Analysis: WWE Co-Presidents host conference call formally announcing domestic Raw & SmackDown deals

WWE𝐆 Co-Presidents Michelle Wilson & George Barrios hosted a on Wednesday mornin𒊎g following Tuesday night’s that WWE had secured “multi-year media rights deals with USA Network and Fox Sports”.

Both the new distribution deal for SmackDown Live with Fox broadcast network (moving to Fridays) and the renewal of the Monday Night Raw’s USA Network deal had been public news for more than a month. WWE finally did confirm the size (increase of 3.6x average annual value) and scope (five years, beginning in Ocntober🐈 2019) of the domestic deals. Today🐠’s conference call offered the first public comments from WWE on the new deals.

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The call was handled by the usual trio of Michael Weitz (WWE’s Senior Vice President of Investor Relations), George Barrios (WWE Co-President and former chief strategy and financial officer) and Michelle Wilson (WWE Co-President and former ♈chief revenue & marketing officer). There were no🅠 comments from Vince McMahon (WWE Chairman & CEO), Stephanie McMahon (Chief Brand Officer) or Paul Levesque (Executive Vice President of Talent, Live Events & Creative).

WWE provided financial insight on “key content agreements” (which is the “licensing of WWE’s flagship programs, Raw and SmackDown) for t🌸heir top seven countries/regions (US, UK, India, Canada, LATAM, Middle East and South Africa) and across all global markets (which included about sixty different agreements according to Barrios).

For the seven larger countries/regions, each global agreement is꧟ in a slightly differentಌ phase.

New agreements --

• US Raw: current 5-year agreement with NBCU expires in September 2019; Raw will remain on USA Network
• US SmackDown: current 5-year agreement with NBCU expires in September 2019; SmackDown move to the Fox broadcast network

Existing agreements --

• Canada: the current 10-year agreement with Rogers doesn’t expire until after 2024
• South Africa: new multi-year agreement with SuperSport began in August 2017

To be negotiated --

• India: current 5-year agreement with Sony expires in December 2019; WWE expects to announce future plans sometimes during the first half of 2019
• UK: current 5-year agreement with Sky expires in December 2019; WWE expects to announce future plans sometime before the end of 2018
• Latin America: the current 5-year agreement with Fox Sports Latin America expires in October 2019
• Middle East: the current 5-year agreement with pay TV partner OSN is through 2019

WWE provided perspective on the “existing and new agreements” showing revenue growing from $213 million in 2017 to $462 million in 2021. The “to be negotiated agreements” should expire in 2019 with their final year around $80 million annually. For the future years, the red bars represent the US, Canada and South Africa deal and the blue bars represent Unite♒d Kingdom, India, Latin America and Middle East deals with the lion’s share of yet-to-be-secured revenue coming from UK (Sky) and India (Sony) deals.

For longer-term outlook, WWE remains adamant that they will not provide “ad💞ditional long-term perspective on the Company’s strategic, operating and financial goals” ཧuntil the “distribution plans for remaining markets have been completed”.

“Most important strategic objective for WWE was to increase the monetization of premium content.” - George Barrios

Questions from the analysts touched on a variety of topics including digital rights, Fox Sports 1 ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚ(FS1) promotion of WWE programming, perspectives on UK & India renewals, rights for WWE’s other television properties (such as Total Bellas & Total Divas) and the $200 million in convertible notes that WWE sold in December 2016.

Digital Rights: BTIG analyst Brandon Ross quizzed Barrios about whether there were any digital rights still available in the US marketplace. (This had been an element oꦡf BTIG’s investment thesis – that there was still additional revenue to be generated from selling the digital rights to Raw & SmackDown.) After a quick synopsis of the WWE’s economic criteria for evaluating proposals, WWE Co-President George ꦉBarrios confirmed that the digital rights for Raw & SmackDown were already included in the new NBCU and Fox deals and that after thirty days, the shows would be available on the WWE Network (similar to the current situation). There was affirmation that new programming, along the lines of Mixed Match Challenge, could still be developed and sold to digital partners in the future.

Co-Promotion: Michelle Wilson affirmed again and 🌠again that WWE was “delighted to join the Fox Sports family” and touted their reach and promotional abilities. While WWE wouldn’t outright confirm꧅ that they were launching a new FS1 show focused on WWE programming, they mentioned that discussions were taking place. They also confirmed that there were contractual requirements around cross-promotion though as usual the company would not get into specifics on the data.

UK & India renewals: The largest outstanding television rights opportunity for WWE is the deals in the United Kingdom (Sky) and India (Sony) which expire at the end of 2019. WWE has affirmed that the sequence of events would be US announcement (now) then UK announcement (before end of 2018) then India announcement (first half of 2019). While not giving much in specifics, George Barrios & Michelle Wilson joked that they have accumulated a lot of frequent flyer miles and that they’re always talking to people in the marketplaces. Barrios noted many UK parallels with the US marketplace and especially pushed how active Amazon has been in that ဣregion with sports rights. George was also especially bullish on the Indian marketplace where he noted that there’s been a lot of change over the last 18 months and new pricing paradigm for mobile and broadband in the country. He pushed there are players beyond the traditional cable or fr🦋ee-to-air partners that are coming to the table.

Other WWE Television Programming: In reply to a question from Needham’s Laura Martin, Michelle Wilson discussed how she felt that WWE’s brand strength continues to improve – especially with shows like Total Divas and Total Bellas. Building on a theme that was discussed at the Business Partner Summit, George Barrios emphasized that WWE is interested in investing in more “localized” content. That would especially include programming being produced in other languages – something that WWE has been launching in India, Latin America and the Middle East. Michelle Wilson also hinted that WWE was exploring “scripted content” including comedies and drama and promoted the WWE Studios brand out of Los Angeles. She also pushed that they’re looking a𝓀t more reality & documentaries series and noted that many players, including Netflix & Hulu, are always looking for more content.

Convertible Notes: In December 2016, to institutional buyers. The purpose was vaguely described as “supporting execution of long-term strategy”. The cash has strengthened has WWE’s balance sheet appearance since 2017, but as the WWE stock price has swelled and WWE secured strong deals from domestic partners, some are questioning the reasoning behind taking on the debt and convertible note exposure. Barrios conceded that hindsight in 20/20, but they felt it was the right thing to do then and that it was to give WWE the ability “to go direct-to-consume🍨r” if needed. WWE won’t go into detail on their exposure (the stock was trading at about $17/share in December 2017 compared to $70/share in June 2018) until they provide their long-term financial perspective following the conclusion of the UK and India negotiations.

Overall, the executives were a g𝔉ood mood and the stock opened at $74/share – up almost $8/share from Tuesday’s close. This was a stark contrast to the disappointment in May 2014 when the NBCU deal failed to reach the heightened expectations of analysts and the stock sharply fell.

Chris Harrington is the co-host of , a weekly podcast that focuses on the business side of professional wrestling.