Q2 2021 World Wrestling Entertainment Inc Earnings Call
[music].
Please standby were about to begin.
Hello, and welcome to the webcast entitled WWE Second quarter earnings if you're listening through a phone line you may ask a question verbally by pressing star Keith.
Followed by the digital 1 on your Touchtone phone, if you wish to remove yourself from the queue. Please press star 2.
I will now turn the call over to Michael Whites S.
S VP financial planning and Investor Relations. Please go ahead Michael.
Thank you and good afternoon, everyone welcome to Wwe's second quarter.
2021 earnings Conference call, leading today's discussion are basic net wwe's, chairman and CEO, Nick on Wwe's, President and Chief revenue Officer.
Mcmahon.
Web's Chief brand Officer.
Kristina ceiling Wwe's chief financial.
Operator.
<unk> will be followed by a Q&A session. We issued our second quarter earnings release earlier. This afternoon and have posted the release our earnings presentation and other supporting materials on our website.
Today's discussion will include forward looking statements. These statements reflect our current views are based on very.
Assumptions and are subject to risks and uncertainties disclosed in our SEC filings actual results may differ materially and 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-GAAP to GAAP information is set forth in on.
Our earnings release and presentation, which are available on our website.
Note that all comparisons are versus the year ago quarter, unless otherwise described.
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 Vince Michael.
Okay.
Do you know what generated solid second quarter on actual results as we focused on fan engagement and increasing efficiency in our content production.
Positive trends that are evident and the demand for our alignment on ticket sales.
As well as our TV ratings digital consumption.
5 events that have Eric.
Through July 26 of them at closer and.
At full capacity.
We have advances from our live events look excellent including on mining.
Summer swim.
It will be the largest.
Summer Slam.
We've ever had here on the United States.
TV ratings for our initial shows were up significantly for some replay before alive crowd to be 60.
16 on July 16, it was up 42% increase in.
And the 18.49 demo, which is extraordinary raw up 15%.
As well.
In the quarter, we implemented a certain organizational changes that will also increase efficiency.
And our content production on the Christina give a little bit more information on that I'm. Looking ahead. We believe we can take advantage of the evolving business environment as we always have we'll build engagement develop their business.
We will drive growth Christina.
Sure.
You guys are going on.
Yes. Thank you very much thanks, guys I appreciate it and thank you everyone for calling in nice to speak with you all again.
As always we'd like to start with some industry perspective.
In our last earnings.
Earnings call, we discussed how earlier this year, the NFL NHL and major League baseball realized substantial increases in the rights fees for their license programs, even with lower linear TV ratings. The NFL saw on media rights increase of 79% the NHL more than tripled its media.
Media rights AAV and major League baseball is getting a higher per game right as part of its new Disney deal.
The second quarter was another busy quarter with deal activity.
A number of rights holders closed media rights deals that saw substantial increases for that product both in our home market as well.
As in other territories also in this quarter, we saw a number of private equity firms invest in sports teams, primarily based on the assumption that there is growth opportunity yet to be realized for their media rights.
On today's call I would like to briefly run through a few of these deals and outline how the economic.
It has reinforced our view that the marketplace, both domestic as well as international continues to place a premium on live content.
Additionally, Stefan I would like to touch on the growth opportunity that exists on our sponsorship segment.
We will end by updating all of you on a number of WWE deals from this quarter that.
Nominated to new revenue streams.
The top Spanish Soccer Division La Liga closed an 8 year deal with Disney in the United States with an estimated AAV of 175 million, which represents a 35% increase from their prior deal would be in.
Wimbledon recently announced.
That have low year extension with Disney in the U S and a 3 year extension with the BBC in the U K both deals saw significant increases.
Also on this quarter private equity firm Redbird capital announced that it was acquiring a 15% stake in an Indian Premier League cricket team following the team between 200.
It's 20 and $300 million part.
Part of the rationale for this investment stems from the rising value of media rights for live sports content globally.
We're confident in saying this because we're seeing similar growth for our own international deals.
Just last week, we renewed our deal in Australia with our partners on.
Third yourself, securing an increase for package for a package of Reits in that territory.
As we begin our efforts to license WWE network internationally, we're encouraged by the trends. We saw this quarter and are confident we will continue to see success as we engage with our partners internationally.
Fox not to come in the future.
As Vince mentioned at the top of the call ratings are up across all of our shows following the return of live fans Stephanie will provide more details on the ratings growth shortly.
Allow us to discuss peacock for a moment 4 months into the Peacock partnership we're.
Seeing the benefits of our streaming partnership with a platform that has broad distribution and continues to grow.
Since moving to Peacock viewership of our pay per view events have increased with backlash up 26% on the sell up 25% and money on the bank up 46% from the prior.
More on the performance on what was the Standalone WWE network.
These viewership numbers are also up considerably from our pre pandemic WWE network numbers.
As you recall, when we announced the Peacock deal. We said 1 of the key reasons for the partnership was to bring the WWE products to a wide.
Here year on hands than those subscribed to WWE network.
We expect viewership of WWE to continue to increase particularly as peacock grows its base of users.
We also wanted to discuss a return to live event touring with you as.
As many of you know we made our return to live events.
On Friday July 2016, with Smackdown on Fox from Houston, Texas, 1 nuance to note here. This was not a return to live events for US we held live events with fans via video screens throughout the pandemic.
And on 1 week of production missed.
So again this was really.
<unk> turned to touring with live fans, but felt great for.
For the fans for our superstars and for our business normally we won't walk you through the specific of the specifics of events. However, today allow me to give you a taste of how our live events are performing.
On Friday July 16th.
<unk> already other center in Houston, Texas, we sold out.
This event was the highest grossing non pay per view event in WWE history in Houston.
Our merchandize sales for that night, almost 50% greater than they were for our last event in Houston. Please keep in mind that these merchandize figures come off of a phenomenal e-commerce.
Sales period throughout Covid.
2 nights later at money in the Bank on Sunday July 18th at Dickies Arena on Fort Worth, Texas, We sold out there.
This event was the highest grossing non Russell mania event in WWE history in the Dallas Fort worth area.
Our merchandize sales for that.
On.
Almost 100% greater than they were for our last event in the area.
These 2 arenas sold out prior to John Cena surprise return at the end of the second show at the end of the money in the bank show that is.
The very next night Monday July 19th at American Airlines in Dallas.
<unk> is down the road from Fort Worth we had our highest paid attendance in Dallas in over 3 years, our merchandize sales for that night, almost 50% greater than they were at our last 2019 event in the Dallas Fort worth area.
Our next live event smack down this past Friday from Cleveland This event.
That night, our highest grossing non pay per view gate in WWE history and Cleveland our.
Our merchandize sales for that night over 60% greater than they were at our last event in Cleveland.
That same night this past Friday, we also made our first ever appearance for either our raw or Smackdown brands.
<unk> was music festival in the U S.
Rolling loud the preeminent hip hop music Festival, which was in Miami over 230000 paid attendees over the course of that 3 day event to WWE matches, including our Smackdown Women's champion Bianca Belair coming off of her on Sasha banks.
At SB win for best WWE moment in front of over 75000 fans on Friday night, almost all under the age of 25.
We saw strong merchandise sales there as well.
The next night, we held our first non televised live events since the pandemic from Pittsburgh. This was the highest growth.
<unk> non televised live event gate in WWE history, and Pittsburgh, 95% of tickets sold our merchandize sales for that night.
25% greater than they were at our last event in Pittsburgh.
On the night after that another non televised live event from Louisville, Kentucky.
This was the highest grossing event.
At the KFC Yum center in WWE history, and our highest paid attendance for non televised event in Louisville in over 5 years on.
On merchandize sales for that night more than 25% greater than they were at our last event in Louisville.
On raw this past Monday, just 3 nights ago from Kansas City, Missouri.
<unk>, our highest grossing WWE non pay per view event in Kansas City in 2014 years.
Our merchandize sales for that night, we're almost 50% greater than they were at our last Kansas City event.
Also in the quarter, maybe added the ability to purchase merchandise via our app for in venue pickup or to be shipped.
From the venue to any location you choose.
Also as you may recall.
As part of our 2021 live events calendar, we announced that summer Slam would be taking place for the first time from an NFL Stadium.
From Allegiant Stadium in Las Vegas on a Saturday Night August 21.
Saturday as a new night for us in terms of our pay per view event without a main event or even a card announced we have sold over 40000 of 45000 tickets and will have a record date for a non wrestlemania event.
From Rolling loud, which I previously mentioned Bianca Belair also announced with.
With Atlanta Hawks superstar tray young that we will be having a new year's day pay per view. This January 1 again, a Saturday from state Farm Arena in Atlanta, Georgia.
Atlanta expects over 300000 visitors for new year's weekend, New year's Eve as of Friday. This year the college football playoff championship games.
Our on that New year's Eve December 31 Friday day.
The NFL, which traditionally goes on Saturday nights when the college football regular season has ended is not going on Saturdays late season with its new 18 week regular season.
So we saw what we think is an opening on the sports calendar and we believe ticket sales.
And viewership will both be indicative of that.
Look for us to announce the rest of our 2021 calendar and most of our 2022 pay per view calendar shortly.
Another area, where we're growing and believe we will continue to grow as our sponsorship business Stephanie on our global sales and sponsorship team have delivered over.
Over 20, new and existing sponsors so far in 2021 with many of them Blue chip companies and executed on a number of innovative activations that really only can be done by WWE.
We're bullish on this segment and we're confident brands looking for unique ways to reach consumers will see a record.
Assess and seek us out.
1 thing to note, we announced our first ever ring announcer competition on Tictoc sponsored by pure life water, where anyone can submit how they would announce 1 of our superstars on their ring walk.
The winners will be the rig on ounces for match at Summerslam, So far there have been.
Of 6.9 million views of the tick tock announcement and thousands of submissions Stephanie we'll have more on sponsorship and a few other items shortly.
As we look ahead the summer Slam, we're planning our second NFC drop leading into summer Slam this time with John Cena.
This follows our successful NFC launch.
With the Undertaker and Russell Mania.
As Youre, all aware and Ftes trading cards memorabilia, all incredibly popular right now with our wholly owned intellectual property, we are uniquely positioned to capitalize on this growing business.
Lastly, we announced this past Monday that we partnered with Jason Bloom and Bloodhound.
Over on our first scripted dramatic mini series, the United States of America versus Vince Mcmahon, which will tell the story of the federal indictment of our founder and CEO by the United States' Attorney's office in the Eastern District of New York.
The 30th anniversary of that not guilty verdict and acquittal was just last week.
We're excited for the story to be told.
At this point allow me to turn the call over to my colleague Stephanie Mcmahon.
Thank you Nick this is an exciting time for our debt although.
We don't know precisely what the future holds the return to our live inventory positions us at an inflection point in terms of our potential fan engagement.
Somehow financial portfolio.
As Nick mentioned, we returned to live event touring with fans in attendance on July 16th for the first time in well over a year as a small aside triple H and I went outside to greet our fans in person will be 4 doors opened at the Toyota Center in Houston.
With over.
The HMA Rami it was akin to a giant family reunion and we've welcomed everyone's Rome with open arms.
In the energy and excitement has only picked up especially with the return of 1 of our biggest superstars John Cena kicking off what we have branded this summer of Sina, taking us into summer Slam.
Our.
<unk> NBC and Fox supported our return with different campaigns airing across their respective platforms and programming from them.
Production standpoint, WWE, applying key learnings and techniques from producing virtual and physical TV to upgrade our audio and visual experience, including the.
Our part of a 40 foot tall by 80 foot wide state of the art curved LCD display for superstar entrances.
In addition, we are utilizing epic's unreal engine 3 day creation tool to generate a wide variety of augmented reality elements and surroundings, bringing our superstars to life and Wayne.
We have never done before.
Costs associated or on par with 2019 per episode cost on average and we have seen the results translate into linear viewership.
As Vince was mentioning earlier the July 16 episode of Smackdown generated a 21% year over.
A year increase in total viewers and a 42% increase in the coveted 18 to 49 demo.
Similarly, the July 19 episode of raw generated an 8% year over year increase in total viewers and a 15% increase in the 18 to 49 demo.
Yes.
The strong demand for live event tickets and the increase in TV ratings builds upon favorable trends in key operating metrics evident in the second quarter.
During the quarter TV viewership continued to remain stable maintaining a trend that began when we transitioned out of the performance center and invested in WWE Thunder.
At the end of August from that time to the end of the second quarter raw ratings have increased modestly and Smackdown ratings have increased 7%.
Since the return of our live audience. However, raw ratings are up 22% in the 18 to 49 demo and Smackdown ratings are up 20%.
<unk> in the quarter digital consumption increased 5% to a quarterly record of 394 million hours and video views increased 13% to $11.2 billion as compared to our prior year period that benefited from COVID-19 related viewing trends the.
The growth included a 3.
Increase in Facebook hours, and a 2 times increase in views as viewers demonstrated interest in current and past events.
WWE is also driving value outside of our in ring programming, we saw solid performance for <unk> WWE biographies, and most wanted treasurer series.
Series, increasing A&D Sunday night performance by 90% in the 18 to 49 demo and increasing total viewership by 21%.
Whether it is with Hearst communications via a any Fox Comcast Netflix or Facebook WWE continues to make a positive impact.
Time for our partners.
Additionally, WWE salesman sponsorship revenue increased 43% year over year.
As I mentioned during our last call brands are looking for unique ways to engage with their consumers that goes well beyond generating impressions.
WWE is perfectly positioned.
Packed to do just that with an ability to create customized content experiences across multiple lines of business and utilize WWE superstars that resonate with target audiences.
A recent example includes a full on zombie invasion to promote Netflix is original production army.
<unk> as the presenting partner of Wrestlemania backlash.
Michelle opened with a cool video mashup of army of the debt and WWE storylines narrated by WWE legend, Dave <unk>, who is also the star of the film setting the tone for the night zombie.
Zombies randomly appeared in backstage.
Of the Deans and popped up as a part of the virtual audience only to then have zombies actually surround the rings and be a part of the action when Ms faced Damian priest.
The results speak for themselves.
In addition to generating over half a billion growth impressions, we saw 25.
Stage lien content views across digital and social and 3 of the 14 trending topics from that night were directly tied to the integration.
The cultural impact and disruption during and after Wrestlemania backlash played a significant role in the films Quaker sent to becoming 1 of the top 10 most watched.
$5 million and Netflix history.
Coming off the heels of our fall 2020 partnership announcement with credit 1 bank, we officially launched the WWE Champion Championship credit card. This past June giving card members the opportunity to show their affinity for WWE, while earning cash back rewards on every.
To move the purchases.
Recognizing our ability to reach consumers. We recently completed a deal with Blue Triton brands, the corporate parent of pure life water the official water of Summerslam peer.
Your life is activating in multiple ways across wwe's portfolio tied to summerslam, including sponsoring the.
Every day, our mentioned Summerslam ring announcer Tictoc challenge.
Providing products to WWE community partner events, and sponsoring our Summerslam, after-party, which we announced yesterday will be hosted by celebrity and comedian Tiffany had ish and supportive her foundation that she ready foundation.
In the.
The quarter. We also released our 2020 community impact report to nearly 5000 global partners. The report highlighted our various initiatives through the pandemic, including generating $12.5 million and in kind of media value and over 650 million impressions for our community partners as WWE continues.
To deliver on our mission of putting smiles on People's faces.
In our view WWE is well positioned to continue to elevate our brand grow our business and engage new and existing consumers across media platforms.
And now I'll turn the call over to our CFO Kristina sailings.
You, Stephanie and Hello to WWE shareholders.
Today, I'll discuss WWE ease financial performance as a reminder, all comparisons are versus the year ago quarter, unless I say otherwise.
In the second quarter WWE generated solid financial results as we focused on driving.
Thank you <unk> strengthening our organization and increasing efficiency in our content production.
Total WWE revenue was $265.6 million on increase of 19%, reflecting the.
The increased monetization of content across platforms, including.
Fanning growth from the staging of Wrestlemania with ticketed fans in attendance.
Adjusted OIBDA declined 7% to $68.1 million, primarily due to higher television production expenses associated with the staging of WWE East Thunder zone and to a lesser extent Wrestlemania.
Here at Raymond James Stadium.
Both of which were produced in our performance center a year ago.
In addition, adjusted OIBDA was impacted by increased personnel expenses as our employees fully returned from furlough by the end of 2020.
Finally during the quarter, we can be.
<unk> TV digital and studio teams into 1 organization for a more unified content strategy and more streamlined content production the.
The related severance expense of $8.1 million has been excluded from adjusted EBITDA as a material.
Buying debt on recurring item.
If you review the second quarter performance in more detail, let's turn to slide 3 of the presentation, which shows revenue operating income and adjusted OIBDA contribution by segment.
Looking at the WWE E media segment adjusted OIBDA.
<unk> $86.2 million a decline of 5%.
As increased revenue and profit from WWE <unk> licensing agreement with Peacock and the escalation of core content rights fees were more than offset by increased production expenses.
Despite what.
We need to be a challenging environment WWE E produced a significant amount of content more than 680 hours in the quarter across TV streaming and social platforms.
At the start of the quarter, we transitioned Wwe's Thunder zone from Tropicana.
Continue to field in St Petersburg, Florida, Florida to the England Center in Tampa Bay.
Call that in the second quarter of 2020, you were producing a bare bones production out of our performance center in Orlando.
While our operating results continued to be impacted by the year over.
Over a year increase in production expenses associated with bringing bringing nearly 1000 live virtual fans indoor show. We also continue to achieve greater production efficiencies relative to our own expectation.
With the return to touring in July we expect that production.
<unk> expenses for raw and Smackdown will continue to decline on a sequential quarter basis.
Approximating their average per episode cost in 2019.
This is a tremendous feat from our television production team.
Which created the award winning Thunder dome environment.
It would be our technology, all while producing shows every single week throughout the pandemic with a constant eye on efficiencies.
Now, let's turn to WWE He's live event business on slide 5 of the presentation.
Live events adjusted OIBDA.
Using $1.1 million.
Increasing $5.3 million due to an 8 times increase in revenue with.
With the staging of Wrestlemania.
This premier event entertain ticketed fans and an audience of over 50000.
Recall that in the year ago quarter.
Was no live events with ticketed fan.
As we have said we are thrilled by the return of a regular ticketed events.
Currently for our announced touring schedule, we anticipate ticket demand and profit per event that is at least on par with 2019.
The improved performance reflects heightened consumer demand and a more analytic efficiency oriented approach by our live events team in the scheduling routing and staging of our events.
Looking at WWE ease consumer products segment on slide 6 of the presentation.
Seed adjusted OIBDA was $8.4 million growing 4% due to a change in product mix.
At higher royalties from the sales of licensed toys and increased merchandise sales at our Russell media venue, where nearly offset offset by lower e-commerce.
<unk> the modest decline in sales on our E Commerce site WWE shop reflected a tough comparison to strong COVID-19 related sales in the prior year quarter.
As a reminder, in the second quarter last year and in each quarter through year end 2020 growth in E Commerce revenue.
Nearly offset the absence of venue merchandise revenue due to the cancellation of live events.
In previous earnings call, we discussed how the introduction of new products, such as new toys title belts and mobile games has generated growth in wwe's consumer products business.
This quarter I'd like to focus on how we're applying technology to enhance products sales.
During the quarter, we introduced a new branded app at Wrestlemania for pre ordering merchandise.
The App enables our fans to order merchandise before as well as during the event and.
And to pick.
Merchandise at a specific location within the venue.
This means that a key upcoming events such as summer Slam, we can expand the sales when that window and increased sales volume without significantly increasing the number of transactions site.
Now let's.
Turning to Wwe's overall cash generation as shown on slide 7 of the presentation.
During the quarter WWE generated approximately $13 million in free cash flow.
Declining $54 million, primarily due to the timing of collections associated with.
Revenue.
And to a lesser extent lower operating performance.
During the second quarter W. W. <unk> returned approximately $28 million of capital to shareholders, including $19 million in share repurchases and $9 million.
And dividends paid.
To date more than $177 million of stock has been repurchased representing approximately 35% of the authorization under our $500 million repurchase program.
Yes.
As of June 32021 WWE.
He held approximately $443 million in cash and short term investments.
Debt totaled $220 million, including $198 million associated with WWE He's convertible notes.
The company has not drawn down on its revolving line of credit and estimates.
Relative debt capacity of approximately $200 million.
And finally, a word on WWE east business outlook.
January WWE issued adjusted OIBDA guidance of $270 million to $305 million for the full.
Year 2021.
During the second quarter key performance metrics demonstrated positive trends and we continue to realized better than expected TV production efficiencies stronger sponsorship sales and heightened demand for live events.
However, we are not adjusting full year 2021 guidance at this time given ongoing caution regarding the potential impact of COVID-19, and its variance on WWE East operations.
For the third quarter 2021, we estimate adjusted EBITDA OIBDA.
Will decline.
Incremental profits from the return to live event touring and the growth of content rights fees will be more than offset by increased television production and other operating expenses.
As a reminder, the majority of the third quarter of 2020, we remained in our performance.
Center in Orlando, Florida, the site, where we have the lowest production cost.
We did not move into WWE Thunder down until the end of August 2020.
So beginning in the fourth quarter of 2021, we expect more favorable year over year comparisons of television product.
Form incentives as well as sustained profits from our return to Turing.
However, given the ongoing uncertainty regarding the potential impact of COVID-19, and its variance we are not receiving more specific quarterly guidance at this time.
Yes.
<unk> finally, turning to WWE east capital expenditures.
As mentioned last quarter, we anticipate spending on the company's new headquarters as we restart this project in the second half of 2021.
For 2021, we've estimated total capex of $85 million to $105 million.
To begin construction as well as to enhance wwe's production and technology infrastructure.
The increase in capital expenditures for 'twenty, 1.2021 reflects the acceleration of certain construction spend.
As the overall cost of construction has not materially increase.
The total net cost of the company's new headquarters through completion.
And net of tenant incentive tax credits and other capital offset.
Is estimated within a range of $160 million to $180 million.
In the second quarter WWE generated.
Solid financial results as we prepared for WWE ease returns to live event touring.
Positive trends in Wwe's key performance metrics and expectations of sustained performance reinforce our belief that continued innovation can enhance WD WWE.
Fan engagement and drive the value of our content and products.
That concludes our remarks and I'll turn it back to Michael Thank you Christina operator, Keith we're ready for questions. Please open the lines.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press star 1.
Moving on your telephone keypad using a speaker phone. Please make sure. Your mute function is turned off to lay your signal to reach our equipment.
Again star 1 for questions, we'll pause a moment to assemble the queue.
We will take our first question from David Karnofsky with J P. Morgan. Please go ahead.
Alright, thank you.
Nick you've.
It's been a really accurate with your predictions on the sports rights landscape, including the College Conference News, we saw this week.
As you noted soccer I, just generally have seen an uptick in value only thing utilized by streaming.
Love your perspective on what's driving this and maybe where you believe the value proposition of WWE is similar.
David Hey, how are you doing just so I can repeat it back to you is a little shaky. The audio on this then you are asking about the soccer rights am I correct.
Sure just how are you.
WWE is similar in <unk>.
Value proposition to Australia.
I think there's a couple of things soccer slash.
1 on football as we know the number 1 sport globally.
See the global positives for our brand certainly not equal to soccer, but appealing on the scale that soccer has been appealing to many many different countries.
So even if you look at that La Liga rights deal.
International I reference that is a significant deal for a property that takes place almost exclusively out of the United States. So there is an audience now as we know as of 15% to 20 years ago. The World was flat. We think soccer is a beneficiary of that we think we're a beneficiary of that and we think theres going to be more of those.
Deal with the deals out there.
Okay, and then just maybe for Chris then.
Can you can you say, how many international events are embedded in your guidance either at the higher low end has that shifted at all from last quarter and then at the start of the year I think you had said the pen.
<unk> growth sort of a 15% to 20%.
Overall impact to the guide just curious to know if those figures would kind of roughly hold at this point.
Sure I think we.
We haven't released a number of total events, we expect for 2021, specifically on <unk>.
<unk> said that our guidance.
Does include.
Type scale international events as well I can tell you that we're forecasting the level of that other than for the second half of 2021.
At or below what we had in the second half of 2019 and right now we have it.
About 35 events on sales.
Sales through the end of September and as Nick mentioned, we'll be announcing the remainder of our second half 2021 schedule shortly.
And those events I will go on sale.
Okay and anything on the pandemic impact.
I'm sorry go ahead.
Sure. It's just at the beginning of the year, you had kind of called out a 15% to 20% impact to the guidance from the pandemic. Just curious if you have an update on those figures Eric.
It's still roughly in the ballpark.
I think that's roughly in the ballpark and again that was based on 2019.
Making assumptions about what the expectation.
We would have been from.
From 2019 into 2020, so it's purely a forecasted number as opposed to an actual number but.
But yes, we haven't changed what we thought the impact from 2021.
Thank you.
We will take our next question.
From Curry Baker.
With Guggenheim Securities. Please go ahead.
Hey, Thanks for the question.
On sponsorship I was wondering if you guys could maybe help us size, what you see the opportunity.
Over the next 2 to 3 years I don't know if you can put brackets around it but you know maybe.
I was thinking on the areas for increased monetization on sponsorship and maybe the ultimate opportunity there.
That would be that would be great.
Absolutely. Thank you Perry this is Jeff.
You know it's tough to get.
Is projections in terms of just how much.
We believe this business can grow but we do believe that there is significant upside we have already seen it tracking them and.
And we have the opportunity now to really fully engaged with peacock across sponsorship as more opportunities open up later in the year.
And also across digital and social.
There.
It helped a ton on opportunities for us from a content production standpoint, and really to bring our sales and sponsorship partners throughout all of our lines of business. So we do look to see a continued positive trend.
Great. Thanks, and then 1 quick 1 might be from Nick.
Is there any update on the.
The TV rights deal are you guys still on conversations or just anything new to add there.
You got some other way trying I think last time it was a 4 pound compound question.
I think we answered completely so we appreciate you breaking them up.
The way you did this time.
Getting more concise.
Thank you. Thank you.
On the media rights, Vince myself, others are still deep into it we remain optimistic on the entire situation and hope to have some good news shortly.
Great. Thanks, guys.
Thank you.
We will take our next question from Eric Handler with <unk> partners. Please go ahead.
Thanks, Good evening I appreciate the question Nick.
Nick I will start with you.
I Wonder if you could talk a little bit more about your out of ring TV production plans.
Specifically as you move forward with this how many do you have a goal of how many hours you are looking to create with different probe.
Brands are you pre selling these so you don't have any financial risk and are you looking at these as profit centers rather than just you know.
Promotional tools.
Yes, thanks for the question Eric.
Yes to all of that at the end, meaning profit center promotional vehicles.
Brand extension I think we see scripted and unscripted TV as all of that.
Steph went through the ratings on the A&D, a part a series and on the memorabilia show there.
Look for more of that from us the unscripted.
Drilling of the stories of many WWE superstars as we referenced would be scripted series.
Dramatic series based on the part of <unk> life look for more from us in the scripted space that were already out to the marketplace with and hopefully we'll have good news on soon.
Great and then Chris.
Kristina just a question for you on on the.
The new headquarters move.
How are you looking at the cash.
Capex cadence as you look into 2022, when does that start to decline and then the previous plan was to sell.
On the existing headquarters and the.
The upside production facility that you hadn't Stanford is that still a goal on how much could that offset some of the capex increase.
Yeah.
Sure thing.
Eric and just to add a little bit to Nick's comments and to put a finer point on it.
So our expectation is not to take financial risk in the way that our studio wood or television studio wood or a movie studio world with regard to production expenses on our on.
Out of range content.
With regard to <unk> I think I agree we look at it is you know.
Our bus.
It has not changed just the pacing of it has changed so we've pulled forward expenses that we thought.
We would be making in 2022, we're making them in 2021, primarily because of supply chain I'm sure. It's not lost to anyone on the call.
That supply chains are a bit backed up and so in order.
To meet our timeline, we need to order some material sooner.
So that they arrive on time on me when we need them in 2022.
We anticipate right now moving to our new HQ in fourth quarter of 2018.
We've already broken ground in.
In June we're very excited for that.
And so that means that as we move through 'twenty, 2 we'll see capex start to taper down.
And also in part because we've pulled forward some of that 22 capex into 'twenty, 1 and with regards to your question yes.
We were very fortunate to own 3 buildings.
Here in Stanford that house on.
Our corporate headquarters, our TV production and our digital production studios and our anticipation is.
In once we've moved in.
To sell these buildings and other is a tremendous amount of demand for Stanford commercial Stanford commercial real estate. So we're confident about our ability to sell those buildings in the future does that answer your questions Eric.
Perfectly thank you very much.
Youre welcome.
We'll take our next question from Brandon Ross with <unk> Partners. Please go ahead.
Thanks, first just kind of a follow up to <unk> question on sponsorship.
So just wanted to drill down on the timing.
When do you expect to.
Starting to see real growth I think in Q2 sponsorship with down very slightly compared to 2019.
With the return to touring should we see that step function up right away Oregon's debt.
Kind of come in time.
As to explore new opportunities that Eric.
Sure.
Thank you Brandon so and in terms of sales and sponsorship the returns on live events, absolutely increases the excitement and energy with our fans the opportunity to engage of course.
Eric.
Financial upside as well, but that has not stopped us from growing the sales in the sponsorship business again up 43% year over year.
Yes. It is due to our Covid time period, but we've seen significant increases across our business and we can we expect.
Of course, they continue to see that growth throughout the end of the year and moving forward obviously.
Great and then.
That's 1 for for Ben.
HW seems to be making some significant.
Again investments in their roster.
That gain didnt viewership, especially in the demo I was wondering how you currently view them as a competitor and.
Phil you need to counter their investment.
With investment additional investment your own roster since you could eventually be competing for media rights.
Or could it be a situation.
Like we saw back in the day, where a rising tide lifts all boats.
So that's certainly not a situation where a rising tide because it's always been tight terms coming after us and all of that.
On time Warner's assets as well that was a different situation.
Oh.
CDW is where they are.
I don't really know what their plans are aligned with what our plans are on <unk>.
Sure.
On competition.
And the way our other considered WCW back of the day on anywhere near close to that.
And on.
I'm not so sure whether investments are.
Patrick Allen is concerned but.
Hum, perhaps we can give them some more some of them.
Brendan I I can add 1 thing to that if that's okay. This is Nick speaking so I think the way we always look at these situations.
Now where it sort of like a horse race for the horse has blinders on.
We're looking straight ahead at our lane and making sure that we stay in the front of the pack at the same time everything is our competition. So if someone out of line a couple of weeks ago that we all chuckled about an agreed with sleep is our competition right. If it was up plus people could be up 24 hours a day watching content from different.
Just on providers, hopefully, including ours. So we don't look at any organization, particularly as competition, yet we see everything.
As competitive with what we're trying to do in terms of eyeballs.
I think it with Reed Hastings.
Said that Netflix competed with sleep.
Content exactly thank you guys very much for the ER and for the answers.
We will take our next question from Ben Swinburne with Morgan Stanley. Please go ahead.
Hi, good afternoon.
Kristina I wanted to come back to your comments about production.
Production efficiencies, which has been I think better than expected for a number of quarters and you also talked about live event profitability being strong looking forward compared to say 2019, when you put all that together it seems like the expense outlook is both.
Good and getting more predictable.
TV products.
So I guess I had a couple of questions along those lines.
1 is is the lack of an increase in full year guidance around uncertainty largely a revenue comment or are there still questions about expenses that you.
You guys were thinking through and then number 2 longer term as we try to think about.
<unk> power for the company.
Are you now at a point, where when the revenues rebase back to where they were.
You can sort of talk about margins relative to what we saw on prior periods because you've got it now a little more confidence and visibility into the company's ability to produce at a certain cost level et cetera.
Earnings context, you can share on that day.
Sure thing Ben Thank you for the thoughtful question I see.
Starting with the last part too.
First about our long term earnings power.
As I mentioned in my comments as we exit.
The year moving into the fourth quarter.
We will but we will see the full Uh huh.
Power so to speak on.
The.
The efficiencies that we've gained in TV production expenses on a year over year basis.
And you know that.
We expect to continue as he moving into 2022.
We are also.
As we mentioned as we look at them lies.
Live touring a live event touring we are at level expense wise.
That are similar to 2019 again.
Some.
Exiting the year, if we are able to exit the year at that level.
It will set us up very well for earnings power in 'twenty 2.
From a guidance perspective I think.
No.
It's really just about where we are in.
In this.
On want to say post pandemic, because it doesn't necessarily feel fully post, but where we are right now in terms of pandemic recovery.
R as Nick related walking through each of our live events.
But we've held.
On a live events with ticketed fan.
The the.
<unk>.
The performance has been ahead of our expectations. We are so excited with the the ticket sales merchandise sales and we're very hopeful that.
They will continue as we move through the year or the rest of the year, we haven't yet announced the rest of our 2021 schedule when those events go on sale and we look at the general.
Pandemic recovery environment will have a much better sense of what.
<unk> third quarter, Inc. Fourth quarter will look like so just feels right at this moment, where we are in pandemic recovery fits and starts that we want to see a few more months of activity.
That makes sense. Thanks, so much.
Ben.
We.
We will take our next question from Steven Cahall with Wells Fargo. Please go ahead.
Thanks Kristina.
Christina on for you and then a bigger picture 1 for Nick maybe first Kristina just a follow up on Ben's question. So as we're thinking about media Opex I know you've got a lot of cost coming back as you get to.
The normal but then you've got this reduction in the per episode cost so sequentially as we kind of moving through the back of the year, how should we think about media opex.
Over that period, and then Nick maybe 1 difference with the other sports leagues and their rates is just the sheer number of hours that they often provide.
On the networks between the live games and the shoulder programming in the highlights in the post season and what that means for advertisers. It is just a lot of tonnage. So how do you think about positioning your content to make sure that you provide enough volume to networks to kind of go for those big price ups like you're sort of alluding to and.
You talked about some of the scripted content, but would should we just think about that.
The portfolio is as adding hours over time thanks.
Thanks, Steve for your question I'll start with with TV.
TV and media Opex as we move through the year.
You know at the rework that we mentioned in our comments and in our press release was really about.
Creating a unified content strategy.
And and finding more even more efficiencies in our content production. So we previously had 3.
3 organizations television production digital content production and studio production and there is a decent amount of redundancies in terms of activity and expenditures across the 3 we only made those changes at the end of May so.
Really deep into the second quarter so.
So we'll start to see those efficiencies in the third quarter, and then and really start to harm in the fourth quarter.
I'm I'm optimistic about continued sequential opportunity.
In what I would call media.
Media production.
On Opex.
As it pertains to other per episode cost that I've referenced in the past as it you know when we look at raw and Smackdown for example.
We are now as I mentioned at or very close to 2019 levels.
Wow.
I expect there to be continued sequential improvement as we move through the year on because of the efficiencies in combining these 3 organizations. There was there was a step function between the first quarter and second quarter, that's not as visible yet and it'll be even more visible.
On the third and very visible on the fourth quarter on a per episode basis on a euro from a year on year over year comparison perspective does that answer your question Steve.
It does.
I didn't jump in on the second part in terms of the tonnage.
Keep in mind.
Already know Steven we go 52 weeks a year at least 7 hours a week on our pay per view weeks at an additional 3 to 5 hours there.
And by the way, we're always desirous of developing new content in ring and out of ring scripted unscripted as we talked about and as you asked about.
<unk>.
We think the tonnage requirement, especially with the consistency of the 52 week schedule gives us I think just off the top of my head, it's almost an exclusive position in the marketplace No. Other sports Entertainment property can go like that we do I'd like to think we do it well and certainly theres more of it.
Yes.
Great. Thanks.
Thank you.
We'll take our next question from David Joyce with Barclays. Please go ahead.
Thank you a couple from me please first thinking about the.
Global opportunity set.
Just recently.
It was announced thinking on revisions and the best thing about the global So I was wondering what you're seeing in terms of combat sports evolution or do you think there will be mergers on various sports or all outright.
Outright acquisitions or joint ventures, it would just be.
Oh.
The way to maybe have some crossover of bench to expand.
You're saying on exposure and engagement.
And then separately or something else.
Today that peacock will be available on the sky platform for free in Europe I was just wondering.
Are you able to tag along with that yet or do you still have.
Other agreements that have to expire first in those regions. Thank you.
Thank you David This is mark I think I can address those for you.
Things on it in terms of.
Univision and the Wade Davis group buying part of commodity Wayne has shown.
On a disposition.
And 2 MMA, we really think he was the champion of Viacom buying Bellator when they did that and he was that Viacom. So I'm not sure that we see any consolidation in the MMA space I'm sure. The UFC guys like their market share position Viacom is putting what it's putting into bellator and.
Commodity we just talked about it sort of feels like the business model that Vince and company at that time built out of less.
Have 1 big global territory in quote Unquote wrestling at that time. The WWE is the model that ultimately differ Titos and Dana White followed.
Whether it was intentional or not intentional to develop 1 global MMA product in the UFC, you've not seen boxing do that yet it's still splintered with different factions all over the place eventually somebody hopefully comes along and does it there, but im not sure that we are going to see any consolidation in that space.
Yeah.
And the second part of the question just back to the Univision part look we like any new.
Any new entrant into the combat space, that's well finance that's a good thing we think for everybody in the MMA space all of a sudden it goes from 2 to.
Slash 3 to 3 slash 4 in the boxing space again, all over the map there in our space. We think again, we're uniquely positioned with what has been built already and what we're going to continue to build.
Last part of it the Peacock on international situation.
It so.
Is that we're in a good moment in time that.
All or almost all of the U S media conglomerates are looking to go internationally. Some globally soon and fast so with a turn key existing products. We obviously already have substantial business with Comcast.
All of these entities again, a turnkey product if they want shows in Germany. They don't have to send production trucks over there and license out the rights to something with US again, you do a deal with us and it comes automatically so we're optimistic on it we're in the middle of a number of things there and let's see.
What we have.
In the next couple of months.
Alright, Thank you Nick.
We'll take our next question from Alan Gould with loop capital. Please go ahead.
Yes. Thank you for taking the question 2.1 for Christine on 1 for Nick.
But with Linda can you just confirm that there is plenty on the guidance assumes there'll be 1 large scale format.
This year.
Our guidance does assume that there will be on large scale international event.
Okay, and then for Nick.
Are you strategically what do you see it.
Chris Thanks step function increase.
In revenue and value and the big 1 obviously was the renegotiation of the U S. TV right a few years ago.
The next big move.
When you start doing combined linear digital deals.
<unk> shipped but what.
<unk> do you see as the next big opportunity.
International Media rights sales and sponsorship as you identified scripted and unscripted TV as we've talked about.
Okay. Thank you.
Thank you.
Thanks, everyone. We appreciate you listening.
The call today, if you have any questions as always please don't hesitate to contact me Michael Weiss on for Michael veto.
At WWE hit quarters. Thank you.
Ladies and gentlemen. This concludes today's conference. We appreciate your participation you may now disconnect.
Strategic.
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