WWE - Earnings call transcript Q3 2020 | World Wrestling Entertainment, LLC

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Operator

Hello, everyone, and welcome to the WWE Third Quarter Earnings Webcast.

We have just a few announcements before we begin. [Operator Instructions]. I will now turn the call over to Michael Weitz, SVP, Financial Planning and Investor Relations. Please go ahead.

Michael Weitz

afternoon, good and you, everyone. Thank Third Welcome Earnings Call. XXXX to WWE's Conference Quarter Officer; Financial Officer. McMahon, discussion and Chief Officer; Chief today's are WWE's President Revenue Salen, Brand Chief WWE's McMahon, Leading Vince Stephanie and WWE's Chairman and WWE's Kristina Khan, CEO; Nick be Their remarks session. by followed will Q&A a afternoon website. earnings We other presentation issued this supporting our the posted materials earnings quarter have third our and release earlier on release and of our discussion will statements. forward-looking Today's include assumptions views, filings. These subject and forward-looking various our based disclosed are SEC current risks our are statements uncertainties and to on reflect in reliance Actual results may should differ not placed materially, and them. undue on be

presentation, we Additionally, are website. our GAAP matters financial is available measures. today of will the and may information include our non-GAAP which be discussing in set on to non-GAAP forth Reconciliation release earnings

that all comparisons financial otherwise the are unless quarter, year should You note ago described. versus

is my today's will time, this reminder, it's a be as to turn on Vince. conference evening. our available replay Finally, recorded, later privilege call the website call and over the this to At being

Vincent McMahon

have place management things feel this to as future CFO, Nick And where they Khan, course, is the new here, to other to and is there's but use who a Salen, this of is of just business new mentioned President stake, felt It's before, there new done going of on a we already as we're And as and here. spirit, enhancive well I for was other well. bunch further of I There's talk a a we're as nonetheless, whether with and much as Head through below. for COVID, been other and specifics confident to Nick. numbers are I some the into you reinvigorating, exciting know not and And do does you stuff of a interaction generalities course, Brand who's many the in the now is on you, things I've to is. want going good at anywhere, and, other position how I'll And what ThunderDome, I Kristina like, weigh is, want Kristina others this Stephanie, of way. here just have that a as Nick and you I I mentioned, new and, Management, that currently And terms enhance going optimism, the that our management. entire this extraordinary But now new never it going have look about that new that that our when don't go and and of course, same really The of are -- really be. has you of -- whole if really have executives fun, think CRO, and later individuals everyone. afternoon, team growth vibrance. those, that's I Stephanie But all say here Thank just quite view as the This feel through resources say. team. the everyone. frankly, find in optimism that all management

Michael Weitz

Nick over to to it Khan. going I'm turn

Nick Khan

Thank very much, Thank Vince. very much, Michael. you

some I and of you, an investors. analysts wanted our with As and share introduction, to my background motivation

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Stephanie Levesque

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Vincent McMahon

want I that. wouldn't to Wow, follow

Kristina Salen

business to try. WWE's I'll review liquidity I'll financial performance, outlook. Stephanie. you, capital Hello Thank shareholders. WWE structure and and Today,

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of WWE new call, That I'll Nick develop returns products new can international on and our we for and to we markets, and strategies Michael and questions. back look forward you believe concludes to content with it As increase this turn from these sharing platforms, portion the progress stated, distribution future. introduce in

Michael Weitz

we're Thank now. questions. open ready Christy, the you, lines Please for Kristina.

Operator

Curry [Operator first from we'll go Securities. to Guggenheim Baker Instructions]. And

Curry Baker

Smackdown. and one under maybe on for both ratings the First, that Obviously, all we remain the pressure see ratings. Raw

you of can I to investors, renewal understand product all clearly heading next generally. ratings plans value if strategy any on And cycle? the current think just the rights to the the of you ratings. going think this the forward ratings? have out into or overall going improve lay for But concrete longer us guess contract improve give remain I guys below just thinking forward the do impacts at COVID levels, we separately, impact term, you And

Vincent McMahon

you television are. who ratings Firstly, many looks consider look us, you When one With of our this, that's in at at what measures. themselves, they when everyone in of total, it's and through cetera, far the et cetera, you fans year, when have than WWE et quarter have of the we ever well, get had. course more into the at now year, that we of look

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other Now the there, and or to without in a Smackdown. next Raw whatever. year forth, we clips the of from have have we and and week And to you it take question, so mothership, next or and comments do and terms video

that give to views. well the So pay ratings us as right fine nonetheless, it's terms that Night But air. back color Night the in bit wouldn't to as and to it's back a Monday It's it's viewpoint. from just never that -- overall is per Friday are Sunday Monday off we're you we're say and then Night, down into of of where going

more can. back. concerned, by brought fans, talent and received As far that's we in. -- is better writing, well We doing everything are getting execution rating as the far as higher, that our as Again, are people is it's better ThunderDome we interested been very

And them basic. do the you pretty that's on want Nick, hit rights? it's to So --

Nick Khan

Nick. is Absolutely. This

has eyeballs. rights, In Viewership has pointed out, not. as television lost linear the Vince terms of

is So of me, many, -- significantly. consumption Consumption is of content parties mentioned, across up content significantly. up Vince many for as us, excuse

rights So to to we're continue in up. in confident going being go marketplace our are the that

to head-to-head Stanley the in on against We We head theirs X at since exceeded some on look you the ratings on TV, Cup the X Lakers finals hit, went ratings Lebron and the that. had network our If week-to-week or a occasions. head ratings increase against of COVID up demographic.

product the that. So and we're we're where understands going, confident confident marketplace in the is that

Curry Baker

rights. deal the Is update you any MENA line? question time for any talking one Are then you Okay. frame or there or getting television regarding on can if still And there? other the And Saudis final to maybe a region? so, the guys expectations parties MENA

Vincent McMahon

that know with want will sure contact time when negotiating. I don't them in still to don't that one is. to on well put our we're a as day, really it rights, going We're is And it line, And basis. happen. happen still concerning when I But

Operator

We'll David with JPMorgan. question Karnovsky next from take our

David Karnovsky

Nick, you would the bit on I tail on little just would alternatives was get you elaborate the the sale potential maybe basis? some service you for doing that be Network. a envision content. some mean on this global We maybe side? hoping of for something Or could what do to And the give and domestic strategic outright on impact Network a

Nick Khan

of at. you the a sale is we're Everything outside what said network of looking

So it would be a licensing of the network.

We like that looking those. abroad. marketplace know, that we As have we and seems it the Everyone believes now there for travel. and are subs a believe, streamers domestically will number of is media

now potentially and to constant are them. globally we about domestically dialogue in the licensing So network with companies

David Karnovsky

was content like something you a or other little. replicating regions on discussed be the Okay. to this And primarily remarks thing Saudi agreement elaborate but then this maybe refer in your this rights, core better something and just prepared in could monetizing other international you Would the would regions? your

Nick Khan

call Your end. a is on little this muffled

Sony I lines of correctly. it think doing with as India. we local in would what say, globalized mentioned more The glocal some It's along we're I content heard content. the

their to content embrace simply on basis. local international content for developing So for our an fans U.S. internationally. territories, It's the that. out doing it's closer not We're even streaming

Operator

we'll And next from Beckel David to go Berenberg Capital Markets.

David Beckel

then sounds watched. advertising a won't on advertising, Network. potentially have pursuing I if review. you you was could But hours could that I viewership or be share I given version the And would of follow-up. question wondering great. update plans the deal data had free any you on a And an like if for the about maybe initial be us strategic quick it

Nick Khan

to Sure. lead some WWE This is free can new the is out I spent proven numbers earlier some which has chatting subscribers. of people I Nick. mentioned due about when to I think that of network, hours the the on to where sample The was tier, product, -- that

So tier. immediate SVOD future, a model a the we're can happy in but plan. not now. things immediate no free situation. combo making AVOD, plans It's change type the with subscription Certainly, of There are it the that's free a tier for with

Stephanie Levesque

And to we are ads from to strategic whatever of process to various technology want perspective, an them. advertising in testing way us use in the allow in, we bring

David Beckel

as That's helpful. And follow-up. just a quick

important a plan review. preserve of in I On forward? strategic strategic the really to know to something data guys. partnership you that is top going you Is

Nick Khan

to Yes. Very Thank us. XXX%. you. important

Operator

And we'll Cannonball to from next Research. go Karasyov Vasily

Vasily Karasyov

is segment. question media My the about

company So gave the old a an year -- the increase would guidance cost. gave team, say, guidance I for in management ago,

estimates the also we TV that know didn't renegotiations, Indian and rights happened And down. the of then the COVID then So at so outcome on. point, went

future you in better on be environment, was you as year slightly least, wondering at ago, more we of confidence So do see us a less, a the I that's margins? margins, implied kind by segment have or this growing now line trajectory, you if of cost that the would slightly could declining, that super-helpful. segment non-COVID course, a much top for the And structure years. tell in QX much much how know that pretty stable normalized color than with Any

Kristina Salen

at for question. stab Kristina. It's your Thanks a take I'll it. answering

of because we maybe focus perhaps initiatives platforms, to on investments media for WWE's And content, mind. business ancillary the think reset strategically, things it's or outside is of touring. within I think events of thing expense events pertains important furlough, it's come segment, going our there consider. of example, as expenses even to key other with should to live to production, but that and and on little media Obviously, But are you the the return investing shifting content any events, focus the event further, savings support to to on into regard short-term cost importantly, about as base it within most expenses to about media return-to-live the that also localized comes touring. consider most you media the then as about forward, we two think a that as new bit digital model strategic adjust

not operating some encourage that XXXX. financial to through still reset as we're the we are would about plans. thinking But you So the our we're that XXXX think and about and of in of we're of -- about think those things process the we going

Vasily Karasyov

I Nick, for And if one may.

said your exact I internationally you like will -- remarks, I the the be Nick, prepared approach spending rewards. think something that potential to think the was balanced versus in more wording

if wanted sure philosophy just make I'm to the is correctly. change what departure? a give a of the is difference same? And you terms it of a of still could Or to it Or points previous just internationally? Is spending I that couple us in understanding that the So is?

Nick Khan

to We simply it. and with want surgical be strategic

XXXX, look Indian doing So in all at event angles we're for with Sony the we that. Superstar that on

India. We have will right that the resonate to talent make in sure it's

We business. make structure that is of have cost Sony's and resonate to sure will the business the something for that event our

that sure of There parties So taking dive a all them into and making be these one events. it's each deep every sense simply more for it involved. makes will and of

Operator

Brandon go And Ross from next, LightShed we'll Partners. to

Brandon Ross

the have profitability, on need greater ratings, know going I said partner who WWE you're how And impact a follow-up. for WWE, for you're think but more perspective the just with earlier ecosystem. not on response pressures potentially wanted then that think I going about you to couple and to but WWE's about TV the future you to especially on is think lot a does with broader question And television you would content? adapt say, your and kind for your have in to broadly? I sports of ecosystem since sports you how of expert rights a and what a the Curry's for viewership, is reliant that And in I Nick, I total you get

Nick Khan

for Thanks question, Brandon. the

I think there's a couple of things.

I you remove the fang traditional at of think look if the a structure conglomerates, so moment. will, for if you the

realizing recent there look you they're at where structures terms it's traditional the conglomerates, changes. of If put certainly we about are it many getting structural content that first, in to us second. all of the It corporate these appears

it. we long consumers can into easily As access that as put place the

"Well, So great who's to following a is looking to second, be at, have to you, in would intellectual if me, their shocking it property. Disney this we hey, so reorg wait anyone, stuff,

films. great have We

beat put company rights. into that a They all be great and If We probably like have package, competitive could sports one we that. we thinking Netflix?" are

of thing. NBC the indicating same If it's Universal's sort reorg, you look at

to the to happy is current side the So with the important fans most partners thing business in addition our our us remain on that product.

While we years X all the look is to at about where now. business the X landscape going be to from in

we it where I seems going. all see be think to

gets prepared it's we're a for it there. it. streaming-first Let's If see world, if

Brandon Ross

fangs, see going biggest wanted bit core was do think you on the what on internationally, since rights mentioned, do all a you take for interest time. I then past, you a type think worked guess, rights in their in the view the which sports And Where it's your get where international it you Is And And you significantly to grow do programming the of fangs becoming rights? are to the that engaged? simply content opportunities? have? you last of disappointment deals of just the to I which Great. terms

Nick Khan

into an we've all sampling specifically It's an Amazon, some tennis certainly executive U.K. -- get you seen recent you them with internationally, going at unless the So you're go We We've more hires to to you're those indicator think with the make hires. live if appetite their I going that of for unless deeper seen believe the business. to me, also don't in certainly NFL. look

they in might contemplating contemplating whatever if, look at be you NBC If model, same the Disney thing. is Universal, and fact, Netflix's

live." haven't put sitting So testing out to you're there we but If at a content basis, Netflix, "Okay, yet fresh tested that saying, registers, you're they looking are perhaps continue we can weekly on as if with already. to They're so they test there, globally mistakes internationally can not Do look tennis? did that few it all there they're make first, seems they it or a Amazon getting live?

more So them, going and priority and first, continues the there. to it's recent we're in but with mind shift for going again, with current Fox's a all acquisition. Again, as Peacock therer Universal of NBC be partners business becomes to with our

So yes, majority our going the terms to anticipation of is in that the fangs, if future they're be there not live. all in great of there, are them not-too-distant the

Operator

And next, Wells Steven go Cahall to from we'll Fargo.

Steven Cahall

revisit to the guidance. wanted just I OpEx

special media before be million implies for running you to like or I clarify of you we that media levels. is in events, Arabia the maybe be over at OpEx $XXX rate going can India? to to then Saudi And that that about $XX the $XX it just segment? do is kind of OpEx new might something think million most should XXXX million first, think, kind that about of if as run So so, going

about So some connected, that second of question just thinking my I'm content And curious it that is correctly. then if is which of like this is kind sounds going production. into

kind pretty tied transformative the some of of I on might this booked think is piece you've the company, could going looking we more is content revenue already When want producing, be media about content this some Is new that production produce network want that to you that be content lifeblood. big clarity a transactions it You're forward. content that into you're at? you're just that for? since that, got of for OpEx prospective piece a the

Kristina Salen

but let I'll I'll answer Nick first, sourcing thing. question. your Sure production content part, OpEx address the

the million to increase and that ThunderDome our part, of of the production employee furlough. Capital, Remember, to them foremost, be that furloughed, nearly think, who majority first million of million we we with -- $XX in estimate due back and the $XX and associated related in yes, the of base nearly also when expenses. that return employees, by year, incremental it's XX% the end $XX by million the all end about from year. will roughly of in anticipate the that you employees I the to think it's to $XX but was were And of furloughed, all expenses and of

in the will explicitly it no, be to of so -- answer you segment. then, the just in media not media majority And

go I'll a Q&A. I when will what live -- importantly, much in the give regard when and More about made be will come live having we to we how expenses. do of clearer events events us operating live comment to think It's events in those will live a capacity picture that events, many back, a the back around earlier clarity year with

revenue limited event COVID. of by because As very I expenses. offset expenses may come we those at lack lack the I And live due come that said those opening remarks, and live been revenue live may in to lower limited of on clarity -- because event has may little at but this of moment, my more expenses the back constraints have say back, event capacity

second that into sourcing. to consider turn And over about well. when to to part it So think the we about expenses content have answer moving as we XXXX, I'll Nick

Nick Khan

Thank you.

as sourcing, of a In have We think down content it we the treasure all terms it we comes property. know, of trove here. intellectual all to

it bets. made the do So it's time. the and see that same where pays We'll at it develop how content, we properly, we've serves it expands audience good We monetize audience off. if a the few think soon

Steven Cahall

would just kind improvement if talked the October? Great. love change continued into continued about was I the And of since you follow-up. just has I trend as of one wondering to that has that line planned. if Performance then Center, quick that ratings know

Nick Khan

Nick This again. you. Thank is Yes.

of back leagues play. consistent all held cluttered and the with Our ratings began, into have since season other coming the fall sports

across in Our yes. board ratings October, the have held consistent

Operator

to Wolfe next Eric go Research. We'll from Katz

Eric Katz

it? hear sure Saudi maybe OIBDA no opportunities to little for new on the call to all want revenue spend good or Kristina joining. in that time and some in pipeline But assuming are want if talk lower expenses. events more you first, congrats Nick XXXX that, XXXX it's than there? events and want make I live to correctly heard XXXX. this the so, on a Was XXXX on is I color of I within on to here. half and I the Any of Well, to the likely the no XXXX? for voice And some just comment

Kristina Salen

no made about sorry, OIBDA. to XXXX clear, comment we I'm just be

Eric Katz

Is on next X or Okay, or Saudi there for year, okay. no comment? X assumption any all at events

Kristina Salen

about our I'm team. speak our XX As sure full the appreciate, for the and to I with in and focus on strategic operating that next. days are financial XXXX XXXX about given it's -- diligently and we I you plan when working with we meet said, And intention you executive seat. Nick the We're very can

Eric Katz

appear about ThunderDome. the Okay. expenses regard would for half that XQ, of the for that's to And with incremental it

of the the back related contracts that? to Amway cuts backup when for Center back before, so, some And said $X would which the do previously location be ThunderDome to that of million there's through you to Center you all you you're How your for Center? of be might at the guys set believe in NBA per that in the does I approach XQ assume go the you'll November? up have Performance end If you because the restarts. bringing month a reports so furloughed believe I workers, neighborhood of somewhere Amway Some again? announced, that Do press if

Kristina Salen

lots the And is world for United that Amway assumption XXXX. to the foreseeable some like there the likely aren't future, in Our anywhere we'll go. the us of of and many right the States fact that places through live given now, into be for Center there sort meaning events in are in XXXX or occurring center

not it's So ours. a of concern

Eric Katz

Okay. Maybe just one. last one

are? the color And sort year? next of $XX you give exactly any that more for into recurring a XQ, little is of on million On what production incentives can those in

Kristina Salen

well are receive states with quite Connecticut, of as incentives, the incentives but actual but -- production to, production state not frankly, the from We production amount, content. the primarily other from themselves. the These of regard from

quarters. fourth relative third sorry, we in every third them multiple received for -- every compelled this every But the to particular felt quarter, them because quarters. in occurs adjusted call have quarter to In quarter. for We it occurring quarter quarter out multiple what's OIBDA

Operator

John to go Evercore. we'll next, from And Belton

John Belton

a NXT. Just couple on

can got that Network. on to year TV distribute the of expires when versus Network looks the if NXT provide from update agreement pretty belt, NXT it there thoughts you ratings, off, your longer NXT. up And Wondering, monetization well. about NXT the first WWE on can might held USA Smackdown plan with about an compare through now like a separate you Any linear under you for Raw term? and has you've distributing So your how

Nick Khan

Network ratings NXT his strong. the last A couple absence for even the with team, to seen on We've the team, NXT, an on of the Paul, that. one, night on team Network. particularly in things entire congratulations Number increase of were on the WWE subscribership which

our So We're seeing comfortable our relationship that think talent. new there. platform with with many we're led We enjoying eyeballs USA. to has position our

to long-enough the of Paul our of we are where continue that for deal, team have runway it's have. unless us term terms feel certainly deal to product that length don't and grow talk on about the partners we things In board discussing with long a typically the those but a we it, way that they

John Belton

working the that isn't maybe And from with been working content any NXT what's for Smackdown? learnings Raw and

Nick Khan

think it to fall be I point view, with across cluttered from seems schedule mean the working of a board. my I

it's we earlier, think always that said want I for but Vince a challenge year, be XX to. lived weeks company, a up to writing. best like do So challenge we've our always best a that is consistently, talent. the always always We going To want the

all about the in to all X that good feel head we direction. right continue products and So

Operator

Next, Northcoast we'll to John Healy go Research. from

John Healy

the pandemic come give an of was watching going the when question, on I'll Trump. and This to being you, some it anyway. how people it mentioned unfair press as one he could Vince, to sports ask I conference He about may back and back. when be rely President a started, COVID with but it could us remember feedback come

I'm to products." see that of it. entertainment, let want where what see just live you mentally, leader as leader, they setting position industry what say, a fans before are in are to to leadership back trying your can begin and and going going see "Hey, given you into to So we're as you our say, or we before it kind the understand trying the needing to to you're So to go for consume the is

Vincent McMahon

on A things that. couple of

in et that's of terms the it call you're and what that, is all a performers. is of can part -- recall, one as know. our and when if panel. although cetera, conference That's current safe was you and for -- If with I when a was with I I Goodell, to that to looking when. would well. a one? of don't fans I at Roger you Amazon obviously, it I it come the really I suggest et extend cetera, up just mean safe our for don't in COVID tell lets Moreover,

Michael Weitz

right to Please, be to now. Sorry, if you your the Weitz and Michael with you. follow-up department, we're going further talk questions, we'll have Michael with stop IR call Guido, happy

Vincent McMahon

Thank you, all.

Michael Weitz

you. Thank

Operator

your conclude call that participation. today. And you our Thank for for does

You may now disconnect.

World Wrestling Entertainment (WWE) 29 Oct 202020 Q3 Earnings call transcript