals internationally. Khan talks about the launch of the WWE Network being ahead of the game and he believes the Peacock deal was the same. He notes that international strategies are just coming together and say they’re in deep talks in many areas.
* Asks about content rights fees being down $11.5 million from Q4 2021, Riddick says it was primarily due to a slight decrease in a premium live event.
* Regarding ramping up international events to a more normal level and if other Performance Centers will be opened, Khan says that they just had their European tour and had over 11,000 in attendance in Paris, plus success across the board. They are back up and running at this point and the results are strong. Riddick says regarding Performance Centers, they’re looking at expanding and improving their Performance Center but haven’t made a decision yet.
* The next caller asks about their philosophy around share buybacks, and how they make that decision. Riddick said that they have an opportunistic program and buy back compared to the intrinsic value, and will deal with the convert sometime in the third quarter.
* Next question asks about ratings still trending flat to down, and Khan says ratings were up on Raw and Smackdown quarter-to-quarter and they’re pleased with the ratings. Regarding their linear CPMs, Khan says they’re good.
Nick Khan, Wrestlemania 38, WWE, Jeremy Thomas
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