held an investor conference call today to discuss the fourth quarter numbers which were released this morning. You can read the numbers at this link. Participating in the call were Chairman & Chief Executive Officer Vince McMahon
, Chief Financial Officer George Barrios and Chief Operating Officer Donna Goldsmith.
Vince McMahon, who sounded like he was battling a sore throat, read a prepared statement and referred to the quarter as being "solid" and put over the increase in live event attendance. He noted that they surpassed their commitment to reduce operating expenses, and mentioned they made changes to how they produce television without the audience noticing. Vince also pointed out their increase in television viewership, going against the trend where most shows have lost audience due to increased options for viewers. He talked about extending their video game contract with THQ, noting it has "much more favorable terms" and that JAKKS is no longer part of the deal. Vince mentioned a "strong launch" with the WWE Mattel toy line, and said that WWE now has four of the top 100 selling items at Walmart. He said that they are "confident" in their television contracts being renewed in the future due to their ratings.
George Barrios then reviewed the financial numbers, which you can review at the above link. He did mention the decline in one out of the four PPV events in the quarter, and noted that WWE has decreased their overall number of PPV events a year from 14 to 13, while increasing the prices of the non-Wrestlemania events. He also noted that they have not made any profits on "12 Rounds" or "Marine 2" since their production partners must recoup all their costs before WWE sees any earnings from them.
A question and answer session was then held. Here are highlights from the session:
- Goldsmith said that WWE feels Mattel will make improvements on WWE products "across the board" noting their impressive reach when it comes to international markets.
- Barrios said they are "cautiously optimistic" about DVD sales, with the switch to Vivendi as their U.S. distributor. Goldsmith noted that their rental market is growing when it comes to DVDs. They will continue to "go local" when it comes to making deals with international distributors for their DVDs.
- A person asked about the PPV price increase, stating it seemed "aggressive" given the economy, and that there had been a PPV price increase three years ago. They were asked if they would be "flexible" if the price increase results in the buyrate for shows declining. Goldsmith said early returns on the Royal Rumble were favorable, and they feel "really good" about the move they have made. They didn't address if they would reconsider the increase if buyrates dropped.
- They put over their success in Mexico, noting their success with television (they are on Televisa and TV Azteca, which they compared to being on CBS and NBA) and their first PPV events. They see South America as a "relative new market" for them, and noted that Mattel's strongest markets outside of the U.S. are in South America.
- Concerning WWE starting their own cable network, Vince said they had been doing "a great amount of due diligence" on it, and they will soon be ready for the next step. Vince said if things go as they plan it will be a "game changer" for them. He said they are "pursuing it and getting ready to take the next steps." Vince said having their own network would only help their broadcast partners, and that it would be similar to the NFL, who promotes their own network during their broadcasts on CBS and FOX. Vince said a WWE Network would promote their shows on USA, SyFY and MyNetworkTV. Vince said he hopes to have the new network "up and running" in a year and a half.
- Regarding Survivor Series dropping in buyrate, while Vince said it was one of the "original four" PPV events, they felt the title had "outlived its usefulness" and would be rebranded. So, there will not be another PPV called "Survivor Series" going forward.
- WWE is talking with THQ about an online game in 2010, noting some international markets don't use "hardware games" and the online game would be more successful.