Tuesday, December 05, 2006

IWW covers latest WWE Conference Call Q&A (12/5/06)

, I just listened to this quarter's Q&A for the WWE Conference Call.
There was the usual babble about nitpicking this margin or that, some
questions about their new Genius distribution deal and clarification
of "other income". Here were the short highlights:

• International buys PPV this quarter was about 36% compared to 40%
last year over this same time frame. They explained it as "cooling in
the international market, particularly Italy where previously the
product had been very hot." (Again, they never frame it as domestic
buyrates falling, only international segment growing!).

• Did they think NA attendance could continue to grow? In short, yes.
It's gone up 7 consecutive quarters and is now averaging 5200/live
event (excluding ECW). Linda noted their peak was something like 9500,
so they believed they could continue to grow. (If you leave ECW's
attendance average in, then there is actually a drop this quarter
compared to last year's time. So, this is probably another reason they
want to not include the ECW empty venues.)

• They are shipping over a million units of "See No Evil" and expect
to sell around a million copies.

• The "sell-through rate" (I presume this is
sent-to-store:people-actually-buying it) dropped a bit this quarter
compared to last year at the same time. In particular, last year's
Undertaker DVD was very successful with a sell-through rate of about

The two most interesting topics covered were:
(1) whether the three separate brands should be managed independently
and (2) IFL going public. I tried to write down Linda's answers as
closely as possible.

Bob Jenkins – Schafer Capital Management

QUESTION: Brand Management:
Why not have them as three separate & distinct brands, ran by three
different people, set up their own budgets and keep them independent;
no mingling of wrestlers except in special occasions?
Because right now it seems like all three brands seems homogenized
into just one entity – no difference between the three and gives the
viewer no reason to check out any other brand over one?

Linda McMahon: Clearly, our entire goal was have these three brands to
have them as stand-alone brands. However, the decision we made when we
first separated the RAW & Smackdown brands was to provide us with
opportunity to reach different audiences on Cable and on Broadcast.
Also, to give us and different touring teams so we could increase our
international live events. All of which we have done.

We've spent the last four to five years in the brand separation. And
now We've found that you can still create more rivalaries sometimes by
crossing over the brands, no different than if you have a different
league competing with another. So, part of the cross-over effect has
been the increasing of that competitive factor.

We also look as ECW is a developmental brand. It also gives us an
opportunity to launch newer talent through there. I think we're
accomplishing the goals that we set out when we first started:
* Give us the opportunity to create more stars by having the two
brands and now adding ECW.
* Providing the opportunity for greater international growth
* More licensing products off the two brands, and now the three brands
with ECW. And ECW is growing slowly.

Your question really is "why not make them even more distinct?" I
think we have created even more distinct brands and since they are now
created distinctly we have the opportunity to cross-promote and have
some of the talent migrate back and forth across the different brands.
So that we can increase the storylines and continue to grow all the
brands in our total business.


Thoughts on IFL going public. (Jefferies & Company, Inc. - Robert Routh)
Linda McMahon: IFL and UFC are "good competitors in the marketplace
for sporting programs. Good demo reach for them. And clearly a growing
sport. We're taking a look at too and even announced last week that we
had the folks from Pride in to meet with us. We having an opportunity
to look at the developmental of that particular business as well."


The last interesting thing was in response to a question by James
Clement from Sidotti & Company, LLC. He asked about whether the
decrease in "prior event buys" in the PPV category meant that they
were getting closer estimates from the providers. WWE responsed that
while "international business means that reporting timeline is slower.
On balance going forward, don't expect big adjustments that we've
seen in the past. Initial forecasts are better than previously

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