TKO Group Holdings will release its first-ever quarterly earnings this evening (Tuesday), after the close of the market. The newly-merged combination of WWE and UFC will report for the quarter ending September 30. The conference call is scheduled for 5 pm ET. Expect documents to become available on TKO’s investor relations website around that time.
There’s some intrigue around which executives will participate in the earnings call. I expect TKO CEO Ari Emanuel and TKO COO Mark Shapiro to participate, who are also leading Endeavor executives. TKO’s CFO is Andrew Schleimer. He’s also UFC’s CFO and I’d predict he’ll speak to the more abstruse financial details. WWE President Nick Khan, who led WWE’s last earnings calls, seems likely as well. The prospect of Vince McMahon or Dana White appearing seems possible but less likely.
How much insight we’re able to get into WWE’s business, compared to how much we got when WWE was a lone publicly traded company will be answered. UFC’s business, on the other hand, was largely obscured in Endeavor’s public reporting. TKO made clear, in a filing last week, that financial results for UFC and WWE will be broken down in today’s release.
Consensus expectations for the quarter are $610 million in revenue and an earnings-per-share ratio of $0.54.
Endeavor, now separated from UFC but controlling 51% of TKO, will report its own earnings on Wednesday evening (tomorrow).
Prepared remarks from executives are normally followed by Q&A with equity analysts. Here are 11 questions that should be pertinent to investors:
1. Silver Lake is working to take Endeavor private. Explain the reasoning and effect it may have on TKO. Can you reassure investors TKO will remain public?
2. The NBA exclusive window reportedly ends around the end of the current NBA season. Assuming NBA must be done before Raw is renewed so that suitor, financial, and TV schedule options are clear- is there risk in renewing Raw on a short turnaround relative to a new deal beginning in October?
3. What risks should investors anticipate related to the ongoing antitrust lawsuit against UFC, which is set to go to trial in April? Is there a risk that the litigation might result in increased fighter compensation? If plaintiffs are successful, do you need to prepare for potential plaintiffs who might see a similar opportunity to take action against WWE?
4. TKO bid on a minority stake in PGA that was rejected. Speak to eagerness to make other sports investments within TKO holdings. Boxing seems like a candidate space.
5. WWE fan interest in content has thrived since Vince McMahon has been less involved in creative. His level of involvement has seemingly fluctuated since July 2022. Is it true that he’s not involved in creative as recently reported? What’s his role in the company?
6. There were numerous WWE layoffs in September. Are more cuts ahead or are broad employee layoffs complete? WWE layoffs were reported. Were there UFC layoffs?
7. How should investors view the Saudi government’s investment in PFL, which has negatively impacted TKO shares? Does UFC Fight Night in Saudi Arabia, happening in March, mean the beginning of a long-term relationship with KSA like with WWE ($100 million per year over ten years)? Fight Night is a minor brand event, surprising given boxing, WWE events in the country have been high on spectacle.
8. Explain the strategy behind improving NXT ratings by featuring main roster talent. Does enhancing NXT ratings have a bearing on how Raw is renewed? What’s NXT’s current average annual value? Are Raw and NXT being shopped together?
9. Were next-day rights with Hulu extended to expire with Raw and Smackdown terms? Expiration tags on WWE content on the Hulu UI appeared but then disappeared.
10. What have you learned from the WWE media rights renegotiating process that will inform how the UFC renewal will go? What have you learned about the state of the macro environment for live sports? Should the disappointing Smackdown renewal (40% increase in AAV) inform expectations for Raw and UFC?
11. With regard to Lachlan Murdoch’s comments on Fox not renewing Smackdown: Why were there challenges with ad sales and retransmission value? Can those economics be improved?
Brandon Thurston has written about wrestling business since 2015. He’s also worked as an independent wrestler and trainer.
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