Kemo
10-29-2015, 05:14 PM
WWE released its quarterly report for the third quarter of 2015 this morning. The WWE press release and WWE Network info are posted. We’ll cover any new information from the call as it’s ongoing. The first part of the call deals with what’s in the earnings presentation itself, so we’ll try to cover some of that here but stick mostly with the new developments on the call itself, like the interaction with the analysts who call in.
As of 11:16 a.m. ET, it looks like we’re most of the way through the presentation on the call, so it’s almost time to get to the callers. This is the “fun part,” so to speak, as some throw ridiculous softballs and some ask tough questions with little middle ground. It’s always at least interesting, so let’s see how this part goes for WWE…
11:21 a.m. ET: Eric Katz with Wells Fargo calls in. Believe he’s a new one. Why is WWE using Netflix’s growth patterns to predict WWE Network success when they’re also saying the fourth quarter should be flat to the third quarter? Barrios sees their growth as happening seasonally (presumably meaning that growth will happen from the Royal Rumble to WrestleMania each year). WWE looks at year to year growth more than sequential growth within the year.
Why the big investments in content?
11:25 a.m. ET: John Blackledge of Cowen and Co asking about WWE Network churn (subscriber loss) and related issues. Did credit card companies sending out new verification chip cards cause issues like it did with Netflix? George Barrios says he doesn’t know on the chip question because they don’t get that level of “granular” data.
11:28 a.m. ET: Laura Martin of Needham is here to throw softballs! Or maybe not, seems like she wants them to cut back on producing new network content? Vince says they need to drive subscriptions and it’s misleading to look at what percentage of viewing is from the video on demand library.
Then she asks about YouTube and plans for revenue sharing. Barrios says they’re “a phenomenal resource globally.” Compares them to cable TV in the past. Barrios talks about taking care in uploading content and only uploading short clips of the TV shows.
What about ad revenue on the network? Barrios says they’re experimenting and doesn’t give any financial details. But it will continue to be a “soft touch” as far as the number of ads.
11:34 a.m. ET: Brandon Ross of BTIG is up. Why only projecting 20-25% network growth with new international markets, etc? Barrios says the closest comparison is early domestic-only Netflix because they’re still so early in the process. As for YouTube, which he also asked about, revenue is up from high six figures to mid seven figures in a few years.
What steps are you taking to improve ratings? Barrios says they don’t look at a single metric in isolation. Social media, engagement, etc…but they don’t like to be down. They want to win “in each ecosystem we play” and they think they are doing fine relative to other pay TV. He asks how they compare to USA’s average, which is a bit higher.
11:39 a.m. ET: Missed the name here. Asked about more subscriber number detail, Barrios half-jokes that they should be happy with the quarterly guidance.
How to reduce network churn? Content and experience, including improving the service quality and user interface.
11:43 a.m. ET: Daniel Moore of CJS Securities. Barrios ends up explaining the differences in how TV vs. film is expensed.
BTW, this happened earlier:
We think our content is great and our fans are satisfied with it. Yes, Barrios really said that.
— Keith Harris (@glasgowkjh) October 29, 2015
He also asked about TapOut, which WWE has invested in. Barrios refused to give any updates.
11:47 a.m. ET: Mike Hickey from Benchmark is up and asks about Germany. “German audiences don’t pay for TV content.” That was interesting. Asked about NXT, Barrios starts talking about social media again and how the Barclays Center sellout shows the the power of social media. A show only on the internet in the U.S. on a service w/ 1.3 million worldwide subscribers drawing like that is unprecedented. He’s right, but NXT is also on Hulu, which is a much bigger and more mainstream service even if WWE doesn’t push that NXT is available on it.
And that’s the end of the call. Bradley Safalow of PAA Research, who normally asks the best questions by far, was noticeably absent.
As of 11:16 a.m. ET, it looks like we’re most of the way through the presentation on the call, so it’s almost time to get to the callers. This is the “fun part,” so to speak, as some throw ridiculous softballs and some ask tough questions with little middle ground. It’s always at least interesting, so let’s see how this part goes for WWE…
11:21 a.m. ET: Eric Katz with Wells Fargo calls in. Believe he’s a new one. Why is WWE using Netflix’s growth patterns to predict WWE Network success when they’re also saying the fourth quarter should be flat to the third quarter? Barrios sees their growth as happening seasonally (presumably meaning that growth will happen from the Royal Rumble to WrestleMania each year). WWE looks at year to year growth more than sequential growth within the year.
Why the big investments in content?
11:25 a.m. ET: John Blackledge of Cowen and Co asking about WWE Network churn (subscriber loss) and related issues. Did credit card companies sending out new verification chip cards cause issues like it did with Netflix? George Barrios says he doesn’t know on the chip question because they don’t get that level of “granular” data.
11:28 a.m. ET: Laura Martin of Needham is here to throw softballs! Or maybe not, seems like she wants them to cut back on producing new network content? Vince says they need to drive subscriptions and it’s misleading to look at what percentage of viewing is from the video on demand library.
Then she asks about YouTube and plans for revenue sharing. Barrios says they’re “a phenomenal resource globally.” Compares them to cable TV in the past. Barrios talks about taking care in uploading content and only uploading short clips of the TV shows.
What about ad revenue on the network? Barrios says they’re experimenting and doesn’t give any financial details. But it will continue to be a “soft touch” as far as the number of ads.
11:34 a.m. ET: Brandon Ross of BTIG is up. Why only projecting 20-25% network growth with new international markets, etc? Barrios says the closest comparison is early domestic-only Netflix because they’re still so early in the process. As for YouTube, which he also asked about, revenue is up from high six figures to mid seven figures in a few years.
What steps are you taking to improve ratings? Barrios says they don’t look at a single metric in isolation. Social media, engagement, etc…but they don’t like to be down. They want to win “in each ecosystem we play” and they think they are doing fine relative to other pay TV. He asks how they compare to USA’s average, which is a bit higher.
11:39 a.m. ET: Missed the name here. Asked about more subscriber number detail, Barrios half-jokes that they should be happy with the quarterly guidance.
How to reduce network churn? Content and experience, including improving the service quality and user interface.
11:43 a.m. ET: Daniel Moore of CJS Securities. Barrios ends up explaining the differences in how TV vs. film is expensed.
BTW, this happened earlier:
We think our content is great and our fans are satisfied with it. Yes, Barrios really said that.
— Keith Harris (@glasgowkjh) October 29, 2015
He also asked about TapOut, which WWE has invested in. Barrios refused to give any updates.
11:47 a.m. ET: Mike Hickey from Benchmark is up and asks about Germany. “German audiences don’t pay for TV content.” That was interesting. Asked about NXT, Barrios starts talking about social media again and how the Barclays Center sellout shows the the power of social media. A show only on the internet in the U.S. on a service w/ 1.3 million worldwide subscribers drawing like that is unprecedented. He’s right, but NXT is also on Hulu, which is a much bigger and more mainstream service even if WWE doesn’t push that NXT is available on it.
And that’s the end of the call. Bradley Safalow of PAA Research, who normally asks the best questions by far, was noticeably absent.