Q3 2022 World Wrestling Entertainment Inc Earnings Call

Please standby we're about to begin.

Hello, and welcome to W. W. E third quarter earnings Conference call, there will be a question and answer session.

At that time, if you like to ask a question. Please signal by pressing star one on your telephone keypad.

I would now like to turn the call over to Seth Zaslow with SVP and head of Investor Relations. Please go ahead Sir.

Thank you and good afternoon, everyone.

Welcome to Wwe's third quarter 2022 earnings conference call leading.

Leading today's discussion are Stephanie Mcmahon Wwe's chairwoman as co CEO , Nick Con Wwe's co CEO Paula back Wwe's, Chief content Officer, and Frank Riddick, Wwe's, President and Chief Financial Officer.

<unk> will be followed by a Q&A session.

We issued our earnings release about an hour ago 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 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, 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.

As a reminder, today's conference call is being recorded and a replay will be available on our website.

I'd now like to turn the call over to Stephanie.

Thank you Seth and thank you all for joining our Q3 was another record setting quarter for our third quarter generating 305 million in revenue and adjusted OIBDA of 91 million, representing increases of 19% and 17% respectively year over year and we remain.

Solidly on track to deliver record revenue and adjusted OIBDA for the full year.

As a backdrop to the strong financial performance for the quarter the renewed energy around our creative has boosted viewership across platforms in a world of declining TV ratings WWE is growing.

Monday night raw on USA network is up almost 5% year over year, while the top 25 cable networks are down 12% Smackdown on Fox is up 1%, while broadcast networks are down over 15% year over year in fact Smackdown regularly attracts.

Over 2 million viewers and ranks number one in the coveted 18 to 49 demo among all Friday night broadcast programs.

Just before the close of Q3 the September 23rd episode of Smackdown saw its biggest audience since 2020.

That rating in particular is directly attributable to a first of its kind multimedia campaign called the White Rabbit project, which was designed to engage and intrigued viewers. There is series of clues in Qs using a myriad of platforms and technology, one of which led to smack.

Down on September 23rd as a destination, our chief content Officer, Paula Vac will speak more to this in a moment.

Year to date viewership of our premium live events on Peacock is up 38% for the same period in 2021.

One notable highlight being clash at the castle, our first returned to a stadium show in the U K in 30 years, becoming of Wwe's. Most viewed international events in both the U S on Peacock and in the U K with a 39% increase in viewership year over year.

In fact clash became the highest grossing European event setting records for merchandise and ticket sales because of strong IP and better storytelling drive all lines of business.

In Q3, we also saw the successful relaunch of WWE shop in partnership with fanatics as we head into the holiday shopping season fanatics plans to scale, the WWE product offering by 25% compared to last year.

And our partnership with Panini has been significantly delivering above plan.

This success is in large part due to a focused effort to weave product into storyline and take a fresh approach with partners opening doors that had previously been closed take our partnership with Major League Baseball for example, as we discussed on our prior call WWE has been creating customized championship title.

For MLB teams, we expedited the production and distribution of the Yankees titles in response to the excitement around Aaron Judge is then chase for the home run record orders were placed by Yankee Stadium as well as fanatics and we instantly sold through the initial inventory.

We also remain bullish on sales and sponsorship while current market conditions have impacted our results. This year, we already have some exciting deals in place that make us optimistic about our performance in 2023.

Speaking of the future Nick Paul Frank and I are excited about the opportunities ahead with a focus across five key areas of course, the escalation of our media rights and content.

International P. CS in the local globalization of the IP across multiple lines of business.

Monetization of our intellectual property, including brand moats around our superstars.

Digital and web three and whatever the meta first become.

And potential M&A that aligns with our core competencies.

We are just getting started and we look forward to sharing more as we fully develop our plan and with that I will turn the call over to my co CEO Nick curve.

Okay.

Thanks, Steph and thank you everyone for joining the call.

Steph said, it's been another strong growth quarter for us in our live events segment as a key driver for that growth.

October extreme rules also set records as the highest grossing extreme rules of all time, we saw strong ticket sales throughout but sales started to spike when all of that and the creative teams White Rabbit project began which Paul will discuss later in this call.

Looking ahead to 2023 in January we had the San Antonio for the Royal Rumble. This Royal Rumble ticket sales have already surpassed the ticket sales of our second highest grossing royal Rumble of all time, which was this past January as Rumble in St. Louis.

In terms of ticket sales for San Antonio to date, we have a gross gate revenue exceeding $4 $6 million, which puts us on track to make Royal Rumble 2023, our highest grossing rumble in WWE history.

Come February we will stage another international premium live events with elimination chamber, taking place at the Bell Center in Montreal.

This will be the first premium live event in Montreal in 14 years.

The clash of the castle, we expect there to be high demand.

For Wrestlemania 39, which will occur across two nights at Sofia Stadium in Los Angeles on April 1st and second 2023, we have sold almost a 100000 tickets already without one match or person being announced.

We expect to have a sold out stadium for both nights.

In addition to what Steph mentioned regarding flash at the Castle. We also work closely with the Cordis Tourism Board and the local government to see.

A cure a slight fee for the event.

That multibillion dollar commitment added to the amazing economics of the event.

Our live events have proven to be a boon to the local economy of the cities we visit shortly.

Shortly after Wrestlemania 38, this past April Dallas Mayor, Eric Johnson in Arlington Mayor, Jim Ross announced that Wrestlemania had over a $200 million economic impact on the Dallas in Arlington regions.

Look for more of US excuse me look for more from us in the slight fee space, a new financial opportunity for US we're in active conversations with other local governments and tourism boards about future events.

Turning to our media segment and international we've closed a number of deals since our last call in September we expanded Wwe's rights deals with our friends at Newscorp, when we struck a new agreement with Fox fell in Australia.

<unk> to our live shows will stay with Fox self pay TV channel Fox <unk> and.

And Fox Co General Entertainment streaming service binge will become the home of WWE network in the region just as Peacock is here in the United States.

As part of the new deal, we will distribute primetime replays of our biggest premium live events on Fox eight and debut a new $24 seven WWE linear channel on Fox.

In addition, we recently closed the deal with <unk> communications, the leading telco provider in the Caribbean for distribution of WWE content on their pay TV service flow TV.

The partnership will also expand our footprint by bringing WWE content to feed the <unk> streaming service for the first time.

And today, we're pleased to announce yet another international rights deal in sub Saharan Africa, we have extended and grown our deal with multi choice group.

WWE content will continue to be available on its super sport linear service, but our move to expand our footprint content will now be available on multi choices market, leading sports and entertainment streaming platform show Max.

Youll also involves the introduction of new localize WWE content, starting with content creation around the WWE talent search in Africa.

Beginning next week, we will have members of the WWE talent recruiting team traveling to Nigeria to start the search.

Debut on Netflix in Q1 20 twenty-three we're.

We're pleased to be partnered with Netflix and expand our international footprint with this original.

Also in 2000 twenty-three WWE studios will premiere a new series on Hulu, featuring Superstars, Bianca Bel Air and Montes for it.

The eight episodes first season is currently in production.

We are also pleased to be doing more business with our friends at Disney and Hulu, where we also recently extended our raw rare wrightsville.

We also continue to see success at any with four different original series biography WWE Legends, most wanted treasures WWE rivals and smack talk bichon.

These shows are delivering a 15% increase in ratings year over year for the time slot.

As you know from previous calls.

We are confident as ever and the WWE product as we head into the next round of media rights negotiations, the marketplaces hungry and willing to pay a premium for life content and.

And a step detailed at the top of his call, we're seeing increased viewership across all of our content.

Taken together the robust marketplace and our strong ratings. We believe we are well positioned as we begin our U S media rights talks next year.

All of US here were also watching closely this quarter as Amazon began its partnership with the NFL through Thursday night football.

We witnessed firsthand in March 2021, when we moved that WWE network to Peacock at a dedicated audience will migrate to a new platform.

Two months into the Amazon NFL partnership we're seeing success for that partnership in the audience shifting to streaming as we know the debut game delivered the highest state ever in prime sign ups in the company's history, providing an immediate surge to Amazon sub base the.

The Prime games are also delivering a higher number of 18 to 49 year olds compared to packages previously, making it more attractive to advertisers.

What we're seeing now is sports shift into streaming is a duplication of the dual revenue stream cable model that may traditional sports network. So valuable healthy subscription fee coupled with the mass audience that is attractive to advertisers as we know this audience will continue to grow over time driving more.

Revenue in higher Cpm's as for the industry, leading NFL, let's I'll see a Sunday ticket brings even another new buyer into the marketplace.

In the traditional players continue to spend big to compete as well.

That's what we saw this past weekend with the new Big 12 deal.

Fox and ESPN are paying a 70 per cent increase the spices. Despite the conference, losing Texas and Oklahoma, That's the power of live.

This marketplace and our performance gives us confidence heading into 2023 with that I'd like to hand, the call over to Paul Triple H Love that.

[noise] Thanks, Nick.

As step mentioned at the top of the call, we're seeing strong viewership numbers across all of our programming.

Creative is working in the storytelling is resonating with our fans.

On the television viewership and streaming we're seeing growth across all of our social channels and.

Q3, WWE at the most social video views of any major sports leagues in fact, WWE outpaced the number two sports league by more than two times. Additionally.

Additionally, we beat our own internal records for video views in July or WWE Instagram page at the highest video views and the history of the account and August are WWE Twitter account set a record for all time views on the page.

The performance as a result of evolving with our platforms, we're seeing more engagement longer watch tides and of course <unk>.

Increased ad revenue.

Youtube Tictoc, both maintain their already strong positions.

WWE remains the eighth most subscribed channel on Youtube with 91 million subscribers.

And the quarter, our channels surpassed 70 billion lifetime views, making it only the seventh channel and history of Youtube to do so.

And on Tictoc, we remain the number one most followed sports league on the platform sitting ahead of the NFL NBA and UFC by millions.

As both Mick and step mentioned before one specific initiative, where we saw success on the social.

On social and that led to linear viewing success as well as what we internally called the White Rabbit project, a multi week long campaign that played out across television social and in arenas.

We started the campaign by introducing moments into our live events and arenas with no mention of our direct digital or social or linear platforms. We let our fans discuss it amongst themselves and try to figure out what was going on.

We then started to we even more elaborate elements, including QR codes with in episodes of Smackdown, and raw and when they went to those QR codes. It led viewers to more clues like interactive games and puzzles that they had to figure out. It would also lead them to cryptic messages to decipher that literally.

<unk> led you further down the rabbit hole.

The buzz and excitement continued to increase as we move forward the QR codes and links leading to the September 23rd Smackdown drove viewership during the nine PM hour by 20% alone as viewers turned in from tuned in to see the campaign.

This was the most watched episode of Smackdown since March of 2020 <unk>.

Project would culminate by leading you too extreme rules and the incredible return of one of our biggest superstars Bray Wyatt.

Very why it's returned it extreme rules resulted in a 30% increase in total viewership and became the most watch extreme rules in history.

The <expletive> just two nights later also benefited increasing our audience to nearly $2 million up 14%. We go over week against stiff competition or Monday night football and the voice.

The campaign also drove sales on our consumer product team.

On the day Abrase return his newly released t-shirt from extreme rules became the top selling item not just among WWE merchandise, but across fanatics entire network of E Commerce sites.

The WWE White Rabbit project is a perfect example of how we can use multimedia approach to drive engagement excitement and ultimately revenue.

Look for us to do more of the strategic creative Sunset extend storyline to different platforms and are executed beyond just our traditional television windows.

WWE truly is 24 seven programming.

As we continue to find new ways to promote established superstars like gray white, whereas equally focused on creating a pipeline for the next generation of superstars as well.

In October we announced WWE campus Rush Ah multi campus College athlete recruitment tour, which will visit top N C. Double a division one universities and search for new talent. The program consists of visiting eight schools. This fall and several more already scheduled for this spring with involvement from colleges.

Across all of the power five conferences.

At each stop on the tour students App student athletes will hear about all of the amazing opportunities that WWE can offer to them whether in ring or out opportunities like Wwe's NIH program that they can utilize including brand building social media fan engagement and media training.

We expect to see more D. One athletes start moving through our developmental system over the next year.

You've heard about our established stars and the and the stars of the future, but the increased excitement around wwe's creative and the WWE in general are opening more and more opportunities than ever to engage with celebrities from outside of the WWE universe, helping us to bring in new fans.

Unexampled this Saturday, we will be in Riyadh, Saudi Arabia for Crown Jewel, where one of the world's most famous Influencers Logan Paul will face off against the tribal Chief Roman rains undoubtedly Roman we'll have the entire bloodline with them, which would make one wonder if Logan will have is very famous brother.

<unk> <unk>, Paul fresh off his win against Anderson Silva in his corner to help even the odds.

That will set us up nicely to round out of the year with this year's Survivor series, becoming Survivor series War games from TD Garden in Boston, which has our fans very excited and speaking of excitement no. One is more excited about war games that our president and CFO Frank Riddick.

Thank you Paul.

His staff and Nick highlighted we had another strong quarter.

Turning to slide three of our presentation and the third quarter, we generated revenue of $305 million and adjusted a web of $91 million, which exceeded the high end of our guidance.

Revenue increased 19% and adjusted OMD increased 17% year over year.

As a result of our performance through the first nine months of the year. We now expect full year 2022, adjusted or whether it to be at the upper end of the range of $370 million to $385 million.

I'll touch on the outlook for the fourth quarter in more detail later in my remarks.

On page four of our presentation, we detail our business performance in the quarter, which shows revenue operating income and adjust nowhere contribution by segment as compared to the prior year quarter. During the third quarter, we had strong performance across our businesses as each of our three reporting segments reported double digit revenue growth.

Looking at our meeting a segment on page five adjusted OIBDA increased 10% on 15% revenue growth core content rights fees increased due to the contractual escalation of domestic right fees from the distribution of our flagship shows raw and Smackdown.

The timing of the calendar. We also are in an additional episodes smack down in the current year.

International core content rights fees increased primarily as a result of the mean a deal that we entered into earlier in the year.

Network revenue increase primarily due to higher domestic revenue related to our agreement with Peacock.

Other media revenue increase due to the delivery of third party original programming to any in connection with our ongoing partnership.

Advertising and sponsorship revenue declined due to our decision to exit a third party partnership in the audio space. This decision had a 3 million dollar unfavourable impact on our results in the quarter and we are currently working on a new deal with another third party.

The growth in revenue was partially offset by higher operating expenses the.

The increase in expenses.

Was primarily related to an increase in third party original programming and higher content related costs.

As a reminder, we resumed regular touring schedule in July 2021, and therefore, the television production costs for our weekly entering content, Ron Smackdown were relatively flat year over year.

Now, let's turn to our live event business is shown on page six of our presentation.

Justin Webb from our live events was $10 million on revenue of $35 million.

During the third quarter, we continued to experience strong demand for our alive events. We held 58 total events 57 in North America, and one international event average.

<unk> average attendance in North America was approximately 6300 <unk>.

<unk> attendance was down year over year as the prior year period reflected pent up consumer demand as well as a higher mix of larger capacity venues.

International ticket sales increased due to the staging of a major stadium event clash at the castle in the current year.

Moving to our consumer product segment on page seven adjusted or we have more than doubled to $19 million.

45% are $11 million in revenue growth.

During the quarter, we recorded approximately $10 million in revenue, primarily as a result of a revision to our estimates related to revenue recognition for certain licensing agreements with minimum guarantees.

Prior to the change in estimates, we expect to wreck, we expected to recognize approximately $9 million. This amount in the fourth quarter, which will be negatively impacted by this amount.

Then you merchandise revenue increase primarily due to an increase in total events.

E Commerce sales declined primarily due to the transition of our digital platform to fanatics, while we remain very positive about the fanatics relationship and expect the fanatics performance to be additives to adjust the web dot the.

The structure of the partnership resulting in reduction of revenue as we record the activity on a net as opposed to gross basis.

As we've previously disclosed a special committee consisting of the independent members of the board of Directors was formed to conduct an investigation into alleged misconduct by Vince Mcmahon, who has resigned in another executive who is less the company.

The Special Committee investigation is now complete and the special Committee has been disbanded manner.

Management is working with the board to implement the recommendations and the special committee related to the investigation.

Our third quarter results include an 18 million dollar expense associated with the cost the company has incurred related to the investigation, which has been excluded from adjusted or we have done.

Going forward, we expect to incur additional costs related to the investigation as.

As we previously disclosed Mister Mcmahon has agreed to pay the reasonable costs of the investigation not covered by insurance.

Now, let's turn at W. E's capital structure is shown on slide eight of the presentation.

And the third quarter, we generated $4 million in free cash flow as compared to $45 million in the prior year period.

Did decreet decrease was due to higher capital expenditures related to the company's new headquarters facility.

And the third quarter, we incurred $51 million of capital expenditures $42 million of which related to the our new headquarters <unk>.

Excluding the new HQ Capex free cash flow would've been $46 million in the quarter or a conversion rate of 50% of adjusted a web dot <unk>.

Year to date, we've spent approximately $97 million on the new H key project and currently anticipate approximately $180 million to $195 million in full year spending on the project.

The company also received $14 million in third quarter in 2000 $7 million through the first nine months of the year related to tenant improvement reimbursements for the headquarter facility.

Excuse me, while these amounts reduce our overall cash outlay for the project. They are not included in our free cash flow calculation.

During the quarter, we returned 9 million of capital to shareholders through dividend payments, we did not repurchase any shares in the quarter due to regulatory and legal requirements related to the investigation.

To date, we repurchased approximately 5.3 million shares for $289 million and have $211 million available under our $500 million repurchase program authorization.

Going forward, we expect to remain opportunistic and our share repurchases we.

We will continue to evaluate various factors such as our stock price financial market conditions regulatory matters and.

In our estimate of the intrinsic value of our stock when determining our level of activity.

As of September 30, WWE held approximately $441 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 in financing strategy for opportunities to lower our cost of capital and increase shareholder value.

Turning to our outlook from full year adjusted a web in February we originally provided a range of $360 million to $375 million in August we raised that range to 370 to 385, we are now targeting the upper end of the range of $370 million to $385 million. We are pleased with our results for the first nine months of the year.

<unk> remained firmly on track to deliver record revenue and adjusted for the full year.

As for the fourth quarter of 2022, we're targeting adjusted a web dot in the range of $83 million to $90 million.

The estimate reflects a year over year revenue growth, primarily from an unexpected increase in domestic media rights fees for the company's premium events as well as the increased monetization of third party programming.

This revenue growth is expected to be partially offset by negative.

By the negative impact related to the timing of consumer product licensing revenue for certain agreements with minimum guarantees that I discussed earlier in my remarks, as well as the timing of the airing of the company's flagship weekly programming in particular, Smackdown, which is scheduled to air one less episode as compared to the prior year period.

We also anticipate that fourth quarter results will reflect an increase in operating expenses as we continue to invest in the creation of our content.

As we've previously disclosed our agreement with Hulu for the raw <unk> expired at the end of September .

In our discussions with Hulu about extending the relationship we expressed our desire to align the timing of the rights and windows for our current for our content. So as to best position WWE for the upcoming renewal discussions in 2023 as a result, we entered into a short term extension that we believe balances desires of both sides. We're pleased with the outcome.

But it will create a modest headwind and our financials for fourth quarter and for 2023.

As for 2023, we're currently in the middle of our annual operating plan process and expect to provide a more fulsome update on our next earnings call given the importance of the U S media renewals for raw and Smackdown, We do expect to continue to invest in the creation of our content to best position in the business for long term.

We're also keeping a close eye on macroeconomic and market conditions, including the potential impact on consumer behavior and any related impact on our financial performance.

In conclusion, WWE generated strong third quarter results that reflected robust demand for our events and increased consumption of programming across platforms. We believe our long term outlook is supported by the rising value of life sports content, increasing spending by streaming platforms on live in sports content.

To acquire and retain customers increasing brand spend with media companies that deliver reach in fan engagement and.

An increasing premium for celebrities and compelling content fueling new IP monetization opportunities and the growth of media and entertainment and international markets.

Looking ahead, we believe that WWE remains well positioned to take advantage of these significant opportunities to support growth across all our lines of business.

We look forward to updating you on the progress of these initiatives and the coming quarters that concludes our remarks and I'll now turn it back to Seth.

Thanks, Frank Operator, we're ready for Q&A. Please open the lines.

Of course, thank you and if you would like to ask a question. Please signal by pressing star one on your telephone.

Telephone keypad, if you are using a speakerphone. Please make sure you meet function is turned off.

Okay equipment again.

Maybe I'd like to ask a question.

And we'll go ahead and take our first question from a brand and Ross.

Right right.

Hi, Thanks for taking the questions I have a couple actually gonna start with Frank and.

Can you talk a little bit about how you see the cost structure growing in the coming year or two especially as you finish up or start and then hopefully complete your your new licensing deals and how do you think about strategic reinvestment, including but beyond talent.

<unk> as you marry your <unk> with your new President Raw and are there any areas for cost structure improvement that you say.

I have a follow up.

Thanks, Brandon, Yes, obviously, we as I said in my comments, we see the need to continue to invest in Concord content creation, particularly as we head into Wrestlemania in Los Angeles supporting the renewal discussions.

Coming up this next year.

We haven't really determined.

Guidance for margin for 2023, yet we're still in the plan process and we're trying to strike that balance between ensuring that we continue to create a compelling content that has driven the ratings and we will result in a in a meaningful uptick in our rights, we do see opportunities to manage and control costs primarily in the non.

Shall we say revenue generating and talent area, particularly the corporate cost, which we have as we've discussed in the past Brandon.

A high level of costs relative to the size of the company and we see opportunities to do that to balance out other increases needed to support.

The business.

Alright, and then for Paul first of all.

You guys all kicked off the call by talking about the success of the creative and what that meant and she gave a bunch of tangible examples of some of the things you're doing can you may be put a bow on it by zooming out a little and telling us kind of what the core tenets of your content philosophy are and how you <unk>.

To manage that over <unk> over a year long cycle.

So I think it's.

It's.

Looking at.

As you said the year long cycle of content creation over that year and trying to sort of big places that you want to go to.

Put them into your creative sort of GPS system, and then figuring out how you want to get to those things. So it's looking further ahead than we've ever done before I think.

As we were rounding the bend to come into the new year and looking at Wrestlemania I'm already beginning in my mind to start to with the team collaborate on what we want next year's Wrestlemania to look like and how we want the spring coming out of Wrestlemania to transfer into the summer and then and then through it.

The fall you know it's it's.

A large cycle and I think the further that we can get ahead of it to know where we want to go obviously.

Our business being different than making movies or anything else right.

The human beings involved injury rates everything else that come along with it but.

When I look at the creative we're doing now when I look at the success of that understand we're still doing that without Charlotte flare, we're still doing that without Becky Lynch, we're doing that without Cody roads were doing that without Randy Orton.

I think those are significant stars that have.

When they return will will move the needle as well.

I think the other big thing for US is really focusing on character development and as we you see a lot of stars returning you will see stars coming up through our developmental system that have never been seen auto raw or Smackdown, before developing those characters.

So that you are invested in them each individually so that they mean more within the the the programming itself and then really for US it's keeping things fresh.

Trying things outside the box thinks some are going to work some or not but I think the white rabbit stuff.

Stuff that we talked about a lot today was really outside of the box thinking that came out of this creative team.

And that lead you to being able to try new things you've never tried before keep the successes lose the losses I'm not afraid of the losses, that's where I learned the successes don't teach me nearly as much as the losses due so when things don't work that's phenomenal will figure out why they didn't and the next one will so I'm.

Not afraid of any of that.

And it's really just moving forward, but having a plan of where you want to go.

I'll bet entered it for Ya.

It did thank you very much.

Operator will take the next question.

We'll go ahead and move to our next question from occurring Baker with Guggenheim Securities. Please go ahead.

Hey, good evening, everyone. Thanks for the question have two for Nick The first one is on the U S renewal for raw and Smackdown next year can you maybe help us thinking about what metrics you're looking at that gives you confidence in the renewal cycle next year is it ratings.

Recent sports rights renewals relative costs, all the above just high level how.

How you are thinking about the renewal and.

What's leading you to be so positive right now.

Thanks, very much Curry I think we always looked at what we referred to internally as the three r's ratings relevancy and revenue and.

And we think the company's firing on all cylinders in terms of that in addition to the marketplace.

Fearing on all cylinders in terms of what it's pain to different entities that deliver those things.

So there's obviously a lot of micro to that macro, but those three macro points or what we are consistently looking at and talking about.

Thanks, and then on the local subsidy front for large events, obviously wells was nice benefit there do you think we can see one or more of these subsidies next year. I know you mentioned there are some active negotiations going on or would you characterize us as more of a 2425 opportunity.

Yeah, it's something we're taking a deep dive into now so we certainly believe that there will be more there we have an offer for one of our premium live events that we like already.

So we're in the process of trying to close that up and there's going to be more than that coming we think with the economic boon as I described in my remarks that our product brings to different cities and countries. We believe we're effectively getting the word out there on that and we're already starting to see the results.

Great. Thanks for the questions.

And we'll move onto our next question from.

Mmk and partners. Please go ahead.

Good afternoon, and thanks for the question.

Paul Paul Netgear with Sir.

<unk> <unk> to Europe , I Wonder if you could talk a little bit about.

What you say or how you think what you think and Ah you're more into in terms of bigger.

Better.

And from there you know what type of timeline there thinking for now let's send some even beyond Europe .

Thanks for the question, Eric bigger better broader idea it might be the tagline for the new brand maybe.

But I've already cleared Monday.

Oh really all right, but we can talk about it.

Frank Frank Frankel handle that I don't pay much for those.

[laughter].

I think that what you see in Europe , when we when we started Nx T U K V.

The desire was to sort of replicate what we were doing in the U S and we gotta start on it and then you know COVID-19 hit and it slowed everything down and then we needed to rethink. It. So we got to a place where we were ready to go again, but it's sort of.

Tough to rebrand something and rebooted, while you are still running it's like trying to change a tire on a car on the highway.

So so we shut it down as Europe evolves and grows once we bring that back I think you will begin to see at replicating a bit more of what you see in the U S. So a system underneath it for recruiting a system underneath it for bring.

Bringing in the best athletes from all around Europe , whether we're recruiting them from the Olympic level.

Same as we are here around college athletics is slightly different there, but around athletics and the youth over there.

We will partner with people over there and as we begin to bring those athletes in training them developing them and whether in our current BC or as we evolve into something bigger.

Trying to turn that into a feeder system for the overall WWE with a raw and Smackdown, and I think that that local globalized sort of brand. There is very attractive to a lot of our partners in market and I think we have an opportunity to make it.

Be something even bigger and Europe also becomes a very interesting hub for us for other countries. So I would take for example, India where.

As we recruit there.

It's very difficult for us to find athletes bring them to the U S to begin training. It's a very long process for us we can get them into Europe , and a much quicker fashion and get them training much quicker much faster and have success and.

In a shorter period of time, so it becomes a very key hub for us I think once Europe is establish you will see us begin to look at branching out into other markets as well.

<unk> very helpful. I mean, one one follow up another person.

Mm mmm email a couple of years into your.

E L deal with college.

Mmm Mmm Mmm curious about.

About your investment.

Into this project and other policy recruitment opportunities.

What's the timeline.

Online but.

You can get these people into the performance center to.

<unk>, who can succeed.

<unk>.

What sort of what's a good <unk> with that.

How long would it take <unk>.

To <unk>.

So it.

It's interesting as we've been doing this for a few years now and.

Recruiting.

Some collegiate athletes, but some slightly differently the difference with these.

Collegiate athletes that are coming into us through <unk> and.

And through the College Rush program that you see being implemented now.

That level of high high end college athletes are used to being trained in coach at a different level. It incrementally increases the speed at which they progress through our program and we've gotten pretty good at predicting so there's a very short window of time once they come in there is almost like a six month to <unk>.

Sort of.

Almost just happens naturally cut off period, and then there's another one slightly after that but maybe four to six months later after that with the crowd starts to thin out a bit and we have some talent right now that are airing that.

That are appearing in NXP programming now that I've only been in the system for maybe six eight months.

You see them almost regularly a year in or so appearing regularly but but like I said, we have some that are better six months in that are appearing within the show now so that the curve is not great and they are picking it up very fast and I think that because of that and the amount of the athletes that are becoming more and more interested in WWE bite.

The day the.

The futures incredibly bright on that front.

Thank you very much.

We'll take our next question David Karnofsky with a J P. Morgan. Please go ahead.

Alright. Thank you Stephanie I think you're prepared remarks, you mentioned as one of your strategic priorities M&A aligns with your core competencies and acquisitions historically I don't think I've been a focus that accompanies so just hoping you could expand debate on that commentary.

Sure.

I actually had taken out the words tack in that were recommended that I was supposed to say and so it really is they're they're smaller strategic opportunities that we're looking at in the near term and in terms of the longterm, who knows what the future might hold.

Okay, and then Nick I think it's been a long time since anyone of those call specifically asked about Canada, but you do have a rights agreement expiring there I think in 2024 and I believe it's still a top five region for you. So I was hoping maybe you can just provide any early view on how you see the market for the content potentially going to negotiations.

Okay.

We think the market there is strong for us.

Especially with all of the U S based companies that have now over the last few years gone internationally instead of a handful of potential buyers in Canada, you have a plethora of them.

So we love our relationship with our incumbent partner Rogers right now.

And we'll see what the future brings but we are quite bullish there.

Alright, thank you.

We'll move on to our next question.

Uh-huh.

Now please go ahead.

Thanks first neck, we're seeing a lot of linear pressure out there in corn cutting in advertising I think NBC guided to a tougher queue for outlook.

As you know Fox doesn't have a streaming platform and it's going to be tougher than per Smackdown, maybe to be profitable on ads over the next few years, so with all that going on and when you think about rights and the expectation for rights in 2020 for this very long question is do you still think that packaging linear and broadcast together.

With a couple of different partners is the right way to go about it or in order to maximize value do you think you'll start to get more creative and look at opportunities to maybe have broadcast only rights and streaming only writes in order to bring in a bigger group of bidders since I think he start exclusive negotiations with your current.

Partners here pretty soon and then Relatedly Frank He said the Hulu Ria writes create a modest headwind I'm just curious if you put those out competitively and could you maybe expand on why that's a modest headwind is it just because it's a shorter term deal. It sounds like you don't want us to read that across as being any sort of implication for the bigger rights renewal.

So I'd love some more color there. Thank you.

Thanks Steven.

Terms of the first part of that question, we think nights of the week matter.

In terms of a return on investment bilinear broadcast networks. We also think the way that it ended up for us.

Withdraw on basic cable Smackdown on free to air and the premium live events on a streaming service Peacock.

Has worked out perfectly and that has allowed us to test each platform out or our product and to see where we could get a <unk>.

Stronger result.

We're happy with all three of those platforms, and where they're going yes, there'll be fewer opportunities and basic cable is there will be fewer basic cable networks, but we think a lot of that content is obviously been picked up by the screamers in terms of free to air will see what folks do with their 10 o'clock hour, but all indicators.

<unk> are the scripted programming has shifted to streaming at least the premium scripted content and that the linear platform. The free to air platform is best for live which we are so we liked the way that it is heading and remain bullish on it frankly.

Franco turnover the second part deal.

So yeah, we did.

Steven.

Clearly you picked up on it we don't think it has says anything about the value of our content that that negotiation.

This conflict was complicated by our desire what we want to do with the second to air Rice.

As well as some some other constraints contractually and how it could be competitively bid. So we just decided that the shorter term deal was better for us and.

We haven't disclosed the original dealer Norwich disclose the new one but just.

Doesn't really say anything about the future of our.

Brice negotiations in 2003, I don't know if Nick you want to add anything to that yeah, I can add to that part of it was part of your question also Steven.

In terms of splitting the right. If you look at the NFL in.

Their recent negotiations.

When it went to NBC. So did the digital rights when it went through Amazon the linear rates were not sold anywhere else and yes of course and the two local markets, you'll get to see a free to air but you saw that across the board uniformly.

Well I'm not sure that that's going to change if it didn't change for them it likely doesn't change for others sure it'd be great on Ron Smackdown to split from four ways instead of two ways, but as long as it's monetize the same number we're good with it.

Thank you.

Operator, why don't we take one last question. Please.

Of course, you bet and our last question will come from David.

Please go ahead.

Thank you given that you.

Done some new deals in Australia, and Africa earlier this year at Nina could you help US do you think about how you were kind of rank rank order of the importance of your markets outside the U S you're granted.

<unk> I'm just trying to think of what this can do for for the broader array of monetization opportunities.

Thanks, David for the question, we think that the live events and the rights deals are one and the same now so even the question that was asked earlier about Canada and the deal coming up there in 2024.

We had mentioned earlier, we have the premium live event in Montreal in February you saw the card.

Show that we talked about as well labor day weekend.

Wales, obviously, that's all tied in so our existing partners and new potential buyers can come and see our programming when you see our stuff live it's a heck of an easier sell because you see that audience reaction and how passionate the fan bases and when you see the increase in viewership for.

Ample and yes, the Cardiff show airing live in Prime time in the UK is a significant factor as opposed to it airing it two or three am if it was emanating from the United States, but I think our ratings premium live event to premium live event, roughly 400% or something to that effect something.

Extreme with that so UK matters to us Canada matters to us the APEC region, we had announced a year or so ago deal with Disney for two of the countries. They're look for us to focus on that Australia, obviously matters. So there's going to be more of an emphasis step Paul Frank and I talk about all the time.

<unk>, it's a global localized product that we're shooting for so when we talk about even the talent recruiting.

Being under the new suit or deal in Africa that will start next week. If we can find one next superstar from the country of Africa that simply resonates I'm sorry, the continent of Africa that simply resonates on the continent of Africa Big win for US if that person can crossover and resonate to the U S. Even a bigger.

When if they can become a global superstar then hey, that's solid gold for us. So we liked the strategy. We think we're implementing it properly and the results were excited to see.

Great. Thank you very much.

Thank you.

Alright, well. Thank you everyone for joining us today, we appreciate your interest in WWE operator, you can conclude the call now.

And with that that does conclude today's call. Thank you for your participation you may now disconnect.

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