WWE Chairman & CEO Vince McMahon, Interim Chief Financial Officer Frank Riddick, and SVP Financial Planning & Investor Relations Michael Weitz are hosting a Second Quarter 2020 Earnings call today from WWE headquarters in Stamford, CT. You can check out coverage of this evening’s press release on the PWMania front page. Below are highlights from the call:
Weitz opens the call with the standard introduction. Vince takes the call and thanks everyone for joining them. He touts the earnings, which are linked above. He mentioned how they are taking advantage of strong engagement on their digital platforms, especially the WWE Network. They set WrestleMania Week viewership records with nearly 1 billion video views across digital and social platforms, which was up 20% from last year. He also mentioned the successful launch of the free version of the WWE Network, which is designed to further engage and convert viewers to subscribers while protecting the value of their premium content, among other objectives. He touted a 6% increase in paid subscribers. He also said they are constantly. Vince touted the hiring of Kristina Salen as WWE’s new Chief Financial Officer. He said they believe more than ever that they have the right team in place for the future. He thanked Riddick for stepping in and doing an extraordinary job. Vince handed the call over to Riddick next.
Riddick went over some of the numbers from today’s press release, which is linked above. WWE created more than 600 hours of content in the quarter. He mentioned how they have saved on production costs by filming from the WWE Performance Center due to COVID-19. Ratings are down 19% for RAW and 15% for SmackDown, due to COVID-19. WWE NXT and RAW were still the first and third highest-rated shows on the USA Network. He also touted WWE’s multiple reality TV projects and their gaming portfolio, which will expand with WWE Battlegrounds this fall. Riddick also touted the success of WWE’s licensing deals, including the special replica championship belts for The Rock and Triple H. He said they are still working on the “transformative deal” for the WWE Network but there is no timeframe due to the coronavirus. He also mentioned how COVID-19 has impacted WWE business. They had 76 fewer live events in the quarter due to COVID-19. They plan to return to live event touring as soon as they safely are able to. The potential impact of COVID-19 on business remains uncertain. That’s it for the openers. It’s now time for the Q&A portion of the call with investors.
The first caller asked Vince about the decline in ratings and what strategy WWE has to turn them around, for the near and longterm. Vince commented on how WWE the audience, more than any other sport, is a part of the program and audience interaction is always a pus. he said it goes back to the origins of this genre and the audience is integral to WWE’s success and TV ratings because of interaction or lack thereof. Vince thinks they can have better characters, more compelling storylines, new characters, and more content that’s not necessarily in the ring, but content that focuses on talent personalities and their stories outside of the ring.
Regarding cost cutting, they will remain disciplined going forward. They expect there will be a cost increase when they return to live event touring due to the post-COVID world. They are aware of some short-term savings that could turn into long-term savings. They are looking ahead to the long-term future but they are still figuring out some of the factors related to COVID-19 and how that will affect the future. They were also asked about the WWE Network, and investing in content, improving it, and an update on international content. They continue to invest in content, as we’ve seen with The Undertaker’s Last Ride and the Ruthless Aggression series. They have localized the price in some of the Network markets, and they are looking at advertising while figuring out the economic value in relation to the user experience.
Another caller asked about WWE possibly returning to the Kingdom of Saudi Arabia this year. Vince said the decision has not been made, but he thinks the return in 2020 is doubtful due to where the Saudis are at with their economy right now, likely due to COVID-19. Regarding the free version of the WWE Network and when they will be able to add advertising to that version, they noted that they have built the ad capabilities already, and they are evaluating their philosophy around advertising. The initial results on the free version are very promising. The strategy is to let viewers sample content and then hopefully convert to paid users. It was noted again that the initial results from the free version are very encouraging.
Another caller asked Vince about why AEW and NXT have bounced back from the initial COVID shock better than RAW and SmackDown, why he fired Paul Heyman from the RAW Executive Director job, and if Triple H’s NXT success could mean he’d be able to help on RAW and SmackDown in an elevated role. Vince said he thinks some of that is because it’s something that’s new, and it’s up to them to make RAW and SmackDown better, and they are trying to make both shows more youthful. He reiterated that they always have to develop new characters, constantly. He said Triple H does help on RAW and SmackDown, as it’s an all hands on deck situation. He also said Heyman did a great job in terms of creativity.
They were asked about new Chief Financial Officer Kristina Salen and if she will have a role similar to former Co-Presidents George Barrios and Michelle Wilson, where she’s involved with company strategy, or if it will be a straight-forward CFO role. Riddick said it will be a “broad CFO role” like he and Barrios have had, including with strategy. He said Wilson really had nothing to do with finance. They talked more about cutting costs by filming at the Performance Center. They are still investing in content but have slowed down on developing Performance Centers in international markets. The lack of touring contributes to that. It was noted that the acquisition of EVOLVE was a very small investment.
Vince was asked about ratings once again and if it will take months or years to turn things around, to get some of the viewers back. He said he would like to think it takes months to turn around as the key here is not being in front of an audience. He stressed again how important fans in the audience are, calling them almost like the third person in the ring. It was also noted that they are constantly looking into alternatives when it comes to filming locations in the COVID era. Regarding the return to live events, Riddick said they would take a “phased approach” to touring again. He said that’s what they are hearing from city officials and venue officials, that there will be a “phased return” to live events, and that it will not be what it was like pre-coronavirus.
That’s it for the call. Stay tuned for more.