Q1 2020 Earnings Call
Thank you for standing by you're currently holding for the webcast.
First quarter earnings.
Assembling our audiences will be underweight shortly we think for your patience and holding nothing because your minimally.
[music].
[noise], Hello, and welcome to the webcast entitled WWD first quarter earnings.
We have just a few nelson's before we begin.
If you're listening through online you may ask a question were believed by pressing Star then one on your Touchtone phone if you wish to be removed from the Q. Please press star too.
Today's call is being recorded.
I'll now turn the call over to Michael.
Financial planning and Investor Relations. Please go ahead Michael.
Thank you and good afternoon, everyone welcome to our first quarter 2020 earnings conference call.
Today's discussion, our bench that man or chairman and CEO as well as Frank predict our interim Chief Financial Officer.
Remarks, we followed by QNX Sasha.
We issued our first quarter earnings release earlier this afternoon.
Posted the release, our earnings presentation, and other supporting materials on our website corporate W.W. dot com forward slash 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 our SEC filings actual results may differ materially an undue reliance should not be placed on them.
Additionally, the matters, we will be discussing today may include non-GAAP financial measures reconciliation of non gap to GAAP information is set forth in our earnings release and presentation, which are available on our website.
Finally, as a reminder, today's conference call is being recorded and the replay will be available on our website.
Later today at this time, it's my privilege to turn the call over to that.
[noise] good afternoon, everyone. As you obviously know work is going to watch.
Pretty strongly.
We shifted gosh [laughter].
John.
Colin like chain.
Limited release actually [laughter] obstacle he was only two or three weeks this negative.
We actually.
We have attached to our business model.
Pretty strong.
Radiation.
Sure cost as well.
Well continue to produce.
Tell me content.
Uh huh.
Well I appreciate the version.
Generally speaking first family for.
We successfully [laughter] Sherwood.
And Oh it was luxury.
Jumps consumption.
[noise] programming.
So many different ways, obviously here.
And would you like everything else you feel it was launched.
[noise] straight off.
[laughter].
Sure.
[laughter] only Uh huh.
As far as Tony I'm sure launched Fokko.
Oh.
No I don't pretty much even.
So what we're starting January one.
Okay. Okay, what happened once we want to message our studio which is not so much.
[laughter], especially on structural really wasn't that much difference.
Terms, where we were.
<unk>.
No, it's a challenging environment.
[noise], but nonetheless, you have to take advantage.
Okay and somehow make it is obvious music anything special.
Sure, Yes, when she treaty.
Hi, I'm doing nasas, many movies and I was just like you question here.
And in many other personality profiles that we.
[laughter] [noise].
[laughter].
But you're certainly [noise].
Locker.
Television ratings and everything else.
[laughter] increased 25% [noise].
[noise] to 90.6 billion hours.
And.
<unk> increased by 15%.
We have a 44.
Digital and social media platforms are already on the property can do anything like that.
Again.
Plus everything else, we're doing in terms of Ah.
Oh gosh knockdown.
It's cheap.
Is the next spring we will.
In addition to that.
Wrestlemania and it was on the corporate rush for many years or so might you know.
Emanation Alpha.
We're all of this can lead and though resolutely was off the charts.
Yes.
Sure Sure Records.
967.
Sure.
Oh, sure digital and social platforms.
20%.
Sure.
Good to see most social not in our history.
Oh more some certainty so.
Social interactions.
Look Instagram and Twitter.
And on network.
[noise] course, two weekends.
So a subscriber additions.
Lives.
Total subscribers reached 2.1 million.
[noise] success, Russia for Saturday and Sunday Night.
Obviously, we [laughter] housing.
Evolving.
[laughter].
Oh sure money very short film cost.
Free cash flow improvement actions and.
As we announced on April 15 for instance.
[noise] cost reductions and served decreasing executive Board member Cox.
Operating expenses.
<unk> costs third party stuff consulting expenses.
[noise] so we're.
Getting ready for what's the call what's the you know.
Which quite frankly I'm not so sure I know you know snows what is that even though we're very very flexible obviously, we can adapt quickly you don't you just reading the tea leaves what.
You can do you know seamlessly.
With the government tells you can do.
And what are your audience once there's a lot of factors and going into.
Just wanted to be.
What are those prospects remain strong.
All right across the board.
We talked obviously that.
Your last year, we would like sports rights over the long term.
Very very healthy in terms of.
Rights fees and things of that nature, but just can you get back to life.
We are doing here in our country and open it back up and some capacity and then what's that going to look like it's pretty much six months two years.
Sure.
He writes work.
I'd be flexible.
Sorry.
French anyway.
Thanks, Thanks bounce.
There are several key topics you'd like it would view today, including the discussion our financial performance.
Recent actions, we've taken to address the cobot 19 impacts on our business and our business outlook.
We generated record first quarter revenue of 291 million and adjusted OIBDA of 77 million, which exceeded our rescinded guidance of 60 to 65 million.
Based on accelerated cost reduction that much cobot 19 had a limited impact on our financial performance.
Although government mandates resulted in the cancellation of live events, we were able to offset the loss of ticket merchandise sales by producing content from our training facility Signet, we're lowering our production and other costs.
During the quarter strong revenue growth from our lead U.S. distribution agreements and the timing of our shoot cheaper show down a bit in Saudi Arabia were partially offset by year over year increases in fixed costs to support the creation content.
And lower results across your lives of them the Cima products businesses.
As we produced content in new ways. We also develop new creative opportunities to promote our brands. This included extending our partnership with Fox sports to offer 22 hours of comp jump on successive Tuesday nights on that that's one.
Collaborating with U.S.P. end of air historical so many events in grain free access to WWD network that need to be networks library content for a limited John.
Importantly, we adapted our business to continue to safely stage enlink performances, but these other content for our global global markets and multiple distribution channels as well as to market all brands.
During the week, leading up to one including our two day Wrestlemania that certain viewership records with more than 967 million video views across digital and social platforms.
It was also the most social that Mark history with more than 13.8 million social media interactions.
And as networks.
Weekend, the subscriber additions are the highest ads in our history, bringing our total subscribers to 2.1 million, 5% above prior year.
The record breaking engagement generated by Wrestlemania as a testament to our creativity and these unprecedented times.
Our ongoing efforts to strengthen our brand and customer engagement were evident during the quarter.
Note Smackdown television viewership increased 16% what was essentially unchanged after mid March when we begin to perform or events without attendees.
Raws viewership in the quarter declined 16% from the prior year quarter, but outpaced USA network, which experienced a 29% decline.
Average attendance at our lives as mentioned North America increased 33%, excluding the late March events, that's compared to an 11% decline in the first quarter last year.
Consumption of WB content on digital platform, such a huge even Facebook.
Crease, 15% to 344 million hours in digital video views increased 25% to 9.6 billion.
To review our business performance in the quarter, let's turn to page four of our presentation, which shows the revenue operating income adjusted OIBDA contribution by segment as compared to the prior year.
Looking at our media segment, adjusted EBITDA increased 74.1 million.
When you growth driven by the escalation of domestic rights fees for raw and Smackdown, Smackdown programs and the favorable timing of aren't Super showdown is that.
Partially offset by a year over increasing content related production expenses.
WWD networks average paid subscribers decreased 8% from the prior year quarter to approximately 1.46 million.
We continue to believe in the viability of them all alternatives strategic options for Wwb network.
Our confidence is based on our discussions with multiple potential partners and consideration or broader media industry factors, such as the evolution of new screening services and the increasing value of live sports content.
It's all potential partners have been impacted by close to 19. These discussions had been extended.
Currently we are unable to estimate when an alternative options will be complete that's still believed that the central for a transformative transactions as possible.
During the quarter, we made important progress on other strategic initiatives extending the reach of our brands specifically you completed multiyear distribution agreements with Sony Pictures networks in India and dancing in Germany.
The parties, but not much to launch a new original series. The mid show show in a feature film the main want both of which ranked among Netflix top 10, most viewed programs.
During their premier weekend, the second week of April.
We also finished the second season, and then images on the USA network premiered the fifth season, a total balance on total balance on he earlier this month in Washington, DC respect like a girl on quitting.
Turning to a live event business as shown on page six of our presentation yesterday, we give them a lot of events declined 3.4 billion.
I know, we do the government mandated cancellation indoor relocation of events.
Although our lives is that revenue reflected 49, fewer and north American a bench in the quarter. The majority of this change derived from efforts to optimize our drilling schedule.
Which had a limited impact on adjusted of with them.
Until mid March we were able to hold arena and stadium based events in front of taking that audiences.
During the quarter, we continued to successfully stage large scale events for phones, including Royal Rumble before capacity crowd at more than 42000 in Houston and cheaper showdown Saudi Arabia.
No consumer product segment, adjusted OIBDA declined 2.2 million, reflecting lower royalties from the sale of toys and video games at retail as well as lower sales and merchandise for online they got Oregon.
During the quarter, we continued to support new products, while driving growth from our mobile game portfolio.
Our to ship with Unilever, we launched or superstar ice cream sandwiches or grocery stores nationwide and at least three new replica title belts, one or E commerce platform WWD shop.
Notably our mobile games, WWF, Supercard, MWW champions, well generating more than 10% revenue growth from the prior year quarter.
Page eight of our presentation shows selected elements of our capital structure.
As of March 31st we held approximately 292 million in cash and short term investments.
Additionally, subsequent to quarter end, we drew 200 million from our revolving credit facility.
Accordingly, we now have approximately 500 million in cash and short term investments to make sure we have the necessary resources to execute our strategy and deliver long term value to our shareholders.
In the first quarterly generated approximately 58 million in free cash flow as compared to a 10 million use of cash in the first quarter last year.
Increase was driven by improved operating performance and to a lesser extent reduce payout of management incentive comp and lower capital expenditures.
Turning now to covert 19 actions of business out what the spread of covert 19 and related government mandates in parts of our business as we had been directed to cancel postpone are we look relocate or live events since mid March.
We've been able to substantially offset the loss of ticket merchandise sales at our live events by reducing operating expenses across all areas or business.
His efforts were highlighted by the introduction of a new model for producing content.
We believe however that the potential impact of code at 19 may not be limited to the sale of larger than tickets and merchandise and the adverse impacts on other areas of our operation or not known at this time.
Mitigate potential risk to our financial performance, we evaluated their operations and develop extensive contingency plans.
This resulted in the implementation of very short term cost reduction in cash won't Britain options.
These precautionary measures include reducing executive and board member compensation decreasing operating expense cutting third party staffing consulting and talent expenses and a reduction of head count by way of follow.
The decision to Carlo rather than probably reduce headcount and reflects the fact that we believe these reductions would be temporary in nature.
Notably the reductions as employee compensation and head Count result, in an estimated savings $4 million per month.
To enhance our liquidity, we've deferred spending on the company's new headquarters.
That was producing 200 to 2020 capital expenditures by approximately 140 million.
The 2020, we now estimate total capital expenditures and 40 to 50 million compared to our previous guidance of 180 to 220 billion.
There's additional precautionary measures. We've also temporarily suspended repurchasing stock under our 500 million dollar program and drew 200 million from a revolving credit facility after quarter end.
As such we believe we have sufficient cash liquidity.
Approximately 500 later to manage the challenge ahead.
We remain unable to quantify the potential impact to covert 19 of our business going forward, but the financial impact to the company may be material. Accordingly, we previously but you are full year 2020 guidance and based on sustained economic uncertainties are not reinstating guidance at this time.
Well our financial performance to date has been strong young going in and certainly impacted pay with 19 out of that business has required us to take quick short term actions to strengthen our financial performance and capital resources. We continue to believe that our growth prospects remain strong and the WWD is well positioned to take full advantage of the changing media land.
Okay, and the rising value of live sports content over the longer term.
Looking ahead. This also includes capitalizing on the growth in media and entertainment in international markets growing our sponsorship business and leveraging increasing digitization to expand and engage our audience.
Previously committed to providing a comprehensive perspective on our road map for creating shareholder value, which we expected to communicate in the first quarter. This year. However, given the uncertainties of the impact to cope with 19 or a business are focused on developing actions to address these impacts in the difficulty and planning and effective event in this environment we post.
On this communication and look forward to speaking a meeting with you that at appropriate times.
This concludes the portion of this portion of our call and I'll now turn it back to Mike.
Thank you Frank journey, we're ready for questions. Please open the line [noise].
And just enough for my greatest I Wonder if you would like to ask a question are we will go first to carry Baker of Guggenheim Securities.
Hey, Thanks, all I've got one I think prevents then another follow up yeah waiting for those wants knock down have appeared saltier. The past couple of weeks, which is a bit surprising since you guys are basically the only live sports content on television.
Yeah do you have any idea why this is the case and could you maybe yeah.
Discussing the steps you're taking to watch.
With our stress.
Sure.
In terms of the why.
It goes back to the product so.
Right.
[laughter] a moment.
But again, it's a different.
Feel completely.
From a live audience, we were the first.
Book Sports too right.
Sure.
A lot of audience as many many years ago.
Just first attraction.
We don't know what we're doing really well.
Beyond anyone's expectations actually by doing that show with.
[laughter] everything we do is about the audience and how they react and what you read them and to fund and what have you done.
Like only to.
And so.
Yes, that's really I think.
And we used to be able to figure out ways, which we are.
And.
We will hear the flowers.
Turning to bad enough on each other so what you're never sure.
Minimize or some of the more.
[laughter] Korea works, we'll say unless there are advantages it would go outside.
Oh, the environments or should we just stay there for two or three matches unique needs. Some relief there in one form or not.
That out as well.
Thanks to figure out in this sort of in.
Do what resonates and things of that nature, So really it's manager for us.
So there's no audience and it's just it's a different show.
Sure.
[laughter].
We're going to get there what we may be able to take this negative.
All right turn into somewhat of a positive as far as.
Greetings and whatever you're concerned Smackdown, virtually no change.
[noise] losses suffered.
Not necessarily because the environment it suffered because we bring in a lot of new talent and you're wrong, it's actually altogether.
How much over.
Let's now obviously.
We have a new champion.
And a.
A lot you foreigners coming actually takes awhile.
That's the reason you use those performers and this story or that story, rather yourself with new talent. This is just.
Take a little wall.
Some of it falls Ranger.
Second certainly.
Okay. Thanks. That's helpful. Then maybe just switching gears a bit can you guys provided any update on the doesn't meet a deal all look Saudi Arabia is there any is there still are an agreement in principle clubs you guys have any better sense in terms of timeline or is there any kind of additional color you can provide at all there.
Oh bloke assessments.
Hey, Chris, but like you take a bench [laughter].
As far South concern out there is.
He wants to have Oh, I'll get back to your questions everybody.
They would love to hammer another huge you that.
Maybe you're talking about.
Oh per year.
Sure.
Sam can shrink superior United States and everyone else is pandemic show.
They are not sure you're going to be able to.
Give us the okay to perform.
November or December they really want us to because it represents.
No huge time.
And what's allowed us not allowed.
As far as like that's concern so.
Good part about that is exactly.
Well just back on that event.
Backside her contracts around to loose money.
And again this everyone is having to deal with a pandemic in one way or another.
We're fortunate that really just another event.
Sorry.
Right.
As far as a junior rush concerned we're still working on those.
[music].
I know, sometimes things moved very slow.
And that's where most squeeze on them I mean your rights.
I know for sure.
We don't.
There's some degree of uncertainty.
So when that's going out.
Okay makes sense.
And we'll hear next from roughly her thoughts Cannonball research.
Thank you good afternoon, I had one clarification on one question.
Can you. Please clarify if the core constant dried stretching your gets in distress quarter included in yen.
New Indiana deal terms or is it still they all dollar terms of the Indian can be rights deal and then the question is about advertising and sponsorship which saw a nice acceleration in the quarter and growth I was wondering what's kind of trends you saw walk in the second crop up margin you're seeing now.
Now there and also might be can help us understand what proportion of its revenue is sort of longer term sponsorship contracts lets us spot.
Given revenue thank you.
So no the the first quarter had India the old deal terms.
Okay.
And then your question about sponsorship or you know we saw.
In the in the quarter good.
Well performance there well some of the trends that we're now seeing in advertising as we get into the second quarter or you know have we did not experience and became the first quarter and.
You know, partly while we are adding to the corporate sponsorship or.
Elements and we did have a very successful Wrestlemania yeah. Those sponsorships for tied to that that slots are the most part we had seen some growth in overall corporate sponsorships, but to date most of our revenue there's more transactional in nature.
Thank you and when will we see continued terms I'm not being done deal flowing through the piano now and it is it fair to expect that in Q2.
Yes.
Thank you.
And we'll go next Eric Katz from Wolfe Research.
Hi, Thank you.
So I think what some of US trying to do is also reconcile your prior OIBDA guidance to three after 350 for 2020 would say stronger results understanding you pulled that guide, but that will came before some of the cost cutting actions you've announced in October 19 attack. So it seems like from the prior guide to a large portion of your new TV rights revenue was gonna be read.
The business and ultimately it sounds like you now have a lot of Cushing to either harvest those revenues by pulling back on those investments. So I'm curious if you can maybe talk through some of the originally planned investments versus what you know that plan moving forward within this environment what are sort of the must pads are for says the banks to hubs.
Michael do you want to cover that.
Sure I think first of all Eric it's a little bit of a misnomer in past calls and follow up.
Try to go through pretty extensively what the different sources of expense growth were year over year. So we had expense growth related to the increase the content changes in the business.
Related to raw, particularly back down Oh, sorry, and and the new distribution on Fox.
We have increases in cost associated with essentially how we're delivering content is kinda bucket one bucket to was related to incentive comp and you know last year, we accrued to lower amount of incentive comp based on the performance of the company and also you know we had from.
What you're getting out I believe as we also had some carryover or or for your annualization up some investment that we made a going into <unk> or at the end of.
2019, and the Annualization a significant when you look at the full year.
And what I would point out is that you know the mode that we being in this year has been heavily focused.
On thinking about how to reduce cost strengthen our financial performance at a line our investment with the current environment I'm. So.
The content and creative investments that we made last year have been both pulled back a significantly and we'll be very thoughtful as we move forward and think about the future about how to went bad but I'd say right now there's the balance of how we're thinking about the business is very focused in terms of aligning the business where.
Reducing cost.
And and keeping focused on having strong financial for the current time.
Okay to be clear that sounds like there is quite a bit of whatever you guys were budgeting for 2020 that you can flex back on is that correct.
Oh, the buckets, what I talked about or things like stack on that's correct.
Okay.
Right and then I'm separately I guess.
I mean lucky.
Clearly, Florida has games in the central business here, if there's a scenario where they do a 180 and you know production Unfortunately get shut down.
Can you talk a little bit about maybe backup plans to continue filming do you have other locations available.
Yes, we do a number on a number of states it would walk much.
Okay, great. Thank you.
Well hear next from David Karnovsky of JP Morgan.
Hi, Thank you I guess, that's just a follow up on that point, but after that otherwise green.
Potential to boot keeping sort of wholesale at some point you could maybe she would like audience.
You know with some social did something in place, but at least you know you're you would have that audience interaction at some point.
Oh, yes, we could.
Right.
Okay to do that like everyone else is I don't know whats livewatch is going to need anymore, obviously, there's a huge need and watch.
Yes, you're right, it's one of either limelight.
No wonder six feet apart.
No everyone's been tested before they come and what you might be able to do.
Smaller arena type thing.
I do it Tennessee.
So anyway.
Yes chances are being the first wants to do it pretty much like the first one of them everything else.
Okay, and then just regarding but deal with a third party for good network content and just to be corrected as the main headwind here that potential partners don't really want to kind of make any agreement in the current environment or do you sense that need oh by the potential partners. The baby fully reevaluate how they'd like do you like.
Sensing Wwb programming, how does the current crisis, maybe change your thinking at all on how you want to distribute so that's.
[noise] well do that made the main and main issue has been there just had their own issues to deal with in trying to respond to cope with my team he hadn't heard.
That they don't have a lack of interest and the property.
That's not the case.
I think we're excited about the performance in the network in this environment I think it only enhances the value of it and you know gives us more more options, but we're still.
You know pursuing a strategic transaction.
And I guess, maybe just a follow up on that point I mean in Watson said that strategic transaction would you ever consider.
Any other changes to networks such as.
Different pricing tiers, or maybe asking sub committee or some number of UBS.
I think we would consider anything that would optimize the value of it when you add some of those things. We've we've also we've also you know.
You know looked at some of those specific function.
Yes, we have a plan for the network in absence of doing a deal this year, having a delayed. So you know we continue to be you noted in this environment pretty excited by the response, we've gotten them.
There are things, we can do to adapt to that we will.
Okay. Thank you.
I think maybe to covert tactical stuff caught everybody was or perhaps down.
A number of individual various [laughter] network and worsen just when you think you're getting close.
You know the bottom Phil.
Close with a number individuals.
Our network.
We continue to invest.
Right here.
Yeah.
They're gonna do any number of improvements and what have you and different marketing for so long.
Yes.
Complete can go from standpoint, not doing anything anyone else just doing it right I hear.
Something happens with someone else. After this 19 is over and they are going to balance sheet et cetera et cetera.
What happened to.
Great. Thank you.
And we'll go next to then Swinburn of Morgan Stanley.
Thanks, Good afternoon.
I know, it's been a I guess a month or so most of the half under this coded situation you've been running the company, but I'm. Just wondering if you have any early ideas and early thoughts and how this may change how you run the business how you approach the product.
And how we might want to think about how does it get D.V. looks operationally financially on the other side of this because obviously its forcing a lot of kind of forced experiments like you mentioned that so many hundreds if you had one or two things you would you highlight today that you finish we should be thinking about as you sort of works through this experience.
Firstly, I don't know that we're going to be.
And equal life business as we work for.
No one can predict what's going to happen here.
We're ready [laughter], if it's a wild.
But I think thats, one of the things that going forward.
So take a while for consumers to a 200 come out.
70000 people like stadium.
5000 people.
Uh huh.
Taking a different earn behavior that people have now in terms of their consumer.
Really if anyone can figure it out.
He will.
So again, we're highly adaptable and as you've seen two years and whatever happens we're there.
No.
I think it's going to be more.
More content oriented.
Marketed.
In terms of.
No that's been more in terms of programming and social and digital media, which are way up like things are going to do there.
So it's safe to.
I say creative environment as well okay.
Obviously, it's not a problem, it's an opportunity right yes.
Yeah, Yeah, and just a follow up you guys talked a lot about raw and Smackdown, and what you're doing there is there any risk that we need to be thinking about that your broadcast partners you know.
Lets say this isn't the product that I agreed to pay for because there was a live audience I realize there probably thrilled but they've got anything.
But you mentioned, it's a different products before so just curious if we need to think about that potential with your partnership.
Our partners, obviously, you're not doing as well as they would like to nor are we.
But as far as a conscious concerned I totally get.
Styrofoam not anyone's fall.
We're not there I mean from audience, but.
Save a lot in what we're doing because again, it's just there's nothing out there now you know where lives, sometimes where one would take some times and we have Oh, a lot of like I'm really good relationship with both.
Both partners.
Contracts as we do there.
Great. Thank you.
Our next question comes from Eric Handler of MKM partners.
Thank you very much couple of clarifications, hoping you can.
I want to give a little bit more perspective first with your Wrestlemania Your post Wrestlemania WPP network subs at 2.1 million members are those all paid or is that.
It does that include free subs as well.
That includes for subs.
That includes free subs are you willing to give what that number is just on a paid a pizza perspective.
No not right now though.
Okay, and then secondly understanding that.
Visibility is very limited and you know it makes sense to withdraw guidance I'm, just wondering if you'd be willing sort of give a little bit of perspective on to Q. You know all things remaining equal right now.
Considering you Didnt have a wrestlemania in front of fans that historically that has cost you about 15 to where that represents about $15 million to $20 million of EBITDA.
If you look at where last year was and then you take out all the live events.
Is it.
I, just think that Twoq you should be profitable.
[noise] I believe based on the cost reductions just you know again you know we're not in a position right now to get guys, mainly because of uncertainty on the rather than side, but you.
If you assume everything else equal in it you know it based on the cost reductions, yes, it should be profitable.
Okay.
Thank you very much and then well let me see if I can push one step further when you look at all things assuming that you have a second Saudi Arabian event this year and at some point later this year, we start seeing live events come back do you still feel you are on a path for a record adjusted OIBDA year.
Yeah, I really don't want to I again, I think we're not in a position to give guidance on the full year right now because it would be where are we would've given it publicly so I think we'd like to differ on that she a few more cards here and how things actually play out.
In the next month or so as they use it looks like the economy, they reopen and we see.
How it affects our business and.
So forth and so I just think it's too early.
Go out on alone.
Okay I appreciate what you guys. Thank you.
And our next question comes from a Laura Martin of Needham.
Oh, that's so you're exactly the guy I want him had a production company right now so globally Netflix that'd be only two companies to do some costs I took a while the iPhone in Korea <unk>, you're still producing content. So my question do you sort of following up on an earlier is if you think that's going to be more digital watch stay at home and it's gonna take longer for consumers to go back in.
To venue 5070 person tenure.
Well Youre mine from what you noted that from doing a bunch of why the bad news you know that reality the new.
And your cost structure lower.
Said another way is your cash flow higher.
And that will take 2020 to two years from now on covert is clearly the high that's complete killing it or extend or whatever what do you think.
My first of all this is cloudy as anyone else's.
I cannot say went onto without.
Pretty quickly.
Overweight and skills or no.
Yes.
When you do is.
Flexible we are.
[laughter] future radios for the country, but I just know that were in do well.
Okay, Alright fair enough I subs were up two fold that Netflix over expectations and here you had referenced sub growth do you think that you called it depends where do you think your new contracts hold onto those Miss that we've garnered in this April covered walk down period.
[noise] Oh.
I'd say new content is always a driver I in terms of stimulating interest.
Obviously, everyone is pretty much start.
For for new content, it could very well [laughter] time watching Netflix and what do you see.
The strong man running around your underwear.
I think there we have a product is very unique.
And obviously that like Australia.
A big time advantage that we have over.
I show business are smart.
There's nothing like this is question where you want.
Yes.
And we're here I guess.
There's a deed.
Hello.
Thanks, that's for sure.
Good.
Well go to your next question from social consumer edge research.
Great. Thanks for taking my question there good way to think about that impacts the change to draw and smack down pre and post cobot 19 on a per show a debates its stuff I think about the benefits that you would get on the cost side from having it just speak in Orlando at your performance out center relative.
The loss of live event attendance and bought a lot about merchandise spend.
Well I think.
Conversely Costas.
No where near.
The differential in terms of a live event.
And what we're doing a.
It's.
He has to change anything you know.
Troms or in one location the stage one location. So there's not much at all moving anything and moving anything else.
Saves a lot of money. So you can look at it that way, but at the same time you know.
Yes, we did audience, everyone does too, but it's the interaction to withdraw from the audience in terms of their and finding and we're having fun facts one.
It's always a you don't want it just continues to produce for sure even though it costs. You last you don't want to continue to produce and a studio environment I'll call. It as compared to what do you could do it certainly more costly I don't want to remote no doubt about that but do you get a lot of Oh I guess maybe.
Intangibles, you get a lot of things.
Audience, obviously merchandising, but nonetheless.
Performance wise faster.
Yes.
It was to offer for flats are working so hard and when you're going to ramp [laughter] playing off of a live audience.
There's no one.
[laughter] differ but our performers are right.
Stepping it up really really working hard and we're trying to.
Great product given consideration where we are.
Understood. Thanks for the answer.
Our next question from Alex.
Capital.
I think I've got a few questions first Frank you've got four to five big International deals done everything, but the mid east deal or would you be able to quantify for us the delta the four deals or how much of an increase you got a the new deals versus the old.
Michael I don't think we did disclose specifics of the.
The deals, particularly internationally we've given.
You know high level looks at the total revenue content, but not by deal not by region.
That's correct, even aggregating before then.
[noise], Michael Knott five Alan.
Okay.
Second timing of the free tier on the W.W. we network.
Turning to thinking is in some sudden <unk> thinking that sometime in the fourth quarter. We already tried to put it out around Wrestlemania will Jones of you know the.
Putting it out there what they up revenue model that we might use with it sometimes sometime in the fourth quarter I think as the current one.
Okay, Vince any yes, when you'll have your next survival events I know the theaters are talking about late June or only two I will say they open up or down at that time, but any idea and he gets one but you'll be able to up your own next five event.
No not really holds one buildings naturally, but smart resolving type thing I have no idea why side I know people are itching to get out Allison.
So your product for sure.
I don't know when it's going to be allowed on what is going to look like where there's a loud I don't think anyone does.
Right right now we're just taking a month by month is we continue and push it further out every month you know in terms of when there was a stinks.
Really no first of all on at all.
Okay. Thank you.
And we'll go next question from Jason Bethany City.
I'm a high level question some of the actions that you've taken regarding like the drawdown on the revolver and lack of buybacks and a reduction in sort of your capex guidance.
It all sort of it for a company that doesn't have a lot of debt.
It seems like a lot of aggressive actions candidly to me. That's what makes me think that made that underestimating the quantum of the cash burn.
Or that you guys are anticipating to the balance to your for.
There's some sort of exalogic this.
Risk that you guys see outside of the life events in consumer products degradation, which I think is obvious.
So can you provide color or color on either of those two farms I just don't I just don't know she does your very discovers company or if there's.
Something more Dallas, it's about ready to happen [laughter] and so I think I think you know over overall you know we are concerned about the uncertainty and the impacts of.
No additional.
Government regulations or changes in societal behavior around cove, it and how long it will last so we wanted to be weakened since we don't know that.
You know we felt like we needed to be it may be overly cautious if you will or overly conservative to try to make sure that we had adequate financial resources to adapt the business. However, it needed to be adapted.
And whatever opportunities might put themselves in front of us and so when it up I would say maybe an abundance of caution.
Because you know if you look at the cash flow into first quarter or with the changes that we've made in capital spending going forward.
So where we don't see anything right now that would result in a huge use of cash but you know we don't know what the outlet we don't know what the market's going to look like or.
Performance is going to look like in the next few quarters, because we don't know what the impact to go that's gonna be it seems we know that yeah, we'll have a better idea of how to model. It. So we've been very cautious.
And you don't expression of cash is king I got structure, we have no debt.
We're not looking as Frank Center.
Hi, some crazy something we're just werent, making certain that we're being conservative and a fraction maybe overly cautious that's one of those.
Okay. Thank you.
Oh no question from Stephen King with Wells Fargo.
I think first first off like in the slide deck that your paid subs on Wrestlemania watered down a little but and then you are up including a 3000 to about 476000, just wondering if you could talk about what you did on the promotional side tend to drive that delta in it than anything we should read.
Modest decline in and paid subs on Wrestlemania.
[noise], Michael you want to handle that one.
Well, but there were a lot of creative thing that we did to drive the the job.
Rove around Rep for me up if you think about it we expanded access because of your.
Partnered with Boston.
And Uh huh.
Good morning.
It wasn't the number one program.
Matt.
Yes.
For me.
Number two across all before that.
Really.
Development, there I think all the things that we're doing.
Brandon.
Oh sure which include living program.
Being show.
And on that.
Hi, good borough.
All contributed.
Yes.
Fortunately around that.
[noise] Vince could you maybe talk a little bit about talent morale. So many other sports leagues they've been shut down I think in part because players in unions have one and safety restrictions are testing in place before they get back on the field or on the core can you just touch on how your talent is your spot.
Finding to production and also how you're thinking about access to testing and if you've had any insight there and how that might impact your ability to continue producing content.
My first question is concerned we we do everything imagine [noise].
Anything coming on premises in fact.
Obviously, you're right. We have this whole Sam you have to fill out can you have to do every week in terms what have you been exposed.
So we're doing everything we can you know for safety and making sure.
This is good as it possibly can be.
Not only monitoring our talent.
Yes, well anyone is that the training facility, we're very careful how many people and onetime.
He just but.
Under some pressure hotel.
When winter here.
Family and small.
In terms of waves as far as Andy.
We have changed.
Okay.
Between mattress research.
Demicks screening I guess, you would say.
Very frequent basis.
The core accessories, 60 stuff, we have something additional as well and Paul effects on the call I'll tell us what.
That yourself.
So it's a company called Allied Biocides that we work through they have they spray that is.
[noise].
Sure, there's a process, which makes it going to surfaces.
And that brought the surface once its coated with this last for 90 to 120 days.
And it acts like it or.
Sure I was explained to me it actually just stored that punctures the cell wall of the virus or what causes the virus and killed it on contacted that last 190 days in it I mean, the 90 to 120 days and it lasts through even the other cleaning and and various levels of everything we're doing so we.
Coated arpus cities of performance centers, all warehouses, even our production drugs with all of that in addition to what Didnt said is that the level of cleaning every single usage and cleaning between everything and we're taking every precaution that we have been advised.
Is a best practice potatoes, and then so.
And then again nice when these testing some long can do that you do that when they become a more from lift and hopefully more accurate no. We'll be right. There was a first our only natural resource obviously.
Our challenge stickiness is a challenge.
Taking this almost as a duty which is always happen with us.
I realize that people are sitting on their board.
And the fact that we could thing.
And we used to get entertainment.
No one else.
So I think they look at us as a challenge really resin to the occasion, it's amazing actually.
And the refuse there aren't able to come down due to certain existing.
Certain things that exists, but nonetheless by March.
Most of them, they're very very special people. They are extraordinary athletes they love to give us what this business. That's why they got into it just to give information for the audience.
Well I used to that [laughter] another.
You know to them because you have to think about that and when you're in the ring is just the live audience spot.
Your next so all in all.
No problem.
Great. Thank you.
Yeah.
And we'll go to our next question from John building of Evercore.
Hey, Thank you I just wanted to ask about the design deal I'm anymore insight you can share there. It looks like you license them some digital rights in Germany, Austria, Switzerland, I know they've been buying up rates across more of Europe.
And you say your existing broadcast contract that would prevent you from from licensing digital rights in other markets and did you discuss with the zone about about expanding the deal beyond Germany, and then I had one a additional on capex after that.
[noise], Michael you want to talk about the zone.
Hi, gentlemen.
[noise] [noise] Jay Jay is not on the call Ben but I would offer a few key points as our pay TV provider.
The zone is is a very sports centric a partner they carried the N.B.A. NFL Champions League I'm. So there are a temporary could partner to work with US and then you have to remember.
That in the same country, we work with a pro see been so they act like dual partners, one covering pay TV the other covering free TV.
So that's the context that I'd like to add around Todd This out.
[noise] got it.
And just one additional one on Capex. So I think your prior guidance was that capital intensity would moderate by a 2022 should we assume that this is that basically this project gets pushed out a year now and capital intensity not moderates in 2023.
Yes, it will be pushed out at least six months, so that it'll probably extend into 2023, the spendings it'll just be moved out.
Got it thank you very much at all.
Our next question from like Benchmark company.
They don't come.
Congrats on a quarter. Thanks for squeezing in just a couple I guess this first on economic no unemployment here is staggering just curious.
To your.
Your sand basis as sort of a perspective.
On.
Sounds relative exposure call it to the current economic unemployment downturn.
[noise] right after that I mean, we don't fall.
Right.
So yeah, we don't we don't have the.
Details of that you know in granular form of you know how much more exposed our fan base may be unemployment things like that historically, our business has not been all that sensitive to economic.
Downturns, but you know this is unprecedented times and as we've talked about you know consumer behavior sociology may be more important than than economics.
And the determining what fans ultimately do not enough you have anything to add to that Jones.
This is our fans are very robust.
No.
That's where we said we're going to play in Madison Square Garden diesel now [laughter] immediately.
I'm going under the old format, which we know it's never.
Take a long time no fans are lucky and you can see boy to consume.
Well I think it.
Thanks.
And it's.
I just mentioned historically because they can change prices. When you think about it should be a new novel targets or when it goes from an arena.
Are they going to charges semi ref, probably not.
Yes.
It's an audience and.
They have to come down and whatever it is those prices are for for rent and everything else Likewise as it producer you need more your.
Cost as well for the second because things aren't [laughter].
There are bad.
No worse, but they might.
He to adapt to that marketability.
And given what do you want but its.
Anyone has a crystal ball.
Thanks for that I guess the.
The difference maybe here in terms of your ability just sort of hand, or what could be a huge recession would be.
The exposure.
And then that work I mean do you have any sense.
And you know sort of survey your fans that no their willingness to paying.
For them that work.
You know Nonemployee, obviously, that's using a lot of cord cutting et cetera, how big of is that sort of biggest economic concern I guess you would have on your business.
Maybe one of them.
Again.
We don't know, which is ready for action whatever's coming actually want to be ready for it I don't think anyone is.
I didn't ask my Crystal ball.
Never goes.
We're going to be flexible enough to go there too and adapt.
Okay. Once you last question comes in the.
You have an annual wrestling loan.
Is that in the budget this year.
[noise], what's under budget.
The two K. 21, W.W. going into two is that your budget this year.
Thank you can handle them.
Yeah, no there's not there's not going to be a launch of the game this year.
Okay. Thanks, guys that's one.
And as a reminder, you May press star one on your telephone keypad. If you do have a question at this time.
[noise] [noise] star one for questions.
[noise] [noise] and currently there are no other questions in the Q.
Okay. Thank you very much for Jonas.
Thank you everyone. We appreciate you live I think if you have any questions don't hesitate to contact us. Thank you.
[noise] African that does conclude the call we'd like to thank everyone for your participation you may now disconnect.
[music].