WWE held an investor conference call this morning to discuss their fourth quarter financial results, which were released today (and you can see here). Participating in the call were WWE CEO Linda McMahon, Chief Financial Officer Michael Sileck and Senior Vice President of Finance Frank Serpe.
After prepared statements were read and the financial numbers were reviewed, questions from investors were taken. Here is a recap of the Q&A portion of the conference call.
– Raw will return to the USA Network on October 3rd, and Smackdown will have their first Friday night episode on UPN on September 9th.
– When it comes to WWE Films, Linda said that FOX and Lion’s Gate Films are pleased with See No Evil and The Marine at this point. Linda put over John Cena’s potential as a “breakout action star”. See No Evil is set to come out in January of 2006, but The Marine doesn’t have a planned release date yet. The next planned film project is The Condemned, starring Steve Austin. Linda said they were “confident” about how the division is coming along.
– On the topic of WWE 24/7, they are rolling out into more systems, with Cox Cable being the largest at this point. Linda said their ability to offer the service is dependent on more cable systems offering Video-On-Demand channels to their customers. She said that they are happy with the growing number of subscribers in the systems where WWE 24/7 is already available.
– They were asked if ratings increases lead to PPV buyrate increases, and Linda said that while there have been “breakout PPV events”, usually ratings increases do lead to PPV buys going up.
– Concerning the possibility of John Cena leaving WWE if he becomes a “breakout star”, Linda McMahon noted that Cena is under a long-term contract, both as a wrestler and an actor, and they hope he becomes a huge star in movies and music (In other words, they have learned from what happened with The Rock). Linda said they have “preferential movie deals” with Cena and Steve Austin.
– When asked about the future of Smackdown, Linda said that you can’t tell what UPN’s “appetite for WWE” will be in September of 2006 when their contract is up. Linda said that the move to Friday night is an “opportunity” for them to prove their value to UPN by bringing a younger audience to the channel on Friday nights, and helping UPN to grow their audience share on that night. She said that if UPN decided not to renew them, they had other options “including other networks and cable”.
– Regarding the “Legends” division, it was discussed how WWE will be presenting a line of merchandise, DVDs, and other products with Superstar Graham, Roddy Piper and Jerry Lawler helping to push the division. Linda said the initial rollout will be domestic, then they will work on expanding it internationally.
– Linda heavily put over the move to USA Network, saying that USA will be “rebranding” their network at the same time WWE returns, and WWE will be a part of their marketing push.
– WWE will have fewer live shows in the U.S. in 2006 due to the increased international tours.
– When pressed about the change in nights for Smackdown, Linda said that it was a UPN decision, not a WWE move. She then reiterated her comments about the Friday night move being an opportunity to increase UPN’s audience on Friday nights, saying the WWE audience “will find us”. Linda admitted there were going to be some preemptions in major markets in the first two months of their Friday night run (baseball games), but also claimed that there were new advertisers for them on Friday’s, due to the lack of programs for a young audience on Friday on other channels.
– One investor asked why WWE was using their substantial cash to make movies rather than offering a “stock buyback”. Linda claimed that analysts had advised her not to offer a stock buyback, and the caller said he would like to know who those analysts are, since he questioned their “sanity”. The caller noted the amount of cash “the family” (McMahons) had pulled from the company, and asked if they would be buying back some of the stock (to show potential investors that they have confidence in the WWE stock growing). Linda never really answered him, and appeared to get flustered by his questions.
– There will be no revenue from WWE Films until 2007.
– Regarding the ECW One Night Stand PPV, Linda said there was a lot of “positive feedback” on the event, and referred to the DVD as having a “turbo release” to get it into stores.
– There was another question about WWE’s cash reserves, with this caller asking why WWE insists on holding the large amount of cash rather than giving dividends to the shareholders (of which the McMahons would still benefit, since they are the largest shareholders). Linda said that they hold the cash for potential investments, and they keep it to be able to pay a 12-cent dividend to the shareholders in case operating income is insufficient. Michael Sileck said it was “premature” to give the stockholders the money at this time, and that shareholders need to be “patient”. The call became heated, as the caller came right out and said he was “insulted” by the insinuation that they were not being patient, pointing out that he (as an investor) has been with the company for four years (longer than Sileck, who just joined), and gone through the failures of the XFL and the restaurant in New York City. He said that WWE is now investing in three movies, and still maintaining their cash reserves, yet are not offering dividends, buybacks or other options for stockholders to share in the wealth. The caller was quickly cut off after reiterating how insulted he was by WWE’s lack of answers.
– Linda was asked again about the ECW PPV. She was asked if it did 500,000 buys. She said that wasn’t true and she didn’t know where the caller got that number. She also added that she didn’t have the preliminary numbers for the buyrate in at this time. She said the general consensus in WWE right now is to have “one off” PPV events with the ECW brand, and that some ECW talent will be brought into WWE.
– There are no plans to put the Raw and Smackdown brands back together.
– The call was abruptly ended as we were told there would be no more live questions and if people had any, they could submit them to a WWE rep.