Q4 2023 TKO Group Holdings Inc Earnings Call

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Cole: Good afternoon. Thank you for attending TKO's full year 2023 earnings call. My name is Cole, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I'd now like to turn the conference over to our host. Seth Zaslow, Head of Investor Relations. Please go ahead.

Good afternoon. Thank you for attending Teekay as full year 2023 earnings call.

My name is cole and I'll be the moderator for todays call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question. Please press star one on your telephone keypad I'd now like to turn the conference over to our host Seth.

Seth Zaslow head of Investor Relations. Please go ahead.

Seth Zaslow: Good afternoon, and welcome to TKO's full year 2023 earnings call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available on our website for at least 30 days.

Good afternoon, and welcome to Tko's full year 2023 earnings call.

A short while ago, we issued a press release, which you can view on our Investor Relations website, a recording of this call will also be available via our website for at least 30 days.

Seth Zaslow: Joining me on today's call are Ari Emanuel, TKO's Executive Chairman and Chief Executive Officer, Mark Shapiro, our President and COO, and Andrew Schleimer, our CFO. After prepared remarks from Ari and Andrew, we'll open the call for questions. The purpose of this call is to provide you with information regarding our full year 2023 performance. I want to remind everyone that the information discussed will include forward-looking statements and or projections that involve risks, uncertainties, and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize, or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call.

Joining me on today's call are Ari Emanuel Tko's Executive Chair and Chief Executive Officer, Mark Shapiro, our president and COO and Andrew Schleimer, our CFO.

After prepared remarks from Orient, Andrew will open the call for questions.

<unk> of this call is to provide you with the information regarding our full year 2023 performance.

I want to remind everyone that the information discussed will include forward looking statements and or projections that involve risks uncertainties and assumptions. Please.

Please see our filings with the Securities and Exchange Commission for further detail.

If these risks or uncertainties were to materialize or any assumptions prove incorrect. Our results may differ materially from those expressed or implied on this call.

Seth Zaslow: Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today, as well as the information posted on our IR website. With that, I'll now turn the call over to Ari.

Forward looking statements speak only as of the date. They are made and we undertake no obligation to update them in light of new information or future events, except as legally required.

Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends.

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website.

With that I'll now turn the call over to Ari.

Ari: Thanks, Seth, and good afternoon, everyone. TKO's strong results reflect robust demand for our premium content and live events. Throughout 2023, we achieved multiple viewership and attendance records, including 10 highest grossing event records for UFC, as well as viewership records at each WWE Premium Live event during the year. We inked significant partnership agreements across TKO, most notably with Anheuser-Busch.

Thanks, Seth and good afternoon, everyone.

Teekay <unk> strong results reflect robust demand for our premium content and live events.

Throughout 2023, we achieved multiple viewership and attendance records, including 10 highest grossing event records for U S C as well as viewership records at each WWE premium live event during the year.

We inked significant partnership agreements across T K O, most notably with Anheuser Busch.

Ari: We secured domestic and international media rights increases for UFC and WWE, including for Smackdown and NXT in the U.S. We launched new international events with significant site fees in the Middle East and Australia, and we made meaningful progress in our integration efforts, including merging UFC and WWE's global partnerships teams to form a unified, best-in-class global partnerships organization. During this period, both businesses reached financial milestones. Based on the full year, both UFC and WWE achieved their best financial performance ever.

We secured domestic and international media rights increases for UFC, and WWE, including for Smackdown, NXT in the U S. We launched new international events with significant site fees in the Middle East and Australia.

And we made meaningful progress in our integration efforts, including merging UFC and WWE <unk> global partnerships teams to form a unified best in class Global partnerships organization.

During this period, both businesses reached financial milestones based on the full year, both UFC and WWE achieve their best financial performance ever for UFC 2023 also marks the fifth consecutive year with record financial performance in terms of both revenue and profitability.

Ari: For UFC, 2023 also marks the fifth consecutive year with record financial performance in terms of both revenue and profitability. The positive momentum has extended into 2024, as powerfully demonstrated by our agreement with Netflix to bring WWE's weekly flagship program, Raw, to the streaming giant's global platform in a deal worth approximately $5.2 billion over 10 years. This agreement will provide substantial and predictable economics for years to come, and it also demonstrates our ability to leverage the Endeavor flywheel to capitalize on the evolving media landscape and forge relationships with new and emerging partners. With regard to our TKO Global Partnerships Group,

The positive momentum has extended into 2024 as powerfully demonstrated by our agreement with Netflix to bring Wwe's weekly flagship program raw to the streaming Giants global platform in a deal worth approximately $5 $2 billion over 10 years. This agreement will provide substantial and predictable economics for year.

Ours to come and it also demonstrates our ability to leverage the endeavor flywheel to capitalize on the evolving media landscape and forge relationships with new and emerging partners.

With regard to our T K O global partnerships group or.

Ari: Our growth potential across both UFC and WWE is significant and already evident, reflected by recent deals with Anheuser-Busch and Slim Jim, and revenue upside in this category is showing strong promise. UFC has set new sponsorship revenue records each of the past six years, and we believe WWE has similar potential. These accomplishments underscore our conviction in the combination of UFC and WWE, as well as TKO's capacity to drive revenue growth and margin expansion, generate meaningful free cash flow, and deliver shareholder value over the long term. Now, turning to some business highlights, at UFC, we sold out at all five of our live events in the fourth quarter, including October's UFC 294 in Abu Dhabi. UFC and the Department of Culture and Tourism Abu Dhabi have a long-standing relationship, which we look forward to continuing through 2028 with the recent extension and expansion of our partnership. During UFC 295 in New York City, we set another record at Madison Square Garden, cementing UFC's position as the first, second, and third all-time highest-grossing events in the legendary arena. Meanwhile, our fight night in Austin, Texas, became the highest-grossing sporting event ever at Moody Center, as well as the highest-grossing U.S. fight night in UFC history.

Our growth potential across both UFC and WWE is significant and already evident reflected by recent deals with Anheuser Busch and Slim Jim and revenue upside in this category is showing strong promise UFC has set new sponsorship revenue records each of the past six years and we believe WWE has similar.

Potential these accomplishments underscore our conviction in the combination of UFC and WWE as well as Teekay <unk> capacity to drive revenue growth and margin expansion generate meaningful free cash flow and deliver shareholder value over the long term.

Now turning to some business highlights at.

At UFC, we sold out at all five of our live events in the fourth quarter, including October's UFC $2 94 in Abu Dhabi.

UFC and the department of culture, and tourism Abu Dhabi have a long standing relationship, which we look forward to continuing through 2028 with the recent extension and expansion of our partnership.

During UFC $2 95 in New York City, we set another record at Madison Square Garden, Cementing <unk> position as the first second and third all time highest grossing events and the legendary arenas history.

Meanwhile, our fight night in Austin, Texas became the highest grossing sporting event ever at Moody's Center as well as the highest grossing U S fight Tonight and UFC history.

Ari: In 2023, UFC's live events continued to attract strong fans; during the year, we sold out 20 events with live audiences, with 7 of those events now ranking among the top 20 highest grossing UFC events of all time. These events were equally successful on broad, For the full year, we had our highest-ever average viewership on ESPN's linear networks for UFC's pay-per-view prelims, meaning the bouts before the main card, as well as the most-watched year of pay-per-view prelims telecasts on record. Average viewership for all pay-per-view prelims in 2023 on ESPN and ESPN2 grew 35% over 2022. This is before factoring in simulcast viewership on ESPN plus for those events, turning to international right.

In 2023, UFC live events continued to attract strong fan attendance during the year, we sold out 20 events with live audiences with seven of those events now ranking among the top 20 highest grossing UFC events of all time.

These events were equally successful on broadcast for the full year, we had our highest ever average viewership on ESPN linear networks for Ufc's pay per view prelims, meaning the bouts before the main card as well as the most watched year of pay per view prelims telecasts on record.

Average viewership for all pay per view prelims in 2023 on ESPN and ESPN two grew 35% over 2022.

This is before factoring and simulcast viewership on ESPN plus for those events.

Turning to international rights during the quarter and to start the year, we completed multiple renewals, including with Sportsnet and TVA sports in Canada, ESPN in Australia, and New Zealand and Sony in India. In addition to renewals covering emerging markets like sub Saharan Africa and multiple European territories.

Ari: During the quarter and to start the year, we completed multiple renewals, including with Sportsnet and TVA Sports in Canada, ESPN in Australia and New Zealand, and Sony in India, in addition to renewals covering emerging markets like Sub-Saharan Africa and multiple European territories. And, as I previously mentioned, our roster of leading sponsors continues to expand, delivering meaningful top-line growth over 2022. In addition to signing new partners like Anheuser-Busch as the official beer sponsor of the UFC in a record-breaking deal, we renewed commitments from long-standing partners, including Monster and Toyota. Now, I'm pivoting to WWE.

And as I previously mentioned our roster of leading sponsors continues to expand delivering meaningful top line growth over 2022. In addition to signing new partners like Anheuser Busch as the official beer sponsor of the UFC and a record breaking deal we renewed commitments from long standing partners, including Monster and Toyota tires.

Pivoting now the WWE demand for WWE live events was similarly robust nine premium live events in 2023 sold out and broke multiple sales records in the process in the fourth quarter. These included fast Lane, which became the most watched and highest grossing fast lane in company history, and Survivor series, which became the highest grow.

Ari: Demand for WWE's live events was similarly robust. Nine premium live events in 2023 sold out and broke multiple sales records in the process. In the fourth quarter, these included Fastlane, which became the most watched and highest grossing movie in company history, and Survivor Series, which became the highest grossing Survivor Series of all time. That momentum has continued into 2024. Last month's Royal Rumble attracted a venue record of more than 48,000 fans to St. Petersburg, Florida's Tropicana Field and had the largest gate of any premium live event in WWE history outside of WrestleMania.

<unk> Survivor series of all time.

That momentum has continued into 2024 last month's Royal Rumble attracted a venue record of more than 48000 fans to St. Petersburg, Florida, Tropicana field and had the largest gain of any premium live event in WWE history outside of Wrestlemania.

Ari: Turning to media rights, as previously mentioned, we recently announced a significant long-term deal with Netflix. This partnership will dramatically expand the reach of WWE and bring weekly live appointment viewing for the first time to the streamer. We're incredibly excited about this new relationship and what both brands can achieve together over the long run. Beginning in January 2025, Netflix will become the exclusive new home of Raw in the U.S., and will also become the home for all WWE events and specials outside the U.S. as they become available, including Raw and WWE's other weekly shows, Smackdown and NXT, as well as premium live events, including WrestleMania, SummerSlam, and Royal Rumble.

Turning to media rights as previously mentioned, we recently announced a significant long term deal with Netflix.

This partnership will dramatically expand the reach of WWE and bring weekly live appointment viewing for the first time to the streamer.

We're incredibly excited about this new relationship and what both brands can achieve together over the long run.

Beginning in January 2025, Netflix will become the exclusive new home of raw in the U S and will also become the home for all WWE events and specials outside the U S. As they become available inclusive of raw and WWE as other weekly shows Smackdown, NXT as well as premium live events, including Wrestlemania Summer Slam.

<unk> and Royal Rumble.

Andrew: The Raw deal follows our new rights agreements that have been announced following the close of the TKO transaction for Smackdown with USA Network and for NXT with CW Network, which widens WWE's overall domestic distribution to include streaming, cable, and broadcast. Together, these deals delivered an increase of more than 1.4x in AAV, exceeding expectations on guidance and demonstrating our ability to capitalize on the evolving media landscape, as well as the quality and value of our premium content across TKO. Just five months in, we continue to make great progress across TKO. Looking ahead to 2024, we are optimistic about the opportunities on the horizon, which Andrew will now discuss in greater detail, along with our financial performance. I'll start with an update on integration and then shift to our financial results before discussing our capital structure and outlook for 24. As Ari highlighted, in the five months since launching this business, we've begun to realize the revenue and cost synergies that underpin the strategic and financial rationale for this transaction. Now that we've completed our first budgeting cycle, we have even greater conviction in the industrial logic of combining these two iconic brands and leveraging the capabilities of Endeavor.

The raw deal follows our new rights agreements that have been announced following the close of the TKO transaction for Smackdown, with USA network and for NXT with CW network, which widens wwe's overall domestic distribution to include streaming cable and broadcast together. These deals delivered an increase of more than one point Forex in.

Exceeding expectations on guidance and demonstrating our ability to capitalize on the evolving media landscape as well as the quality and value of our premium content across TKO.

Just five months in we continue to make great progress across TKO looking ahead at 2024, we are optimistic about the opportunities on the horizon, which Andrew will now discuss in greater detail along with our financial performance.

I'll start with an update on integration and then shift to our financial results before discussing our capital structure and outlook for 2004.

As already highlighted in the five months since launching this business, we've begun to realize the revenue and cost synergies that underpin the strategic and financial rationale for this transaction.

Now that we've completed our first budgeting cycle, we have even greater conviction in the industrial logic of combining these two iconic brands and leveraging the capabilities of endeavor.

Andrew: These businesses are highly complementary, well-positioned for success, and are delivering record financial results. On the revenue side, let's start with media rights. In addition to the meaningful wins we discussed on our last earnings call related to renewals for Smackdown and NXT, last month we entered into a transformative partnership to align WWE's content with the global reach and scale of Netflix. This long-term agreement will give us visibility and stability into a high-margin revenue stream well into the future, in addition to a best-in-class marketing partner reaching hundreds of millions of fans around the world. With this latest deal, we have now positioned WWE Media Rights with the leading global streamer while continuing to take advantage of traditional distribution formats. Across both UFC and WWE, our distribution partners at Disney, Comcast, as well as Netflix, see the value of the strong viewership and engagement our premium live sports and entertainment products deliver.

Businesses are highly complementary.

All positioned for success and are delivering record financial results.

On the revenue side, let's start with media rights.

In addition to the meaningful wins, we discussed on our last earnings call related to renewals for Smackdown, and an X gene last month, we entered into a transformative partnership to align wwe's content with the global reach and scale of Netflix.

Long term agreement will give us visibility and stability into a high margin revenue stream well into the future. In addition to our best in class marketing partner, which is hundreds of millions of fans around the world.

With this latest deal we have now positioned WWE media rights with the leading global streamer, while continuing to take advantage of traditional distribution formats.

Across both UFC and WWE, our distribution partners at Disney Comcast as well as Netflix show the value of the strong viewership and engagement, our premium live sports and entertainment products deliver.

Andrew: These relationships position us extremely well going forward as we execute our plan to maximize fan engagement and monetization in the next cycle of renewals for our content in an ever evolving media landscape. In sponsorship, shortly after the new year, we announced a unified global partnerships team focused on delivering unique, authentic integrations across our portfolio per brand partner. Global Partnerships is and will continue to be a significant high-margin growth area for us. In live events, we benefit from the continued strength of the mature economy, which has persistently driven record results across our business. To reiterate, site fees are a key growth area for us. As one example of immediate synergy, this past weekend, Elimination Chamber was held in Perth, Australia, where we secured the first meaningful site fee for WWE in the region.

These relationships position us extremely well going forward as we execute our plan to maximize their engagement and monetization in the next cycle of renewals for our content in an ever evolving media landscape.

And sponsorship shortly after the new year, we announced a unified global partnerships team focused on delivering unique authentic integrations across our portfolio for brand partners.

Global partnerships is and will continue to be a significant high margin growth area for us.

In live events, we benefited from continued strength in the experienced economy, which has persistently driven record results across our business.

To reiterate.

These are a key growth area for us.

As one example of immediate synergy this past weekend elimination chamber was held in Perth, Australia, where we secured the first meaningful fee for WWE in the region.

Andrew: The event will increase fan engagement and strengthen our presence in the market. Furthermore, we recently announced a five-year partnership to bring multiple live events to the Honda Center in Anaheim, California, with both UFC and WWE securing preferential economic terms. Over President's Day weekend, we held both UFC 298 and Monday Night Raw there.

The event will increase fan engagement and strengthen our presence in the market.

Furthermore, we recently announced a five year partnership to bring multiple live events to the Honda Center in Anaheim, California, with both UFC and WWE, securing preferential economic terms over.

Over Presidents' day weekend, we held both UFC 298, and Monday night raw, there and while it's early endings. This partnership establishes a template for how we will leverage the global popularity of our two iconic brands.

Andrew: And while it's in the early innings, this partnership establishes a template for how we will leverage the global popularity of our two iconic brands by packaging events for arenas and tourism authorities around the world. On the cost side, we continued to make significant progress. We completed our review to identify savings opportunities across each of our businesses.

<unk> events sport arenas and tourism authorities around the world.

On the cost side, we continued to make significant progress we completed our review to identify savings opportunities across each of our businesses.

Andrew: This focused on areas such as finance, marketing, human resources, legal, and IT. In addition, it included overlapping personnel in revenue-generating areas such as sponsorship, media rights, and consumer products. We're now in the process of seeking business integration that can yield efficiencies in other areas, including live events, production, and operations. As we discussed on our last call, we've identified and commenced action on run rate savings that, when fully realized, will allow us to achieve the upper end of the previously communicated range of 50 to 100 million in annualized net savings. We recognize a portion of these savings in 2023, and we anticipate realizing the balance in 2024.

This focused on areas, such as finance marketing human resources legal and it.

In addition, it included overlapping personnel and revenue generating areas, such as sponsorship media rights and consumer products.

Now in the process of seeking business integration that can yield efficiencies in other areas, including live events production and operations.

As we discussed on our last call we've identified and commenced action upon run rate savings that when fully realized will allow us to achieve the upper end of the previously communicated range of $50 million to $100 million in annualized net savings.

We recognized a portion of these savings in 2023, and we anticipate realizing the balance in 2024.

Andrew: We will continue to optimize the cost structure as opportunities present themselves. Turning now to our financial results. For your 23 reported results, the results include 12 months of activity for UFC and three and a half months of activity for WWE. WWE activity is not included in the reported results for 22 or from January 1st through September 11th, 23.

We will continue to optimize the cost structure if opportunities present themselves.

Turning now to our financial results.

Full year 2003 reported results include 12 months of activity for UFC and three five months of activity for WWE.

WWE activity is not included in the reported results for 22 or from January one through September 11 23.

Andrew: To assist with comparability, we've presented supplemental financial information in our press release and IR website that includes WWE activity and a portion of WWE revenue related to the corporate group for the fourth quarter and full year 2022 and for the period from January 1st through September 11th, 2023. For full year 23, TKO generated reported revenue of $1.675 billion. Net income was $176 million, adjusted EBITDA was $809 million, including WWE activity for 2022 and from January 1st through September 11th, 23. combined revenue was $2.619 billion, compared to 2.432 billion in the prior year, an increase of 8%. Combined adjusted EBITDA was $1.092 billion for 23 compared to $1.013 billion in 22, also an increase of 8%.

To assist with comparability, we presented supplemental financial information in our press release and IR website that includes WWE activity and a portion of WWE related to the corporate group for the fourth quarter and full year 2022 and for the period from January one through September 11 2023.

For full year 'twenty, three TKO generated reported revenue of $1 $6 75 billion and.

Net income was $176 million adjusted EBITDA was 809 million <unk>.

Including WWE activity for 2022 and from January one through.

September 11th 23, combined revenue was $2 six $1 9 billion.

Compared to 243 2 billion in the prior year, an increase of 8%.

Combined adjusted EBITDA was one point <unk> 2 billion or 23 compared to $1 <unk> 3 billion and 22 also an increase of 8% or.

Andrew: Our combined adjusted EBITDA margin was 42% for both periods. Now I'll walk you through our segments. For the full year, our UFC segment generated record results reflecting continued strong performance across each category of the business. Revenue increased 13% to $1.292 billion. Adjusted EBITDA was $756 million, an increase of 11%. UFC's adjusted EBITDA margin was 58%, down from 60% in the prior period.

Our combined adjusted EBITDA margin was 42% for both periods.

Now I'll walk you through our segments.

For the full year, our UFC segment generated record results, reflecting continued strong performance across each category of the business.

Revenue increased 13% to $1 292 billion adjusted.

Adjusted EBITDA was $756 million, an increase of 11%.

<unk> adjusted EBITDA margin was 58% down from 60% in the prior period.

Andrew: Media rights and content increased 10% to $871 million. The increase was primarily driven by higher domestic and international rights fees resulting from increases in contractual revenues, higher fees associated with international renewals, and one additional pay-per-view event in 2023 as compared to the prior year. Live events revenue increased 34% to $168 million. The increase was driven by five additional events with a live audience, 26 and 23, as compared to 21 in 2022, as well as higher ticket prices. Sponsorship revenue increased 18% to $196 million.

Many of the Reits and content increased 10% to $871 million.

Increase was primarily driven by higher domestic and international rights fees, resulting from increases in contractual revenues higher fees associated with international renewals and one additional pay per view event in 2023 as compared to the prior year.

Live events revenue increased 34% to $168 million.

The increase was driven by five additional events with a live audience $26 23, as compared to 21% and 2022.

As well as higher site.

Sponsorship revenue increased 18% to 196 million the increase was driven by new partners and increases in fees from renewals.

Andrew: The increase was driven by new partners and increases in fees from renewals. Adjusted EBITDA reflected the increase in revenue partially offset by an increase in expenses. The increase in expenses reflected higher direct operating costs, primarily due to an increase in athlete costs from different matchups, as well as higher production expenses associated with one additional pay-per-view event and five additional international events, as compared to the prior year. Marketing and venue costs also increased due to five additional events with live audiences in 2023. SG&A increased primarily driven by higher personnel from a greater headcount, as well as increased travel and other associated costs with the additional pay-per-view event and international event turning to WWE. The following commentary on the full-year segment includes WWE activity for 2022 and for the period from January 1st through September 11th, 2023. For the full year, we generated record results reflecting continued strong performance across the business, in particular live events.

Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses.

Increase in expenses reflected higher direct operating costs.

Merrily due to an increase an athlete costs from different match ups as well as higher production expense associated with one additional pay per view event and five additional international events as compared to the prior year.

Marketing and menu costs also increased due to five additional events with live audiences in 2023.

SG&A increased primarily driven by higher personnel from greater head count as well as increased travel and other associated with the additional pay per view event and international events.

Turning to WWE.

The following commentary on the full year segment includes WWE activity for 2022 and for the period from January one through September 11 2023.

For the full year, we generated record results, reflecting continued strong performance across the business in particular live event.

Andrew: The segment's combined revenue increased 3% to $1.326 billion and combined adjusted EBITDA was $533 million, an increase of 4%; the segment's combined adjusted EBITDA margin was 40% in both periods; media rights and content revenue increased 1% to $883 million. The increase was principally related to the contractual escalation of media rights fees for our flagship weekly programming, Raw and Smackdown, and premium live events, which more than offset a decline in third-party original programming due to the timing of delivery. Venture revenue increased 17% to $262 million. The increase is related to an increase in domestic and international ticket sales. Sponsorship revenue increased 11% to 69 million euros, driven by new partners and contractual step-ups in existing agreements. Consumer products licensing revenue declined $22 million to $112 million, primarily due to the previously disclosed transition of our digital retail platform and vending merchandise business to Fanatics, as well as a decrease in collectibles revenue.

The segments combined revenue increased 3% to 132 6 billion and combined adjusted EBITDA was $533 million an increase of 4% the.

The segments combined adjusted EBITDA margin was 40% in both periods.

Media rights and content revenue increased 1% to $883 million.

Greece was principally related to the contractual escalation of media rights fees for our flagship weekly programming raw and Smackdown, and premium live events, which more than offset a decline in third party original programming due to the timing of deliveries.

<unk> revenue increased 17% to 262 million the increase was related to an increase in domestic and international ticket sales.

Sponsorship revenue increased 11% to $69 million, driven by new partners and contractual step ups in existing agreements.

On a product licensing revenue declined $22 million to $112 million, primarily due to the previously disclosed transition of our digital retail platform and venue merchandise business the fanatics as well as a decrease in collectibles revenue.

Adjusted EBITDA increased as higher revenue was partially offset by an increase in expenses.

Andrew: Addressing the VADA increased as higher revenue was partially offset by an increase in expenses. The rise in expenses reflected an increase in content creation costs partially offset by lower expenses related to the timing of third-party original programming and the transition of our digital retail platform and venue merchandise business to Fanatics in addition to the realization of cost synergies post the close of the merger in September. Turning to corporate, Corporate reflects the general and administrative operations supporting both of our segments, including finance, legal, HR, and our executive team. Corporate also includes the fees paid by TKO to Endeavor under its services agreement. On a combined basis, corporate expenses were $196 million for the full year.

The rise in expenses reflected an increase in content creation costs, partially offset by lower expenses related to the timing of third party original programming and the transition of our digital retail platform and venue merchandise business. The fanatics. In addition to the realization of cost synergies post the close of the merger in September.

Turning to corporate Corp.

Corporate reflects the general and administrative operations supporting both of our segments, including finance legal HR and our executive team.

Corporate also includes the fees paid by <unk> to endeavor under our services agreement.

On a combined basis corporate expenses were $196 million for the full year.

This includes expenses related to new employment agreements for a number of our executives.

Now moving onto our capital structure.

We define free cash flow as net cash provided by operating activities less capital expenditures as I'll expand upon in a moment free cash flow excludes the majority of the mandatory tax distributions to our owners, but does include a portion of cash tax paid quite detailed pubco.

Andrew: This includes expenses related to new employment agreements for a number of our executives. Now moving on to our capital structure, we define free cash flow as net cash provided by operating activities less capital expenditure.

Andrew: As I'll expand upon in a moment, free cash flow excludes the majority of the mandatory tax distributions to our owners but does include the portion of cash tax paid by TKO PubCo. For the full year, we generated $420 million in free cash flow. This includes approximately $50 million in favorable working capital related to the timing of customer payments that were contractually due in January 24 but received early on December 23. During the year, we also incurred $49 million of capital expenditures, approximately $25 million of which related to WWE's new headquarters. We ended the quarter with $2.761 billion in debt and $236 million in cash and cash equivalents.

For the full year, we generated $420 million in free cash flow.

This includes approximately $50 million and favorable working capital related to the timing of customer payments that were contractually due in January 'twenty four but received early in December 'twenty three.

During the year, we also incurred $49 million capital expenditures of approximately $25 million of which related to Wwe's headquarters.

We ended the quarter with $2 76, 1 billion in debt and $236 million in cash and cash equivalents.

As a reminder.

Our year end cash balance reflects the use of $100 million in the quarter to opportunistically repurchased one 3 million shares.

Now turning to our outlook.

For full year 2024, we're targeting revenue of $2 $5 75 to $2 65, 1 billion and adjusted EBITDA of 115 to $1 7 billion.

Andrew: As a reminder, our year-end cash balance reflects the use of $100 million in the quarter to opportunistically repurchase 1.3 million shares. Now turning to our outlook. For full year 2024, we're targeting revenue of $2.575 to $2.650 billion and adjusted EBITDA of $1.15 to $1.17 billion. There are three notable drivers I would like to address in our guide.

There are three notable drivers I would like to address in our guide.

Number one.

As you know our current deal with USA for Raw and September 32024, and given the lead time Netflix required to ensure technological readiness, our new long term deal commencing on January one 2025.

Andrew: Number one, as you know, our current deal with USA for Raw ends on September 30th, 2024, and given the lead time Netflix requires to ensure technological readiness, our new long-term deal commences on January 1st, 2025. As a result, our guidance excludes any revenue or adjusted EBITDA in Q4 from the domestic rights fees for Raw. This item is purely timing-related, and we are in the process of securing distribution for RAW during the interim period in Q4. We will provide further details once we have an update. For the avoidance of doubt, in 2025, with the commencement of the Netflix deal, our financials will include a full year of media rights for RAW, inclusive of the step-up built into the new deal. Number two.

As a result, our guidance excludes any revenue or adjusted EBITDA in Q4 from the domestic rights fees for raw.

Item is purely timing related and we are in the process of securing distribution for raw during the interim period in Q4, we will provide further details once we have an update for you.

In some doubt in 2025 with the commencement of the Netflix deal. Our financials will include a full year of media rights for raw inclusive of the step up built into the new deal.

Number two.

UFC performance will be impacted by the revenue recognition of its live events and.

In 2023, we benefited from the delivery of one live event, we were not able to stage in 2022 due to COVID-19.

This will impact comparability between 'twenty, three and 'twenty four results are.

Andrew: UFC performance will be impacted by the revenue recognition of its live event. In 2023, we benefited from the delivery of one live event we were not able to stage in 2022 due to COVID. This will impact comparability between our 23 and 24 results.

Our guidance range is reflective of 2020 for having one less pay per view from a U S media rights revenue recognition perspective, we.

Estimate the impact to revenue and adjusted EBITDA to be approximately $20 million.

Number three.

The timing and magnitude of the net cost synergies, which we anticipate realizing this year at the upper end of our previously stated range of $50 million to $100 million.

Andrew: Our guidance range is reflective of 2024 having one less pay-per-view from a U.S. media rights revenue recognition perspective. We estimate the impact on revenue and adjusted EBITDA to be approximately $20 million. Number three, the timing and magnitude of the net cost synergies which we anticipate realizing this year at the upper end of our previously stated range of 50 to 100 million. The other notable drivers of growth related to our 2024 performance include meaningful growth in partnership sales, the renewal of licensing agreements for UFC content in certain international markets, the monetization of new third-party original programs, and enhancements to ticket yield across our live event portfolio in addition to site views in key As we discussed on our last call, given the quarterly fluctuations related to the timing of events and content deliveries, among other items, we do not intend to provide quarterly guidance and believe our results are best evaluated on a full year basis. However, as we look to the first quarter of 24, we wanted to highlight a few notable items. At UFC, the current calendar includes three numbered events compared to four in the prior period.

The other notable drivers of growth related to our 2024 performance include meaningful growth and partnership sales.

A new licensing agreements for UFC content in certain international markets.

The monetization of New third party original programming and enhancements to ticket yield across our live event portfolio. In addition to <unk> in key markets.

As we discussed on our last call given the quarterly fluctuations related to the timing of events and content deliveries among other items.

Not intend to provide quarterly guidance and believe our results are best evaluated on a full year basis.

However, as we look to the first quarter of 'twenty four we wanted to highlight a few notable items.

At UFC. The current calendar includes three number of events compared to four in the prior period. In addition, we expect five events with live audiences compared to six in the first quarter of 2023.

At WWE results were impacted by the absence of consumer products licensing revenue that was recorded in Q1 2023 related to the early termination of an agreement for licensed collectibles year over year consumer products licensing will also reflect the previously disclosed transition of our venue merchandise business fanatics.

In terms of free cash flow, we're targeting full year 2020 for free cash flow conversion in excess of 50% of our adjusted EBITDA target range.

Andrew: In addition, we expect five events with live audiences compared to six in the first quarter of 2023. At WWE, results will be impacted by the absence of consumer products licensing revenue that was recorded in Q1 2023 related to the early termination of an agreement for licensed collectibles. Year over year, consumer products licensing will also reflect the previously disclosed transition of our venue merchandise business, Fanatic. In terms of free cash flow, we're targeting full year 2024 free cash flow conversion in excess of 50% of our adjusted EBITDA target range. Our expected conversion rate in 2024 reflects approximately 50 million of CapEx related to non-recurring projects, such as the completion of WWE's headquarters and UFC's new Performance Institute in Mexico City, which opened this past weekend. We expect this non-recurring CapEx to be weighted towards the first quarter of the year. Our free cash flow conversion target also reflects an unfavorable working capital impact of approximately $50 million related to the early collection of customer payments I mentioned earlier in my comment.

Our expected conversion rate in 2024 reflects approximately $50 million of capex related to nonrecurring projects such as the completion of Wwe's headquarters and UFC, New performance Institute in Mexico City, which opened this past weekend.

We expect this nonrecurring capex will be weighted towards the first quarter of the year.

Our free cash flow conversion target also reflects unfavorable working capital impact of approximately $50 million related to the early collection of customer payments I mentioned earlier in my remarks.

As we previously discussed we're structured as an up C. As is common with FCS CTO opco will be making periodic distributions of cash to its owners endeavor and detailed pubco to cover tax obligations on a quarterly basis.

For full year 2024, we expect to make distributions to our owners on a pro rata basis at the highest individual tax rates at the time applied to taxable income.

As it relates to the income at <unk> pub co, we anticipate paying taxes at the lower corporate rate of approximately 25%, resulting in excess cash at TKO pubco.

Andrew: As we previously discussed, we're structured as an upstart. As is common with upstarts, TKO OpCo will be making periodic distributions of cash to its owners, Endeavor and TKO PubCo, to cover tax obligations on a quarterly basis. For full year 2024, we expect to make distributions to our owners on a pro rata basis at the highest individual tax rates at the time applied to taxable income. As it relates to the income at TKO PubCo, we anticipate paying taxes at the lower corporate rate of approximately 25%, resulting in excess cash at TKO PubCo. It is not lost on us that we expect to have significant cash on hand in 2025.

Not lost on us that we expect to have significant cash on hand in 2025.

As such we will consider a wide spectrum of alternatives to increase shareholder value, including organic investment at positive ROI <unk>.

Reducing our net debt position returning capital to shareholders in the form of share repurchases and dividends and Nonorganic investments should a unique and compelling opportunity present itself.

Absent financial and environmental factors, we believe we can support our net leverage level of up to three times based on our financial and growth profile, given our contracted revenues high margin flow through and the cash generative nature of our business.

Net leverage target should provide insight into our framework for liquidity.

Andrew: As such, we'll consider a wide spectrum of alternatives to increase shareholder value, including organic investment at positive ROI, reducing our net debt position, returning capital to shareholders in the form of share repurchases and or dividends, and non-organic investments should a unique and compelling opportunity present itself. Absent financial and environmental factors, we believe we can support a net leverage level of up to three times based on our financial and growth profile, given our contracted revenues, high margin flow through, and the cash generative nature of our business. This net leverage target should provide insight into our framework for liquidity. Considering recent inflation data, as well as the current interest rate environment and uncertainty around rate cuts, our focus today is on generating cash flow, and we expect net leverage to continue to decline in the near term.

<unk> recent inflation data as well as the current interest rate environment and uncertainty around rate cuts. Our focus today is on generating cash flow and we expect net leverage to continue to decline in the near term.

We look forward to providing further updates on our plans with respect to capital allocation in the coming quarters.

In conclusion, we generated robust financial results and 2023, reflecting strength in both of our businesses.

Extremely excited about the road ahead, and our prospects for 2024 and beyond.

I'll turn it back to Sam.

Thanks, Andrew operator, we're ready to open the call for questions.

Perfect. If you would like to queue for a question. Please press star followed by one on your telephone keypad if for any reason you'd like to remove your question. Please press star followed by two.

Again to join the queue for a question. Please press star one we will pause briefly as questions are registered.

Yeah.

Yeah.

Our first question is from Ben Swinburne with Morgan Stanley. Please go ahead.

Andrew: We look forward to providing further updates on our plans with respect to capital allocation in the coming quarters. In conclusion, we generated robust financial results in 2023 reflecting strength in both of our businesses. We are extremely excited about the road ahead and our prospects for 2024 and beyond. With that, I'll turn it back to Seth. Thanks, Andrew.

Hey, good afternoon, guys, maybe to start with you a kind of a bigger picture question.

Netflix deal is sort of a seminal event for.

Your company, but also the industry beyond the dollars what excites you about bringing raw and all of the WB content to Netflix globally, and what do you think means for the business over the longer period of time, and then I just had a quick follow up for Andrew on the guidance.

Operator: Operator, we're ready to open the call for questions. Perfect. If you would like to queue for a question, please press star followed by one on your telephone keypad. If, for any reason, you'd like to remove your question, please press star followed by two.

Listen we're extremely excited about the relationship with Netflix, we do a ton of stuff with them on the movie and TV and non scripted side.

We're very pleased with the financial terms.

Operator: Again, to join the queue for a question, please press star one. We'll pause here briefly as questions are registered. Thank you for tuning in. Our first question is from Ben Swinburne with Morgan Stanley. Please go ahead. Hey, good afternoon, guys.

We're entertainment sport.

We think the strategic relationship and benefits.

From the deal are significant.

And as you have indicated based on your question. It is a transformative deal, which we're excited about like the deal. We made first time with USC and ESPN plus I think this is it on the same level with them. They are the largest streamer.

Ari: Ari, maybe to start with you a kind of a bigger picture question, you know, this Netflix deal is sort of a seminal event for your company, but also the industry. Beyond the dollars, what excites you about bringing Raw and all the WWE content to Netflix globally? And what do you think it means for the business, you know, over a longer period of time? And I just had a quick follow-up for Andrew on the guidance. Listen, we're extremely excited about the relationship with... We do a ton of stuff with them on the movie and television and non-scripted side. We're very pleased with the financial terms. Um, you know, we're an entertainment sport.

On a global basis.

So that global reach I think for our product is extremely important we think we can benefit them and their strategy going forward with asphalt and Avon and so it's a good combination and now as you can see we have.

A great assortment of deals Comcast for Smackdown.

CW for NXP, and Netflix and we have one day left with the PLE. So all in all pretty incredible.

Yeah.

Thank you and then Andrew just to be put a finer point on the.

Ari: We think the strategic relationship and the benefits of the deal are significant, and as you have indicated based on your question, it's a transformative deal, which we're excited about. Like the deal we made first with the UFC. ESPN Plus, I think this is on the same level with them. They're the largest stream on a global basis.

Fourth quarter. It sounds like you expect to have raw distributed and there will be revenue and cash flow at this point can't quantify that and so there's nothing in the guide that sort of make sure I got that right.

Yes, you got that right.

Currently excluding any income from off of Q4, which on a run rate basis based upon the existing deal terms is equivalent to $75 million.

Ari: So that global reach, I think, for our product, is extremely important; we can benefit them and their strategy going forward with SVOD and AVOD, and so it's a good combination, and now, as you can see, we have, I think, a great assortment of deals. Smackdown, CW for NXT, and now Netflix, and we have one deal left, with the PLEs, so all in all, pretty incredible Thank you. And then, Andrew, just to put a finer point on the fourth quarter.

And I would just say the following.

Again, we don't have anything for them.

We believe raw will in the fourth quarter.

<unk>, we have no further information than that and we feel pretty positive about it but as Andrew said he went through the numbers with you don't assume don't assume any numbers then.

So look we're going to get on the best platform. We can that's best for the brand and the content programming the viewership and are following.

But don't assume any dollars that is why we pulled it out of there.

Got you. Thanks, so much.

Andrew: It sounds like you expect to have raw materials distributed, and there will be revenue and cash flow. It's just at this point that I can't quantify that. And so there's nothing in the guide.

Our next question is from Brandon Ross with light shed partners. Your line is now open.

Yeah.

Hey, everyone. Thanks for taking the question.

Andrew: I just want to make sure I got that right. Yeah, you got that right. We currently exclude any income.

First I wanted to follow up with Andrew's commentary on capital allocation.

Andrew: All for Q4, which on a run rate basis based upon the existing deal, is equivalent to 75 front. And I would just say the following. We, you know, again, we don't have anything for them. We believe RAW will air in the fourth quarter. We have no further information than that. We feel pretty positive about it. But as Andrew said, he went. Yeah, don't assume. Don't assume any numbers, Ben.

Just wanted to double check that you said youre going to hold off on that generally until 2025 and <unk>.

You did mention in there that.

You would potentially look for special situations, if a very large shareholder we're too.

So a lot of stock at once would you be open to buying that stock directly.

Ari: So, like, we're gonna get on the best platform we can, that's best for the brand, and the content, the programming, the viewership, and our following. But don't assume any dollars; that's why we pulled it out. Thanks so much.

<unk>.

Then my second question.

I'm trying to learn to be political.

Okay.

Yeah.

What was your second question.

And then the second question is you did this global deal with Netflix I think you didn't give.

Operator: Our next question is from Brandon Ross with LightShed Partners. Your line is now open. Hey, everyone.

Real clarity at the time on what international markets are not covered in the deal or contemplated over the long term. So any clarity you could give on that.

Brandon Ross: Thanks for taking the question. First, I wanted to follow up on Andrew's commentary on capital allocation. Just wanted to double check that you said you're going to hold off on that generally until 2025, and you did mention in there that you would potentially look for special situations. If a very large shareholder were to sell a lot of stock at once, would you be open to buying that stock directly? And then my second question is: I'm trying to learn to be political.

It would be helpful.

Yeah, well, let me take the first one Brandon in terms of capital allocation. What we did say is that we expect to have meaningful cash flow or cash on hand in 2025, we gave some guidance on adjusted EBITDA conversion to free cash flow you look at our adjusted EBITDA range sons any income for raw for <unk>.

Ari: OK. What was your second question? Okay, and then the second question is, you did this global deal with Netflix. I think you didn't give real clarity at the time on what international markets are not covered in the deal or contemplated over the long term. So any clarity that you could give on that would be helpful.

For us rather healthy we anticipate building up cash over the balance of this year and I think the commentary was we'd be in a meaningful cash position by the end of 'twenty five that does.

Andrew: Yeah, look, let me take the first one, Brandon, in terms of capital allocation. What we did say is that we expect to have meaningful cash flow or cash on hand in 2025. We gave some guidance on adjusted EBITDA conversion to free cash flow.

By any means limit our exploration of potential things over the next six to 12 months, but the point was five point was around just the cash balance.

The second question on the second question look I think we would generally be opportunistic or look to be opportunistic and we would view.

Andrew: You look at our adjusted EBITDA range, SONS, any income for raw materials for Q4, that's rather healthy. We anticipate building up cash over the, I think the commentary was that we'd be in a meaningful cash position by the end of 25. That doesn't, by any means, limit our exploration of potential things over the next 6-12 months, but the point was, the fine point was around just the cash position. On the second question, look, I think we would generally be opportunistic or look to be opportunistic, and we would view any opportunity through the lens of creating shareholder value. There was a shareholder that sold stock.

Any opportunity through the lens of creating shareholder value.

There was a shareholder that sold stock.

As you know we participated as I mentioned in our prepared remarks to the tune of $100 million roughly.

Roughly one 3 million shares.

I'd just add it doesn't as I said based on the first answer with with Ben and this Netflix is an incredible partner, it's over $5 billion I think in my opening remarks, I said 5.2, it's an unbilled if a long term deal we take out.

Mitigated a lot of the risk in the business.

We're very happy with it I think certain people that we're talking to right now were questioning whether we would ever get to deal with raw. After we made the Smackdown deal and as you can see it's an incredible deal throwing off a ton of cash.

Ari: As you know, we participated, as I mentioned in our prepared remarks, to the tune of $100 million, roughly $1.3 million. I would just add, listen, as I said based on the first answer with Ben and this, Netflix is an incredible partner. It's over $5 billion; I think in my opening remarks, I said $5.2 billion. It's a long-term deal; we've mitigated a lot of the risk in the business. We were very happy with it.

And Brandon just let's call it out I mean, obviously, we're talking about visit Mcmahon specifically in terms of cash and stock still holds I believe 20 million shares.

Exactly it's all registered and he'll do whatever you're going to do and we're on the sideline. We will have a look we'll see we have no idea on timing, we're not having any discussion with him. He's given us no point of view on his motive where it be plans to sell or not sell or if it does how much so we're going to wait around.

Ari: I think certain people that we're talking to right now were questioning whether we would ever get a deal with RAW after we made the Smackdown deal. And as you can see, it's an incredible deal, throwing off a ton of cash. And Brandon, just, I mean, let's call it out.

And find out just like you.

Perfect and I think the last part of it.

Ari: I mean, obviously, we're talking about Vincent McMahon specifically in terms of cashing out. He still holds, I believe, 20 million shares, exactly, it's all registered, and he'll do whatever he's going to do, and we're on the sidelines. We'll have a look, we'll see, we have no idea about timing, we're not having any discussions with him. He's given us no point of view on his motive or if he plans to sell or not sell or, if he does, how much.

On Netflix brand in terms of what's in and out of that deal just to be clear and put a point a finer point on that one.

Netflix has the right to all international territories as and when.

They become available.

We're kicking off with that.

Obviously, Latam and Canada some of the key markets that we thought that we put in our initial press release that were of importance that are available as of January. The first those that are not available as at that time would roll in if and when they become available subsequent to January one 'twenty five yes.

Andrew: So, you know, we're going to wait around and find out just like that. And I think the last part of your question on Netflix, Brandon, in terms of what's in and out of that deal, just to be clear and put a fine point on that one, Netflix has the right to all international territories as and when they become available. We're kicking off. Obviously, LATAM and Canada are some of the key markets that we put in our initial press release that were of core importance and available as of January 1st. Those that are not available as of that time would roll in if and when they become available subsequent to January 1st.

And those are really premier markets for them Brandon U K.

It was a definite priority for them Latam was a definite priority for them. So we're glad that kind of those deals are up and available and is the rest come out over time.

I'll be jumping and they've shown they want to expose the WWE E. Two there were 260 million global subscribers and obviously beyond the points, Andrew and an army of Articulately laid out.

Andrew: Yeah, and just, I mean, those were really premier markets for them, Brandon. The UK was a definite priority for them. LATAM was a definite priority for them. So we're glad that some of those deals are up and available. And as the rest come out, over time, you know, they'll be jumping.

Also excited about the fact that we exceeded.

Ari: And they've shown they want to expose WWE to their 260 million global subscribers. And obviously, beyond the points Andrew and Ari have articulately laid out, you know, we're all so excited about the fact that we exceeded our guidance, right? We told the street, we saw a 1-4 across the board for these three properties.

Our guidance right.

Hold the street, we saw a one four across the board for these three properties, we just exceeded that guidance and.

We got it with Netflix I mean, that's the big headline when you're doing almost a $5 2 billion deal with the best platform in the world with the most biggest audience in the world arguably one of the best media content brands in the world and by the way happened to be one of the best marketers in the World just see the front page the idea of seeing WWE raw on the front.

Ari: We just exceeded that guidance, and we did it with Netflix. I mean, that's the big headline. When you're doing almost a $5.2 billion deal with the best platform in the world, with the biggest audience in the world, arguably one of the best media content brands in the world, and, by the way, happen to be one of the best marketers in the world, just see the front page. The idea of seeing WWE Raw on the front page when you go to Netflix is something we're really excited about. Thank you for watching!

When you go to Netflix is something we're really excited about.

Alright, great. Thank you.

Okay.

Hmm.

Our next question is from Mr. Please.

Eric Handler with Roth <unk>. Your line is now open.

Good afternoon. Thank you for the question two questions actually first with regards to Netflix deal. How does this impact what you may or may not do with international brand extension sort of like Ww in Europe.

Brandon Ross: I agree, thank you. Our next question is from Eric Handler with Ross MKM. Your line is now open. Good afternoon.

Eric Handler: Thank you for the question. Two questions. First, with regard to Netflix. How does this impact what you may or may not do with international brand extensions, sort of like WWE Europe or what you have now with WWE UK? And I'll come back with a second question afterwards. I really don't understand that first question. Well, how does that work, is one bucket leaked out?

Now with WWE, UK and I'll come back with a second question afterwards.

I really don't understand that first question.

What would how do you see on <unk>.

Yes.

Go ahead.

I was just there is this partnering with up with Netflix have any impact on what you may do with future brand extensions of WWE sort of like what you have now with <unk>.

Ari: Go ahead. I was just wondering, does partnering up with Netflix have any impact on what you may do with future brand extensions of WWE, sort of like what you have now with, you know, NXT UK? Does that help you at all with, you know, having one global partner? Does it help you as NXT UK maybe morphs into NXT Europe or NXT Latin America or something along those lines? And Nick Kahn is also on the call from WWE, and he can comment on it.

NXT UK does that help you at all with having one global partner doesn't help you as you as NXT UK, maybe morphs into NXT Europe.

Our NXT Latin America, or something along those lines.

<unk> is also on the call from WWE and you can if you can comment on it Nick yes, so for US our global localized product has always been a priority. We think Netflix helps us with that so even if you look at the premium live events scheduled for this calendar year Perth, Australia. This past weekend in Berlin, we own France Riyadh.

Nick Kahn: Yeah, so for us, a global, localized product has always been a priority. We think Netflix helps us with that. So even if you look at the premium live event schedule for this calendar year, Perth, Australia this past weekend, Berlin, Lyon, France, Riyadh, Canada, all over the world, look for more local stars from those markets down the road as we expand our tryouts to international markets. So we feel confident over time that that will all be covered and will be part of the network. Also, just remember, our Netflix deal is important to know for everybody. Our Netflix deal doesn't preclude us from creating new content and events and programming on a global basis. We just have some first look rights that they would have a window to, essentially, evaluate.

Canada all over the World look forward down the road more local stars from those markets as we expand our tryouts two international markets. So we feel confident over time that that will all be covered and will be part of the Netflix deal.

Yes.

Great and then also just remember as a former it doesn't.

Our Netflix deal is important to note for everybody, our Netflix deal doesn't preclude us from creating new content and events and programming on a global basis. We just had some first look rights that they would have a window.

Essentially evaluate so it does it.

Nick Kahn: So it doesn't, in NXT, just across the board, we have an opportunity to create all kinds of new material, sell it for an incremental rights fee, but they're going to be first in line to pay that rights fee. The Contender Series, which we created after we had the Ultimate Fighter. So you can see we're creative as relates to wrestling, and in bull riding, we had the individual, and we created a team event.

Can you just across the board, we have an opportunity to create all kinds of new material sell it for an incremental rights fee, but they're going to be first in line to pay that right like we have with UFC.

The contender series, which we created after we had the ultimate fighter.

You can see we're creative as it relates and in Bull riding we had the individual and we created a team event. So we have the ability to do that within this deal and ESPN is very similar to Netflix on our risk points because they have a first look as well and any new program and they say no we're out there collecting incremental right.

Ari: So we have the ability to do that within this deal. And ESPN is very similar to Netflix on Ari's point because they have a first look as well on any new programming. They say, no, we're out there collecting incremental rights. Got it. Okay, that's helpful.

Got it Okay. That's helpful. Secondly, you've talked in the past about having weaker.

Ari: Secondly, you've talked in the past about, you know, having weekend back-to-back events with USC and WWE. You just did that in Anaheim. I'm curious how you think about revenue and or cost synergies when you do back-to-back events like that. So, as you know, we just did, as you pointed out, a Saturday night and a Monday night. So it was UFC on Saturday night in Anaheim, with Raw only on Monday night. Smackdown was in Utah. Those two alone.

Weekend.

Back to back.

Fence with UFC and WWE, just did that in Anaheim I'm curious, how you think about revenue and or cost synergies. When you do back to back or if that's like that in the same city.

So as you know.

We just did as you pointed out a Saturday night Monday night, So as UFC Saturday night in Anaheim Raw only on Monday night Smackdown was in Utah at that time.

Those those two alone.

Ari: There was significant savings on the box office, et cetera. And we now are looking at the calendar. This will be for 2025 with regard to all three. The revenue, you could imagine sponsorship, kind of a ticket package. Site fees, which are growing significantly. There's a significant revenue opportunity, licensing in the arena. And as you saw in Mexico City, there was a WWE star there, as you saw at the WWE event.

There was significant savings on the box office et cetera.

And we now are looking at the calendar. This will be for 2025 with regard to all three of the revenue.

Could imagine sponsorship.

It kind of a ticket.

Package.

Site fees, which is growing significantly there's significant revenue opportunity licensing in the arena and as you saw in Mexico City. There was a WWE star there as you saw at the WWE event, there with Chandler was there promoting stuff. So there's a lot of crossover there and there is some cost synergies.

Ari: Chandler was there promoting stuff, so there's a lot of crossover there. And there are some cost synergies that we recognize, but there will be more because those were just two of our events. Yeah, just to put a pin in that one, Ari hit the top line.

We.

Nice, but there will be more because that was just two of our events and there's more to come just to put a pin in that one.

Hit the top line on the cost side we.

Mark: On the cost side, we benefit from venue rent economics by virtue of bringing both shows to the same building. And it doesn't necessarily have to be the same weekend, Eric. We can bring both properties and negotiate a multi-visit deal, if you will, with that venue and realize the same beneficial or preferential rent economics as we did this past weekend. Ari talked about the top line, more beneficial ticket rebates by virtue of packaging these two programs together in the same venue. So look, it starts to get really interesting. And that's before any logistical savings on T&E, other production, event operation efficiencies, and otherwise. So look, that's something that's well in the works here. Eric, think just about, this is a good analogy here, kind of years ago.

We benefit from venue rent economics by virtue of bringing.

Both shows to the same building and it doesn't necessarily have to be Eric the same weekend, we can bring both properties and negotiate a multi.

Visit deal if you will with that venue and realize the same.

Beneficial or preferential rent economics as we did this past weekend already talked about the top line more beneficial ticket rebates by virtue of packaging. These two programs.

Together in the same venue. So look it starts to get really interesting and that's before any logistical savings on any other production event operation efficiencies and otherwise so look that's a that's something that's well in the works here Eric.

This is a good analogy here kind of years back. This is varian now now August two.

Mark: This is very analogous to ESPN and ABC having Sunday night and Monday night. Right. So anytime there were back-to-back shows that were even in the same region, there was substantial cost savings on truck, personnel, satellite time, you name it. So we think there's a real halo effect for us on the production side of the cost. Thank you so much.

<unk> and ABC, having Sunday night, and Monday night football right. So anytime there was back to back shows that were even in the same region. There were substantial cost savings truck personnel satellite time, you name. It. So we think theres a real halo effect for us on the production side of the cost synergies.

Helpful. Thank you so much.

Thank you Sir.

David Karnovsky: Our next question is from David Karnovsky with J.P. Morgan. Your line is now open. Hey, thanks for the question. Aria, we wanted to get your latest thoughts on just the sports rights landscape, given obviously the distribution agreement with Netflix, but also the sports joint venture for some legacy media firms, and then the continued pressure at Linear. How are you seeing upcoming renewals with UFC and WWE Network as positions? Well, I mean, on the latter point, as you know, we have the PLEs, and we have the UFC deal coming up. We feel very strongly about that and our partnerships that we currently have. But there are many players in the marketplace just based on the subscribers we have at Comcast with the PLEs and what we've done for ESPN slash ESPN Plus with the UFC. Mark just completed a pretty good negotiation as it relates to the football playoffs. So, and what we just did with regard to Netflix.

Our next question is from David Karnofsky with J P. Morgan Your line is now open.

Alright. Thanks for the question I wanted to get your latest thoughts on just the sports rights landscape given obviously the distribution agreement with Netflix, but also the sports joint venture for some legacy media firms and then the continued pressure in linear kind of how are you seeing upcoming renewals with UFC and WWE network is positioned.

Well I mean.

On the on the latter point, we as you know we have the <unk> and we have the UFC deal coming up we feel very strongly about that and our partnerships that we currently have but there's many players in the marketplace. Just based on the subs, we have at Comcast with the <unk> and what we've done for ESPN Slashy ESPN plus with the UFC.

Mark just completed a pretty good negotiation as it relates to.

The football playoffs, so and what we just did with regard to.

Netflix I think they are now.

Ari: I think they're now a player in this, and I think everybody is kind of paying attention to them and what they're going to do. And now with the new entry with the Fox. Warner Brothers and ESPN. That being said, I think they're all moving to a linear, either AVOD or SVOD service, and I think our assets are going to be really important in that conversation. We're going to see what happens with the NBA.

Layer in this and I think everybody is kind of paying attention to them and what theyre going to do and now with the new entry with the.

Fox.

Warner Brothers, and ESPN that being said I think they're all moving to a linear either at Avon restaurant service and I think our assets are going to be really important in that conversation, we're going to see what happens with the NBA I think thats going positively and so we feel very good about where sports rights in general are going Marc.

Ari: I think that's going positively. And so we feel very good about where sports rights in general are going. Mark can talk more specifically about college football, but it's all on an upward trend. Yeah, I think.

Talk to more specifically on college football but.

It's all on an upward trend.

Mark: David, first of all, on the joint venture, Ari and I have no comment on that. We're not going to get into WBD, Disney, the whole combination. Just back on the sports rights front. You know, I think, geez, for the better part since we bought the UFC, it's just been commentary about sports rights, the bubble. When's it going to burst?

I think.

David first of all on the joint venture.

Mark and I have no comment on that we're not going to get into the W. BD Dizzy.

The whole combination just back on the sports rights fronts.

Geez for the better part since we bought the UFC has just been commentary about sports rights. The bubble when is it going to burst when's the cap coming and we certainly face a lot of those headwinds on the WWE renewals, but I'll just remind you.

Mark: When's the cap coming? And, you know, we certainly faced a lot of those headwinds on the WWE renewals. But I'll just remind you, like,

Mark: They're just the platforms that will pay for premium content, and we're blessed by having two great premium content properties in the WWE. And when you have premium content and you have several bidders, which clearly there are out there, and you have a move from linear to digital, but you still have to keep linear alive, you've got a pretty robust marketplace. When Ari talks about the College Football League and the NCAA deal, and the renewal that ESPN did that was three times, 3X. Then also the CFP, as you know, they went from five games to 12 games.

They're just the platforms are going to pay for premium content and we are blessed by having two great premium content properties and the WWE and Yossi and when you have premium content and you have several bidders, which clearly there are out there and you have a move from linear to digital but you still have to keep linear alive, you got a pretty robust marketplace.

And when he talks about the <unk>.

College football you're talking about the NCAA deal and the renewable that ESPN did was three times three X. Then also the CFP as you know they went from five games to 12 games that was <unk> increase that ESPN been off and then Amazon takes a wildcard NFL playoff game, which was a big hit on Peacock for $110 million.

Mark: That was a healthy increase that ESPN bid off. And then Amazon takes the wild card NFL playoff game, which was a big hit on Peacock for $110 million, and they have the first right of first refusal. They jump on it for next year and up it to $120 million. And then the NWSL, which also includes IMG and WME Sports, did the negotiating on that end with a multitude of players, women's soccer. That went for a big number.

And they have first right of first refusal they jump on that for next year and up at the 120, and then the NWS cell, which also <unk> sports.

Did the negotiating on that and with a multitude of players women's soccer that went through a big number so not to mention the NASCAR deal was a very healthy deal sports live sports, especially when you have what we have which is volume and year round. We're sitting in a really good place. This conversation has been the same conversation with.

Mark: So not to mention the NASCAR deal was a very healthy deal. Sports, live sports, especially, when you have what we have, which is volume and year-round, we're sitting in a really good place. You know, this conversation has been the same conversation with... motion picture and television; when is the bubble going to burst with regard to contact? I would just say to you, I appreciate everybody, but it's eventually got to burst when exactly what Mark said.

Motion picture and TV, one is the bubble burst with regard to content.

I would just say to you I appreciate everybody. It's eventually got a burst it nevertheless, when exactly what Mark said when you have premium content, which we sit on whether it be at edr or here premium content sells for premiums.

Andrew: When you have premium content, which we sit on, whether it be at EDR or here, premium content sells. And then just on a separate topic, I wanted to ask about the class auction lawsuit against UFC. My understanding is that this could be heading to trial in the coming months. I guess in that context, any update you could provide on your thinking here, and how do we look about the read-through from this to what could happen with a second lawsuit representing a leader first? Yeah, look, as we've always said, and this has been our consistent message since we started talking about this case publicly. We believe strongly that the facts and the law are on our side.

Okay, and then just on a separate topic I wanted to ask on a class action lawsuit against Youll see my understanding is that.

It could be heading for the trial in coming months I guess in that context any update you could provide on your thinking here and how do we how do we look about the read through from this to what could happen with a second lawsuit representing a later period.

Yeah, well as we've always said.

And this is a consistent message since we started talking about this case publicly we will.

We've strongly that the facts and the law are on our side and we look forward in terms of timing to make our arguments.

Andrew: And we look forward, in terms of timing, to making our arguments to a jury at trial. But, as is typical in a case like this, we've been engaged in private mediation simultaneously with our trial preparation, and that's what we're prepared for. Thank you. Operator, we'd like to take the next question... Our next question is from Peter Cepino with Wolf Research. Your line is now open. Hi, thank you. Two, if I could.

Through a jury trial, but as is typical in a case like this we've been engaged in private mediation simultaneously with our trial preparations in that.

That's what we're prepared to comment on at this time.

Thank you.

Operator, let's take the next question please.

Our next question is from Peter Zaffino with Wolfe Research. Your line is now open.

Hi, Thank you two if I could first regarding the UFC are you worried at all about competing for Disney ESPN programming budget.

Ari: First, regarding UFC, are you worried at all about competing for Disney ESPN's programming budget in a two-year period of time when they are going to be funding NBA inflation and several other contract renewals in context of their broader corporate commitment to reduce programming costs? And the second question is about competition. I wondered if you've seen any behavior changes at the PFL since they took in outside capital. Thank you. I'll take the second part first. I mean, just do yourself a favor.

In a two year period of time in which they are.

I'm going to be funding NBA inflation in several other contract renewals in context of their broader corporate commitment to reduce programming costs.

Second question is on competition I wondered if you've seen any behavior changes at the PFS since they took in outside capital. Thank you.

I'll take the second part first I mean, just to yourself a favour look at the ratings that just happened.

Ari: Look at the ratings that just happened. We're happy with competition. Not only are the PFL and Bellator competitions, but football's competition, basketball's competition, video games are competition. There's a lot of competition, and there's a lot of competition in the MMA space. That being said, we performed significantly better than them as it relates to the ratings that took place.

We're happy with competition not only are the <unk>.

F L and.

And Bellator competition, but football's competition basketball's competition Videogames are competition, there's a lot of competition and Theres a lot of competition and then M&A.

That being said, we performed significantly better than them as it relates to the ratings.

It took place recently.

Ari: As it relates to the NBA and whether they're going to be on ESPN, Comcast, Warner Brothers, Amazon, etc., and their budgets, we know how much the UFC drives ESPN slash ESPN Plus. We're happy with our relationship. I think they're happy with us, and we feel very positive about that relationship and what's going on. So, that's all I'll say.

As it relates to the NBA and whether they're going to be at ESPN, Comcast Warner brothers, Amazon et cetera, and their budgets.

No how much the UFC drive SPN Sochi, ESPN, plus we're happy with our relationship.

I think.

They're happy with us and we feel very positive about.

That relationship and what's going to come.

So that's all I'll say right now.

Operator: Operator, we'll take one last question. Next question. Our last question will be from Ryan Grevette with UBS. Your line is now open. Great, thank you.

Operator, let's take one last question.

My answer.

Alright.

Yes.

Got it.

Next question for either one.

Our last question will be from Ryan Gravette with UBS. Your line is now open.

Yeah.

Great. Thank you just going back to the Netflix deal are there cost savings that you can realize by having just.

Andrew: Just going back to the Netflix deal, are there cost savings that you can realize by having just, you know, largely one partner for the majority of your programming internationally, like sunsetting a WWE Network, in any way to quantify that? And then just curious about the initial reception from your sponsors on the cross-selling opportunity here and any way to frame, you know, when that could drive higher WWE sponsorship revenue. Outline This is Andrew.

Largely one partner for the majority of your programming internationally.

Like sunsetting of WWE network, and any way to quantify that.

And then just curious on the initial reception from your sponsors on the cross selling opportunity here in any way to frame.

When that could drive higher WWE sponsorship revenues. Thanks.

I'll outline this is Andrew I'll take the first part Mark will take the second one I think you hit the nail on the head on one of the opportunities vis vis our deal with Netflix as you know.

Andrew: I'll take the first part mark. We'll take the second one. Yeah, I think you hit the nail on the head on one of the opportunities, you know, The Lion's Share, day one of our content international. The WWE Network will be licensed to Netflix, and that there is a longer tail for WWE Network. Operating in the market that will then shift, deals are up, so sunsetting that network is certainly part of our plan and will yield costs when we transfer over to the license model, as I said, and then just on the partnership side of the business, which is obviously, and maybe even arguably, among the top three revenue synergies we see for TKO going forward. Let's remember when we, meaning Endeavor, bought UFC, they were doing roughly $35 million in partnership revenue. Not a lot of inventory identified, not a clear strategy, not a robust global staff selling it, and not any local folks, which, by the way, WWE is very good at. They sell really well locally, but it's national; they need work.

The Lions share of day, one of our content internationally inclusive of the WWE network will be licensed to Netflix and to the extent that there is longer tailed WWE network.

Operating in the market that will then shift to Netflix at the time in which.

Those deals are up so sunsetting that no network is certainly a part of our plan and will yield cost savings.

We trends for over to the license model as I said in my prepared remarks.

And then just on the on the partnership side of the business, which is obviously and maybe even arguably are.

Among the top three revenue synergies, we see for <unk> going forward, let's remember when we meaning endeavor for you.

See they were doing roughly $35 million in partnership revenue.

Not a lot of inventory identified not a clearer strategy not a robust global staff selling it and not in the local folks which by the way WWE is very good at it.

Sell locally really well, it's nationally need work and now here we are.

Mark: And now here we are, you know, end of February in 2024, and we've got a clear line of sight to well over $200 million in partnership revenue for the year. So it's been a great growth story for us. And just as a reminder, similar to Netflix, not only are the dollars good, and the margins good, and the recurring revenue good, but these are great marketing partners. You're not going to find better marketing partners for our brand than Monster Energy and Anheuser-Busch, et cetera. So we're really confident that we can really materialize the same kind of results on the WWE side, especially since we have merged a best-in-class global partnership theme that is now on the street selling both.

End of February in 2024, and we've got a.

A clear line of sight to well over $200 million in partnership revenue for the year. So it's been it's been a great growth story for us and just as a reminder, similar to Netflix not only of the dollar is good and the margin is good and the recurring revenue good but these are great marketing partners youre not going to find better Mark.

Getting partners for our brand than Monster energy and Anheuser Busch et cetera. So we're really confident that we can really materialize. The same kind of results on the WWE side, especially since we have merged our best in class Global partnerships team that is now on the street selling both <unk>.

Operator: Well, thank you, everyone, for joining us on today's call and for your... TKO. Operator, you can conclude the call. That concludes today's call. Thank you all for your participation. You may now disconnect your line.

<unk>.

Great well. Thank you everyone for joining us on today's call and for your interest in Teekay LNG. Operator, you can conclude the call now.

That concludes today's call. Thank you all for your participation you may now disconnect your line.