WWE Q3 2021 Estimate: Predicting a beat on earnings

Follow our ongoing coverage of WWE’s Q3 earnings report and conference call on Thursday, beginning at 4:00pm ET, both here at wrestlenomics.com and on Twitter @BrandonThurston. Anyone may view WWE’s public filings and listen to Thursday’s 5:00pm conference call at corporate.wwe.com.

Subscribers at patreon.com/wrestlenomics get access to a live stream discussion with Brandon Thurston at 8pm ET Thursday night, covering WWE’s Q3 earnings report.

WWE’s third quarter earnings report on Thursday will be the first since the return to touring, which resumed on July 16.

My estimate of earnings per share ratio for the quarter ($0.56) is well above the highest of 11 analysts. Analysts’ mean EPS is $0.35, the low is $0.27, and the high is $0.39, according to a Refinitiv Stock Report.

I made an effort to not consider other EPS or revenue estimates before formulating my own. In some recent quarters, my estimates have been more accurate than the consensus of stock analysts. [See Chart 1 and 2]

Possibly stock analysts are overestimating the expense of WWE’s return to touring or are overlooking the likelihood the company will recognize several million dollars in production incentives, the norm for Q3, which I’ve modeled as a $17 million negative expense. My understanding of comments from CFO Kristina Salen on recent earnings calls is that media expenses for the return to touring will be similar to those of 2019, when media expenses were lower than those associated with WWE’s elaborate Thunderdome presentation that was used instead of touring.

I estimated $273.9 million in revenue for the period of July 1 to September 30. The consensus is at $260.6 million, according to Seeking Alpha.

The projection that WWE would report $195 million in net income and more than $1.1 billion in revenue for 2021, would set annual company records, adjusted for inflation.

RETURN TO TOURING

Expect WWE to celebrate its best North American average paid attendance in many years. My estimate is 7,900, which would be the highest for a quarter since 2010 Q1. High attendance was driven by strong ticket sales early in the return and the Summerslam event in Las Vegas in August. The latter alone had about 45,000 tickets distributed. I anticipate total worldwide paid attendance for Q3 at 330,000 across 42 events. I assumed 10% of all tickets distributed, reported by WrestleTix, were comps, and the rest paid.

A Live Events division revenue estimate for Q3 is difficult to anticipate because it’s evident WWE benefited from “pent-up” demand as it returned to running shows with fans in attendance for the first time since March 2020. Results reported on Thursday also probably won’t be as informative about Q4 and future time periods.

I anticipate a profitable Q3 for the Live Events division, with as much as $7 million in operating income for a division that has struggled to show profitability in the last few years before the pandemic. However, I expect negative operating income for the division to return in Q4 as WWE runs more events than the prior quarter (about 56), and with lower attendances.

The first few events in July drew especially well. It’s likely WWE was able to charge higher ticket prices for these events in response to the increase in demand, but to what degree is more or less guesswork. The company will report the average price of tickets sold, broken down by North America and international regions, but those average ticket prices will look different going forward, in time periods with more relaxed demand. Indeed, some events in Q4 already appear to be struggling to move ticket sales. WWE offered discounted tickets in at least two markets recently, San Francisco and Long Island.

With the return of events WrestleTix has emerged as a fantastic resource, tracking activity on publicly-visible seating maps, and reporting ongoing counts of tickets distributed for events held by WWE, All Elite Wrestling, and other wrestling companies. My estimate of metrics related to live events largely rely on information from WrestleTix.

TV RATINGS

The return to touring clearly benefited television viewership of WWE’s flagship programs, Raw and Smackdown. Sequentially, total viewership was up 2% and 6% in Q3 for Raw and Smackdown, respectively, following four consecutive quarters of often double-digit sequential losses in viewers for both shows.

Raw and Smackdown averaged viewership in Q3 slightly higher than the prior year [Chart 3], a period when TV was produced in front of no fans and mostly before the Thunderdome was introduced. Raw is averaging well below its Q3 2019 numbers; Smackdown is slightly higher by the same comparison but in Q3 2019, Smackdown was on the USA Network, before the move to Fox with its higher reach.

Internal trends aside, WWE’s flagship shows remain among the most-watched programs on television, especially in the key ad demographic, with viewers aged 18 to 49. During Q3, Raw’s median rank among both broadcast and cable programming on Mondays was #4; Smackdown’s median rank on Fridays was #1. These programs deliver those results at the cost of about $1.7 million per hour of new content, in the case of Raw, and $2.0 million per hour in the case of Smackdown, likely on the low-end of the cost of comparable programming.

For one peer example, ESPN’s new deal with the NHL is reportedly worth an average annual value of $400 million, nearly twice as high as TNT’s deal with the league. ESPN gets about 118 games per year, which comes out to about $3.4 million per game. The season opener in October delivered a 0.38 P18-49, the best for a game so far this season, and a number that would be under Raw’s lowest ever (0.39). WWE charges $4 million and $5 million per episode of Smackdown and Raw, delivering an average demo rating in October of 0.57 for Smackdown on broadcast and 0.45 for Raw on cable. WWE is paid more per event than the NHL while delivering better in the demo, which suggests in my view WWE live broadcast rights are fairly-priced if (and it’s a big “if”) ad and carriage values for WWE and NHL are comparable enough.

AEW COMPETITION OUTLOOK

WWE is increasingly vulnerable to direct competition from All Elite Wrestling, which launched in 2019 and is funded by the Khan family, who also own the Jacksonville Jaguars. While WWE remains by far the leader in wrestling, it’s my long-standing belief the company will continue to cede market share to AEW for at least as long as Vince McMahon remains WWE’s CEO and head of creative. I believe McMahon has no plans to retire, nor does he intend to sell control of the company, despite what I view as weakly-supported speculation.

WWE’s greatest challenge in my view is the quality of its content and the direction of its creative, headed by McMahon. Management doesn’t genuinely recognize the problem, so they won’t meaningfully address it. The increase in value of live sports rights, which has benefited the sports industry in general, provides ample cover, driving WWE to set financial records.

In the meantime, AEW, a company I believe wouldn’t exist if WWE had been producing better quality content over the last five years, has managed to have its weekly program, Dynamite, on TNT essentially tie Raw in P18-49 in the same week on two occasions in September. AEW is also out-selling WWE in six markets currently in which both companies have upcoming live events.

WWE’s wide lead over AEW in total viewership is almost entirely driven by viewers age 50 or older, a group less valued by TV advertisers. However I believe WWE’s product is more appealing to kids. Suggesting WWE is still well ahead with kids, the company dramatically outperforms AEW on YouTube [Chart 4], albeit with a massive historical video library at its disposal. AEW is not seeing the year-over-year declines in views WWE is for the early pandemic months [Charts 5 and 6], possibly related to increased interest in AEW since the addition of former WWE stars CM Punk and Bryan Danielson.

But on a new platform, TikTok, WWE also has a huge lead. AEW has just 338,000 followers on TikTok, as of the end of October. WWE had 14 million, or 41x the number of AEW’s followers [Chart 7]. AEW actually went months with little or no activity on TikTok until this summer [Chart 8].

While AEW may be capturing young and middle-aged adults, WWE continues to outperform AEW on online video platforms. WWE also has a higher percentage of its audience who are women and people of color. Furthermore, while there’s a generation of wrestling fans (and talent) disenfranchised by WWE who may be attracted by AEW, there’s also a generation of fans who have embraced WWE’s brand of wrestling for what it is.

Disclosure/disclaimer: I do not currently hold any positions in WWE stock (NYSE: WWE) and have no plans to initiate any such positions. This article was written independently. It expresses my own opinions, solely. I am not receiving compensation for this article. This article is not and should not be construed as investment advice.

EDIT: This article has been updated to correct YouTube data that incorrectly showed higher view counts for WWE and more negative year-over-year growth for AEW.

[Chart 1] ^Jump back to where you where in the text

[Chart 2] ^Jump back to where you where in the text

[Chart 3] ^Jump back to where you where in the text

[Chart 4] ^Jump back to where you where in the text

[Charts 5 and 6] ^Jump back to where you where in the text

Source: socialblade.com

[Chart 7] ^Jump back to where you where in the text

[Chart 8] ^Jump back to where you where in the text

Brandon Thurston has written about wrestling business since 2015. He’s also worked as an independent wrestler and trainer. For more, see our About page.

WWE beats first-quarter estimates, Nick Khan talks Amazon and Apple as potential bidders for sports rights

At 8pm ET tonight I’ll do a livestream review of the WWE earnings report exclusively for patrons at patreon.com/wrestlenomics. Video and audio will also be available for patrons on-demand afterward.

This article will be updated periodically after 4pm ET with the latest live coverage of WWE’s Q1 earnings report today.

Read the WWE Q1 2021 Earnings Report Estimate and Preview posted earlier today.

The earnings conference call will be streamed live at 5pm ET at corporate.wwe.com. The earnings report and other information is expected to be available on the site as well.

You may also follow along with this tweet thread.

Earnings press release: https://corporate.wwe.com/investors/news/press-releases/2021/04-22-2021-211046456

Key Performance Indicators:

Click to access q1-2021-kpi.pdf

WWE reports Q1 2021 net income of $43.8 million. That means an EPS of $0.51 per share, more than doubling expectations.

Revenue for the quarter is $263.5 million, a few million over expectations.

On profitability, WWE writes that “upfront revenue recognition related to the delivery of certain WWE Network intellectual property rights was partially offset by the absence of a large-scale international event.” The former likely refers to peacock, the latter, KSA events.

WWE resumed its stock buyback program in Q1, buying $75.0 million work of shares, intended to return value to shareholders. “WWE intends to continue opportunistic repurchases under the program.” The program had been paused early in the pandemic.

Online media consumption is up sequentially but down from last year’s Q1, new KPIs show. In Q1 2021 fans watched 367 million minutes of online video.

This measures video viewing across Facebook, Instagram, Snapchat, TikTok, Twitch, Twitter, YouTube, as well as WWE platforms.

It’s notable that the slide that in the past would be updated with a count of WWE Network subscribers domestically and internationally is gone from the KPIs. It’s possible international subs are disclosed in the 10-Q, but who knows.

p. 3 of WWE’s trending schedules shows the most granular look at WWE’s finances the company discloses.

There was huge growth in the Network segment, coinciding with the beginning of the Peacock deal in March. Year 1 of the deal is probably front-loaded.

Click to access q1-2021-trending-schedules.pdf

WWE’s social media KPI slide shows huge, unusual growth in Facebook followers. Meanwhile Twitter followers were down 3 million.

For what it’s worth, these numbers include all talent and brand social media accounts. It’s not a representation of unique followers.

I don’t get CNBC on Sling, sadly. I’m hearing CFO Kristina Salen is appearing on the network right now.

Revenue for the Consumer Products segments was up from Q1 2020 despite no venue merchandise. Online merchandise sales were compared to recent quarters since the pandemic, with 10 million in sales. Product licensing was up to $11 million, higher than the last two Q1s.

The more detailed quarterly report (10-Q) has just been released:

https://otp.tools.investis.com/clients/us/wwe/SEC/sec-show.aspx?FilingId=14887022&Cik=0001091907&Type=PDF&hasPdf=1

p. 7 of the 10-Q further confirms, not that there was any doubt, that this quarter included upfront payments from NBCU related to the new Peacock agreement for WWE Network content.

Doing a quick search of the 10-Q there doesn’t appear to be any international subscriber counts published in the document. Unless I’ve missed something the era of tracking WWE Network subscribers appears to be over.

The webcast link for the conference call, beginning at the top of the hour is here. Anyone should be able to register and listen:

https://streaming.webcasts.com/starthere.jsp?ei=1415038&tp_key=0aaa3165c5

Media operating expenses (including the cost of the Thunderdome) for the quarter was $123.9 million. That’s down from Q1 2020, which included a Saudi event.

In Q1 2019, that number was just $98.5 million, although at that time there was still a Monday-Tuesday TV schedule.

The investor presentation is now available.

It’s pretty nondescript. Some column charts with financial highlights that Salen will probably go over.

Click to access earnings-presentation-q121.pdf

The conference call should beginning any minute with comments from Vince McMahon, Stephanie McMahon, Nick Khan, and Kristina Salen.

I will tweet notes of their comments and try to paraphrase best I can. These tweets are not necessarily direct quotes.

WWE shares are up 3% currently in after hours trading, probably due the company overperforming stock analysts expectations on profitability for the quarter.

The call is beginning. SVP Michael Weitz begins the call as always with a welcome and introduction of the executives, and reading of disclaimers.

He hands the call off to Vince McMahon.

Regarding Covid, Vince says, at first WWE was in survival mode but then we found a way… We saw this as an opportunity to open a “treasure chest”. He praises the leadership team.

After short remarks he hands it over to Nick Khan.

Khan says he’ll discuss new developments in media industry and then will give an update about programming and live events.

Khan talks about the increases in sports rights fees for NFL and NHL from new deals. He points out that’s despite NHL linear ratings being down.

One of the big takeaways is the media networks are paying to license linear and streaming rights. The days of splitting those rights days are over, Khan says.

These companies view live rights as key for attracting and retaining subscriptions for streaming platforms.

Wrestlemania was distributed on Peacock in the U.S. for the first time. “We were thrilled with the result” and NBCU was even happier, Khan says.

We’re excited about possibility replicating the Peacock deal in key international eras.

Content rights aren’t the only focus. On April 10, WWE dropped its first NFT featuring the Undertaker. Many sold out in seconds. We were thrilled with our first foray into the space. Look for more NFTs in the future, Khan says.

Khan discusses WWE Studios output. A new deal Crunchy Roll, Young Rock on NBC, Stone Cold biography on A&E.

He turns the call over to Stephanie McMahon.

Stephanie says Wrestlemania attracted more than 50,000 fans. She describes the even in glowing terms. “The power of belonging”.

(My note: Tampa Sports Authority records show there were just under 40,000 fans at the stadium for both nights combined.)

Stephanie says Wrestlemania on Peacock was a success. She says Wrestlemania media coverage increased 25%, representing 1.2 billion media impressions.

A list of musicians and celebrities who appeared on Wrestlemania are mentioned. Bianca Belair is also mentioned.

WWE had 14 new and returning blue chip sponsors for Wrestlemania, Stephanie says.

Video views hit 1.1 billion and 32 million hours of content were consumed. Represented a 14% and 19% increase, respectively.

Raw delivered its best P18-49 performance in over a year, Stephanie says. (My note: Showbuzz data confirms this is accurate.)

TV viewership continued to remain stable, maintaining a trends since WWE entered the Thunderdome.

Raw ratings hold steady and Smackdown ratings increased 9%. Appearances of Bad Bunny during Raw led to an 31% increase in Hispanic audiences, Stephanie says.

It clear once again “large-scale international event” is code for Saudi Arabia events.

She turns over to CFO Kristina Salen.

Salen was awed by the WWE team at Wrestlemania.

She’s now discussing this slide from the investor presentation.

“We did achieve some efficiency quarter-over-quarter,” Salen says about expenses related to Thunderdome production.

Salen summarizes live events business since Covid, referring to this slide.

Predicting the pace of that return of live events is challenging. WWE doesn’t anticipate the return of live events until at least the second-half of 2021, Salen says.

Now on to the third major business division, Consumer Products.

WWE was the #1 action figure sold at Walmart, Salen says.

WWE has a ton of cash on hand (my words). Salen mentions that WWE resumed its stock buyback program in order to return value to shareholders.

WWE is maintaining its previous full year guidance of $270 million to $305 million in adjusted OIBDA, due uncertainty related to live events, including “large scale international events”.

Salen finishes her comments and the line is being opened for Q&A with stock analysts.

Curry Baker asks about sponsors. WWE is undermonetized relative to live sports. Can we get insight on inventory for Peacock deal. What’s the size of the opportunity over the next few years?

Khan defers to Stephanie who agree that there’s an huge opportunity. She puts over how there’s an ease of doing business with WWE because of superstars.

Launching product on Peacock was the priority, Khan says. Further monetizing it is next.

Baker asks about the lift WWE expects in ratings in the second-half of the year. Anything new on storylines or talent that you think might reenergize the fanbase?

Khan jokes we have a 4 question limit per person. He says with ratings “it’s the culmination of everything.”

“Eyeballs are going away from” linear, Khan says, downplaying declines in linear TV viewership. WWE numbers are “robust”.

The fans are our fourth wall, Khan says. We think the return of fans is going to have a direct positive impact on all parts of our business.

Brandon Ross asks Khan to size “record viewership” of WWE on Peacock.

Peacock has asked WWE not to disclose numbers, Khan says. WWE woke up to calls and emails from Peacock, which usually means they’re thrilled. Many of us heard from them Sunday night and Monday morning.

Ross asks about NXT moving nights to Tuesday. How did you weigh that move. “It appears AEW is reaching record viewership … Do you think about them? Do you care?” Ross asks.

Khan says everything is competition. All we’re focused on is attracting eyeballs to our content.

Khan brings up NHL and says he believes NBC and NHL will not continue to be in business together, so that had no effect on the decision to move NXT.

“We’re pleased with the increase in NXT ratings and not focused on anyone other than ourselves.”

Ross asks if there’s other players besides Amazon in the big tech company world that will be suitors for content like WWE.

Khan thinks Apple is working on something and WWE is seeing what they’re moves are going to be. “We know live matters, and that’s what we do.”

Laura Martin asks if WWE can actually sell rights to content during the term of their current U.S. agreements.

Khan mentions international opportunities and says that in terms of the existing content in the U.S., that’s licensed through October 2025.

Salen takes a question on opex. When we’ve discussed TV production on a per episode basis. It’s now up 30% year-over-year, she says. While it’s up, QOQ we were able to make Thunderdome more efficient.

Eric Katz from Wolfe Research asks if WWE would hold a residency while phasing in touring. Is the return “full bore” or a phase-in.

Salen says WWE hasn’t decided yet what their plans will be. Their hope is that they will return to full touring, not phase-in.

Salen adds that the current guidance assumes the return of full touring in the second-half of 2021.

David Karnovsky from JPMorgan brings up increase demand for live content. Will some sports like NFL or WWE disproportionately benefit?

Khan says there’s only so much money to go around. New content will have more challenges. SEC college football is in great shape. Khan looks for some kind of consolidation school or conference wise.

Salen takes a question on eCommerce. She brings up the launching of new title belts, the launch of legends and how enthusiastic fans are about legendary WWE superstars. We’ve been doing a lot to get folks to come to eCommerce and stay.

Ben Swinburne with Morgan Stanley asks if we’ve seen all the revenue recognition of one-time assets, or is there more in Q2? On NFTs, what’s the opportunity there?

Salen says yes it’s largely done. Some one-time revenue around marquee shows, but nothing like the size of Q1.

Khan jokes “we remain undefeated against the weather” regarding Wrestlemania.

On NFTs, Khan says owning IP is something WWE will be in long-term. 100 limited Undertaker cards sold out in 5 seconds. “These are the baseball cards of the digital world.”

Vasily Karasyov asks about the status of the global localization strategy that was rolled out by Paul Levesque in 2018.

Khan says no plans have not changed. They’ve just been delayed by Covid. Khan brings up the Superstar Spectacular for the India market earlier this year.

Weitz says they have time for one more question. Steven Cahall asks if Peacock delivery in Q1 outperformed their expectations and about how NXT TV rights performed compared to expectations.

Salen says there’s no change with impact to full year guidance for Peacock deal.

On NXT, Salen says it’s still within guidance range. They’re really pleased with the result but nothing to update on guidance due to NXT’s new TV deal (going into effect Q4 2021).

The call has ended. Thanks for following along.

Tonight at 8pm, I’ll do a live stream review of the earnings report for patrons only. Link here for current patrons or signup for just $5/month and get access to the massive viewership spreadsheet and more.

https://www.patreon.com/posts/50327861

Originally tweeted by Brandon Thurston (@BrandonThurston) on April 22, 2021.

Brandon Thurston has written about wrestling business since 2015. He’s also worked as an independent wrestler and trainer. For more, see our About page.

Live coverage: WWE Q4 2020 earnings results and conference call

This post will be updated throughout the day. You can also follow along @BrandonThurston.

Today I’ll be covering WWE’s Q4 earnings report. Much discussion of the new Peacock deal, plus annual records in profit and revenues are expected.

Documents release around 4:30pm ET at corporate.wwe.com. Conference call at 5pm.

Here are some things to inform you for the day ahead:

Last night I wrote a preview on possible topics to be discussed:

WWE Q4 2020 Earnings Report Preview: Suggested questions ahead of report of record profits

In November I wrote an estimate of results:

Q4 2020 Estimate: WWE will double its annual net income from 2019

Earlier this week I completed a 63-page PDF report on the entire industry in 2020:

Documents have dropped!

Earnings press release: https://corporate.wwe.com/~/media/Files/W/WWE/press-releases/2021/4q20-earnings-pr.pdf

KPIs:

Click to access q4-2020-kpi.pdf

WWE reports Q4 net income of $13.6 million and a total of $131.8 million for full year 2020, a new company record.

Q4 revenue is $238.2m and $974m for 2020.

WWE reports EPS of $0.15 for Q4. Average EPS estimate was 0.32, so Q4 was about half as profitable as analysts expected.

Key Performance Indicator slides show Smackdown holding up better in Q4 on broadcast than Raw on cable.

WWE Network average paid subscribers for the period were up for the second consecutive quarter.

Online video consumption continued to grow in Q4.

Click to access q4-2020-kpi.pdf

WWE today records its highest annual net income in history, adjusted for inflation.

WWE records its highest annual revenue ever, adjusted for inflation, just short of $1 billion.

If operating income (before taxes and other adjustments) is your preferred profit metric, we don’t have as deep records on that but WWE appears to have shattered that record as well in 2020.

The annual report (10-K) has already posted:

https://otp.tools.investis.com/clients/us/wwe/SEC/sec-show.aspx?FilingId=14672396&Cik=0001091907&Type=PDF&hasPdf=1

The annual report (10-K) has already posted:

https://otp.tools.investis.com/clients/us/wwe/SEC/sec-show.aspx?FilingId=14672396&Cik=0001091907&Type=PDF&hasPdf=1

WWE had a strong year for online merch in 2020, generating $41 million, the most ever in a year. This somewhat offset the lack of venue merch sales since March. Orders were up from the prior year and the average revenue per order was the highest in at least 13 years, at $56.72.

There isn’t a ton of new information in the earnings release on outlook since WWE gave guidance last week when it announced the Peacock deal. WWE projects adjusted OIBDA (their preferred non-GAAP profit measure) for 2021 that’s within the range of what’s recorded for 2020.

As we wait for Vince McMahon, Nick Khan, Kristina Salen, and Stephanie McMahon to begin the conference call.

WWE was low on profitability in Q4 relative to analyst expectations. Not to an alarming degree, but the stock is adjusting down 4% currently in after hours trading.

Conference call on http://corporate.wwe.com finally beings. Sounds like we join in progress and there may’ve been issues with the audio stream. WWE president Nick Khan is talking, putting over the Superstar Spectacle and now Bad Bunny’s appearance at Royal Rumble.

Normally Vince opens the call. Sounds like we might’ve missed that on the corporate site web stream.

Khan talks about WWE targeting LATAM and India regions. In China, WWE launch on Tencent video.

You will see WWE championship belts using team logos.

He hands over to Stephanie.

I will now try to summarize and/or quote WWE execs. These may in some cases be paraphrases. Stephanie narrates WWE Network history and the next steps with licensing to Peacock.

Steph puts over talent appearing outside content, celebrities appearing inside. Matthew McConaughey. Yes Steph does mention Sasha Banks on Mandalorian. Rey Mysterio wearing the Victoria brand on his mask and posted on social media to his followers in Spanish how proud he was.

WWE CFO Kristina Salen begins. She reviews WWE’s record revenue and record profit. “Large-scale international event” is code of Saudi events.

Salen says Thunderdome increase production costs by approximately 25% per episode. Unclear if that’s relative to PC production or pre-Covid production costs.

Salen mentions Wrestlemania but urges WWE doesn’t anticipate the return to ticket live events until at least the second half of 2021.

Salen says sales for championship belts grew more than 100% in 2020. Seems this is likely a big part of what’s driving the increase in revenue per eCommerce order.

Salen notes 2022 and future years will be impact by variety of factors. Contractual escalation of core content rights fees will drive growth. Other factors may temper growth. We expect highest incremental impact of Peacock in 2021.

TV production costs after Covid may be lower than Thunderdome, but higher than 2019 due to Monday to Friday TV production.

Will want to carefully relisten to this guidance later.

This ends prepared remarks. Q&A begins!

Paraphrasing!

Q: More color on costs for Peacock deal? One-time migration expenses?

Salen: Migration costs in Q1, embedded in guidance already. Tech infrastructure savings will be offset “by investing in systems that are long overdue.”

Q: On revenue side of Peacock deal. Any offsets there besides subscriber revenue going away? Stephanie, sponsorship opportunity following deal going to NBCU?

Steph: We can comment on specific deal terms but NBCU is industry leader in sales & spons space.

Salen: Revenue impact is embedded in guidance. And no other offsets besides subscription revenue.

Q: Is there ability to move higher profile content off PPVs and into Raw to bring Raw ratings up?

Khan takes Q, not Vince. Khan seems to tactfully answer no, focusing on Peacock.

Laura Martin of Needham tries to ask Vince a question. Nick takes this one too. It doesn’t seem Vince is in the room.

Khan says international plan just getting started, a lot of room for growth. Stephanie took over sales and sponsorship area. With NBCU partnership you’ll see more ad/spons opportunities. Championship belt deal “with just one of the major sports leagues”, doesn’t say which.

Q: What’s WWE doing to drive viewers back to Raw and Smackdown?

Khan: We don’t believe we’ve lost eyeballs. We believe eyeballs shift from linear to digital. Now that we’re out of presidential race, virus still focused on. With great in-ring product, there’ll be growth.

Q: Is the rest of media industry move to off load rights to bigger platforms? What’s given up by leaving DTC? Data?

Khan says to look for WWE events to big piggyback onto NBC events.

Salen assures there is no upcharge around special content (PPVs) so there won’t be volatility.

Q: How will NBCU evaluate success of WWE content on Peacock? Sub adds, ad sales?

Khan explains the three Rs: ratings, relevancy, and revenue. Ratings based on subs. Relevancy, as excited as they are about it. And revenue it’s an opportunity for them to sell against it.

Khan: “We think it has no impact on us, the departure of NBC Sports Network… There’ll be no affect on Raw or NXT.”

Very direct answer that seems to say Raw and more interestingly NXT won’t be affected by NBC Sports Network content potentially moving to USA Network.

Q: Can you help us understand profitability of Saudi events?

Salen says looking at Q4 2020 should give you an idea of the absence of a KSA event has.

Q: Do both KSA events in a given year have same profitability?

Salen: Talking about live events is hyper theoretical right now.

The call has ended.

Clarifying: Vince McMahon was in fact on the call at least at the beginning. Full audio replay is up at https://streaming.webcasts.com/starthere.jsp?ei=1278679&tp_key=5afce1de54

Brandon Thurston has written about wrestling business since 2015. He’s also worked as an independent wrestler and trainer. For more, see our About page.

WWE Q2 2020 Earnings Report Preview: Predictions & Suggested Questions

WWE’s Q2 earnings report is tomorrow, July 30, after the market closes for the day.

Expect documents to release around 4pm ET with a conference scheduled for 5pm.

The report will cover the period from April 1 to June 30. This will be the first quarter where the period took place entirely within WWE’s events being affected by COVID-19.

Since no traditional live events took place, expect revenues for that entire division and the venue merchandise segment to at or very close to zero. Lower costs associated with producing television out of the Performance Center in Orlando, however, makes those productions more profitable.

This will be the first quarter that includes revenues from WWE’s upgraded TV deal with Sony in India, which is now definitively the company’s #2 TV market, pulling ahead of the United Kingdom. The Sony deal is worth an average annual value of $50 million over the course of five years.

Along with U.S. TV fees related to Raw, Smackdown — and to some extent NXT — this should be the biggest quarter ever for core content rights fees.

The company will report an update on WWE Network subscribers, which have been down year-over-year for the last four quarters. During the previous earnings report, in April, WWE revealed that paid subscribers on the day after Wrestlemania were down from the year prior, although the total count including free subscribers was up. Free trials were nearly doubled.

Expect the advertising and sponsorship segment within WWE’s media division to take a hit due to a general decline in ad demand related to COVID.

The other media segment will be down from the year prior, only due the fact there was a major event in Saudi Arabia in Q2 2019, worth about $50 million in revenue. That segment this quarter will likely be carried by ten episodes of Total Bellas, which did well in viewership. This segment should contain revenue related to The Big Show Show, which released on Netflix in the quarter.

It’s evident from socialblade.com that WWE had its biggest quarter ever on YouTube. WWE probably only generates a few million in revenue from this area per quarter, however. Expect the surge in WWE YouTube views to be reflected in the company’s reporting of AVOD (ad-supported video on demand) views and viewing hours, reported in its Key Performance Indicators document. Related revenue is reported within the advertising and sponsorships segment of the media division.

It’ll be interesting to see whether WWE’s eCommerce and licensed product sales will be strongly affected by the pandemic.

A full table with revenue and key metrics predictions are at the bottom of this article.

An earnings release (8K), trending schedules, key performance indicators, an updated investor presentation, and a quarterly report (10-Q) will be published by the company at corporate.wwe.com.

Expect comments on the conference call from CEO Vince McMahon and the final full-time appearance of interim CFO Frank Riddick, who hands off duties to new CFO Kristina Salen effective August 3. It’s possible we’ll hear from Salen on the call, as well as EVP Paul Levesque. The later has frequently spoken on COVID-19 safety issues.

Anyone can login and listen to the call at this link.

The call normally opens with comments from McMahon and Riddick, followed by a Q&A session with financial analysts who cover WWE stock.