– WWE held an investor conference call today to discuss the second quarter numbers which were released this morning. Participating in the call were Chairman Vince McMahon, Chief Financial Officer George Barrios and Chief Operating Officer Donna Goldsmith. Chief Executive Officer Linda McMahon was present for the call, and was introduced, but did not make any comments at all during the call.
Vince McMahons stated they did a “pretty good job” this quarter, despite the economy, putting over that they had an operating income increase, despite a decrease in revenue. Vince praised their operating efficiency. Vince said if you take Wrestlemania out of the mix, they still have a 4% increase in attendance, which he says is a good barometer of interest in their product. Vince said DVD revenue had a “sharp decline” and said that DVD sales and PPV buys “need to be addressed” while also bringing up the economy as a reason for the drops. Vince said he is still “bullish” on the company, and that they will soon be rolling out a three-year business plan to increase profitability starting in the next quarter.
George Barrios reviewed the numbers, noting that Wrestlemania was included in the second quarter this year. Barrios also brought up the “economic climate” when mentioning numbers that have dropped from last year. They also stated that second quarter revenue was hurt by changing foreign exchange rates. They noted there was lower attendance and lower ticket prices for international events. Again, it was stressed that WWE increased operating income despite having an 18% decrease in revenue (excluding Wrestlemania). Barrios mentioned the increase in TV rights fees due to international growth and the addition of WWE Superstars on WGN. Regarding DVD sales, they noted there were two less releases this quarter, and mentioned a general decline in DVD sales due to, you guessed it, the economy. They noted the increase in online advertising revenue, saying it offset a decrease in online merchandise sales. All of the numbers can be seen at this link.
There was a brief Q&A session.
When asked if the “guest hosts” have brought a positive change to TV viewership and attendance, Vince said “it is hard to say” at this point, but he did praise the appearance of Shaquille O’Neal. Vince said that they got a lot of coverage on ESPN with Shaq, and that entertainment programs that normally wouldn’t mention WWE did talk about them following the Seth Green and Jeremy Piven appearances. Vince said it was just a different approach to try and “broaden the audience” and it “seems to be working” at this point.
Regarding the Denver debacle, Vince said he is still awaiting a letter of apology from Stan Kroenke, in a joking way. He said they sent them a bill for about $300,000 for costs they incurred as a result of being moved out of the Pepsi Center. Vince said they haven’t gotten the money yet, but there are no plans for legal action at this time.
Vince said WGN is very happy with WWE Superstars, and the show is where they expected it to be in terms of ratings.
When asked how they cut $7 million out of the cost of Wrestlemania this year, Vince said it was just efficiency this year and the fact that they went outdoors last year, which mean more costs, including building a “one time use” entrance structure. Vince said a lot of it was just scaling back production costs and marketing.
Regarding DVD sales, Donna Goldsmith noted that they have been “bucking the industry” until now. She said some of the titles this year have not been as strong, but that they feel there are strong titles that will be reflected in the next quarter. She also brought up the economy, decrease in retailers and that retailers are not ordering as many units in advance now. She said they may offer more retailer “exclusives” going forward. George Barrios also stressed there were two less titles this quarter.
When asked about the change in “operating effientcy” regarding Wrestlemania, and whether it will continue going forward, Vince said that they will continue to be efficient regarding production and marketing costs, but that it will go up and down depending on the venue they run.
Donna Goldsmith stated that the current litigation between Jakks and THQ should not have any effect on them. Vince stressed that “Jakks are not our friends”.
Regarding “12 Rounds”, Vince said it’s showing was “a bit disappointing” but that he is proud that if you put all their films together, there is “a slight profit” in the division. Vince said they have learned a lot about the film industry, and films are part of their upcoming three-year business plan.
Vince said WWE will not discount tickets, saying “the circus can do that”, and that discounting tickets means you discount the product. Vince said the lowering of ticket prices overseas was a result of the countries they were in versus last year.
Vince said there will be more international events as part of their three-year plan, but they won’t always be “A-type events”.
The entire conference call was just over thirty minutes, with most of the time being taken up by the opening statements by Barrios and Vince.