There was a bit of a tease at the top of WWE’s Quarterly Investor call, held on Wednesday morning, when Seth Zaslow, the company’s Head of Investor Relations, listed off who would be participating. While he specifically mentioned CEO Nick Khan and CFO Frank Riddick by name, he only mentioned the title of the Chief Content Officer. Panicked “smart fans” may have wondered if Vince McMahon was going to do a surprise run-in later in the call and reveal that he had supplanted Paul “Triple H” Levesque for the role (“It was me! It was me all along!”). Their fears would be assuaged later on in the call, though, when Levesque did chime in to talk about the company’s recent ratings success.
Indeed, the call was full of discussions of the success of the company, both actually realized in the quarter and what is expected to come after the company’s announcement in April that it will be merging with the UFC to form a new publicly listed company that will be majority-owned by UFC’s current owner, Endeavor Group Holdings Inc. (“Endeavor”).
The deal, which is expected to fully close in the second half of 2023, is expected to unlock new revenue streams for WWE, according to Khan and Riddick, and “significant opportunities to increase the organic growth profile of the combined entity.”
And while Endeavor will have the majority ownership in the new deal, WWE does not expect that their new owners will involve themselves in the Creative aspects of WWE. Instead, the growth opportunities are more based on synergies in operational excellence and potential marketing and sponsorship opportunities.
“I can certainly represent emphatically that there is no-one in Endeavor or UFC that has any interest in trying to interfere in (our Creative content),” said Khan. Levesque echoed those comments, noting that “Creatively, we will continue to do what we do and (maintain) the momentum that it has.”
That momentum led to plenty of record-breaking successes as of late, including: WrestleMania 39 which was the company’s most-watched and most-profitable event in company history; the 2023 Royal Rumble, which broke viewership and revenue records for that event; and Elimination Chamber, which had the highest gate and merchandise revenue for that event in history.
In addition, the TV ratings for RAW and Smackdown are bucking declining TV trends, with increases in the key 18-49 demographics, and the highest time-spent viewing rates ever (a metric which has not been usually mentioned during these calls – for those who are curious, average time-spent rate for RAW is 72 minutes out of the three-hours, and 42 for Smackdown out of 120).
The increased interest also led to higher live attendance figures and related consumer product revenues (which increased $7MM year-over-year for Q1). The increase in the latter is also partially attributed to the new deal that was signed with Fanatix to handle in-venue merchandise sales in addition to the company’s e-commerce WWEShop platform. And credit was given to the company taking a localized approach in its offerings of venue- and city-specific merchandise.
In addition, Khan highlighted the strategy for running more international events – including two that will emanate from Saudi Arabia this year, the first being Night of Champions in May. He noted that 2023 will see the company’s biggest run of international shows in the company’s history, starting with this month’s Backlash. The first weekend in July will see a live Smackdown and the Money in the Back event take place in London’s 02 Arena, and both are expected to sell out.
Part of the strategy involves the potential for getting government subsidies to hold events in the city, a revenue opportunity first realized with last year’s Clash at the Castle show in Wales, and repeated again with Backlash (Khan noted that the company received a seven-figure subsidy from the government of Puerto Rico). The other is to allow local broadcast partners the chance to see the product live, which they believe will help them realize the market potential and potentially lead to TV and Network deals.
On the US front, those TV deals are currently under negotiation with the incumbent networks, NBCU for RAW (on the USA network) and FOX for Smackdown. Khan said that the discussions with both networks have been productive and he believes that both networks “… (are) seeing the growth and impact of the product in the right way.” Those discussions are exclusive to the incumbents for a month before the company can shop around to other companies. Though, Khan noted in response to one of the investment firm’s question, that WWE has an idea internally of what the market value of the broadcast deals are, even if they cannot confirm same through negotiations with other companies while the exclusive negotiating window is closed.
All three executives were bullish about the company’s negotiation efforts, noting that the rise in ratings is a testament to the success that they can offer a broadcast partner. The recent Creative upturn that has helped drive those ratings was asked about, and Levesque offered his insights as to the reasons.
“That really comes down to us having assembled the right team across the board,” he said. “We have world-class Superstars, and that continues to grow every day through our developmental systems, NIL, international recruiting and domestic recruiting. The writing team is world-class. Kevin Dunn’s production team, there’s nothing like it in the world. It engages our fans like nothing else in the world.”
He noted in particular that the company’s Creative focus on character development has really hit the target in recent months, citing the Sami Zayn / Bloodline storyline in particular. “I think it’s got our fans excited about the characters and content like they haven’t been in a long time.”
Khan noted that the company is insulated from any dangers of losing ground in this front as a result of the Screen Actors Guild strike that officially started yesterday.
“Our writers are not members of the Guild, so it should have no effect on the product,” he said, noting that this is also the case for their A&E programming.
Which all bodes well, they predicted, for the rest of 2023. Both Khan and Riddick ended their respective portions of the call by predicting record revenue for the rest of 2023, and maintaining their outlook for the full year’s OIBDA of between $395 and $410 Million, which would be an all-time record for the company.
“We’re excited about 2023,” Khan summed up. “Our company is well-positioned and we are very optimistic about our historic agreement with Endeavor and the UFC. Until (the deal is closed), we are focused on closing that deal while continuing to execute on our strategy and grow our business.”
“It’s an amazing time for WWE and we remain extremely excited about our long-term future.”
