Q3 2019 Earnings Call
Please standby.
Hello, and welcome to the W. W E third quarter earnings webcast.
We will conduct a question and answer session. After prepared remarks, and you may ask a question by pressing star one on your touch on some of.
If you wish to remove yourself from the Q. Please press star too.
Just a reminder that today's call is being recorded.
And now I will now turn the call over to Michael Weitz.
<unk> financial planning and Investor Relations Michael.
Thank you and good morning, everyone welcome to.
Third quarter 2019 earnings conference call.
Today's discussion or George Barrios, and Michelle Wilson, our co president.
Their remarks will be followed by acuity session.
Our chairman and CEO is even Riyadh, Saudi Arabia production of Oregon Crown Jewel.
We issued our earnings release early this morning.
Our earnings presentation of other supporting materials on our website corporate.
You mean forwards last investors.
Today's discussion will include forward looking statements. These forward looking statements reflect our current views are based on various assumptions and are subject to risks and uncertainties disclosed in resi bluntly.
Actual results may differ materially.
Your line should not be placed on.
Finally, the matters and we will be discussing today may include non-GAAP financial measures reconciliation of non-GAAP to GAAP information is set forth in earnings release and presentation, which are available on our website.
As a reminder, today's conference calls be 40.
It will be available on our website later today at this time.
My privilege to turn the call over to Georgia.
Thanks, Michael Good morning, everyone. Thanks for joining us today for review of our third quarter business performance or progress on key strategic initiatives.
During the quarter, you achieved adjusted OIBDA, 24, or $5.4 million, which exceeded our guidance, primarily due to lower cost across our businesses.
Despite this result, we're modifying or full year 2019 guidance when adjusted OIBDA range of 180 $190 million would still be an all time record. The change is attributable to the delay in completing a previously contemplated agreement in Mena region and the impact of accelerated investment.
To support the creation of our core entering content.
We continue to work towards the completion of Amena agreement no assurances can meet give in this regard.
Third quarter made important progress on key strategic initiatives initiated the next phase Wwb network service developing in content and continue to strengthen our brands.
Got it investing in our core in response to.
Launching NXT on USA.
And preparing for the successful debut Smackdown box broadcast.
As we focus on our content or domestic TV ratings continue to improve.
I think TV ratings for raw declined 14% in the second quarter improved to a year over year declined 6% in the third quarter.
Similarly, domestic TV ratings for smack down which declined 11% in second quarter improved to 4% decline in the third quarter importantly ratings for both raw and Smackdown surpassed the agri performance on the top 25 cable networks.
As we emphasize last quarter, we're excited about the launch of Smackdown live on box.
It's making WWD available wise.
Do we see here on a premier broadcast platform.
Programs debut on October 4th celebrated its twentyth anniversary on television attracted 3.9 million average viewers, making it one of boxes highest rated Friday night programs over the past three years.
Additionally, Smackdown averaged 3.1 million viewers to date over its three shows on box broadcast up more than 150% as compared to the same time slot over the prior four weeks on box.
On a year over year basis, adjusted OIBDA declined approximately $10 million based on lower revenue from our network and what does that businesses and higher fixed costs.
Putting some of the accelerated investment I mentioned.
These factors were partially offset by $10.7 million reduction in accrued management incentive compensation associated with our lower expected full year performance.
The discuss our business performance in the quarter, what started phase Threea presentation shows revenue operating income and adjusted OIBDA contribution by segment compared to the prior year.
Looking at our media segment adjusted OIBDA declined $8.9 million is the escalation of core content rights fees and higher results from our portfolio film releases were offset by a reduction in network subscription revenue.
And increased content related expenses.
Networked average paid subscribers decreased increased 9% approximately 1.51 million for the third quarter.
Driven primarily by the impact of lower subscriber additions earlier in the year, which we had previously discussed.
As we have projected at 10% decline for the board fourth quarter that reflects the lower subscriber base at the start of the quarter.
As we looking ahead, our primary focus for Ww network is there's continued evolution as I mentioned last quarter or do you platform provides subscribers with a better user experience.
Chris Wells from the birds commented that network was completely overhauled much better search capabilities improve video quality and now feels more consistent across platforms. It looks far better and is easier to use.
Mike Johnson from VW Insider said, it's a usually forward into the future for W.W. eat so as I've said before we remain really excited about the long term opportunity for the network.
During the quarter, we made important progress on other strategic initiatives that extend the reach of our Ww brand and our superstar talent.
Typically we prepared for the transition of Smackdown to Fox Broadcasting short already mentioned.
Both the program success, along with our support thoughts launched a new AD campaign with the Tag line, we're all superstars, which has been highly visible across boxes array of Marquees sports programming.
As you heard from George Smackdown successfully transitioned to thoughts as measured by overall viewership.
Importantly in this shows the first three weeks on Fox Knockdown was the most viewed Friday night program on broadcast among the coveted adult 18 to 49 demo.
Well the building Smackdown position, we also expanded our Wednesday night show NXT from one to two hours and began to gather program line on USA network.
These changes further build the brand as a complement to our flagship programs, including the newly licensed NXT show. We are now we now error seven hours of light in marine content that span Monday, Wednesday, and Friday every week, creating a primetime lineup that broadens our brand reach and deepen our fans.
Right.
While reducing the two highest rated programs on USA network Monday night, raw and Smackdown, like we continue to produce develop and partner on new original content across other platforms.
On television boxed about Wwb backstage, which is a new weekly studio shows two Premier November 5th Fs one.
Our direct to consumer not work, we plan Crown Jewel windfall feature top boxing and U.S.C. talent Tyson theory and came Glasgow.
For social and digital platforms, we developed after the Bell, which is our first weekly podcast series.
We're also excited partner with Paramount on the enemies feature film Rumble, which is set to release in July 2020.
Moving to be superstars, Becky lunch enrollment rates together with the main castle provide voices for the movies characters.
Like reading original content in this way, we can reach new audiences, while providing our current fans with additional opportunities to engage with our Super Star talent.
Now turning to our live event business as shown on page five of our presentation adjusted OIBDA from World for live events declined $3.1 million, primarily due to lower attendance out or events in North America.
Although we had 19 fewer events in the quarter. This change had limited impact on the engine to know what.
During the quarter, we continued to successfully stage and large scale events for fans.
We perform summer slam in front of its sold out crowd of nearly 17000 fans in Toronto.
We were turned in China for the fourth straight year with W.W., we like Shanghai at the Mercedes Benz Arena.
And then just a few hours we were a whole crown jewel in Riyadh as our second event this year in Saudi Arabia.
Over the coming months, we plan to hold life event tours across Europe , Asia Pacific and Latin America.
And our consumer products segment, adjusted OIBDA declined slightly as a $2.6 million reduction in revenue from the prior year quarter was offset by lower operating expenses.
Finally, we continued the evolution of our franchise video games with the launch of W. W. Two K. 20 on October 22nd which was developed by take two interactive.
The initial feedback on the release has been next we believe in the ability and take you interact and to further develop the game engine.
Finally, new functionality and experiences overtime that are critical to driving thinking long term growth.
Page seven of our presentation shows selected elements of our capital structure as of September Thirtyth 292019, W.W. yield approximately 231 million in cash and short term investments you estimate WWD as approximately $200 million and debt capacity.
All in credit facility.
Cash flow declined approximately $52 million from the prior year quarter predominately due blue due to the unfavorable timing of working capital and lower operating performance.
Lesser extent the change of free cash flow also reflected attained $10.4 million increase in capital expenditures majority of which was related to the execution of our workspace plan, notably subsequent to quarter end. We received a 60 million dollar payment for an outstanding receivables and would have resulted in year over year.
Cash flow growth in positive free cash flow in the period and had been received during the quarter.
Our previous full full year guidance, which targeted adjusted OIBDA of at least $200 million assume continued improvement in or engagement metrics for the second large scale event in the Mena region and the completion of a media rights deals in the medium region.
Although we are holding a second large scale than today, Riyadh, Saudi Arabia or previously contemplated agreement for the region has not yet been completed.
Additionally, we've also accelerated investment to support the creation of our core in rent content.
While reducing or delaying other expenses to lessen the impact of that spending.
Given these developments we've modified our full year guidance when adjusted OIBDA range of 180 $190 million. Our full year guidance includes estimated fourth quarter 2019, adjusted OIBDA of approximately $108 million to $118 million.
Fourth quarter results reflects substantial revenue growth from our new content distribution agreements in the U.S., which became effective at the start of the quarter.
Looking forward when to provide indepth perspective on our 2020 performance long term strategy and business model in mid to late February following the announcement of our 2019 results.
No that this timing attempt the Mt. Three factors communicating as soon as possible.
Minimizing the range of outcomes around our 2020 guided entity or is the best practices for the communication are important strategic matters close you're right.
As part of that disclosure, we expect to discuss the evolving media landscape.
Pillars in trajectory of our growth.
Our approach to validate and managing anticipated investments.
And our capital allocation.
Sitting here today, we anticipate that our core content rights will drive significant growth in revenue and adjusted OIBDA in 2020.
As the media environment continues to evolve we believe several important industry trends are likely.
Spec value of live sports content will continue to rise.
We believe there will be strong growth in the media and entertainment sector in international markets, especially India and China.
We think brands will continue to look for in sponsor properties that deliver reach and deepen engagement.
And finally, the Digitization will accelerate.
When companies to reach a larger share of the global population their products and services.
Importantly, we believe W.W. he is well positioned to take advantage of advantage of these industry trends and to drive strong growth into the future.
I believe is based on several key factors first WWF position in the U.S. live content ecosystem.
Sponsorship business and in our view under indexing the relative strength of our brand.
Our strong global fan base.
And finally, our strong focus on Digitization expand further reach that global audience.
Looking ahead, we believe that the escalation in content rights fees will continue to drive a transformation in our business model.
Over the last several years, we've seen an increasing share revenue coming from contractual arrangements with third parties.
Dissipate a significant share of 2020 remi will be contractual in nature as well.
This trend to continue providing a large.
Rone stream of revenue with low volatility.
By taking advantage of the industry trends that I. Just described we can believe we believe we can transformer business drive growth and maximize shareholder value.
So that concludes this portion of our call ill now turn it back to Michael Thank you George.
Worry please open the lines for questions.
Certainly into the audience. If you do other question at this time. Please press star one on your Touchtone phone.
Additionally, if you're joining us five speaker phone today make sure. Your mute function is turned out to allow the signal to reach our equipment.
Once again that is star one.
Alright.
And we'll go first to.
David Karnovsky at JP Morgan.
Hi, Thanks for taking the question on the lower outlook for 2019, I think there's been some confusion on the guide since you are holding up you know the crown jewel events that I can you bucket out the they tend to 20 million between the middle East deal. The performance in some areas that are more transactional in content investment and then just on the pull forward effect.
And just talk about where you're investing more in content now thanks.
Yes.
Can't bucket out within them getting a little bit more color. We anticipate the field would have been completed early in the quarter happen. So that has an impact on the guide.
And then as I mentioned brought forward some investments into our core enriched content as I said before those investments really or the production of that constantly a three components.
It has the creation of the story lines.
Second is attracting developing and retaining talent.
And then the third is the production Ellen.
What our fan experience at the event and also what they want us on video and so we accelerate some investments and across all three of those core entering content elements.
Okay, and then I was hoping you can provide some background on your decision to bring and executed you. Let's say how do you think that will impact network subs over time and do you see keeping a at ICSI at full failing to 52 week basis or does the show what should the show golf tour occasionally to be better positioned on Wednesdays. Thanks.
No I think.
Sure so as we.
I mentioned before David around NXT in the release, when we announced its moved to USA.
The long term strategy is the opportunity to create another core a flagship property.
Launched fourth in the in the pay TV ecosystem in the U.S., we as we mentioned there at the end we think the value of what content is going to continue increases socially U.S., we bought the opportunity to do that.
Was worth some of the risk of on the.
The network I think it's also important to note that as you've probably seen the window the turnaround between and exceeded United USA now getting two hours of nearly line constant back on the network is actually we think is valuable for network subscribers, but it was managing that tension between.
As you mentioned the network and just as opportunity to create another powerful library and alongside one snack now.
Okay. Thanks.
And we'll live next to Eric handler at MKM partners.
Good morning, and thanks to the question a couple of things for you George I wondered.
You clearly laid out the opportunities for revenue growth in 2020.
And I'm curious and fully understanding that there's still some variables influx on the revenue side has anything changed at all with regard to your expectation of expenses and 2020 and how's that shaping up.
Yeah, we're still continuing to evaluate 2020 Eric.
The core costs going into the year as well as any.
Additional investments.
But I would say, they're not really a material change necessarily on on the expense side for 2020, although we did accelerate as I mentioned.
Some cost that we were expecting 2020 into 2019.
So that means actually by accelerating those costs those costs should actually subside and 2020.
Although year over year impact on with accelerated would be minimized by definition doesn't mean that there may not be additional.
Investments are rises in or fixed cost, but obviously, if we run for a year over year would be mitigated.
And then with regards to you know your international deals you you've got the mean a deal still ongoing negotiations and yeah, you've got India supposedly.
Not finished up mid any comments there. So we'll so that they are still need to be done can you. Maybe talk about are there any specific bottlenecks that you could point to that has caused these deals to go on longer than expected and then with India you know there.
Version of the yes, I see see seemed like they wanted to do some on bundling with sports rights deals I don't know where that necessarily is but there was a cricket deal done about a month ago, which is the first sports deal that I at least have seen in the last year.
Does that mean at least maybe we could think about India.
At least bid.
The the wheels or progress are starting to churn a little bit more than they have in the past several quarters.
I don't want to characterize in discussions we're having I'll continue to stay on India. As we said before we think we'll have.
Our distribution plan set by the end of year by the end of this year.
And then we never really talking about a timeline on the Mena region will stay away from that.
And as you mentioned before.
There the regulatory environment in India around pay TV has been changing over the last several months.
Again, I want to characterize what that means for us, but like you. We also took notice of that a recent announcement on the on the cricket rights.
Thank you.
Our next question is from Laura Martin at Needham.
Hi, guys.
Thanks for that commentary on the industry I can't really interesting George I'd Love. Your insight now we started out price war going on in the general entertainment ecosystem and streaming between like Disney and Apple low borrowing each other and the new H.B.L. Mack is essentially essentially the fact, a free to anybody with an eight.
TMT device or pay already paying $15 a month for HD out. So my question is are you guys rethinking that all the 10 dollar price point in the U.S. for your streaming service given how many services are now kind of decreased by $7 per month. That's my first question.
Yes, So I think we've mentioned this before we think there's a fundamental difference between general and entered brought general and entertainment offerings again, whether that's in traditional pay TV or DTC as opposed to our offering which is really targeted at a.
Ultimately small portion over overall fan base, but our most passionate fans. So we think there's a fundamental difference there we think there's a fundamental different value proposition.
Around that so we're not we don't really thing.
Thing you mentioned those different services really has it.
Direct correlation to our service.
Okay, and then can you remind me now that next does move to you I'd say what are the original how many hours of original programming on the network I assume that next is now at 30 day delay the way the other ones are so what's the original warm the network now that people are paying for when they get to $10 and my payment Bill every month.
Well first of all the window for NFC is actually about 24 hours or so and it's also more libin ring content. So before on the network you get about an hour per week as well as our takeovers three or four times a year now you're going again.
Good day.
100 ounces that live content available.
As well as those special that I mentioned.
We anticipate increasing in 2020, but we think there's actually added benefit and then when you step back or is your question look at these higher value proposition for the for the network obviously.
The pay per views and Wrestlemania still or the.
Most premium content, we have it's a big driver of the filing proposition. We're still in addition to those were still doing roughly 200 hours of original content onto the network. In addition to the pay per view. So we still feel great about the value proposition and then when you add the product itself. So just talk about the car.
Because of the product itself, we feel really excited about and our fans are excited about what we've been able to get them to talk about some of the element.
Third parties are saying about that so yeah, we still feel really good about the value proposition the network and as we move forward.
Our ability as I've said before to be able to create tiers. The premiums here that we think we'll bring additional value who subset of our subscribers.
Here and make the content more available to more people for the first time ever.
Eventually be able to watch still going to be content on the big screen without hands and rely on passing insulin because that read here would be available on the connected devices. So that we think thats a big thing we think the localization of the content over time is a big deal.
All of that together, we feel we feel good about the future. Obviously had mentioned in the last quarter just the way the math work than any subscription service, but in ours, because Wrestlemania is such a big part of the gross add that once we were down year over year that was going to have a ripple effect throughout the year, we're seeing that when we look you know over the next several years.
The reasons I just mentioned, we're still really excited about the opportunity there.
Okay and my last May has a modeling question. We've now since we got to deal with Saudi Arabia, we'd done two events a year can we just nobilis then going forward George to a year or is that right modeling answer.
Yes, I can't.
To that right now Laura.
Around 2027 for the reasons I mentioned, we want to talk about 2020 ones, we've locked down several elements.
There is still open so I really can't answer okay.
Okay, Alright, alright.
Thanks very much here question. Thank you.
And we'll move next to Eric Katz at Wolfe Research.
Thanks, Good morning, everyone.
I wanted to maybe stick with a few and the on the mean a deal first knowing you can't say too much but one clarification upfront does the Q4 got include the second Saudi event or is that looped into larger Mena region TV deal.
So now what we said originally as we look into Q4 the guide our previous guidance based on improved engagement.
The second event.
End of human rights deals all three individually.
Phil mentioned in her remarks.
Earlier in the next hour to that event will be going lives. So that part of the guide.
Consistent with what we thought.
Okay, and then and it was much in the release in any kind of set apart in the call regarding the deal that no assurances can be given and I know you can't guarantee deal, but I guess the last line about assurances didn't necessarily used to be in there. So it sounds like to us their scenario our deal might not get done even though there is an agreement in principle. So I guess, maybe just trying to be clear on.
What are the sticking points that could potentially cause a deal to die even though you have a 10 year partnership with the Kingdom.
I think it's like any other discussions you're having with a partner you're trying to find a common ground that were for you.
Three months ago, we expected that yield to be finalized.
Characterized it knows discussions are ongoing so I'll leave it at that I'm not sure. There's much more I can add a than that but I would say is somewhere in the all discussions you're just trying to find common ground.
Okay, and then maybe just one more on the crown jewel events, particularly.
Is this expected to be as profitable as some of the prior events. Considering you brought in Tysons Furion can't Alaska has just wondering if it's more expensive event than before and potentially that's impacting the guide.
Yeah, I'm not going to talk specifically about a one event, but as I mentioned, we definitely accelerated some investments into our core entering content.
Okay, and I guess, just the last one if I could squeeze it in on that particular comment there is there anyway to quantify or just if you had a certain amount of investment spend expected for 2020.
Percentage, maybe that was pulled forward into 2019.
Yeah.
To answer that.
Okay worth a shot thanks guys.
Well go next to the Philly karate out at Cannonball Restocked research.
Alright. Thank you George can I ask about the guidance change can you quantify for us what percentage of it is from that topline revision and what percentage or what proportion is due to higher costs and then they have one another.
No I can't break that out sorry facility.
Okay and in terms of India, The fact that a youre.
I would look like 2020 will now be provided in February just wanted to make sure that does not mean, but you expect.
The deal I mean did not to be closed this year. It is still build expectations is that correct and they've done that you're going to remind us what happens.
On a theoretical case, if you don't have a deal on January 1st It does go up the area and they don't get there.
Fees or is there an extension or what are the possibilities here.
Yes, like I said before we still expect or distribution plan for India to be settled by the end of year.
Want to talk specifically about hypothetical.
So our expectation is that deal gets done by the end of the year.
And though about the film that you called out there at least some prepared remarks.
Do you expect that do have any material or notice symbolic and all make impact and 2020 , that's why you're bringing it up and if so can you tell us approximately what the economics looks like the instead of participation as at the one thing fee.
It sounds like that.
Yeah, I know, it's not material facility. It was a there's an impact on the quarter, but I wouldn't think about as material part of the business moving forward.
Alright. Thank you very much strategically is incredibly important we said it before it broadens our reach.
We've de risked the model fairly significantly so we like to business, we like the role it plays but as far as financial impact.
It is expected to be material either way.
Thank you.
And next month, we will hear from John Belton at Evercore.
Thanks shifting gears, a little bit I was wondering if you could talk little bit about your sponsorship business.
And how you think about that opportunity and whether adding Fox's abroad. As partner has impacted this effort has since the increased distribution opened up conversations with new brands or just how you I you think about that opportunity going forward would be helpful. Thank you.
As I mentioned in my comments, obviously transitioning to Fox has had tremendous impact on our brand in terms of pure marketing power that they brought to the table and you were watching any sports on box in the last couple of months I'm sure you saw a promotion of WB Friday night Smackdown multiple time.
So that the benefit to our brand and being aligned with marquee properties like the NFL or NASCAR. The World series in fact, we're promoting in the World series. The benefit you know to the world. The sponsors are sponsorship community that month for those types of branded believes and you know really is then I had.
Asset to us so.
What I will say, both NBC and Fox had very successful upfronts around W. W. Boston particular, because they are packaging, our advertising with or other sports properties, we saw significant uplift and CPM, we've seen new advertisers coming to the roster on such as Amazon Prime we've had.
Calls Taco Bell advertisers that we haven't done business with before so you know to your question. Yes, we do believe that that affiliation with possible open doors for W. Have you do have sponsorship discussions and again, we're putting our a lot of working to.
Identifying who will go after and you know what the asset package will look like but we feel good about that opportunity as George mentioned in his comments.
Thank you.
Well next year from Ben Swinburn at Morgan Stanley .
Thanks, Good morning.
George as you know one of the things you listed around the guidance change back last quarter and this quarter is engagement how would you guys assess engagement trends at this point I mean, obviously, we've seen the ratings, but you've moved to Fox one of the thing that was interesting is your you you highlighted hours digital hours grow growth of 14% year on year.
But your Avon hours, I think our flat, which would suggest hours are growing faster and beyond the network could you sort of high level tell us how you see the engagement trends for the business today and.
And whether they are at a point, where you felt.
I need through to accelerate investments, which obviously took the guidance down sort of beyond what is that was not one of the three [laughter] from last quarter. So he has a management team you've decided to sort of step on the gas on the investment front is there a relationship between somebody's engagement trends, you're seeing and the investment back in the business.
Yeah, I think like you highlighted been you've seen some improvements.
Absolutely.
He was with a raw and Smackdown, improving the year over year numbers, improving sequentially, but I think it's fair to say that you know, it's not where we want to be and so we continue to be super focused on.
On the core in marine content, especially those three areas I mentioned the story, telling the creation of that you're tracking developing and retain the talent and then the production elements themselves on the content. We're really focused on that I do think it's fair to say.
Some of that investment or for that reason so.
As you feel better this quarter than we did last quarter still not where we wanted.
To get better.
Okay, and I don't if you'll answer this but NXT and material.
But it contributor to EBITDA you were a material contributor to EBITDA immaterial impact EBITDA in the fourth quarter, either good or bad.
Yeah, we haven't talked about the economics of NXT I think if you remember the release when we announced that we said that we were doing this for the long term.
Okay, and then maybe just lastly, wrapping up but sticking with expenses I mean, I look at last year. I think you grew total opex around 10% so higher it looks like this year is going to be about 10% again.
You know.
Are you guys I know you can articulate a longer term vision in February .
But how should we think about you're balancing of topline and and investing back in the business.
You know you guys seem to be.
Willing to sacrifice some short term even relative to execute sort of public guidance to try to maximize the long term is that my interpreting these moves the right way.
Any color on that I know I know 2020 still a moving target, but just wanted to understand the philosophy.
Yes, I think.
Mentioned it before Ben.
Trying to manage <unk>, along these kind of different time frames number one we're very focused on.
As we are in 19.
We're very focused on the value of that live content.
20, 2020, 420.5 in the U.S., especially.
Intervening years between 20, and 20 million Viper really important breast Michel talked about sponsorship we think over that during that time periods that will be as a driver growth.
I talked about the network and our plans for everything.
Driver growth between those and then frankly, we think beyond 2025 other than some of these international markets. Some of these opportunities will take time to develop.
But I like to say, they're not public so it's hard to track and when you look at the FDA, except in China that happened over 25 years of investment and my guess is can prove it some of those early years.
Yeah, there were a losses.
But.
I am I guess, they're happy with the relative performance of that business over time, So I think for US we're trying to think across those timeframe, we're trying to balance.
The question you asked me to investments in the short term during the long term, but clearly we're also we are focused on the 1920 as well it's not just one term we're trying to just make the right trade offs.
Right and is it does the fact, the 2020 is still a little bit influx or maybe a lot in flux impact your buyback appetite, even though the stock obviously continues to be under pressure.
Yeah, I don't really want to get into a scribing rationalize rationale around the buyback you talked about it before there's multiple inputs that go into that.
The value.
Their cash flow considerations as well as any statutory issues. So we know those things we look at and inform the buybacks of.
We want to go much beyond that.
Okay. Thank you.
And we'll go next to Brandon Ross at like Chad.
Hi, how are you doing just.
This off was installed as the Smackdown executive director earlier in the year and then he was pretty quickly given the hook can you tell us what happened there and then I guess related is is hayman fully.
Integrated into the creative process at this point for Rob.
And then I have one more which is that.
The ARPU for for the network appears to have been down this quarter a could you give any any reason for that thanks.
So on the first one then.
As mentioned before on the call. It one of the internal projects. We've had is just like every part of the organization is how do you continue we strengthened structure and the process.
To accomplish that goal of that particular function in the cases the of the writing.
A lot of work done early the year around that one of the manifestations of that was the screen or the creation of these roles executive directors of each of the brands.
And as Vince mentioned, it allowed him to be more targeted.
Yeah, well in cell.
In the creative process. So we're really really happy about the structure and continue to invest in that and strengthen it internally.
Not been talking about it.
Secular individual ultimately the structure of the process.
What feedback loops you create around that you do that really really well over time trying to recruit you know the best talent possible put into into the roles and we do everywhere. So the creative writing for us is not really different buckets.
Specifically about any individual either area or fall, but we feel really good about the changes we made the structure.
In a process on the ARPU element as a reminder.
Oh brand in there in addition to the pure DTC that's available primarily at 999 U.S. around the world or though it's also available.
Your Roes in the UK and Ireland. In addition to that we have some license partners.
And therefore as those subscribers.
Overall.
The amount attributable for the license partner could shift, but kind of impact the ARPU to some degree. So it's just the mechanics of that of the composition were not public and on that composition would be that we haven't really made any price changes anywhere other than that.
Thank you.
Next we'll go to Steven Cahall at Wells Fargo.
Yes. Thank you. So maybe first just on the strategy in financial perspective, the 2020 and beyond comment.
You mentioned in here mid to late February and you mentioned some of the things that balances that communication I just wanted to kind of here unequivocally if it turns out that either the Mena agreement or the India agreement aren't done by February do you still go ahead with that maybe with a little bit bigger range. You know is that kind of come hell or high water event.
Or do you think that you need to get that was done in order to to hold that event and then a quick follow up on the events I know, they're down year to date and North America, Oh, how what do you think is the right number or trend on a go forward basis and do you think you do a few less events that will give you more pricing power.
And the events that you do have thank you.
Yeah. So.
At this point as I mentioned the prepared remarks our plan.
To close earnings.
Come out with.
The 25 perspective, and a longer term perspective.
We're going to Atlanta to stick to that as far as a wasn't bad.
Number jumped mentioned fewer best in the quarter and ultimate didn't really impacted profitability in the course, you get a sense of the scale of each events profitability because of that.
As we shift at composition or think about the composition.
Thing to keep in mind is that the average attendance overall.
It is a blend of both our televised events was back then see Monday to Friday night, which have higher average attendance and not televised events, which are happening around those events, but have lower average attendance.
We can shift the composition and just the composition changes the average as opposed to the pricing power I don't think fewer non televised events has necessarily has a direct impact on the pricing of.
The televised I think those two things are separate I will say that I think we feel pretty good about.
Pricing on the best kind of lending the value, we're providing but also giving people.
An opportunity or.
Income levels and opportunity to enjoy what we do so I actually feel pretty good about that.
Thank you.
And our next question is from Jason Bazinet at Citi.
I hate to beat a dead horse, but I know that [laughter] question, we're getting from investors I think what everyone struggling with it it's sort of that very modest reduction in your EBITDA guidance for the outsized to move in the equity.
And I guess my question is can.
And you put in there regarding sort of accelerated investments is it fair to say that you're just trying to get the buyside and sell side to temper down there out your EBITDA estimates.
In anticipation this February event or is that a bridge to part because clearly the buyside is sort of taken out one line in your release in sort of.
Extrapolated you know this sort of worst possible outcomes, so what that intentional or would you describe that is.
Not intentional on airport.
Well what was it.
Clear with pro.
The pulled out of the guide which was.
I talked about Oh.
Bringing some costs forward.
So just investing in the core entering.
The combination at Oh, Yeah, there was no.
As our portfolio.
Any other since 2020 or so I was just as last quarter.
Okay. Thank you.
We'll next go to Bernie burning that turning.
At Rosenblatt Securities.
Hi, Thanks for taking the question I know, it's early and only been about a month, but have you observe any indirect benefits being on Fox broadcast thus far.
Whether it be network engagement or live events.
I think it's too early to tell I.
I mean, we said it before we think there's a halo through the rest of the business over time and yet given that we're only a four weeks into it.
So.
Got it and just one follow up with 2020 guidance expect in February well, we get an update or at least.
Not that the international renewals are complete if there are signed by the time.
Oh look in the past what we've done is when the deal gets completed.
The issue of the lease or joint release with a partner Oh the deals that we've done that this year, obviously with the China Latin America.
Okay.
In our normal practice, Oh, we anticipate that would continue.
Got it thank you.
Moving next to Alan Gould at capital.
I think you have got two questions first George I, you're closing comments or the prepared remarks, you highlighted the international markets and you spoke especially about India and China can you flesh that out a little bit further.
Yeah, just the information, we look at and again looking out into the future over the next five to 10 years. When you look at the global media and entertainment sector in the total growth in that sector.
And where it's going to come from.
Roughly thing 70% of.
Total growth over the next several years from outside the U.S.U.S. still by far the largest market and then within that and for presented expected that Indians.
<unk> so.
Point being as its something we look at it informs that are thinking about how we should think about what to do today to be able to take advantage of that opportunity whether it's three years from now five years to known zone.
Okay, and then one sort of a boring accounting question, you had higher DNA and interest expense this quarter I assume they were both due to the commencement of your new headquarters lease on July one although at a three Q numbers good run rate numbers for those line items.
Directionally.
That's right and you hit on it for those people weren't as well versus yours and put the asset on and you're taking the present value lease payments, which importantly assets liabilities that was the tenant improvement cost you didn't begin to see that DNA into interest expense. So.
That should be a pretty good.
No the run rate.
Okay. Thank you.
Not include Allen, obviously onions, Buildout, we do on top of that that's just for the capital lease around so.
I will have elevated capex as I mentioned before over the next couple of years.
Build out the facility. So those are two different things.
And we'll go next to the benchmark company and Mike Hickey.
Hey, George Michelle Good morning, guys. Thanks for taking my question.
Pretty good MCU here, thanks for taking on the.
I guess it.
I'm curious George on the show your view of the emergence of E. W.
And maybe the impact you're seeing or or potential impact, whether its TV ratings or talent the cost of town or or how you sort of think about migration risk. Thank you I'm a follow up.
Sure.
I think we.
Before.
But.
The live content ecosystem is competitive so whether you're talking about the NFL standalone or that next year of off the end a baseball NASCAR.
And then start kind of moving down and you get the third or fourth year. So everybody is a competitor to some degree ultimately what we try to do is.
Drives much engaged in this weekend.
Good night.
Feels pretty good.
Or is dream doing that and then our ability to continue doing that in the future. So they're competitor like you know there's a lot of competition for eyeball.
So.
Taking seriously.
Our expectations we won.
You said your investment talent and it's going higher as part of sort of your accelerates then <unk> is the cost would be your talent on average going higher minutes age that you sort of challenging though [noise].
The normal sort of.
<unk> expense you would expect to put out there and again sort of curious on how you think about migration RASK weather, obviously tiara codes.
Pretty big screen, ADW, but do you worry about losing other restaurants that network.
So just to clarify what I said was that.
That you know, reducing our coronary content, it's three elements and cost.
Related side, a little bit about you model, we put in place there.
Which is fracking developing and retain talent and then the third one is the actual production elements that we said that when an all three cases on a year over year basis, they're higher.
Costs are higher so it's up making investments is what we think it's the most important thing.
We do I.
I don't want to really get into kind of you know external perspectives on that what may influence. It. The only other thing I would say is historically as the company has done better or town has done better and we think that's part of a win win a virtuous cycle and we think that's a good model is one that we can.
What was expected to continue employing.
As far as individual talent, making choices you know everyone's got a decision to make I will say.
We have.
Sizeable wrestling platform by and were magnitude maybe towards the magnitude of anyone in the world.
The amount of consumption due in the United States across the world on traditional pay TV.
35 billion video views that we do.
Platform.
And social media accounts that we have been the large second largest that's five sports service in world. So I would imagine.
So, but I would imagine as people are thinking about who aligned with that all those things are really really important we certainly things.
Right. Thanks, guys.
Well go next to carry Baker at good Manheim.
Hey, Thanks for the question guys, Oh, but just to be clear on the them. You know guide. So that includes the saudia that's happening today and you being paid for that in the fourth quarter correct.
Well when the payment happened difference that's a that's obviously a on the cash flow side. So we haven't guided guys the cash flow, but you're right to the economics at the event.
Once again in Q4.
Okay and I I guess is there any reason you can't get more opportunistic on the buyback from if you want to just given again the share price and your balance sheet.
Other than the reasons I mentioned, we're going to.
The value.
Other.
Well considerations and obviously take into consideration any statutory restraints.
And we'll make a decision.
The reason you to.
Okay and.
And then only investment fought for next year and over the next couple of years I think I've heard you are primarily focused on like three buckets building out your data tech capabilities, which I believe is primarily personnel.
Localization, which includes the performance centers, which we've kind of guest is like five to 6 million per performance Center.
And continuing to pay talent more which it appears you've kind of accelerated already starting in the fourth quarter. You can you elaborate on sort of those buckets and if there's maybe a bucket or in an area of investment that you know where may be missing as we try and think about the investment picture next year and over the next couple of years.
The current.
Portfolio of assets.
Having said as you mentioned is around technology Digitization broadly.
Consumer technology and data one second is content.
We invested in our core and content as I mentioned and in the third is localization and some of the initiatives like.
A PC might it multiples.
The ability to create new content as well or penetration in particular market, but yet for your question.
Year to date and think those are just three key areas for us.
Okay. Thanks for the questions.
And with no additional questions at this time I'll turn the program back over to the management group for any additional remarks.
Hi, Thanks, everyone.
She listening to the calls today, if you have any questions. Please don't hesitate to contact thank you.
And once again that does conclude today's conference and again I would like to thank everyone for joining us today.