Notes from the WWE Q3 investors call
WWE Chairman & CEO Vince McMahon, Chief Revenue Officer & President Nick Khan, Chief Branding Officer Stephanie McMahon, Chief Financial Officer Kristina Salen, and SVP Financial Planning & Investor Relations Michael Weitz hosted a Third Quarter 2021 Earnings call today from WWE headquarters in Stamford, CT. You can check out coverage of today’s press release at this link. Below are highlights from the call:
Weitz opened the call and welcomed everyone, then went over the basics. Vince touted the solid financial results and said they’re pretty strong due to the global demand of all things WWE, including the return to live event touring. Vince said live event touring is where the WWE brand really comes alive, unlike any other media company, and they’re raising their 2021 guidance due to the results. He mentioned that they only had 1 event in Saudi Arabia this year due to the COVID-19 pandemic, and noted that they saw a number of positive trends this quarter, and their eyes are open to many more ways they can take advantage of their IP and the evolution of sports entertainment. Vince turned the call over to Nick.
Nick thanked everyone for calling in. He mentioned how RAW’s rights with Hulu is coming to an end towards the end of 2022. He said NBC was an active Hulu owner in 2018 and Peacock didn’t exist then, indicating they may be interested. He said the battle for RAW rights will be intense and fun. Khan said WWE continues to expand their original programming slate, touting the third season of Miz & Mrs. Escape The Undertaker on Netflix. He touted how they merged content departments into one place six months ago, WWE Media. They will soon announce a bunch of scripted and non-scripted content, and recently completed a WWE kids cartoon with a streaming platform. He said they are bulling on upcoming TV rights negotiations as they were before, which brought in massive new revenue for the company. He said they have interest from new buyers.
The early previews of the Vince McMahon docuseries from Netflix are “out of this world” and Khan said wait until you get to see it. Khan touted how they signed a deal with Spotify and The Ringer for Spotify to become the exclusive audio provider for WWE, which opens them up to Spotify’s 165 million subscribers. WWE is confident hat with Spotify’s expertise and their library of IP/talent, they will deliver an audio product that excites fans. Khan mentioned their strategic approach to PPV and they are making adjustments to make each PPV a special event, in not just the content but all things surrounding the event. He mentioned how they announced the PPV schedule for 2022, and are hosting multiple events in stadiums on Saturday nights. He went over the various PPV events announced for 2022 and how some of them were scheduled to have no sports competition, and how the WWE Day 1 PPV will take advantage of people being in Atlanta for the holiday weekend. He said Money In the Bank is one of WWE’s “five big” pay-per-view events.
Khan touted the new trading card deal with Panini, noting that the trading card industry is booming right now. They received several bids from card companies but Panini’s offer is a significant step up from their current deal with Topps. He also touted the new NFT marketplace with a group owned by FOX. WWE officials have spent significant time with FOX executives to figure out how the two sides can continue working together. Khan said it has been a busy quarter with a focus on strengthening their existing businesses and growing new business.
Khan turns the call over to Stephanie. She says unfortunately she has some bad news… she announces how The Miz was eliminated from ABC’s Dancing With The Stars, but mentioned how many eyeballs the former WWE Champion had on him. Stephanie noted how they are moving from an arena-based touring model to a stadium-based model, which allows for more focus and happenings for their tentpole events. She said digital consumption is up again and they have a renewed focus on creating new content for various platforms. She touted some viewership and how more people watched SummerSlam on Peacock and the WWE Network than any other SummerSlam event. She touted the Summer of Cena, calling it a strategic move, and how John Cena became their top merchandise mover, especially with the youth audience, and he moved the ratings in those youth demographics when he was on RAW and SmackDown. She touted the surprise return of RAW Women’s Champion Becky Lynch, and then Brock Lesnar’s return, noting how an Instagram photo of Lesnar broke an Instagram views record set in the summer by Cena.
Stephanie talked about pivoting to multi-year deals with advertising partners, which have brought growth, and several of their recent marketing campaigns, and how the company has just begun to unlock some of their incredible IP, which dates back generations. She compared WWE to the Marvel universe with Superstar/hero being their own franchise. She touted the A&E Biography series, Xavier Woods’, Becky on the cover of Golden Crisp cereal, and The Miz’s Miz & Mrs. They are focused on more localized content. She mentioned an increase in RAW and SmackDown ratings, despite return of live sports competition. She talked about how they saw increases in various digital content, and how video views were up 38% to 12.8 billion as compared to the prior year period that benefited from COVID-19 viewing trends. She said it’s close but WWE is the #1 sports brand on TikTok, with 14.5 million followers. She said continuing their focus on innovation and interactivity, WWE was recently announced one of 3 launch partners with Snap/Snapchat’s new Arcadia AR (augmented reality) studio, which will help WWE create AR experiences for fans at live events.
Stephanie said they are excited for the WWE 2K22 launch in March 2022. She mentioned how the Take2 President said earlier this week that it will be the biggest WWE 2K launch in history. Stephanie said WWE is pleased with their overall performance in the quarter. Stephanie turned the call over to Salen and she went over some of the numbers in the press release linked above. Now it’s time for the Q&A portion of the call with investors.
They were asked about RAW Day 2 streaming rights (Hulu) and international WWE Network rights, and a timeframe on when they will be done. Khan said the RAW deals are up towards the end of 2022, so they will be done by then if not sooner. Regarding international rights, he talked about how the lack of ability to travel has slowed down the process, but travel is opening up and they hope to have an update for investors in short order.
They were asked about the profitability of WWE Studios projects being up. Khan said the model has changed and now it’s about licensing their IP to other studios for scripted and un-scripted projects, instead of creating new films and projects that they finance. He said that way there’s no risk or investment, only paid projects to them. Khan said great success means great profit, while mediocre success still means great profit that way. He said lots of deals are to be announced and they feel like this will work out OK.
They were asked about NFTs and the metaverse. They believe it will continue to evolve, be more robust, and is here to stay. Regarding internal changes with various departments, Khan said they want the most efficient business model possible, which produces the most amount of high-end content possible. He said it’s about having the right people in place, and in the last year and a half they’ve taken a closer look at what is needed, and adjustments.
They were asked about WWE NXT and the progress there, and if the revamp has gone the way they wanted. Khan said it’s starting to go the way they wanted it to. They wanted a younger, fresher in-ring approach and they think they have it. He mentioned how you’ve seen some younger talents get called up, and you will continue to see more of that, more recruiting efforts, which were spearheaded by Triple H and Bruce Prichard, among others.
Stephanie said at one point, when asked about sponsorship opportunity size, that there’s no reason why they can’t have deals in the hundreds of millions of dollars in 3-5 years. They were also asked about the stadium-model of events and what effect it might have on volume. Khan said stadium events will not impact the volume of NXT, RAW or SmackDown events, pay-per-view is separate. WWE wants to attract more fans to events and they believe fans want to attend the big events in the right cities on the right nights.
Weitz wrapped things up and that’s it for the call. Stay tuned for more.