WWE had plenty of exciting news during today's Second Quarter Conference Call. WWE stunned most observers when they announced that WWE Network will be launching internationally in less than two weeks. With stories of massive cost-cutting and questions looming regarding the company's financial future, there was exceptional interest in today's conference call. On Monday, I asked more than a dozen questions for the WWE. My inquiries covered a number of subjects including: details of WWE cost-cutting strategy; India TV rights; future of key executive positions; international WWE Network developments; projected subscriber churn; digital media rights including Netflix and Hulu; supplement WWE Network programming; taking on partners for the WWE Network and WWE Studios; attendance trends; and comprehensive WWE Network accounting. In the end, the press release and subsequent conference call touched on many of these topics. Here's what we learned...
Cost-Cutting Strategy
WWE is engaging on an ambitious cost-cutting program. This includes cutting 7% of their staff (including some wrestling talent) and generating cost-saving equal to $10M (2014 OIBDA) and $30M (2015 OIBDA). This will involve a $4.5M restructuring charge which the company will observe this quarter. Having completed their company-wide assessment they are in the process of eliminating inefficiencies, many related to the rapid ramp-up required to achieve the tight timelines involved in launching the domestic WWE Network. It's an important development because these cost-savings are directly related to the further lowered WWE Network breakeven projections for 2015. Now, the company can turn a profit, albeit a small one, in 2015 with less than a one million annual WWE Network subscribers.
India TV Rights
WWE did confirm that they are still in negotiations for the India TV rights deal. Today's big surprise was that WWE announced a 10-year deal with Rogers Communication for both TV/PPV programming as well as distributing the WWE Network as a pay channel.This month WWE also announced a new 3-year deal with France's Groupe AB and a new North Africa/Middle East deal with pay-TV channel OSN. While WWE is still finalizing terms for the India deal, they did confirm during the conference call that, consistent with company policy, they will not be sharing financial details. Instead, WWE is just reaffirming their previous release about "Key Content Agreements" from May which aggregated a number of deals (US, UK, Thailand and projected India).
Key Executive Positions
With aggressive cost cutting in place, it seems less likely than ever that WWE is going to announce hire profile firings for the WWE Network. It looks like Matthew Singerman's position as head of the WWE Network and EVP Programming might stay unfilled for the time being. WWE did announce this week that they hired a new head of Sales & Partnership Marketing.