Wrestling

Full Coverage of the WWE Q3 2022 Earnings Call with Stephanie McMahon, Nick Khan and Others

on

WWE Chairwoman & Co-CEO Stephanie McMahon, Co-CEO Nick Khan, Chief Content Officer Paul “Triple H” Levesque, President & Chief Financial Officer Frank A. Riddick, and Senior Vice President & Head of Investor Relations Seth Zaslow hosted a Third Quarter 2022 Earnings call today from WWE headquarters in Stamford, CT. Below are highlights from the call:

* Zaslow thanked the operator and welcomed everyone to the call. He introduced the executives and went over the basics. Stephanie took over and said Q3 2022 was another record-setting quarter for a third quarter. She touted record revenues from the press release and said they are on pace for record numbers for the full year. She says the backdrop to strong financials was the renewed energy around creative, which boosted viewership across all platforms. She says in a world of declining TV ratings, WWE is growing. She said RAW is up almost 4% year over year, while the top 25 cable networks are down 12%. She says SmackDown on FOX is up 1% while broadcast networks are down over 15% year over year. She said SmackDown regularly attracts over 2 million viewers and ranks #1 in the coveted 18-49 key demographic among all Friday night broadcast TV programs. She said before the close of Q3, the September 23 SmackDown saw the biggest viewership since 2020. The ratings increases are directly attributed to the first of its kind multimedia campaign, the White Rabbit Project, designed to engage and intrigue fans with a series of clues and cues, using a myriad of platforms and technologies

She says year to date viewership of Premium Live Events on Peacock is up 38% for the same period in 2021, and one notable highlight is how Clash at The Castle was the most viewed WWE international event in the United States on Peacock, and in the UK. With a 39% increase of viewership year over year, Clash at The Castle became the highest-grossing European event, in merchandise and ticket sales. She said this proves strong IP and better storylines drive all lines of business. She said in Q3 WWE also saw the successful re-launch of WWE Shop with Fanatics, and Fanatics plans to scale up their offerings for the holidays, by 25% to compare to last year’s holiday offerings. She said the Panini trading card partnership is also delivering above what was planned, and this is all largely in part due to a focused effort on weaving products in storylines, taking a fresh approach with partners, doors opening that were previously closed. She touted the success of the MLB partnership for custom title belts. She said they also remain bullish on sponsorships, noting that current market conditions have impacted the results but they still are optimistic about their 2023 performance. She said she, Triple H, Nick and Frank remain excited about opportunities ahead with a focus on 5 key areas – escalation of media rights and content, international Performance Centers and local globalization of IP across multiple lines of business, monetization of WWE’s IP including around the Superstars, digital and Web3 and whatever the Metaverse becomes. She said they are just getting started and they look forward to sharing more as plans develop.

Khan took over and said this was another strong quarter of growth for WWE, and the live event sector was a key driver. He says Extreme Rules set a record in ticket sales, and those sales began to spike due to White Rabbit. With Royal Rumble 2023 in San Antonio, they have already surpassed the sales of the second-highest grossing Rumble of all time, held this past year. In terms of ticket sales for the 2023 Rumble, they are currently at a gross gate of $4.6 million, putting it on track to make 2023 the highest-grossing Rumble in WWE history. Elimination Chamber 2023 from Montreal, they expect high demand as well. With WrestleMania 39 from Los Angeles, they have already sold around 100,000 tickets without one match or person announced, and they expect a sold out So-Fi Stadium on both nights. Khan mentioned how they worked closely with the Cardiff, Wales tourism board and local government for Clash at The Castle, and how they are working with other local governments as these WWE events are a big boom for the local economies. Khan said to look for more from WWE in the site-see space as they are talking with more local tourism boards and local governments about future WWE events in their markets.

Khan said they recently closed a number of international media rights deals since last fall, including deals in Australia, The Caribbean, and Sub-Saharan Africa. The Sub-Saharan Africa deal includes a Superstar talent search of the continent. The WWE recruiting team will travel to Nigeria this month to begin the search. The local focus has resulted in moving the WWE Network to much larger streaming platforms in these regions, which is increasing WWE’s global footprint. He touted the success of local-language originals in international markets with WWE Studios movies. The 8-episode (?) Spanish-language “La Luchadora” series about an aspiring female luchadore will premiere on Netflix in Q1 2023, executive produced by WWE Studios. They are also working on a new 8-episode Hulu series with Montez Ford and RAW Women’s Champion Bianca Belair, and the first season is in production. They are also pleased with doing more business with Disney and Hulu, and the RAW RIA rights deal with Hulu was recently extended. They are also seeing success with their 4 shows on A&E, which are delivering a 15% increase in ratings year over year, in the timeslot.

Khan said they are as confident as ever in the WWE product as they head into the next round of media rights negotiations. The market is hungry and willing to pay a premium for content, and there’s increased viewership for all content. That with a robust marketplace and strong ratings, they feel they are well positioned to begin U.S. media rights talks next year. They will also begin watching closely as Amazon begins their NFL Thursday Night Football partnership as they witnessed first-hand when they moved to Peacock that dedicated audiences will migrate to new platforms.

Triple H took over now and touted the strong viewership numbers. He said creative is working with storytelling, and it’s resonating with fans. Beyond that, there’s also viewership growth across social channels. He said Q3 had the most social video views of any major sports league, outpacing the #2 league by more than two times. They also beat their own internal records for video views. In July, the WWE Instagram had the highest video views in the history of the account, and in August the WWE Twitter set the record for all-time views on the account. The strong performance is the result of evolving with their platforms, more engagement and longer watch times, which brings increased ad revenue. He said the WWE YouTube and TikTok accounts maintain their already strong positions, and WWE remains the #8 most-subscribed channel on YouTube with 91 million subscribers. In Q3, the WWE YouTube surpassed 70 billion lifetime views, making it only the 7th channel in the history of YouTube to do so. WWE on TikTok remains the #1 most-followed sports league on the platform, ahead of the NFL, NBA and UFC, by millions. He said one specific stat was the success on social and how it led to linear viewing success, thanks to the White Rabbit Project. He mentioned how the long campaign played out across social and the arenas.

Triple H then went over the basics of the White Rabbit campaign and how they let it develop organically among fans, then introduced the interactive elements like QR codes, puzzles and such.

Triple H touted the successful return of Bray Wyatt and the White Rabbit campaign, noting that Wyatt’s return resulted in 30% increase in total viewership and the most-watched Extreme Rules viewership in history. RAW two nights later also benefited with an increased audience to nearly 2 million up 14% over the previous week, with competition from the NFL and The Voice. The White Rabbit campaign also drew an increase in sales as on day one of Wyatt’s return, his new t-shirt was not only the top selling item among WWE merchandise, but the entire network of Fanatics e-commerce websites. WWE’s White Rabbit campaign was the perfect example of how to use multimedia to drive engagement, excitement and revenue. Triple H said to look for more of these strategic creative stunts as WWE truly is 24/7 programming. He said as they continue to find ways to promote established Superstars, they are also focused on the pipeline for the next generation of Superstars. He touted the WWE Campus Rush tour of schools and said they expect more D1 athletes to be in the WWE pipeline this time next year.

Triple H said the increased excitement around the creative and WWE in general has led to more opportunities than ever to engage with celebrities outside of WWE, helping to bring in new fans. He wondered if Logan Paul’s brother Jake Paul will be in the corner of Paul this weekend at WWE Crown Jewel in Saudi Arabia as Logan faces Undisputed WWE Universal Champion Roman Reigns, who will have The Bloodline in his corner. He also touted Survivor Series with WarGames.

Riddick took over and went over the numbers from the press release. He mentioned the investigation into the allegations against former WWE Chairman & CEO Vince McMahon and former Talent Relations head John Laurinaitis (without naming Laurinaitis), and said the investigation has completed, and the committee has been disbanded. The WWE Board of Directors is working with management to implement the recommendations made by the committee. It was noted that going forward, they expect to take on additional costs related to the investigation. It was also reiterated how McMahon has agreed to pay all reasonable costs related to the investigation, that are not covered by insurance.

It’s now time for the Q&A portion of the call.

Triple H was asked about the core tenets of the current creative philosophy and how they manage that year long cycle. He says it’s about content creation, trying to pick places you want to go, and how you want to get there. He said they are looking ahead more than they’ve ever done in the past, looking at WrestleMania season and how they want to be positioned in the spring, summer and fall. It’s a large cycle and they look to see how they can get ahead of it. Looking at the success and the creative they’re doing now, he said they’re doing it without Charlotte Flair, Becky Lynch, Cody Rhodes and Randy Orton, those are significant stars that will move the needle as well when they return. The other big thing is really focusing on character development and while we see a lot of stars returning, we will also see new stars coming up through developmental, which have never been seen on RAW or SmackDown, and they are developing those characters… so you’re invested in each individually, so they mean more within the programming itself. He said they are keeping things fresh, trying things outside the box, some work and some don’t, but White Rabbit was really thinking outside of the box from the creative team, and that leads to you being able to try new things, keeping the successes and losing the losses, and he’s not afraid of the losses. He said creative now is about moving forward, but also having a plan of where you want to go.

Khan was asked what metrics have them confident when it comes to the RAW and SmackDown renewal fees next year. Khan referred to the 3 R’s – ratings, relevance and revenue. He said WWE is firing on all cylinders in terms of those, and in addition the marketplace is firing on all cylinders in terms of what it’s paying to different entities that can deliver those three R’s.

Khan was asked about more local subsidy deals for larger events, like with WWE Clash at The Castle, and if WWE expects more of those deals in 2023, or if it will be more like 2024 or 2025, referring to how Khan earlier said they were in active talks with local governments or tourism boards. Khan said they are taking a deep dive, and they certainly believe there will be more local deals for events. They have one offer for a PLE they like already, so they are in the process of trying to close the deal, and more are coming. They think with the economic book the WWE product brings to different countries, they believe they are getting the word out and already seeing results.

Triple H was asked about NXT Europe, what he thinks it can morph into in terms of bigger, better, bolder, and what timeline they are thinking for expansion past Europe. He said what we saw in Europe, it was designed to replicate NXT in the United States… they got started, then COVID-19 hit, slowed things down, and then they needed to reignite it, but they got to a place where they were ready to go again but it’s sort of tough to rebrand something and reboot while you’re still running it. He said as Europe evolves and grows, and they bring it back, we will see more of what we see in the United States with NXT – a system underneath it for recruiting, a system underneath for bringing in the best athletes from all around Europe, whether it’s recruiting from Olympics or elsewhere. He said they will bring in athletes, train them in the current Performance Center or something bigger, and turn those talents through the overall WWE system, whether RAW or SmackDown. He said the local global brands are very attractive to a lot of their partners in those markets, and they have the opportunity to make it be something even bigger. He said Europe also becomes a very interesting hub for WWE in other countries. For example, in India they recruit talent but it’s very hard to find the athletes then bring them to the United States to train, it’s a very long process, but they can get the talents to Europe much faster, train them much quicker, and have success in a shorter period of time. It becomes a key hub for WWE at that point. He said once Europe is established, they will be branching into other markets.

That’s it for the call. Stay tuned for more news and notes.

You must be logged in to post a comment Login