Q2 2022 World Wrestling Entertainment Inc Earnings Call
Okay.
D C.
Sure.
[laughter].
Hello, and welcome to WWE.
Second quarter earnings call.
We have just a few announcements before we begin.
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I will now turn the call over to Seth Zaslow, SVP and head of Investor Relations. Please go ahead Sir.
Thank you and good morning, everyone.
Welcome to Wwe's second quarter 2022 earnings conference call.
Leading today's discussion are Stephanie Mcmahon WWE chairwoman and co CEO , Nick Con Wwe's co CEO all of that WWE is head of creative and talent.
And Frank Riddick, Wwe's, Chief financial and administrative officer.
Their remarks will be followed by a Q&A session.
Issued our earnings release earlier this morning, and have posted the release our earnings presentation and other supporting materials to our website.
Today's discussion will include forward looking statements. These 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 and undue reliance should not be placed on them. Additionally.
Additionally, the matters, we will be discussing today may include non-GAAP financial measures reconciliations of non-GAAP to GAAP information are provided in our earnings release and presentation, which are available on our website.
Finally, as a reminder, today's conference call is being recorded and a replay will be available on our website.
I would now like to turn the call over to Stephanie.
Good morning, everyone. Thank you for joining us today before I discuss highlights from the quarter I wanted to address some of our recent management changes after more than 40 years of running WWE. My father, Vince Mcmahon has retired.
Is it true founder and entrepreneur My father, and my mother for that matter pour their hearts and souls into building this business and taking WWE from a regional wrestling promotion in the 19 eighties to the global media Enterprise we are today.
He built the foundation that WWE stands on and prepared us for the future.
WWE and its board of directors have had succession plans in place and it is both a privilege and an honor to be leading the WWE with my partner, Nick Kern as co Ceos and with Paul Triple H Live Act also my husband, leading our talent and creative.
Nick Poland I first met around 2015 about it talent, but Nicholas representing our relationship grew with the three of us having the opportunity to work together during your last media rights negotiation, Nick was still an agent at the time, but it became quite clear how well the three of US work together and what a tremendous asset Nick would be to art.
Decorative team.
A few years and Triple agents, 50th birthday Party later, it's hard to imagine where we are now we independently fell in love with WWE has kids and now have the opportunity to live our dream as professionals.
Paul is joining us today fresh from last night's broadcast of Monday night, Raw and D. C. You'll be hearing from him in a few moments.
Working alongside Frank Riddick, our CFO and our strong leadership team our goals are to maximize shareholder value by continuing to grow WWE across all lines of business. The team's success in doing just that as demonstrated by our strong year to date performance has given us the confidence to raise our full year 'twenty two.
Turning to guidance, which Frank will provide more detail on shortly.
This quarter saw record results for Q2, we generated revenue of $328 million and adjusted OIBDA of 92 million increases of 24% and 34% respectively over the prior year.
In fact, each business line saw increases over the previous year quarter, highlighting the strength of each one of our segments.
Since our last call we staged for premium live events.
Each one has continued the trend of viewership growth since licensing WWE network to Peacock here in the U S and represents the highest viewership in their respective histories. The following four comparisons are all year over years.
Or backlash in May we saw a 49% viewership increase how long the sell in June we saw a 45% viewership increase money in the bank in early July had a 17% viewership increase and summer Slam at the end of July we saw a 20% increase in viewership.
Yeah.
Our flagship linear programs raw and Smackdown continued to perform well driving in and out of those premium live events. We saw this trend clearly on the August 1st episode of Monday Night, Raw and USA network coming two days after summer Slam that show drew more than 2.2 million viewers, making it our.
Most viewed episodes since March 2020.
For the quarter raw ranked behind only round, one and two of the NBA playoffs in the key 18 to 49 demo among all Monday night cable programs and Smackdown on Fox ranked number one in 18 to 49, among all Friday night broadcast programs in the quarter.
Our viewership success is not limited to our in ring content last month, our second season of biography WWE Legends premiered on A&D, along with two new shows WWE rivals and WWE Smackdown. The.
The Sunday block of Primetime programming delivered a 77% increase over the prior year's time slot.
This marks the latest step in our growing partnership with A&E networks that will see us deliver more than 130 hours of programming over the next several years.
On our social platforms, just last month, our Youtube channel crossed the 90 million subscriber threshold.
We also surpassed 70 billion lifetime views, becoming justice seventh channel on Youtube to achieve those numbers.
Kicked off WWE remains the number one most followed sports league with over 18 million followers more than the NFL MLB NBA and U S C.
Whether a broadcaster streaming cable or social WWE programming is achieving market, leading viewership our diversified distribution approach is capturing fans at multiple touch points, Nick will speak about how we plan to capitalize on that strong viewership performance as we head into our next round of domestic rights renewals.
Before I turn the call over I want to reiterate how humbled and committed I am to WWE in my new role.
Literally spent my entire life in and around this company and I have a deep appreciation and respect for our branch employees.
Fans and superstars that makes WWE and unique media property, unlike anything else in sports or entertainment.
With that I'll turn the call over to my partner and co CEO Nick Com.
Thanks, very much Stephanie.
Against the backdrop of our viewership success step discussed we're also seeing growth in consumer products and live events.
Focusing substantial increases year over year for the quarter.
We expect to see strong performance in both in the back half of the year as well.
Consumer Products' unit, we recently relaunched WWE shop with our partner fanatics.
The merchandise is now available across fanatics and fans edge sites.
Look for an expanded assortment of products in the near future across all points of distribution as we grow WWE shop offering to leverage an expertise and scale fanatics.
We've also had a strong start to the year with our trading card partner Panini and.
In the first half of the year alone we've exceeded 2021, I'm, sorry, 2020, two's full year performance expectations.
There is still growth ahead, as we are planning additional product drops in the back half of the year.
As we've done work to strengthen our existing lines of business, we continue to identify new revenue opportunities.
Last fall, we announced the partnership with Fox is blockchain creative Labs are first NFC collaboration drops ahead of our premium live event held on a sell in June .
All of those LFG sold out in under 24 hours, our last drop for summer Slam with blockchain. So all NFC you sell out in less than $60.
The past quarter was also our first and our partnership with the premium live events business on location, our first action activation with Elena sell in Chicago It was.
Great start, which continue to grow with our summer slam on location offerings from just over two weeks ago, which exceeded all sales from the prior events.
At Summer Slam, we also rolled out another new revenue stream with the ticketed live event experience of Undertakers wanted dead Man show featuring of course, the Undertaker and an intimate setting sharing never before heard stories from Miss Hall of Fame career.
This event sold out we announced the second undertake or one dead Man show for Friday September 2nd in Cardiff Wales that event sold out in three hours.
Look for more of this from us.
Quarter also saw healthy performance around ticketed live events. Following Wrestlemania 38, we saw sold out shows for a premium live events backlash and Providence, telling us selling Chicago money in the bank in Las Vegas.
At Summer Slam, we hosted almost 50000 fans at Nissan Stadium in Nashville.
<unk> will speak more about that event shortly.
Our next premium live event is a major international Plaza at the castle and less than three weeks on Saturday September floored at Principality Stadium in Cardiff Wales.
This is our first UK stadium shown over 30 years.
Over 45000 tickets have been sold to that event.
Also to note. This November 5th and returned to Riyadh for our Crown Jewel in premium live events.
That will be our second events in the region this year.
We're pleased to be back in the territory with a regular cadence of shows.
We're capitalizing on these well attended events by customizing our in venue merchandise offerings.
After a record setting venue merch sales at this past Russell we.
We continued that trend by capturing a 95% increase year over year on money in the bank sales in.
In venue sales have been revitalized business for us as we pivoted to location events and storylines specific merchandise in venue.
Turning to media rights, we've been detailing on these calls for the past two years, how hungry the marketplaces for live premium content today, we remain as confident as ever as we prepare for the U S rights renewal for raw and Smackdown.
Additionally, as everyone knows since those most recent rights deals the marketplace has become even more crowded with buyers interest from deep pocketed Tech companies has never been higher.
On Netflix we've been saying on these calls for many months that we believe Netflix would look to enter alive strengths. We got confirmation of that this past quarter when Netflix made a bid for the rights to formula one.
We believe Netflix is appetite for life will only increase after the introduction of their AD tier as we all know the strongest cpm's are those sold against live programming.
With alphabet, the parent company with Google.
We're seeing bids for premium sports products, both here in the U S and internationally. The company recently put forward a bid for the U S. NFL Sunday ticket package and pursued the Indian Premier League broadcast rights in that region.
With Apple we saw their entrance into the sports space and made a really strong statement in their first year. Following the major League baseball deal this quarter Apple acquired the MLS rights and a 10 year $2 $5 billion deal and MLS is still set to see more revenue from games they will sublicense along.
With Spanish language television rights.
NFL Sunday ticket will be announced shortly we all expect that to go to a streaming company.
Formula One who I briefly mentioned went from $5 million, a year or two over $85 million a year.
16 X multiple.
We know your wafer is out in the U S marketplace right now and we expect that we will more than double its fee from its previous deal.
Churn rates will blow past the $1 billion in AAV, and we will have three or more buyers.
As you know.
As we know there is no type of programming more valuable.
Sponsors been live.
As the streaming landscape matures and sports become a core offering on these services, we believe our products three pronged ability to drawing viewers retain viewers year round and amass large audiences that sponsors love week to week puts WWE in a small group of premium properties for any media company.
With that I'd like to turn the call over to Paul of that.
Thank you Nick.
I've had the good fortune to work in this business for over more than 30 years, where they are on screen and the office in the writers room, the performance center and many of those at the same time wherever the opportunity was available I always took it I always wanted to learn the behind the scenes.
Why we did what we did so I could apply those learnings and become the best talent I could possibly be.
In my new role, leading creative and talent. It comes with a great responsibility, but I am incredibly confident that we have the right team in place to succeed.
Part of that mission is orchestrating storylines and creative that appeals to our existing fans and helps us grow that WWE universe, along the way. It is early days, but we believe that <unk> seen some initial signs of this positive momentum.
At Summer Slam last month.
Rock listener drove a front loader.
During his entrance and at one point in the match he picked up the ring with the tractor and raised at 15 feet in the air which centers opponent Roman reigns tumbling to the floor and as I've mentioned I've been in this business for a long time I've seen a lot.
But I've never seen anything like took place that night at Summerslam.
And our fans responded.
On the phases of the 48000 fans at Nissan Stadium.
You read the reactions on social media when summer Slam was trending number one worldwide on Twitter.
That moment alone surpassed 20 million views across all social platforms within 48 hours alone.
We want to continue to create these moments and memories that will last a lifetime and we will get there by writing compelling story lines for the most intriguing characters and then on top of that developing new talent.
Talent is an area, where this company has a renewed focus.
Last December we launched our Nio program that sought to identify the next generation of superstars from collegiate Athletics.
In the nine months since its launch we've signed over 30 be one athletes. This list includes all Americans National champions and even the Olympic gold medalist.
Our Nal program has been recognized as an industry leader. This past June Wwe's next in line was named the Best Nio program. The inaugural Nal Summit and in July to come the same recognition at the hash Tag Sports Awards.
Outside of Nio, we've taken steps to make our talent development pathway more robust in an effort to attract the younger and more diverse group of athletes at scale.
Wrestlemania 38, and Dallas, we held our first ever all collegiate athlete trial, we had over 50 individuals' whittled down from hundreds.
Try out over a three day period, we executed our second such dry out in Nashville, leading up the summer Slam, which by the way saw a cameo in viral moment from NBA champion Dwight Howard If you haven't seen it I highly recommend.
Through the first half of this year, we've signed nearly 50, new developmental talent at an average age of 23, the quality and depth of our talent pipeline is as strong as it has ever been.
We continue to find new innovative ways to recruit and develop talent across the globe, which is core to our growth and reflective of our expanding fan base.
And that fan base turned out for us.
Last week at <unk> Stadium in L. A.
As we held our kick off event for Wrestlemania that will be held at that same stadium on April 1st and second next year.
When we opened up ticket sales for the event, we saw the most successful first day sales and Wrestlemania history.
Over 90000 tickets were sold within the first 24 hours more than any event in WWE history, and a 42% increase over first day sales for Wrestlemania 38 at AT&T Stadium in Dallas.
At roughly 80% for an event that is still eight months away.
And we have yet to announce the single match taking place plenty overnight.
40 years, we have never sold that many tickets to Wrestlemania that quickly and.
And with those record numbers, we are tracking towards sellouts with passionate fans. So five stadium for both nights.
It is an amazing time for us and I look forward to the next steps and with that I will turn the call over to Frank Thank.
Thank you Paul.
Several key topics, which we'd like to review today. These include discussion of our financial performance the progress of key initiatives and our business outlook.
Stephanie and Nick highlighted we had a strong quarter.
<unk> were in line with the preliminary numbers, we announced a few weeks ago.
In the second quarter, we generated revenue of $328 million and adjusted OIBDA of $92 million, which exceeded the high end of our guidance.
Revenue increased 24% year over year, primarily due to the return of a full schedule of live events, including the staging a record Wrestlemania as well as an increase in consumer products and media rights.
Adjusted OIBDA increased 34%, primarily due to the growth in revenue, partially offset by higher event related costs, including the production of our premium live events, most notably Wrestlemania.
As a result of our performance through the first half of the year, we raised our guidance for the full year.
I'll touch on the outlook for the third quarter and full year in more detail later in my remarks.
During the second quarter, we had strong performance across each of our business segments on.
On page four of our presentation, we detail our business performance in the quarter, which shows revenue operating income and adjusted OIBDA contribution by segment as compared to the prior year quarter.
Looking at our media segment on page five adjusted OIBDA increased 5% on 4% revenue growth.
Core content rights fees increased primarily due to the contractual escalation of domestic right fees from our from the distribution of our flagship shows raw and Smackdown, and international core content rights fees also increased primarily as a result of our recently announced a deal.
Network revenue increased primarily due to higher domestic network revenue related to the Peacock agreement.
During the second quarter, we revise the premium live events calendar to include an additional event in the fourth quarter of this year.
This change resulted in the deferral of approximately $6 million of revenue from the second quarter until later this year.
The growth in revenue was partially offset by higher operating expenses the.
The increase in expenses were primarily which was primarily related to the creation of our content, including the staging of Wrestlemania.
Division production costs for our weekly in ring content also declined as a reminder, we produced this content in the WWE Thunder dome at Tropicana field and the Yngling center in the prior year period, which was more expensive than our regulatory schedule.
Now, let's turn to our live events business as shown on page six of our presentation.
Adjusted OIBDA from our live events improved $13 million based on a 13 $32 million increase in revenue with a return to live inventory.
During the second quarter, we continued to experience strong demand for our live events.
We held 59 total events with 55% in North America, and foreign International markets average attendance in North America was approximately 6800.
We returned to full capacity at tenants for Wrestlemania contributed to both the increase in revenue as well as the average attendance.
In our consumer products segment page seven of our presentation, adjusted OIBDA increased 96% or $8 million on 96% or $22 million revenue growth.
The results were primarily attributable to continued strong performance from our franchise video game WWE <unk> 'twenty, two as well as increased sales of trading cards in other collectibles.
The new merchandise revenue also increased as did ecommerce sales the.
The increase in ecommerce sales was primarily driven by the sale of existing merchandise inventory to fanatics in connection with the launch of the new digital platform.
As we previously disclosed a special committee consisting of the independent members of the board of directors has been conducting an investigation into alleged misconduct by Vince Mcmahon, who has resigned in another executive who has left the company.
The investigation is substantially complete and based on certain findings during the investigation. The company has revised its previously issued financial statements. The revised financial statements reflect unrecorded expenses for payments made personally by Vince Mcmahon totaling $19 $6 million from 2006 to 2022.
Payments had no cash impact on our business level recorded since they were paid by our principal shareholder and were deemed to have provided a benefit to the company.
Our second quarter results include a $1 7 million expense associated with certain cost the company has incurred related to the investigation.
Going forward, we expect to incur additional costs related to the investigation.
Vince Mcmahon has agreed to pay the $1 7 million of expenses incurred to date and additional reasonable expenses of the investigation not covered by insurance.
Now, let's turn to Wwe's capital structure is shown on slide eight of the presentation.
In the second quarter, we generated $10 million in free cash flow as compared to $13 million in the prior year period.
The decrease was due to higher capital expenditures related to the company's new headquarter facility.
In the second quarter, we incurred $47 million of capital expenditures $40 million of which were related to the new headquarters.
Excluding the new HQ Capex free cash flow would have been $50 million in the quarter or a conversion rate of 55% of adjusted OIBDA.
The company also received $11 million in the second quarter and $13 million through the first six months of the year and tenant improvement allowances for the headquarter facility.
These amounts reduced our overall cash outlay for the project. They are not included in our free cash flow calculation.
During the quarter, we returned $19 million of capital to shareholders, consisting of $10 million in share repurchases and $9 million and dividends paid our share repurchase activity in the quarter was limited, reflecting regulatory and legal requirements related to the investigation as well as market conditions.
To date, we repurchased approximately $5 3 million shares for a cost of $289 million and have $211 million available under our $500 million repurchase program authorization.
As of June 30, WWE held approximately $444 million in cash and short term investments that totaled $235 million, including $214 million associated with the carrying value of our convertible notes, we have no amounts outstanding under our $200 million revolving line of credit.
Our current and projected liquidity remains strong and we continue to evaluate our capital structure and financing strategy for opportunities to lower our cost of capital and increase shareholder value.
Looking ahead, we've raised our outlook for the full year adjusted OIBDA. We are now targeting a range of 370 to 385 million, which represents an increase of 14% to 19% from 2021.
This compares to the original range that was provided in February of $360 million to $375 million.
Our results through the first six months of the year had been ahead of our projections coming into the year in particular improved licensing sales, including video games as well as lower business and production expenses contributed to our outperformance.
The initiatives that could have implications for ww's performance for the remainder of 2022 include the continuing execution of our live event touring schedule, including our stadium strategy for Wpz's premium live events additional monetization of new original series the <unk>.
Licensing overall second window rights additional licensing of WWE network in international markets and sponsorship channel sales.
We are closely monitoring the trends in our business is our outlook is subject to certain macroeconomic risk over the remainder of the year in particular potential impacts on consumer spending as we discussed on our last earnings call. We've seen some pressure on expenses, primarily related to labor delivered cost of merchandise and diesel fuel.
To date, we've been able to manage these costs and largely offset the impact with other cost savings and efficiencies.
At this point is unclear what impact slowdown in the economy and changes in consumer spending may have on our non contractual areas of business such as live events and merchandise revenue going forward.
As appropriate we will make adjustments to our business to address any potential impact on our operations.
As for the third quarter of 2022, we're targeting adjusted OIBDA in the range of $70 million to $80 million.
Estimate reflects strong year over year revenue growth from the contractual escalation of domestic media rights fees for the Companys flagship programs and premium events as well as the benefit of ticket sales from class at the castle, our premium live event in Cardiff Wales and increased monetization of content.
We also anticipate that third quarter results will reflect an increase in operating expenses.
In conclusion, WWE generated strong second quarter results that reflected robust demand for our events and increased consumption of our programming content across platforms.
We believe our long term outlook is supported by the rising value of live sports content increased spend by streaming platforms on live and sports content to acquire and retain customers increasing brand spend with media companies that deliver reach and fan engagement and increasing premium for celebrities and compelling content fueling new IP monetization opportunities in the <unk>.
Growth of media and entertainment in international markets.
Looking ahead, we believe that WWE remains well positioned to take advantage of significant growth opportunities. These include increasing the production and monetization of content leveraging our celebrity talented world class production capability to fuel new content and product offerings and capitalizing on our global expanding global audience to support growth across all of our.
This launch we look forward to updating you on the progress of these initiatives in the coming quarters.
That concludes our remarks, and I will now turn it back to Jeff.
Thank you Frank.
Operator, we're ready for Q&A. Please open the lines.
Thank you once again, if you would like to ask an audio question. Please press star one to cancel this request. Please press star two if you would like to ask a question via the web and simply type. Your question in the ask a question box and click send.
Our first question is from Eric handler from <unk>.
And partners. Please go ahead.
Good morning, and thank you for the question two questions for you first.
With regards to the second window rights to raw.
Wondering since you have.
Negotiations coming up next year.
Rod Smack that are you better off waiting.
On.
Good day to rates and make that a part of.
The next raw and Smackdown television contract.
And I'll follow up after that.
Thanks, Derrick, it's Nick I'll answer that if that's okay with you.
Yes, it's something that we talk about all the time, it's a delicate balance of monetizing the content short term versus making sure. It's monetize long term. So it's absolutely something that's top of mind.
One that we are discussing and we'll figure out.
Great and then secondly.
I thought it was interesting that you are.
Year over year advertising and sponsorship revenue was down in the second quarter, even though Russell maybe there was a bigger event.
This year, just coming out of the pandemic I'm wondering if you could sort of give an update on whats going on in with sponsorships and what youre seeing with the <unk>.
<unk> of contracts and the size of those contracts.
We've seen an increase hi. This is Jeff. Thank you for the question we have seen an increase in the number of partners that we have Brian on.
The partners that we do have are continuing to do business with us for greater return.
And we do project growth throughout the year, though not a ton of growth. This is a slow going process, a little bit and we.
We are committed and believe in the $100 million number that we've thrown out before but for this year all of our guidance is baked in we are tracking towards our guidance and sales and sponsorship and holding steady we had a bit of a hold and given the current situation, but a lot of positive momentum behind.
And that we are now picking up once again.
And we did see Summerslam increase year over year about 40% of revenue growth in sponsorship.
So again positive momentum there and still more to come on sales and sponsorship.
Thank you very much.
Our next question comes from.
David.
<unk> from Jpmorgan. Please go ahead.
Alright, Thank you, maybe one for Nick or Stephanie.
The mayor of Dallas recently stated that Wrestlemania had over $200 million positive impact on the city and I guess, just given the economic benefit that youre, creating do you see opportunity to extract more value from your major events.
Either a competitive bidding process or getting municipalities to at least kind of help defray some of your cost of staging is.
Absolutely.
Not just for Russell Mania for a number of our premium live events.
That is the case and caught up where we did receive a subsidy. So in addition to the strong ticket sales there there will be a subsidy on top of that we're looking to replicate that for our major events moving forward.
And then Nick just a follow up on your <unk> comments.
So we've seen some recent organization's recently or at least reportedly.
Turned down more money from streamers in order to kind of maintain distribution and promotional resources.
Maybe get with traditional media companies and we recognize that doesn't mean that the step ups and those businesses are small but wanted to see how you think about kind of balancing reach and value for raw and Smackdown. As you go into the next negotiation.
It's always important to us that the access to the content is easy. So if you look at our current U S situation, we have a broadcast deal with Fox basic cable deal with raw streaming deal with our premium live events and Peacock, we'd like that balance because it allowed us to test it out while certainly peacock, we're still new in streaming was getting.
<unk> to.
To become the norm rather than the exception. So it's something we looked at often we thought formula one was smart for whatever that's worth and sticking with their incumbent in passing on a little bit more money to take a test for streaming only option.
We will see it all comes down to the dollars and value to the shareholders. So depending on what the marketplace says, we'll take it all into consideration.
Great. Thank you.
We will take our next question from Brandon Ross from <unk> Partners. Please go ahead.
Hey, Thanks for taking the questions I have one for Paul and one for Steph.
First for Paul as head of creative what opportunity do you see the refresh and improve the product and what changes should fans and investors look for as.
Your product evolves over the coming months.
Thanks for the question Brandon.
I think the opportunity in front of US is massive and is a great man. Once told me first day on the job shrinking and Thats.
What we're doing here is first day on the job thinking for me I've been doing this for a long time from a behind the scenes of creative.
Since really almost the very beginning of my career here with WWE, but im approaching it from a first day what is working what isn't working.
From the overall picture all the way down to the smallest of the details and really trying to create from there. It all comes down to the same thing.
That it has come down to since the beginning is creating iconic characters putting them in amazing storylines and fantastical storylines and whatever works for those characters the best.
And then running with it and watching how fans react to that along the way so.
The opportunity is massive I think it's an opportunity for us too.
Not only engage with the stores that we have across our fan for our fans, but to create new stores as well.
Create the platform and the opportunity for them to become bigger than.
Anything we've seen prior to it.
Thank you and then Beth.
You ended your prepared remarks, saying you're committed to WWE.
Mike you had just begun to leave of absence and workforce back into the company.
When he came back as co CEO .
Can you just tell investors whether being co CEO is what you want for the long term and how important is it to you personally to continue your family's legacy.
Thank you.
I have worked in WWE since I have been about eight years old modeling Merchandised for then catalog and in any variety of capacities. My parents couldn't afford a nanny when we are bringing up the business. So on weekends I was sitting with our receptionist at headquarters.
Worked my entire life for this business I Love. This business I took a leave of absence, realizing and that I needed a little bit of time with my family given the drilling schedule in nature and I got about three weeks, which is more than a lot of other folks to get them.
And I was not forced into returning.
Is the CEO and chairman and the interim position I offered and that was an opportunity for me to come back and be a part of this company that I love and have the opportunity to lead this company.
It is.
This business is something I believe in Q linked quarter, I believe and the impact that we make on People's lives not only growing the business, which I believe we have so many different opportunities to do has been laid out and by all of US here speaking today, but because of the impact that we make we truly bringing people together for generations from all.
All over the world with all different backgrounds, we give them relief, we give them entertainment, we give them an opportunity to come together that is very rare and unusual and special and whatever we can do to continue to deliver on that promise is what we want to do now that being said and I understand your remark.
And I think I'm reading between the lines.
Suddenly.
Sure Brandon.
But that being said Vince Mcmahon My father is still very much the controlling shareholder.
He is still has his eyes on what is the best for our business in terms of maximizing return to our shareholders of which he is the biggest shareholder next Paul Frank and I remain.
Focused on delivering the maximum results for our shareholders. So we will properly evaluate any opportunity that comes our way with that lens in mind.
Thank you your next career could be as an analyst good job reading.
Yes.
[laughter] Thanks Scott.
Your next question will come from Steven Cahall from Wells Fargo. Please go ahead.
Yes.
Thanks, Nick Thanks for the commentary about content rights and streaming I think there is no doubt as you say that the streaming market continues to get more crowded with buyers and.
I think a lot of those bidders like Netflix and Apple and Amazon, they're probably going to be looking at streaming only I doubt you disagree with that but they're not looking to take on linear rights I think you've still got the second day rights on Peacock for raw and smack down. So I'm just wondering how youre thinking about kind of transitioning those rights into something that's more of a streaming.
Package and linear package and is the way you kind of look at the world that if you do that you'll be able to maximize that streaming value, but it may come with a little bit of devaluation of linear since it may not be live and exclusive anymore as it's on but the net net comes out ahead. So just wondering if I'm if I'm thinking about that.
Correctly, and then secondly, with the event in Cardiff should we think about that Frank is being as profitable as what you've traditionally done in Saudi Arabia, and do you have an appetite for doing even more than three international events a year going forward. Thank you.
Thanks, Steve on the right side for US number one most important in the U S. Our incumbent partners Fox and obviously NBC you NBC you an encompassing peacock. So we always go to them, we always talk to them first about anything going on obviously Fox is big bet to be aside is that broad.
Cast is here to stay if you look at the ratings across the board.
On network live continues to deliver it also delivers on streaming as we all know even that MLS deal, we thought months ago internally that the lacrosse deal that Disney did with I think it's called PLL.
That deal would sort of preclude MLS is re upping with Disney because the content tonnage had been replace at a far lesser price point, so apples saw that opportunity as well they paid I believe it was three X or so to get those rights with again some of the content being sublet.
Since to linear so we don't see it as a binary thing we see it as a thing where you can do both unless someone of course comes in and says we want those rights exclusively and we want them just on the streaming platform as you finally saw Amazon do with the NFL, obviously getting it a season early from Fox. So we're bullish on it.
We think theres a lot to unpack and we think that we're in the middle of a backing it.
So Steve on your second question with respect to the profitability of the premium live events, specifically card of <unk>.
Excluding media rights that we assigned to those events.
We're expecting cargo to be.
Very profitable on a relative basis, not quite as profitable as wrestlemania, but very profitable because of the subsidy that were receiving and it's also we're planning that it will be a sold out event.
And so we have started tracking all of these premium live events and looking at their contribution on their own to the bottom line and can say that we've dramatically improved the profitability of those premium live events because of the stadium approach, but also because venue merchandise as Nick mentioned in his comments has become a lot more we've done a lot more effective job.
So for example at Summerslam year over year venue merchandise was up 20% on a per cap basis. It was up over 40% and so by going to those very targeted premium live events with better ticketing larger audiences.
Larger to take larger ticket sales and enhancing the venue merchandise they become a lot more profitable and thats a very specific strategy that we're following.
Great. Thank you.
Thank you.
Thank you. Our next question from Alan Gould from Loop capital markets. Please go ahead.
Yes, thanks for taking the question most of them but.
But to Frank can you tell us where we stand on in terms of the headquarter capital expenditures.
How much is left this year, how much will be done next year and secondly can you give us some idea of how many international events, we should see this year.
So on the headquarters.
The total numbers for the spending hasn't changed we're looking at a total cost I think as we said publicly between 270 and $300 million.
Now there are some offsets to that in terms of.
Tenant improvement allowance tax credits proceeds from sale. So the net cost will be.
Lower than that I would say your year to date, we're about.
For the for year to date were about $60 million of that or so.
By the end of the year, we should be probably 75% to 80% through with the remainder comment coming in the first quarter.
Yes.
On live events International live events, Yes, we're looking at more expanding the touring of international live events and premium live events.
There's been discussion about adding another premium live event, we haven't made a decision on that internationally, but continue to see.
<unk> to do that.
Our even our weekly shows that have gone over.
To Europe . This year have been sold out <unk> been very successful in Germany, and France. So we're seeing continued opportunity there.
I would expect that you'll see it expand.
Thank you.
We will take our next question from David Joyce from Barclays. Please go ahead.
Thank you.
Please.
Drill down a little further on the global TV viewership, obviously in the U S.
<unk>.
On broadcast or cable, it's been stable in the cord cutting environments that would imply some pricing power you will have in renewals, but globally.
Are there some markets that you could point to with improving viewership trends and also while you alluded to.
Licensing opportunities.
Incremental markets should we think about.
That could be additive to your global media rates. Thanks.
Dave This is Nick David Thanks for that a couple of things ratings in the UK very very strong. It's one of the reasons that we're doing the curve show. So we could have a local U K premium live events stadium events for our fans there, which we also will think will increased viewership coming into it and going out of it.
In India, we remains the second most popular sport granted a distant second after cricket, but the second most popular sport in the country in Australia, We continued to register in a meaningful way.
And I would suggest we have a longstanding deal with Sony in India and the other two territories WWE network still agnostic.
Look for some developments there those are two of the many that we're focused on.
Sure.
Alright, thank you.
Thank you.
Operator, we'll take one last question please.
We will take our final question from Vasily <unk> from column born Cannonball Research. Please go ahead.
Thank you good morning, I had a couple of big picture questions first of all can.
Can you tell us.
In your experience how does your business.
Recession, we had blended planted but that was not.
Typical so what time the lions rather than rely on some cost lines, where we have been watching to see if you are getting impacted and.
The second question is what is the team's philosophy in terms of cost increases.
That would coincide I'm not coincide with the Reits.
Seasonal increases do you.
Did you have a philosophy of expanding margins and the media segment or do you think that yes, I'd say that those increases.
With the talent.
<unk> pulled back some bellus product. Thank you.
So with respect to the recession impact.
Probably the most analogous recession and we looked at in terms of the impact on the business would be the 2008.
Timeframe.
Just caution you that.
Analyzing that.
Time frame and the impact on the business the mix of our business was very different back then at that point in time.
About 30% of our business was contractual and 70% was.
More trends towards more of a transactional business related to live events and merchandise.
And as our profit expanded through the media deals and the ml and the network our mix of business has shifted the other way around where now 70% contractual and 30% transactional. So it may not be totally analogous but to answer the question directly yes. There is some there will be some there had been historically when you look.
At previous recessions and impact with a lag of six to 12 months.
Because of the downturn in consumer spending in a recessionary.
Environment, where we saw some some some downturns on the order of magnitude of 30% or so on the revenue lines.
And now I think the impact.
We have in this recession, if we are truly in a recession. So far we haven't seen any impact.
We might get an impact with the lag as we discussed at the recession continues but I think the overall impact even though those line items might be affected would be lower because of the mix of our business. So but the lines that are affected.
Typically our ticket revenue from live events merchandise revenue shop revenue.
Anything that is more of a transactional nature.
Including <unk>.
<unk> sales and things like that.
With respect to margins on on.
Expansion of domestic media rights, whether it be for streaming or four.
The TV shows no.
We try to manage so that we can grow margins over time, obviously, the incremental margin on expansion of rights fees as large for us and.
We track that of course, we have to manage talent expense against that and maintain.
The quality of the show and the breadth of talent to keep the rights fees going up but we would expect the margins and we try to plan our expense base, so that as our domestic rights fees go up our margins expand in the media section.
Thank you.
Well. Thank you everyone for joining us today, we appreciate your interest and WWE <unk>.
Operator, you can now conclude the call.
Thank you that will conclude today's conference call. Thank you for your participation ladies and gentlemen, you may now disconnect.
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