WWE held their 2016 Second Quarter Earning Results conference call earlier today. Michael Weiss welcomed everyone to the call and noted that Vince McMahon and George Barrios were also on the line and passed things over to Vince McMahon.

Vince said that he was pleased with the execution of their strategy, was proud of their revenue hitting a new record and said that the WWE Network had their highest quarter ever, hitting 1.52 million average paid subscribers. Vince then discussed the WWE Brand Extension with RAW and SmackDown having separate rosters now and said that last Tuesday was the best rating for SmackDown ever since it moved to cable from broadcast television and said that the Brand Split is working very well so far. Vince said that they had 7.7 billion digital video views, up 50% from this time last year and said that it showed their popularity beyond just viewership on traditional television. Vince then put over the live airings of WWE RAW and WWE SmackDown LIVE in China and said that they see a lot of growth in that market.

George Barrios began reviewing the financial material from this morning and said that they are not attributing any of the growth from last year at this time due to WrestleMania landing on this quarter and provided separate breakdowns with and without WrestleMania in order to show the growth, even if that didn’t happen in this quarter. Barrios said that revenue was up 17% and that WWE Network revenue was up $7.7 million from this time last year. Barrios said that they launched in 6 new countries over the last year and had 1.1 million domestic subscribers, while the churn was down to 9% from 12% this time last year and said that they will have 300 original hours and 1,500 archival hours by the end of the year, increasing the WWE Network’s library four times from when it launched. Barrios said that live events were up $1.2 million due to European events doing well and NXT expanding its touring schedule, while licensing was down $2.5 million due to a lower royalty rate for their video game franchise from this time last year and that they expect the overall rate for the game to be in the area of last year. Barrios said that none of the changes they made internally had a major impact on their current revenue and that the company has $190 million in debt capacity. Barrios announced that WWE have acquired the building that houses their production facility in Stamford, Connecticut and expect that to be completed during the third quarter. Barrios said that the company predicts 1.49 million subscribers for the WWE Network in the third quarter of this year and then passed things along for the question and answer session.

The first question asked about potential expenditures that showed some declines in margin. Barrios said that they are making investments in content and other areas that does cut across the board. The next question asked if they expected any impact from the Olympics possibly taking away from their WWE Network and ad sales, to which Barrios said that they didn’t expect any impact.

The next question asked about the Brand Extension and what the rationale was in doing it again and how it will effect their cost structure and more. Vince McMahon said that they have a plethora of talent thanks to Paul Levesque’s NXT and the WWE Performance Center and said that you can’t use all the intellectual property at the same time and that the split allows them to use more of the talents and IP and noted that they did it in the past until they ran out of talent, but that going forward, they won’t, thanks to NXT and the WWE Performance Center and said that his allows them to do more pay-per-views, more shows and create more revenue. The next question asked how international WWE Network should be looked at going forward as there are no new potential country launches outside of China. Vince said that they do not give international versus domestic guidance and said that other than China, there are no more launches that would impact their growth going forward.

The next question asked if the storyline Brand Extension had resulted in subscriptions driving. George Barrios said that it is too early to see any trends in place, but they are excited about the Brand Extension and feel that it will drive their business in all areas, but that it is too early to see any trends. The next question asked about the economics for China. Barrios confirmed that it was an exclusive digital deal for that market and said that they are excited about the deal with PPTV and that they will have RAW and SmackDown LIVE airing live in that market and that the previous deal had a 2-3 week delay and they found a great partner in PPTV. The next question asked how much content is left in the archives. Barrios said that by the end of 2016, they will have 6,000 hours of material on the library and then said that they are going to keep growing the 6,000 hours for the most of their lifetime, but there is no guarantee that all 150,000 hours of content that they have will ever be available.

The next question asked how they are going to measure the success of the Brand Extension going forward, to which Barrios said that when they look at traditional television, they look at ratings and the total consumption on the paid platform and it will be hard to separate the live change versus the extension as they are happening at the same time and said that on the WWE Network, they are looking at new additions of subscribers and how they are keeping current subscribers and said that in the pay-per-view era, they were just looking at how many paid shows that they had each month. The next question asked about the gift card for the WWE Network, to which Barrios said that they see it as another form of payment and that they will add other forms of payment over time.

The next question asked about the UFC sale and whether the company would look into a sale if they were ever approached. Barrios said that they were privately held, so you would have to go with what is in the media, but said that in regards to a sale, they are always willing to listen to a great idea if it is the best for their audience and their employees. The next question was from the final caller who asked about new technologies. Barrios said that they do 360 degrees video now and have done testing for Virtual Reality content and the ones they think are the real wins for the WWE Universe are the ones that they adopt.