WWE held their third quarter 2016 conference call earlier today, with Vince McMahon and George Barrios present on the call. WWE’s Michael Weiss welcomed everyone to the call and introduced the aforementioned men. Vince McMahon said that their revenue this quarter was on par with their earnings this time last year and was in the area of what they forecast, although on the lower end and said that the brand extension has worked really well and said that they have done about twice the ratings with SmackDown going live and said that they have increased the value of their broadcasts and their product all over the different platforms. Vince said that NBCU signed deals with 52 new blue-chip advertisers and put over the new TV deal in Germany and praised their 71% increase in social media views from this time last year and said that ESPN and other sites are seeing their popularity and taking advantage of it with their own verticals.

George Barrios then ran down the financials that were released and said that the WWE Network stands at approximately 1.46 million subscribers and that digital engagement metrics continued to grow, with over 11 million video views across social media platforms. Barrios said that the TV revenue was down a bit, because this time last year, they had Total Divas and Tough Enough airing, but that those series did not have episodes airing during that period in 2016. Barrios noted that the WWE Network growth was offset by increased spending on production and new content and that productions costs were shared between the Network and TV segments of the company and that they now have four times the amount of content on the Network that they had when they launched back in February 2014. Barrios noted that licensing was down a bit due to a lower royalty rate for the new WWE videogame and a slower sale of toys and noted that they are not getting a flat rate for the game now, but are paid at a different rate which will have a ripple effect on the licensing royalties. Barrios said that they will continue to execute their business model in 2017 and that every day, they become more digital, more global and more direct to consumers and that they are also expecting increases in WWE Network subscribers and for their television deals to increase and bring more money to the company in the years to come and believes that they will hit a target record for financial growth in 2017. Barrios then turned things over for the Q&A session.

The first caller asked about them potentially mentioning a softening of WWE Network subscriptions in the fourth quarter, to which Barrios said that it is a subscription model and while they are always happy with what they do, some spectacles and attractions mean more than others. Barrios was then asked about the survey released about different tiers for the WWE Network and said that they are always talking to their audience to see what type of content they are interested in and what different content they can provide and said that no one should read too much into it, because it is just about communicating with the audience and seeing what they want. Barrios was then asked that if the WWE Network subscriptions come in softer in 2017, are they going to cut spending and said that they are not going to go into additional guidance and said that the revenue growth is based on their levels of investment and they want to meet or exceed their commitment and said that they take it seriously when they put their numbers out.

The next caller asked if there are areas that they are not happy with and whether that means they will be dialed back. Barrios said that they have been adding more people on the ground in local markets and that has been working great and said that they have the new television deal in Germany and that is an example of investing locally in the market. Barrios said that the real values of investments they are making now will be seen in the long-term and their content always depends on which platforms. Barrios said that in regards to social media, they see the value immediately, while on the WWE Network, the direct piece of value for each piece is hard to value, but that they are working based on how they view the next 5-10 years, on both short-term and long-term investments. Barrios was then asked about when they will start talking about reviewing their television deals and said that their domestic deal expires in September 2019 and that the UK deal expires on December 31st, 2019, while the Indian deal expires at the same time as the UK. The same caller then asked about cord-cutting, to which Barrios said that someone he respect says that their crystal ball is a little cloudy on that subject and put over the popularity that the company generates for their original programming on every platform and said that they will make decision on the best place where their content will be when they have to make those decisions and said that television is the best driver for their top monetization.

Vince McMahon was then asked about the recent AT&T/Time Warner merger and the recent sale of the UFC and why he has not considered a sale to get the most value for shareholders. Vince said that they would always consider anything, but there is something to be said about controlling your own destiny and said that there is always a question about how much control and influence you would lose in a move like that, but aht if there was a deal that they could not refuse, then they would consider it. Vince was then asked if there was a merger deal that allowed him to continue to control WWE’s business, would he be interested and noted that they are open for business. The next caller asked if there were any international original programming that they could bring back to the United States, to which George Barrios stepped in and said that they do localization in some markets and are working on that for the WWE Network and said that they are going to talk about that today, but that in two years, you might be able to look back and say, look at what WWE did with this and pointed out that a big part of their social media numbers are international. Barrios then noted that they are continuing to work on the China market as it is the last country that they have yet to launch the WWE Network in and said that there is nothing to announce yet, but that it is something they are still trying to figure out and said that he hopes it is something that they can make an announcement about in future months.

The next caller asked for thoughts about content producers being acquired, given how unique and valuable the WWE content is, to which Barrios said that those are big questions with no real clear answers and that what is important to WWE is that there is a vibrant, competitive appetite for content and that their numbers are public and out there and that when they license content to a partner, they bring those partners and that as owners and creators of their own content, they are in a great position and said that whether they go direct to consumer on the WWE Network or license for TV deals, they are in a great position. The next question asked about NBCU relationship and how the last deal was billed as more of a partnership and whether there are any other realms that they could partner in, such as theme park attractions. Barrios said that they have never felt like they license their content and then step away and said that they license the content, then work with partners to make the content as important and popular as possible and that they and NBCU are both happy with what the last two years have built and teased that they would be in Orlando for WrestleMania next year and would be there all week and that additional announcement could come there.

The next caller asked whether they would attempt to bundle deals for the WWE Network where someone who signs up for a year gets a free ticket or merchandise in exchange for their commitment. Barrios said that if he did not know any better, he would think that the person was applying for a job in the subscription marketing group and said that the Network is their second biggest business and their fastest growing business in 2016 and a big part of that is how they can connect with their fans and said that they are thinking of bundles such as that and in the next few months, you might see something like that rolled out, but they don’t want to confuse the audience and said that there will be some experimentation. They were then asked what they think is driving the decline in WWE Network subscriptions for the third and fourth quarter. Barrios said that there are variabilities and that is why they put a range on where they think they will be and declined to comment on specific factors, but said that there was a trend they were looking at and they have data and are looking at it. The next caller asked about their future with MLB.AM given that a big piece of them was purchased, to which Barrios said that they have been a great partner and that they are a big part of why the WWE Network is the fifth largest VOD service in the United States. Barrios said that they will judge how things go forward as they see how the Disney influence changes how they operate, if at all. They were then asked about potentially bundling with other VOD services, to which Barrios said that they have to look at different economics, whether they get customer information and what sort of metrics they get from that and said that with the WWE Network, they get more insight into the engagement of the audience than they get with anything else, but noted that bundles were a possibility.