Steve Carrier on May 3, 2023
Welcome our live coverage of WWE’s 2023 First Quarter Earnings Call, brought to you by Ringside News. Below are highlights from the call.
During the call, Seth Zaslow welcomed everyone and the WWE executives, including Nick Khan, Paul Levesque, and Frank Riddick, were present. Notably, Vince McMahon was not in attendance.
Seth Zaslow greeted the participants and Nick Khan kicked off the call by discussing the Endeavor takeover of WWE. He recapped the recent announcement that WWE and UFC will merge into a new company and reported that they are actively seeking regulatory approval, with expectations of completion in the second quarter of 2023.
Khan also disclosed that WWE is currently in “engaged” discussions with NBCU and FOX regarding the renewal of media rights.
Nick Khan highlighted the impressive financial success of Wrestlemania 39, reporting that it was the most profitable in WWE history, with the highest attendance and record-breaking gate revenue. Viewership also increased by 31%, and sponsorship revenue increased by over 100% compared to the previous year. The event even broke the previous year’s record for merchandise sales.
Internationally, the event was also a huge success, with 35 million viewers tuning in to watch.
Royal Rumble 2023 was also a success, becoming the most viewed Rumble in history.
Furthermore, Elimination Chamber 2023 was also financially successful, generating a larger gate than any previous Elimination Chamber event.
Despite industry trends, Raw and Smackdown are continuing to seek growth.
Nick Khan reported that WWE had experienced a 52% increase in attendance in North America, accompanied by higher ticket grosses. With many sellouts and no signs of slowing down, the company is on a steady path to growth.
Summerslam 2023 had an impressive number of tickets sold on its on-sale day, surpassing any other non-Wrestlemania event in WWE history. As a result, they are expanding the seating sections at Ford Field.
In a new deal, Fanatics will now oversee in-venue sales of WWE merchandise.
Khan also highlighted the upcoming Backlash event, for which they received a seven-figure subsidy. The company is currently in discussions with multiple locations for similar deals.
Finally, WWE is promoting the return of Night of Champions events in Jeddah, Saudi Arabia on May 27th, and in London, UK on July 1st. Discussions regarding media rights for these events in the UK are ongoing.
According to Nick Khan, WWE is proud of its current business and is excited about the prospect of further growth in 2023. The company’s long-term future is a major focus, with attention currently turned toward the Endeavor transaction.
Frank Riddick provided an overview of the Endeavor deal, highlighting the positive aspects of the transaction. While no new ground was broken, Riddick went on to review the financial numbers from the earnings report.
During the Q&A session, the WWE executives were asked about the increase in costs for content creation. Frank Riddick explained that the increase was mainly due to certain events being rescheduled from Q1 to Q2, as well as the costs associated with staging those shows. However, he stated that they do not anticipate any significant changes.
Nick Khan was also asked about renewals for Raw and Smackdown. He reported that they have had productive conversations with NBCU and FOX, and have seen growth in the product. While he could not provide an estimated timing for the renewals, he expressed confidence in the future of both series.
WWE executives were asked whether they are able to gauge interest from other networks outside of NBCU and FOX during the exclusivity window. Nick Khan replied that while he believes WWE is on the radar of many networks, the company is committed to honoring its exclusivity agreements and keeping discussions within those circles during that period.
The executives were also asked about any potential extensions with Peacock. Khan replied that since the current deal has a few more years left, they will evaluate their options at that time.
The WWE executives were asked about the potential for a deal in India. Nick Khan explained that the company had to pause its efforts due to the impact of COVID-19 and a large merger between Sony and Z in that region. However, they hope to resume discussions once the merger is complete and are optimistic about the potential for a deal. Additionally, they are monitoring all media rights deals in the area closely.
When asked about WWE’s preparedness for being a part of a new structure and management transition, Nick Khan responded that everyone at WWE is excited about the opportunities that could arise from the Endeavor transaction. He explained that Endeavor is not new to WWE, and that they fully embrace the deal. Furthermore, there is no indication that UFC or Endeavor have any interest in changing the way WWE runs their business or creative process, as Endeavor does not do this with UFC. Khan emphasized that Endeavor is skilled in expanding businesses internationally, and he looks forward to seeing what they can achieve with WWE after the deal is complete.
Paul Levesque echoed Khan’s sentiments, stating that excitement levels are high and they are looking forward to continuing to do what WWE does best. He expressed enthusiasm at the prospect of Endeavor leveraging their expertise to help grow WWE internationally across all areas of the business.
WWE executives were asked about the Fanatics deal. Frank Riddick responded by highlighting the positive economic benefits for both parties, explaining that Fanatics’ sourcing and product creation abilities will be a significant asset for WWE. He stated that the minimum guarantee provided by Fanatics was favorable for WWE, and that the company is optimistic about the deal, saying that they are “very bullish” on it.
WWE executives were asked to explain the corporate overhead and the major facets involved with the merger. Nick Khan responded by explaining that corporate overhead includes the costs of finance, data analytics, and the corporate office, among other expenses. He went on to clarify that the primary expense in this area is the cost of people and their compensation, rather than the cost of running a public company. Other expenses, such as insurance, the cost of the board, and SEC filings, are not the largest portion of these costs. However, the company is comfortable with its current overhead and is working to reduce these costs once the merger with Endeavor is complete.
Paul Levesque was asked about what has been done to drive WWE viewership higher, to which he responded that the company is thrilled with its performance this year and the revenue it has generated. He attributed this success to assembling the right team across the board, including building talents through the NIL program, the Performance Center, and international recruiting. He also praised Kevin Dunn’s production team, calling it unparalleled in the world.
Levesque emphasized the company’s focus on character development, citing The Bloodline and Sami Zayn as examples of engaging storylines that fans are invested in. He explained that they are extending the overall look of the event horizon, planning a year ahead and tracking backward. Levesque added that if something doesn’t work, it is not seen as a failure, but rather a learning experience.
WWE executives were asked about the exclusive windows for FOX and NBCU. Nick Khan responded that the exclusive windows run for about a month each.
They were also asked about advertising and sponsorship growth, specifically whether WWE is looking for all-year deals or event-to-event deals, and if they have received any interest from UFC sponsors who have never worked with WWE before. Khan explained that the company has been trying to establish more comprehensive and long-term sponsorships. However, they are waiting for the Endeavor deal to close before entering into discussions with existing UFC sponsors and partners.
When asked about potential future acquisitions internationally, the WWE executives explained that their focus is currently on closing the Endeavor deal and building upon their existing business. Once the deal is completed, they will consider future opportunities.
Regarding expenditures in the future to keep ratings growing, Nick Khan explained that once new deals are made and revenue is generated, the company plans to use the funds judiciously. At this time, they are unable to provide specifics on how the money will be allocated, but they remain optimistic about the company’s future prospects.
WWE executives were asked about the status of WWE Network internationally, including in the UK. Nick Khan revealed that the company is in discussions with potential buyers in the UK about programming, including the Network. Additionally, they are running events in London, such as Money in the Bank, to give potential buyers an opportunity to see the product in person for themselves. Similarly, the decision to hold WrestleMania in LA was partially made with the same goal in mind.
When asked about the ongoing writer’s strike and its potential impact on their programming on A&E, WWE executives clarified that their writers are not members of the guild. Nonetheless, they expressed support for the writers striking and hope that a solution can be found soon. They confirmed that the strike would have no impact on their A&E series.
Regarding future events, they explained that after the Wales event, they are exploring similar deals in other locations, including discussions with cities in the United States and other countries. They cited the upcoming event in Puerto Rico this weekend as an example of these types of deals.
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May 3, 2023 8:37 am
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