The call opened with Michael Weitz doing the intros of Vince McMahon and George Barrios. After the technical information, he turned it over Vince.
Vince said he always looks at the key drivers, attendance, TV ratings and WWE Network. Attendance is up. TV ratings are up as well. And the Network is up too, at 700,000 subscribers. He said that they have a solid base and a number of directives to grow on that. He mentioned the world-wide roll out of the Network and said the UK would get it in October. He talked about the new deal with Rogers in Canada. It's a bit different as it's a deal for both the TV shows AND the Network. Beyond those issues, he said that they have developed plans to increase their outlook for 2015, including a 7% drop in staffing. He thinks the outlook is good for the company.
George then took over. He said that for the second quarter their results beat their guidance. He talked about how they generated 161,000 subscribers after WrestleMania and they netted enough after churn to get to 700,000. He said that the average user has it on 2.5 devices. Most subscribers access the Network at least once a week. He talked about their five point program to expand the Network. Part of that strategy is the new deal with Rogers in Canada. The Network will be a Pay TV channel on their system and will be available to other systems in Canada. Canada will get the same content on the Network that the US does.
He talked about the countries that will get the Network in August, and added he expects it to be available there in October. Some markets will not get the Network until after that, but there aren't many of them.
He said that they have been promoting the Network on Raw and Smackdown but now they plan to ramp up third party advertising. New shows coming to the Network are The Monday Night War and WWE Rivalries. They will launch on some Smart TV and Blu Ray later this year and add features like Resume Play. They did 424,000 WrestleMania buys in the US and feel they can convert many of them to WWE Network subscribers.
He then went into the numbers from the release, which you can read elsewhere on the site.
After George went over the numbers, they took questions.
The first called loved the numbers. She was interested in the new pricing directives. Do you think the ability it grow month to month will help? Vince said that they are learning as they go. There are many aspects to growing the Network.
She was asked why they ramped up to go global earlier. What are the economics of it? He said that they rolling out the English version world wide because it allows them to get world wide faster. They may add a language specific version down the road but for now it will be the US version. They feel that it will largely just lead to more revenue since getting the word out won't be that expensive.
They were asked about the churn in subs of 128,000 subs. George said that any subscription business has churn. That is part of managing the business. He said renewal churn hasn't started yet. Basically, the churn was due to cards not having funds on them when WWE tried to charge them. He was asked how the people that didn't pay, didn't pay. George didn't really want to get into it.
How will they save the 30 Million dollars? He said that they brought in so many people to get the Network up that there was inefficiency. So now they are more streamlined. He was asked if the lion share was in releasing people. George didn't want to say.
They were asked if the highest churn of subbers came after WrestleMania. George said generally you are right, and they happen around billing cycle. They were asked if the churn is lower after Mania. The caller was basically asking if a lot of people paid ten bucks to see Mania and then canceled and George was vague.
George reiterated that overall expenses will be reduced going forward.
George was asked about their subscription projections if it included people that buy just a month and George said it's based off of the $9.99 price.
George was asked how they plan to get people to renew when the six month commitment expires next month, given that the PPV slate is weaker. They will try to drive awareness.
They were asked about DVD sales and the pricing. He wanted to know if it's being driven by an increased price for Mania. George said it was basically the content itself is what drove the revenue.
He was asked when they see people subscribe. When there are PPVs of course.
They were asked why they decided to make The Network a Pay Network in Canada. Vince said they are Canadian and they look at things differently. He said that he doesn't know if they will do it anywhere else in the world. It could, they will see. They were asked about the deal terms and George didn't want to get into all of that, but suffice to say they are happy with it. Vince said they made us an offer we couldn't turn down.
They were asked about how before they mentioned that all PPV business wouldn't be gone. Is the guidance for 2015 still assuming that there will be no PPV revenue? Yes it is. Basically, WWE is saying that anywhere they have the Network, they expect to make no PPV revenue (so anything that they make, is a bonus). Also they may raise the one month only price for WrestleMania.
They were asked what percentage of subscribers are set for automatic renewal. They won't say. They are asked if people on the six month payment will have to pay all of it up front. Nope, they won't but it will be an option. Are they concerned that some subscribers will cancel the six month deal and just do the $19.99 deal occasionally, costing them money. They will learn as they go and Vince added that there may be new pricing options.
Are they still targeting 1M domestic subs? They would be really happy if that were the case.
Why is attendance up? People are excited about the product.
Does Rogers have the ability to embed advertising into the Network stream? They are still working on it and eventually it will be built in.
What is the status of the TV rights deal in India? They are finalizing the deal now. They have agreed to terms and are hammering it out. They won't give the specific increase for a market.
How many TV rights deals overseas are coming due? We don't comment on that.
Will the Rogers subscriptions be counted in the Network number? Yes.
How many of the new countries getting the Network didn't have PPV access before? A lot of them.
Can you tell us what the top audiences for their products outside of the US? It's hard, but it's basically the places they talk about all the time, Canada, UK, South Africa, Mexico, etc.
They were asked how long it will take to get into the markets that won't be rolled out this year? Probably 2015 or 16.
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