4th Quarter Earnings Call Full Recap – WWE CEO Nick Khan, Chief Content Officer Triple H, President & Chief Financial Officer Frank A. Riddick, and Senior Vice President & Head of Investor Relations Seth Zaslow hosted the Fourth Quarter & Full Year 2022 Earnings call today from WWE headquarters in Stamford, CT. You can check out coverage of today’s press release at this link. Below are highlights from the call:
Zaslow opened up and went over the basics for the call. Khan took over and said 2022 was another record-setting year for WWE. In 2021 they surpassed $1 billion revenue for the first time, and in 2022 they grew that to $13 billion, up 18% from the prior year. He touted record profitability of adjusted OIBDA, and how they over-delivered on initial projections with that. Khan said they are seeing the WWE product reach more people on more screens, domestic and international. Khan said WWE is well-positioned going forward.
Khan addressed Vince McMahon’s return as Executive Chairman and said Vince is driving the strategic alternatives process. They have retained The Raine Group to help with that process with an end goal of maximizing value for shareholders. He said the process is underway but still in the early stages. He talked about how there is more interest than ever in owning content and IP, so with media rights fees coming up in 2024, they have a unique opportunity to explore a wide range of maximizing value as companies recognize the value of content and IP like WWE has, and companies that see the value in owning the content they host on their platforms. Khan said it’s still early in the strategic alternative review process, but they continue through the process with a broad set of options. He said they are not guaranteeing a sale and they do not plan to make future announcements on the review process unless appropriate.
Khan addressed Stephanie McMahon’s departure, calling her a great friend and business partner. He said Stephanie had an immeasurable impact on WWE, and they thank her for returning last year when she did, and for her continued support of WWE and the fans. Khan said he’s honored and privileged to sit in the seat he’s sitting in now, working alongside Triple H and Riddick. He said their team has re-engineered record performance and they are confident in their executive key initiatives for the year ahead.
Khan then looked back at 2022, touting the first full of touring post-pandemic, and went over some of the gate records that were set, including RAW and SmackDown gate records in more than 20 cities. He touted the record Royal Rumble gate set last week, and the gate record they’ve already set for WrestleMania 39,before any match announcement. They full expect WrestleMania to be sold out across both nights, and to further drive their success. They are seeing similar growth in TV viewership. He touted increased watch time, the drawing of younger audiences, and the bucking of national trends for traditional and other viewership.
Khan said aggregate PLE viewership is up 43% from 2021 to 2022. He touted viewership on Peacock and viewership during football season. Khan said two years into the Peacock deal and they couldn’t bee more pleased. He said WWE Premium Live Events are driving subscriptions and serving as tentpole events for Peacock, keeping people coming back to the service. Khan touted Royal Rumble viewership being up 25% from the year before, Extreme Rules was up 26%, Survivor Series was up 46%. Khan noted how they are also seeing an increase in international viewership. He touted the success of WWE Clash at The Castle and mentioned $12 million was spent by fans in restaurant and bars, with 75% of attendees coming from outside of Wales. They already expect more than 12,000 in attendance for WWE Elimination Chamber in Montreal. They are seeing strong growth for the VIP Experiences through On Location in the United States, the first international experience will be with Elimination Chamber. Khan also touted merchandise sales at venues with a 62% increase in venue merchandise for Extreme Rules, and a 76% increase in venue merchandise for Survivor Series.
Khan touted WWE Shop’s revamp and their trading card partnership with Panini. He touted sponsorship success and said the average client spend is up 98% from last year. He touted the Mountain Dew and Applebee’s deals for Royal Rumble as being seven-figure deals each. Khan praised the WWE employees and crews, their amazing colleagues, and said they are off to a strong 2023, and they expect to deliver record revenue and adjusted OIBDA in 2023.
Triple H took over the call and said the record results are because of their amazing roster and a writing team that is as prolific as any other. He said strong content is the bedrock of WWE and it drives the company. He touted the WWE Royal Rumble – Cody Rhodes’ win, Rhea Ripley’s win, the drama with The Bloodline, Logan Paul, Pat McAfee’s return. He touted the RAW 30th Anniversary viewership and the increased success and views across all social media platforms. He mentioned 16 billion views on social media in 2022. Triple H said the success is leading to new revenue opportunities. He mentioned how they plan to launch three new international TikTok accounts due to the success of the WWE En Espanol TikTok. These localized accounts are key to growth in those markets. He touted the clip of Paul filming himself leaping onto Undisputed WWE Universal Champion Roman Reigns at Crown Jewel, and how it drew more than 40 million viewers in 24 hours, across all of Paul and WWE’s platforms, making it WWE’s most-viewed social highlight of 2022. He also touted Paul and Ricochet colliding at the Royal Rumble, which drew 26.5 million views on all platforms.
Triple H said none of this would be possible without their roster of Superstars. He said WWE continues to invest in their robust recruitment process to build future WWE Superstars. The NIL program is approaching the one year mark and with the recent third class announcement, they now have a stable of nearly 50 NIL athletes that represents 13 sports with 40-plus All-American honors, 12 NCAA titles and an impressive 13.5 million combined followers across all social platforms. He said the first NIL class successfully transitioned to full-time training at the WWE Performance Center, and their TV debuts are on the horizon. He touted how they recently launched building blocks designed to attract young talent and to solidify stakeholders. They launched Campus Rush in Q4 with visits to three schools, and will be announcing the spring schedule in the coming weeks. Triple H pointed to how WWE stars like Reigns, John Cena, RAW Women’s Champion Bianca Belair, Big E, and The Rock were all major college athletes who transitioned to WWE. WWE wants to make that transition as easy for all college athletes.
Triple H touted the major success of the Spanish-language “Contras Las Cuerdas” film on Netflix that just came out. He mentioned how production is underway for the Hulu series on Belair and Montez Ford, and that will roll out on Hulu later this year. They plan to announce soon an exiting new way to get the stories of WWE Superstars to the fans.
Triple H said he’s having a lot of fun in his role, and having Vince around has been great as it’s allowed him for the entire creative team. He said they are standing on the shoulders of giants and having Vince around is a major asset for the company. Triple H said this is the best time of the year as they’re kicking off the Road to WrestleMania. He said this is an amazing time for WWE and they look forward to continuing to build the business with this leadership team for the longterm.
Riddick went over various highlights and numbers from the earlier press release, which is linked above. It was noted that the current NXT TV deal with USA Network expires in September. The current media rights in the MENA region expire in March.
It’s now time for questions from investors.
They were asked if potential buyers may be impacted by Vince’s return. Khan was asked if he can tell investors with certainty that Vince will be willing to end his involvement with the company following a sale if that’s what gives shareholders the most value. Khan said that’s a tough (or good?) question, and Vince has declared to the Board and to others in management, that it’s all about the shareholder value. Khan said obviously Vince is a shareholder also, so it’s not about what role he will have, it’s about maximizing the value.
They were asked to elaborate on the “right partner” they’re looking for to buy WWE. Khan said a partner that has more than just deep pockets… a partner that understands the media business and is in the media business, one who understands how to further monetize the media business, one that certainly understands WWE’s IP and product, what WWE is doing with it, what can be done with it… a partner that understands media rights, domestic and international. Khan said they see the international growth opportunity as being huge, so in terms of choosing the right partner, these are things they’re looking at. Also, who can accelerate WWE’s business and again, what’s the best value for shareholders.
They were asked about a rise in production costs. Riddick said this is investment-related as they have put effort into making the shows more vibrant, and they have expanded the talent pool. These things will pay off with the media rights renewals.
They were asked about why they think there’s such a strong demand for WrestleMania 39 already, and if they would consider monetizing things like the ring skirt and ramp. The investor said it seems WWE has a lot of underutilized inventory. Khan said yes, monetizing these things is something they’re taking a deep-dive look at, and it’s something they want to do. In terms of what’s driving the WrestleMania demand, he said it all started with Stephanie and how she changed the culture of WWE’s sales group, along with the leadership, the new Head of Sales & Sponsorships, changing the leadership mentality from maybe to yes. Khan said so when Pepsi and Mountain Drew pitched the idea of sponsoring a match, the answer was “yes, absolutely,” and then the conversation with Triple H was like, “hey, we could probably do this, right?” Khan said Triple H and WWE creative made every accommodation to get the Pitch Black match done. He said that’s what is driving the demand, in addition to how they’re going to talk with people at higher levels of these companies.
They were asked about potentially selling before signing new TV deals, as well as RAW ratings being down since 2019 and in Q4, while SmackDown is up in the same period. They were also asked about WWE NXT ratings. Khan said the current deals with NBCU and FOX are 5 year deals, so if they end up doing more 5 year deals, it would take a number of potential buyers off the table, so they want to go into talks with any potential buyers described above with the idea tht they get the opportunity to potentially make offers while also respecting the contractual language they already have with FOX and NBCU. Regarding the RAW ratings being down, Khan talked about Disney’s NFL simulcasts, and with the proliferation of gambling and the enhanced/increased NFL Monday Night Football schedule, RAW is up against different competition once NFL season begins on Mondays, and that has something to do with it. For the RAW ratings surge, he said Triple H and WWE creative have put in effort to make sure RAW creative is on par with SmackDown, not that it wasn’t before, but when you’re going up against Monday Night Football, they need to put the enhanced focus on the roster and creative. They think these efforts are paying off and will continue to pay off. Regarding the NXT ratings, Khan said they are seeing growth there, and USA Network is thrilled, NBCU is thrilled. He said as much as NXT is its own brand, it’s still WWE’s farm team and their feeder system to get people called up, so the expectation is not the expectation they and others have for RAW and SmackDown, but the expectation of the outside world is the same as within WWE, and that’s growth, and Khan thinks we’re seeing growth.
They were asked about the market in India. Khan said they are waiting on the Sony-Z merger to be approved, which they hope will be in April. He talked about how COVID-19 stunted growth in different markets, especially India. Once the merger is approved, WWE plans to hold a big PLE in India. This is the event that was postponed last month. They said they are still looking to invest in a new Performance Center, and they are investing in NXT Europe this year. They are looking to do more monetizing of the talent IP.
Khan mentioned how any company potentially buying WWE would respect their current TV deals, and WWE would make sure of that. WWE wants to have good conversations with all of those partners. The negotiations for RAW and SmackDown TV deals will begin right after WrestleMania.
They were asked about how important it is to have NXT on the same network as RAW or SmackDown so they can have multiple nights there. Khan said they are happy with the NBCU partnership. He mentioned how if they have a PLE on Saturday and NBC has Sunday Night Football, they get a lot of promotion for RAW on Monday between those two shows, and then RAW promotes NXT on Tuesday, while all these shows promote SmackDown on FOX that Friday. They like the way this cadence has worked. Khan recalled how RAW on the USA Network was preempted due to the Winter Olympics last year, and moved to Syfy in short order. He said RAW carried 90% of its audience in the key demographic and overall viewership to Syfy, with short notice. He said they are pleased with what WWE can do on any platform with their programming, but it’s working quite well with NBCU.
They were asked about the importance of traditional TV vs. streaming and digital these days. Khan said it’s still important, but not as important as it once was. They like the “TV everywhere” idea and said even if you look at the Peacock viewership, a lot of the devices are mobile, so they like people being able to watch what they want, when they want, where they want. The way it was designed for this rights cycle, they had a show on broadcast TV, one on cable, and premium shows on Peacock, and all three platforms worked for them. He said going into the new rights cycle, FOX is the traditional broadcast partner and they love it, it works, while USA Network continues to work and they are a longtime partner for WWE. USA also brings the young audience and WWE doesn’t want to miss out on that. They have a renewed energy and focus on the young audience, which is part of why we’re seeing a spike in the 18-35 demographic, and WWE wants to keep all of that up.
That’s it for the call.
4th Quarter Earnings Call Full Recap