After the formal introductions, Vince McMahon said that their Performance Center in Florida is doing very well and said they are continuing to work on a subscription model for the future Network. He praised the live events and said things were strong.
Vince passed it over to CFO George Barrios. He noted they had some lower international TV rights this quarter. Dead Man Down’s low performance and the THQ bankruptcy brought down the company a bit. They lost $3 million due to the THQ issue but noted they have locked in their new deal for the license going forward. Barrios noted their Twitter and Facebook followers are up 73% in the last 12 months. Using those strengths will be a key part of their strategy going forward.
Revenue was 3% when they remove the Studios from the earnings. TV was up 15% from this time last year thanks to the third hour of Raw, Saturday Morning Slam and Main Event. They now produce 6 1/2 hours of TV domestically a week. PPV buys were up 17% from this time last year, which makes sense since The Rock was on both The Royal Rumble and The Elimination Chamber this year.
Digital media was way up thanks to Hulu Plus licensing and stronger online ad sales for WWE.com.
International licensing was down.
Licensing revenue was the same as this time last year. The Take 2 videogame deal offset what declines there were on toys and other licensing. Toy sales were down 6%, specifically internationally. International licensing was down 23%.
Live event revenue was down 4% due to AXXESS events not being including in the first quarter this year, as they were last year. If AXXESS had been included, they would have been up.
Average attendance was up 6% in North America.
Turkey and Gatar live events doing poorly brought down this quarter’s international live attendance and sales in comparison to last year’s quarter, where events in The U.A.E. did much better.
They lost money this quarter due to Dead Man Down, which received a 4.7 million impairment. They lost $5 Million this quarter on the Studios this quarter. That had to be expected as they were changing over the model and Dead Man Down was expected to do much stronger by those in the entertainment industry before it opened.
The Call, which did do well, will profit the company almost $6 million but they have not received those earnings yet as they are profit-sharing and it takes time for the money to come in.
They balance sheet remains strong with over $130 million in cash and assets and “very little debt.”
Barrios said that in the second quarter, they will have one less PPV as compared to last year and that investments made to help the company’s future (Network, Performance Center, etc) could offset what bump they might receive from Wrestlemania.
They intend to improve their money portfolio, continue to negotiate Network deals, and negotiate new TV deals to help the company’s overall outlook.
They went into the Q&A:
They were asked to discuss the International markets more since there’s been some weakness on the international fronts over the last few quarters. George Barrios said that they shouldn’t focus much on Turkey and Qatar, which did do less than expected, but they understand the international concern. They have brought in new staff and are restructuring the international operations and working with new partners. They are aware of the issues and are working to change them. The international events are always profitable so they aren’t going to back off on tours while they restructure. They noted that they will go back to U.A.E. in the third quarter this year.
The WWE Network was brought up and they were asked if there was a potential timeline. Barrios repeated they are not going to prognosticate publicly. They are working on negotiating with distributors domestically and noted they have spoken to a few potential international distributors. They have been working on creating content and feel the Network will be a potential driver for the company by 2015.
They spent more on “celebrity guest involvement” this year’s quarter than they did the previous year.
“The Call” profits are based on current estimates. They invested $1 million on the film and look to recoup over $5 million.
They were asked about the Yahoo.com deal and how similar the deal was with Youtube. Barrios declined to comment saying they don’t like to comment on commercial terms since they are different partners. The Yahoo deal will be figured into the third quarter.
They were asked about the new TV shows. Vince McMahon said the Divas series on The E! Network is being designed to appeal to the female demographic. The more shows they have and the more flexible that programming is on different networks, it all helps their footprint as they try to launch their own Network. The shows would be a way to promote the Network through all the different outlets.
On Legends House being potentially launched this summer on a cable network, Barrios seemed surprised that was brought up and said it was still designed as a “Network program at this time” for the company. They seemed to avoid the idea that it may launch elsewhere, which is something that we’ve heard discussed of late from sources, since the content is almost a year old already.
That was it for the questions. Pretty much the same old song and dance, but it’s going to be that way until they have a major announcement to make.