George Barrios at the Deustche Bank 26th Annual Media, Telecom & Business Services Conference

3/6/18 George Barrios at 26th Annual Media, telecom & Business Services Conference
Webcast

(Using a version of the January Investor Deck)

19:10 We learned the passion for that in-ring content from our most passionate fans

First 22 minutes
* 2017 Financials
* Bragging about YouTube dominance & views
* Joseph Campbell’s Monomyth (“Everyone knows what happens in a ring.”)
* We put different content on different platforms.
* Half the broadband homes in the world have a WWE fan!
* Key Content Distribution Agreements expire in 2019
* Long-tail opportunity is 25% revenue/75% of video consumption comes int’l
* We have over 10,000,000 user accounts across all our platforms

Investment Priorities
* Content
* Emerging Markets
* Technology

21:30 Q&A Begins

Q: Where are the current levels of the sports rights revenue in the US. Given the metrics you’ve put up and the popularity of the sport, it seems like it could be bigger.... What are the prospects for really accelerating and why haven’t we seen more of that in the past?

A: In 2014, our top seven deals generated about $130m. In, 2018 will generate about $235m. That’s a 80% increase over four years. By any metric, we’re one of the largest purveyors of live data in the world. In United States, our core content has under-monetized relative to others if you believe ratings are right metric. This next renewal cycle will answer that question about whether we’re able to narrow that gap.

24:00

Q: Could we see broadcasters actively interested in the rights or will it be predominately a cable property?

A: Distribution is more at risk than it’s ever has been for a network. Theoretically, it’s always been at risk, but practically speaking, today with skinny bundles… viewership is incredibly important. Our numbers are out there. They’re public. Everyone can see the scale of both the size of our audience and as well as how much time they spend consuming our content. So I’d like to think if on the other side, if you monetize from generating distribution revenue and ad revenue, we’d be an attractive property in that environment.  We’ll announce something between May and September.

25:00

Q: Any thoughts on digital players coming in for some of those rights and actually competing for those rights? How would you think about licensing television rights to a digital player?

A: Are they active and in the market? Amazon has secured rights for live content, primarily Tennis in the UK. Everyone knows that Facebook did bid pretty aggressively for the digital rights of the IPL, which is Cricket in India.
For the last ten years, there’s been talk of the digital players actually becoming active participants in the live rights ecosystem which is more valuable but also more expensive. The last 12-18 months, those are no longer rumors - they’re active.
FaceBook launched the Watch tab, I’m not sure if we were the first call, second or third, but we were one of the first calls to create original live content for that platform. They’re trying to create a new viewing behavior. The watch tab is an active experience where you’re going to seek out video as compared to the lean-back experience of the news feed. They’re trying it first with YouTube. They called us. We did a great new show with them - Mixed Match Challenge. They’re seem to be happy. There’s not a lot of benchmarks to compare it against. Time per video spent - grew. What I think they’re trying to do - that’s what important to everyone. It continues to grow. The fourth quarter was the biggest quarter for consumption and video views and monetization on YouTube.

27:45

Q: As a rights holder how do you think about those platforms?

I think it’s a combination of reach, some cases the reach may not be where the traditional players are, in some cases it’s greater reach but it’s behavior - are people used to and willing to consume long-form video on that platform. If they make a pivot and they’re not, you can damage the overall brand.
Our view is “it will come”. People will watch long-form video on those platforms.

It’s not a matter of if, it’s a matter of when. The behavior is already changing.
We tested Raw & Smackdown viewership on YouTube - full episodes - in certain parts of the world - so we can see it. We did that because we wanted to see the behavior.
It’s kind of a march towards that. If you make that in this renewal cycle, you are making a bet that’s going there. 

Similar we thought six or seven years ago, we thought direct-to-consumer was going to grow and that would be the way to reach the consumer.
We’ll see how the world shakes out and what the future holds.

29:20

Q: I was looking at the over-the-top growth numbers you were putting out.

A: Over-the-top is so 2013.

Q: Direct to consumer, you’re about one and half million subs. Just looking at the numbers you put out. Looks like growth has slowed. Do you think there’s room to accelerate it? Why given the popularity of your content, why isn’t it actually growing faster? Some media company has over the top services that have more subscribers.

A: The thing to remember about is, what I mentioned with the tiering of the content.
The direct-to-consumer is not for every person out there. May not be for new WWE fan or even a casual WWE fan. They get a lot of that content already. They get Raw & Smackdown for 5 hours a week.We’ll produce 600 hours for the digital platform. So they get that content.
So really, the direct-to-consumer is for the portion of the fanbase who is super passionate.
Having said that, it’s four years in, we thought we could get it to three or four million subs. Four years in, we’re about half-way there, to the 3 million. So, we feel great. It’s the second largest business we have. Second most profitable.
It’s is the hub of the direct-to-consumer strategy. It’s where we engage. Where the most time is spent.

30:50

I think to re-accelerate the growth, part of it would be localization. Today is a US product.
25% of our subscribers come from outside the US. It’s $9.99 so that price point doesn’t work everywhere. It’s only in US currency. So you’re asking a potential fan in some markets to take the FX risk. Sounds wonky but it’s actually an issue. People realize that. That they’re taking that in certain markets. It’s only in English.
It’s designed a US product that because of the ubiquity of broadband we’ve made available.
I think that localizing would help bend that curve.
We think there’s an opportunity to tier that product.
On the higher end of the tier, it’s an ARPU-play (average revenue per user).
On the lower end, integrating free video, like you see today on WWE.com with the premium video - there’s an opportunity for both to improve conversion and retention. So that’s what we’re working on.
In the short and intermediate term, because what I just described is in essence a new product, in the short & intermediate term, it’s using the data to drive better and better retention and acquisition. That’s what we’re hard at work on.

32:05

Q: Does it make sense to maybe try to move some of the content you have on other digital platforms into the direct-to-consumer. It’s always a balancing act. What Netflix has shown us is you’ve have to make some make some investment and take some pain for awhile, but if you make the content exclusive and the and it’s a rich place for the source of content, you’ll grow subs but it’s hard to have your cake and eat it too. How do you think about that balancing out?

A: Yeah, it is. We call it the “delicate balance” internally because when we’re creating those 1,500 hours of content the real question is “What platform to put it on?”. Obviously we think we’re tiering it correctly today, because it’s what we’re doing. but it’s something I think overall, over time... The simplest way to think about it is we can drive significant sub growth tomorrow by putting Raw or SmackDown on the Network. It may not be the right thing to do, either for the brand or for short-term monetization. That’s an extreme case but to frame the question. Those are the decisions we have to make every day.

We don’t think it’s about more content on the direct-to-consumer, right now. There’s a lot of content on there today. As a reminder, it’s is different from CBS All Access which is essentially CBS in another form. This is unique content for our most passionate fans. It’s not for all 160 million broadband homes in the world. It’s for a fairly small percentage of those homes where people really really want to go deep. We think the content strategy is right. We don’t think is more necessary more. It’s some of the other things I mentioned: Functionality, Features, some of the tiering I mentioned is a bigger opportunity.

34:00

Q: Someone in the company said, yeah we’re open to, when asked about being a public company, do you want to comment on that?

A: If you’re referring to .. in 2016…

Q: Whatever.. Can you comment on that approach?

A: I’ll go back to the quote, Vince gave when given the context of all of the media consolidations, someone asked him, would you consider something like that.

His answer was “We’re open for business. We’re creative people in both storytelling as well as business. All we care about is entertaining our fans and doing that in the best way possible. We are always looking at creative ideas.”

George Barrios at Morgan Stanley Technology, Media & Telecom Conference (2/28/18)

2/28/18: George Barrios at Morgan Stanley Technology, Media & Telecom Conference
(He sounds tired.)

(0-5 minutes)
George Barrios, co-President WWE
MS: “More and more people are following the company/stock.”
1. Global Appeal
2. Tiering across Content
3. Data Powerhouse

1. Global Appeal of the Brand
70% of consumption of video happens outside of the US

2. We have configured a unique content strategy
We tier across three platforms - we don't replicate across the platforms. In the bundle (pay TV), Facebook/owned-operated AVOD, WWE Network. They're windows.
Tiering our content across the different ecosystems.

3. Was a legacy media company, transitioning to digital direct & social. On a journey to become a data powerhouse. We're developing a deeper & much more informed relationship with our fans.

MS: Focus for 2018?
A lot of the work we'll do this year is the reap the benefits from the previous year's works.
a) We'll continue to invest in data, product, technology stack. It'll affect the
b) Localize more content.
c) Build our brand bigger outside the US - build our talent pipeline.
d) We're going to put more and more people around the world.

We expect to announce our "distribution plans" for three major markets (India, UK, US).

(5 minutes-10 minutes)MS: What can tell us to think about the Rights opportunities?

GB’s Bear Case: Pay-TV ecosystem is going through some level of consumption. Buyers for content are managing themselves through that. Our content has been undervalued (long history) compared to other content. Disruption.

GB’s Bull Case: We’ve worked very hard to reposition the value of the content in the marketplace. Anchoring is a “very significant cognitive bias.” We are positioning as digital, social powerhouse (that may been to strong of a word) but we’re viewed as leaders. The disruption is beneficial to the content rights holders.

MS: Being undervalued historically?

Measure success by how much time we’ve been able to drive - with content. Let’s add up all of the hours and see what the market is paying for those hours. NFL is #1. NBA and WWE are going back and forth for #2 and #3 on Cable.

MS: What are the other things you’re thinking about for positioning and distributing content?

As an IP rights holder. Ultimately, the market will help us decide whether we have do exclusivity.

MS: Guidance for 2018. Adjusted OIBDA goals.

A lot of work internally trying to rationalize the opportunities. Consumption of video content out of the US (70%) with India as #1. That’s fertile ground. There’s a lot of investment opportunity. We’re not in the mode to pull back. We have a business model that allows us to invest and grow adjusted OIBDA.

More local. More video content. More data, product.

(10 minutes-15 minutes)MS: International Rights renewals versus Domestic? Options available to you?

The approach & thinking is the same. Industry structure & Market dynamics are different. Where the content sits. For example, UK we’re “tiered up on Sky Sports”. For us as we go into these things you do similar benchmarking around the world as we talked about in the US. Some markets we think there’s opportunity, others we think we’re fairly well priced - obviously we always want another deal. The level of distribution we’re getting - are we reaching all our fans that we want to? We have to balance all of that. The approach & the thinking and the mental model is very similar, but the specifics are different market-by-market.

MS: Market like India you’re in an interesting spot, a good one, as Sony lost a big piece of content to Star in the IPL (Cricket)?
We sit with Sony now. They’re recent partners. We were on with Zee, Sony bought the Ten Sports and bought the network - we’ve been with Sony now for about a year. Good start to the partnership. Obviously, if you aggregate the viewer hours, when you do that math, India is our largest market - not per capita, but in total. We are categorized as sports in totality during the year, we don’t have a season, so we’re 52 weeks, and if you add it up during the year, it’s Cricket, it’s us, it’s Kabaddi and it’s a fairly big drop-off after that. We’ve been able to “put smiles on a lot of faces there.” Hopefully that harbors well for us.

MS: Let’s talk about the WWE Network. That subscriber growth moderated last year. You talked about 3-4 million? Do you think that’s still the right number? What are you doing to drive acceleration?
We continue to do research, consumer research, customer stats - we think over the long arc of time, the 3-4 million feels right. We looked at a lot of subscription business - not a lot of data - but 8-9 years getting to steady state, and we’re about four years in.

We’re a lot smarter today. WE’re getting smart to reach out to fans and bring them in. We hope we can bring them in on the acquisition side. We can bend the curve back up.

The bigger opportunity for us to the languages, right now it’s an English. Localizing in at least one other language. Localizing around price & currency.

We’ve done a lot of work around what a tiered product could look like - premium tier and integrating our free content. YouTube. DotCom. Creating a different environment for the free content which leads you more seamlessly into the paid content.
In the short term, we’re getting smarter and smarter every day so hopefully that helps on the growth side.

(15 minutes-19 minutes)
MS: Leveraging data and understanding your customer base and the marketing opportunity?

It’s happening. The company is fundamentally different operationally than four years ago. We have tens of thousands of data points among those ten-plus million user accounts. Today when we launched the Network, we sent out one Marketing message. Last week we sent out “a hundred”. My guess is that in a few years, we’ll be sending out a thousand. Algorithmically and at scale. This is not hard work. Sounds like a black box. All you’re doing is Aggregating, uploading, cleansing, and standardizing data. It takes time but not conceptually difficult. It gets back to the investment level.

My boss will ask me from time-to-time, we need to move faster.
We double the people. We build at a faster.
We’re trying to moderate at that.
Creating more content
Localizing more content
Recruiting more talent
Have our cake and eat it too. Make the investments so we can reap the benefits in the future but today deliver improving results. We can do both without one harming the other.

MS: Continuing on the path of Digital. Heard from FaceBook talking about Watch. You are one of their earlier partners on the premium side of the content . What’s your experience with Mixed Match Challenge? 

It’s good.

MS: Where do you take this product? What have you learned so far?

Watch is Facebook’s strategy for Lean-back video consumption. We think that’s great. We think that’s terrific.

20 billion views. WWE is the largest sports video platform in the world. We’re #1 on YouTube. So if anyone is doing anything on video and sports, we get a call. Mixed Match Challenge came from that.

Creating video for a different platform like that, especially live video. New format.

It also informs our creative team and reimagining our core live.

Mixed Match Challenge itself, not a lot of benchmarks to compare to, but we’ve definitely seen increased watch time per video on FaceBook which is really important for us. The FaceBook team seems really, really happy. It’s been a good test for us.

MS: You announced you were going to recut your segments for reporting, ten down to something more manageable. What was the initiative or drive behind that? Do you think it’ll help us understand the drivers of the business?
Definitely. It also reflects how the company manages the business. Really today the distinction between TV, Network, Digital is somewhat interesting, what really matters though for us is we’re creating content and there’s multiple ways to monetize - subscriptions, license fees, there’s advertising. We’ll give a little bit more granularity into those. From a cost side, all the costs are produced as content. Fundamentally there’s no difference to produce this piece of content versus that piece of content. They monetize it differently. We think it’ll be a simpler, clearer way to look into the business for investors.

(19 minutes-21 minutes)
Q&A

Audience: “I had a question on succession issues with Vince McMahon and what the public comments are on that?”
Uh yeah, what we’ve said is, “The board reviews the succession plan.” There’s one in place. Obviously I’m personally not privy to it. They’re very thoughtful about that. Vince has said multiple times this is probably broadest and deepest management bench that company has ever had - a combination of people who been with WWE for a long time and really have it going through their blood as well as people from different industry, technology, other media, that have come in.

Audience: “Just when you think about the US renewal, how important is it to keep same partner - NBCU - do you think there could be other parties being interested like technology players? Is there the ability to split up Raw & Smackdown?

Yeah, so, the first thing I’ll say is that NBCU has been a great mutual partnership for many, many years. We work really, really together with them. To be with them that lock.

Having said that, ultimately the evaluation we’ll look at is at the platform in:
1. Deeping engagement with our fans
2. Bring in new fans
3. Monetize for us.

That’s our evaluation criteria. We’ll be very dispassionate about how we look at those.

Certainly while it’s been rumored for a long time, it’s a rumor no longer, some of the largest digital platforms are seeing value in live sports and their pocketbook - they’re putting their money where their mouth is around that - and we have a large presence in digital today.

We’re evaluated through those three prisms, I’ve mentioned.

Audience: “I’m a die-hard New England Patriots fan. Is Rob Gronkowski going to come to the WWE?”
I don’t know. I’m a die-hard WWE fan. I hope he does.
…
I’m a die-hard WWE fan.

(21 minutes-28 minutes)

Audience: Common owner for US/UK rights? (Comcast/Sky)

We put the dates out that we think the dates.

Different distribution strategy

Can’t saying anything else about that.

How would it affect our rights? I don’t know. That’s really a question for them.

Our deals are Co-terminous. Several years ago there was some discussion about whether there would be players that want global exclusive rights.

Audience: Ronda Rousey signed? Should we thinking about that impact of that to the business?

I’ll answer that question. The context is interesting. It really is our women’s revolution. When we think about three years ago, we had WWE Superstars and WWE DIvas. People saw the change of the female talent in NXT. There was this hashtag that went global, #givedivasachance - we don’t like how you’re structuring female wrestlers in a storyline. I think there was about three days of that trending globally. I think Vince came on and said, “We hear you. Keep watching”.

Divas’ moniker is retired. For the first time ever, we had women headlining major PPV events.

We can measure it. We can see time spent.

Within that context, we think Ronda is is super talent. Super cool. She is all in. She’s all in.

My daughters know who Ronda Rousey is. It’s exciting.

We’ll see where it takes us.

MS: Advertising. How is it viewed by advertisers today? Buying groups behind the content?

What we see is more on the digital side? We’re moving that inventory through YouTube.

Smaller number. But today it’s no longer a small part of the business.

We have less visibility to USA. USA has been public. They said they have added 200 new advertisers from last years.

They have broken several new categories. They’ve been very public about their success. It’s a win-win.

It feels like it’s been a real positive story with us.

MS: There’s a lot of focus around advertisers around brands. Do you advertisers view WWE as family-friend and want to be associated it?
There’s very little content that’s PG. If you’re looking for family friendly content.

We’ve very high on co-viewing stats,.

This whole digital-social transformation that changed the narrative of the brand, both from a B2B and B2C perspective.

I think all of that has created a positive context.

(transcript by @mookieghana)

Wrestlenomics Radio covers this conference on the latest episode.