WWE held their business outlook conference call today with Michael Weitz opening the call and stating that George Barrios and Vince McMahon will host the call and that Vince McMahon is on the call from the UK via a cellphone. Vince took over the call and said that he isn’t sure that the WWE either didn’t give enough information last week or that they gave too much, so he’s here to clear things up. Vince said that they were a little disappointed in the NBC Universal TV deal, but with all told and with interational deals, they are at $200 million, which he said is almost double. Vince then talked about the WWE Network and said that they have invested significantly and their core business is rock solid and they feel very bullish on their business model and how it will do in the future and then passed the call over to George Barrios.

Barrios took over the call and said that in late 2011, they invested $75 million into the development of the WWE Network and about $40 million into the manpower side and talked about how they got good TV deals overseas and are working on negotiations for their TV deal in India and said that their research showed that the WWE’s programming was undervalued in comparison to other programming. Barrios then said that the international expansion of the WWE Network internationally will help the company and they feel that by the time they get to a stable level in 2-3 years that they will have anything between 2.5 million – 3.8 million subscribers and noted that if they get to 1.3 million subscribers, that they will make up for the pay-per-view revenue that they expect to lose and said that previously they thought the number to get there was 1.25 million, so that’s not a big jump. Barrios then noted that if they get to 2.5 million subscribers that they will generate an extra $100 million in OIBDA and then talked about their potential scenarios and how prospective scenarios could work financially as well as subscriber growth and more and noted that after starting out with 670,000 subscribers in April, that they now need to add more by creative a five point strategy as well as new content, international expansion, marketing and more. Barrios noted that they will be opening up the call for questions.

The first question was what the operating expense for the WWE Network would be at 1.5 million subscribers, to which Barrios noted that it would be around $49 million and estimated that 10-20% of the revenue would be expenses and that would include credit card fees, affiliate costs and more. George was then asked if the WWE Network launch hurt the company’s TV negotiations and should they have delayed it. Vince stepped in and said that was a fair question and that he would answer it himself and said it did have a negative effect and said that if they didn’t do it this year, then they would have had to wait until next year, as they wanted to debut the WWE Network before WrestleMania 30 and said that it’s fair to say that it affected their negotiating rights in the United States for their new TV deal. They were then asked to go further into their new TV deal, to which George noted that all deals will be less than 5 years and that they are still being worked out, but none will be more than 5 years. George then noted that earlier the assumption in the company is that they will be getting no pay-per-view revenue going forward and that they get $60m in the US and $20m outside of the US and it costs $40m to produce the events and those numbers will now be reported under the WWE Network.

The next question was about the future of the divident and if it is at risk going forward. George said that if they’re successful implementing their Network strategy, then they will continue it, but if it doesn’t take off, then the divident could be in trouble. They were then asked about the DirecTV sale and investing in over-the-top providers, to which Vince said that he thinks everyone realizes that OTT is the future and they are willing to work with people and that it’s not a case of it’s not their way or the highway. There was a call which saw George Barrios and the caller dropper, while Vince was left waiting. The next question was about turnover in the personnel and said that they are happy with the management team that they have and won’t get into specifics about things like executives getting fired. The next question was about the current subscriber count, which George noted will be revealed on the next earnings call. George then talked about costs and his phone cut out again. The next question was in regards to subscribers and if they expect it to rise before WrestleMania 31 and then stay static until next year, to which George said not to make assumptions and talked about the research that they did overseas and said that there are a lot of variables and not to read anything into it right now.

They were asked about the lower affluence profile of the wrestling fan audience and were asked if them making less money will hurt them with the WWE Network, to which Barrios noted that it didn’t have an impact in 3 of the 4 markets they did new deals in. The caller from earlier came back on and asked about costs, but before he could continue, his phone cut out again. George talked about the business model being hard to project exactly, so they have to consider many different scenarios and will have to look at costs when they get to a steady state and know what they have to work with. They were then asked if they are spending considerably more money on marketing the WWE Network than they thought, to which Barrios aid that has changed more than they thought, but nothing major. The next question was about their confidence in the costs that they have in the WWE Network, to which Barrios noted that they have to work at a steady state and said tha tthey have to get there first before they know and are learning everyday how things will go in the new WWE and should know more in the next 12-18 months. The next question was what they have other than WrestleMania to drive subscriptions. George said that they have a large marketing team working on it and doesn’t want to announce anything just yet. The next question was about a threshold that they need to see to know if the WWE Network is successful, which Barrios said depends on ramp rate and more and there is no number right now and they need to see consistent growth and get to a steady state and if they don’t, then they will have to re-evaluate. George then talked more about the WWE Network and thanked everyone for their time and ended the call.