WWE held their quarterly earnings conference call earlier this morning, with Michael Weitz opening up on the call before introducing Vince McMahon and George Barrios.

Vince noted that the WWE were way up with digital media and TV rights and had increases on the home video and PPV revenue front. Vince said that their TV footprint has grown and praised their growth on social media and said that they have the #2 action figure line in the United States and that overall, it was a very good quarter. Vince said that their Rolling Stones PPV has started to open doors to many other opportunities and discussed their partnership with the National Guard and Susan G. Komen for the Cure, before going on to note that they are excited about their new deal with Take Two and the release of the WWE 14 videogame. Vince commented on the increase of TV programming in regards to the third hour of WWE RAW, WWE Main Event, WWE Saturday Morning Slam and their deal with Hulu and stated that 2013 will be flat in terms of TV growth, but that they company would have increases in talent development and creative teams, as the fourth quarter has seen four hours a week jump to 6 and a half hours of WWE programming per week, before passing it over to George Barrios.

Barrios noted that the WWE’s core business did very well, especially when the expenditure for the WWE Network and the losses on WWE Studios are out of the way and said that the company have improved their home video business, while working on PPV and talent development growth and that they have improved the licensing and marketing of their brands. Barrios said that the TV audience has expanded by 12% with expansion and elevation of social media with followers on Facebook and Twitter.

Barrios said that pay-per-view revenue was up 4% from the previous quarter, despite one fewer event being produced to the year prior. Live events were down this quarter, partially due to 8 less international dates and that a year prior, they had a great tour of Mexico. Barrios said that WWE Studios had small revenue, which can be equated to breaking even and that they had a big leap compared to last year when they lost millions on WWE Studios’ projects and that their new strategy will push them in the right direction in 2013.

Barrios noted that the WWE took on more staffing costs, partially due to long-term WWE Network plans and then reviewed all material in the press release. Barrios then commented on the WWE owning and monetizing their own content for the WWE Network as their best asset and that there is a belief that content value will rise between 5-14% a year in the future. Barrios said that the company are uniquely positioned as they have a mix of story and character driven content as well as live sports-esque programming. Barrios said that the WWE Network will be a paid subscription channel and that the model would be the best approach for them. Barrios said that the estimates are for between 2-4 million subscribers and that the Network would feature all events with the exception of WrestleMania, while the events will be available as are for non-subscribers. Barrios noted that the company will be buying a new corporate jet and selling off the current one and then noted that the question and answer session was next.

They were asked about distribution deals domestic and internationally and noted that deals for WWE RAW and WWE SmackDown in the United States, United Kingdom and India will be renegotiated over the next few years and they are programming that they’re not looking to bring in-house on the WWE Network. McMahon said that it is important for them to have their entities out there, so that they can promote and bring interest in to their other products, such as the WWE Network. Barrios said that they are getting out of the prognostication business but are working hard and feeling good about a launch date. Barrios said that they are optimistic, but they are getting out of pushing dates.

They were then asked about the effect of PPV revenue with the WWE Network and noted that WrestleMania represents more than half of their pay-per-view earnings, so they might only lose a portion of that and look at the network as a way to get viewers to subscribe to them, especially when they are not able to afford big monthly PPV bills.

They were then asked about the new deal with Take Two and admitted that they were behind the curve on some of the platforms that the WWE fanbase used. They noted that they were happy with the games released through THQ, however Take Two have really impressed them with their plans to brand and come up with different platforms and that the new deal is structurally a little different to the THQ deal, while financially, it will be the same, as long as the games sell. Barrios said that THQ going backrupt cost the WWE between $4-$5 million and that their next quarter earnings will show their game revenue as flat, because of the fact they received an advance royalty from Take Two, but lost money on THQ’s bankruptcy and loss of expected revenue and royalties.

They were then asked once again about the WWE Network and if all programming would be PG or if they would push the envelope and noted that they have the ability to push the envelope depending on the airtime and noted that some of their films and home movies are not always rated PG. Vince noted that they can repurpose the Attitude Era material and said that the WWE Network can be all things in terms of remonetized material and new and unique programming.

They were then asked about the WWE Studios projects and their economic involvement, which Vince said would depend on box office performance and that their upcoming releases “Dead Man Down” and “The Call” are very important to see where the WWE Studios strategy stands and how their new strategy will work out. Vince said that they’re not going to give out any targets and that they will be partner distributed, so they will account for them on the net basis.

The next question once again went back to the WWE Network and how it could change the PPV model, however they noted that they didn’t want to get into their specific PPV rights when it comes to the WWE Network and will have more details on that down the line as they get closer to a launch date, but noted that overseas will be different depending on the market. They also noted that the $40 million television rights fees should be their nominal fees going forward.

They were then asked about what would be a steady state for the WWE Network and noted that they need up to about 1 million subscribers to at least break even, but can’t give any numbers, because it will all depend on how many people move over from the PPV’s to the WWE Network. Barrios said that once you launch a system and use that system’s reach as a denominator, then you will have a pretty good idea of where you will be and for them, they have four different scenarios, based on the data that they have. Barrios said that they believe at full distribution they could reach 3-4 million subscribers and it depends on how quickly they get carried by systems and how quickly they reach subscribers. Barrios said thaty expect that it will be on a system by system basis and feel that within 6-12 months of launch, they should have a pretty good idea on how the model is working.

Vince and Barrios then thanked everyone for their questions and wrapped up the call.