TKO Group Holdings Inc (TKO) 2011 Q2 法說會逐字稿

Thank you and good morning, everyone. Welcome to WWE's second quarter 2011 earnings conference call. Today we will review our financial results for the second quarter and we'll follow this review with a Q&A session. Joining me for today's discussion are Vince McMahon, our Chairman and CEO, and George Barrios, our CFO.

We issued our earnings release earlier this morning and will be referencing a presentation as part of our discussion. These and other materials, such as quarterly trending schedule, are available on our corporate website at Corporate.wwe.com. Several items, including the timing of WrestleMania and an impairment charge related to our film, That's What I Am, impacted the comparability of our results on a quarter-over-quarter basis.

WrestleMania 27 was staged on April 3rd this year and contributed revenue of $35.9 million; pretax profits of $16.7 million; and $0.15 of earnings per share to our second quarter 2011 results. In conjunction with the promotion of this event, $1.4 million in marketing expenses were recognized in the first quarter of 2011. WrestleMania 26 occurred on March 28, 2010 and contributed revenue of $28.8 million; pretax profit of $13.1 million; and $0.12 of earnings per share to our first quarter of 2010.

To facilitate an analysis of our financial results on a more comparable basis, we will discuss our performance on an adjusted basis, adding the prior year impact of WrestleMania to our second quarter 2010 results and adding the promotional costs that were recognized earlier this year to our second quarter 2011 results.

In addition, we have also adjusted our second quarter 2011 results to exclude the $3.3 million impairment charge related to our film, That's What I Am. Schedules outlining these adjustments and reconciliations for non-GAAP financial information discussed on this call can be found in our earnings release and in our website presentation.

Finally, we will be making several forward-looking statements today as part of our discussion. These statements are based on Management's estimates. Actual results may differ due to numerous factors. These factors are described in our presentation and in our filings with the SEC.

At this time, it is my privilege to turn the call over to Vince.

Good morning everyone, give you some sort of perspective on our second quarter, it was mentioned to a certain extent it relates to WrestleMania, we're essentially flat to last year, which is not anything we're proud of. It could be worse, obviously in this environment but nonetheless, it could be a whole heck of a lot better.

Our increased profit launch of the new video game WWE All Stars and a strong WrestleMania were more than offset by the absence of our domestic television rights for shows such as NXT and Superstars. Quite frankly, we've been sitting on these rights, waiting for the right opportunity to come along to take advantage of the rights and we're there now. In addition to that, we're going to roll out other television programming. For instance, there's an 8 o'clock show that's contemplated to start up shortly. It would be a live show just one hour before Monday night Raw. That would be significant revenues for the company as well as, again, capitalizing on the rights we've been sitting on with NXT and Superstars.

Home video declined about 35% as compared to an industry average of about 7% which we're not proud of and we think however that that's due to some of our titles that were not as in-demand as we have coming up. We have we think expected growth with titles such as Randy Orton and we have a Shawn Michaels versus Bret Hart rivalry. We're going to start a new rivalry series. We've had some great ones in the past and we think this is going to be something our audience is really going to look forward to.

Speaking of WrestleMania, as was mentioned, we did well this year and I think we'll do even better next year, just looking forward. We announced actually the day after this successful WrestleMania; we announced our main event for the following WrestleMania, which is going to be held in Miami on April 1. So again, we look forward to that and some of the key metrics not withstanding that, Raw television ratings continue the favorable trend; up about 3% over last year, which is pretty extraordinary, quite frankly, compared to other television shows that are on the air. Actually there's no television show that's been on the air as long as we have in terms of number of episodes. We're way ahead of Lassie and Gunsmoke and you name it.

(Inaudible) that and to consider not only are we up slightly over last year in Raw television ratings, but also the staying power which I just mentioned is extremely important in terms of the stability of our overall performance going forward. Likewise, from a live event standpoint, our attendance was down about 3% which again is down, not up, but that versus down 19% last year in the same quarter, so it's a good indication of attendance coming back in a strong basis.

Again from a WrestleMania standpoint, from television pay-per-view, really good. Generally speaking however we've got a decline in our revenues. However, I can tell you that our recent pay-per-view, aptly entitled Money In the Bank, I might say, is up about 20% as projected as well. So it appears as though the pay-per-view revenue is on an upswing.

From a film performance standpoint, certainly we're disappointed in our DVD sales, not withstanding an award-winning release entitled That's What I Am. It's a little tough to eat those award-winning release sandwiches when in fact they're not successful. And that caused us roughly a $3 million impairment charge. We're confident however our reengineered approach to deliver higher returns with a lower risk and the way that we're going to do this is sort of an increased emphasis on the genres. That's What I Am is a great movie, but at the same time it really doesn't necessarily play to our television audience, so the genres I think are extremely important, not just good movies.

Likewise, we have a paid TV window now which we did not have before and with the increase on the perspective genre, we think that from an interactional standpoint we're going to have a lot more appeal, as well as distribution that WWE is not doing on their own in international, in terms of releases. Likewise, I think a lower production budget is important for us in terms of the way we've been doing films and we're about $1 million over budget really in terms of the way to make money with the traditional way of doing these films. But we have come in, by the way, on budget with every film we've ever done, or slightly below.

So again, I think it's a reduced distribution risk by going with international rights with those that are set up from a distribution standpoint as opposed to WWE doing it. The other aspect of that is a presell approach which many of you are familiar with in the film business, in terms of what is known as, not international rights, but selling to foreign first, then bringing back a lot less riskier budget for just domestic. So that's it on films.

From a content strategy, finally we're rolling out the WWE Network after all these many years in terms of putting it all together. We have, I think the most compelling startup network in history, which is saying a great deal. Because I understand what other networks have started out as. We have extraordinary leverage with all the content distributors. And again, we're finally rolling that out with meetings coming up actually this week and next. So we're very proud of that and we think again, that's going to be significant bottom line number to us going forward.

And again notwithstanding that in terms of the new content that would be developed in the application of some of our more strategic and older content, notwithstanding the newer content, also as I mentioned before, we're able to develop content outside of the network, for instance this 8 o'clock live show that we're going to be rolling out, which would not necessarily have anything to do with the WWE Network. So we're ready to roll this out and very very excited about doing it. It's well thought out, extremely well thought out and one that has to work in my view. I don't know how anyone can say no, quite frankly.

So that pretty much wraps up the quarter in terms of where we are, so I'll turn it over to George.

Thanks Vince. There's several key topics which I'd like to review today. These include our second quarter financial performance, our business outlook for the remainder of this year and an update on our approach to the movie business. I'd like to start by sharing my perspective of the company's second quarter results, which was highlighted by the strong performance of WrestleMania.

On an adjusted basis, WrestleMania contributed an incremental $7.1 million in revenue; $2.2 million in profit; and nearly $0.02 in EPS to our second quarter results. In addition, the launch of our new video game, WWE All Stars propelled growth in our licensing business. Changes in foreign exchange rates, although had a $1.9 million positive impact on revenue and approximately $800,000 impact on profit.

These positive developments however, were more than offset by lower than anticipated sales of home video in the absence of domestic rights fees for our NXT and Superstars programs. As a result, our adjusted profit contribution declined 2% to $55.6 million. On an adjusted basis, our EBITDA was essentially flat to the prior year quarter, as a decline in profit contributions was offset by a 4% reduction in SG&A expenses. That reduction can be attributed almost entirely to the changes in our accrued management incentive compensation and in our accrued reserves for bad debt.

Key operating metrics such as average domestic live event attendance and current period domestic pay-per-view buys declined in the second quarter when evaluated on a comparable basis excluding WrestleMania. But the gap to our prior year performance continued to diminish and we believe that while down, our business is steadily improving. It's important that ratings for our Raw television program were 3% above the prior year.

For a more detailed review of our performance in the quarter, let's turn to page 6 of our presentation, which lists the revenue and profit contributions by business as compared to the prior year quarter. Starting with our live events including merchandise sales at these events, our adjusted revenue from both domestic and international markets was essentially flat to the prior year. In North America, the strong performance of WrestleMania was partially offset by a 10% reduction in the number of non-WrestleMania events. The occurrence of 6 fewer domestic events in the quarter was due to routine changes in our touring schedule. In addition, average attendance at these events declined 3% to 5,600 fans.

In our international markets, a 20% decline in average attendance to 6,600 fans, due in part to territory mix, was offset by the favorable impact of contractual guarantees and an increase in prices. Average ticket prices rose 11% to over $68, lifted by favorable changes in foreign exchange rates.

Turning to our pay-per-view business, adjusted revenue increased 17% or $5 million from the prior year quarter, driven by the strong performance of WrestleMania. Pay-per-view buys for WrestleMania increased 20% to over 1 million buys worldwide. Revenue from our non-WrestleMania events was essentially flat to the prior year quarter.

For these events, a 9% decline in our domestic current period buys was offset by a comparable increase in international buys. Such international growth was due primarily to the distribution of events in the UK. Our television partner in that country selected two events; Extreme Rules and WWE Capital Punishment for distribution via pay-per-view as compared to one event, Over the Limit in the prior year quarter.

Revenues from the distribution of our television programming increased by 4% or $1.2 million, primarily due to improved contract terms and contractual increases from our existing programs. In addition, our television rights were favorably impacted by a revised contract with a Canadian distributor. Under the revised contract, we receive television rights fees rather than advertising revenue. These factors were partially offset by the absence of domestic rights fees for our NXT and WWE Superstars program, as referenced earlier.

In April we discontinued the broadcast of our WWE Superstars program on domestic television and we continue to evaluate alternatives for maximizing our revenue from our original programs.

In our consumer products segment our licensing revenue increased by 38% or $3.3 million, primarily due to the launch of our new video game, WWE All Stars. New game sales more than offset the decline in revenue from our SmackDown versus Raw franchise and contributed to a $4.2 million increase in video game revenue. During the quarter, shipments on our SmackDown Versus Raw video game declined 47% to 196,000 units. Recognizing the potential of this popular title, we are working with our video game licensee, THQ, to develop and launch its successor, WWE 12, which is expected to debut in November 2011. The highly anticipated release marks the most significant overhaul in the game's software in years. Early indications from media and consumers are very promising, citing the major improvement in the core game play and TV style presentation.

With regard to our toy licensing, we continue to be pleased with our relationship with Mattel and revenues related to toys were essentially flat to the prior year quarter. Our home video revenue declined 35% of $4 million, reflecting a decrease in unit shipment, lower sell through rates and a reduction in average effective unit prices. Specifically, the quarter had an 11% decrease in unit shipments to 917,000 units, due in part to one fewer release in the period and a significant decline in sell through rates. Estimated returns increased to 41% of gross retail revenue. In addition, the average effective price of our home video titles fell 6% to approximately $12.50, reflecting the impact of ongoing discounts and promotional activity.

In our magazine publishing business revenue decreased 36% to $1.6 million, reflecting lower newsstand sales in the current quarter. And in our digital media segment, adjusted revenues increased 9% to $6.2 million, driven by higher sales of merchandise on our e-commerce website, WWEShop.

Revenue from e-commerce increased 17% or $0.4 million, as online purchases increased 26% to approximately 59,000 orders. This growth was partially offset by an 8% decline in average revenue per order to $46.71.

During the quarter, WWE Studios recognized revenue of $4.3 million compared to $0.7 million in the prior year. The growth in revenue was driven by the release of our latest film, That's What I Am and by receipts from our movie, 12 Rounds.

Revised ultimate projections for That's What I Am, which reflect lower actual home video sales than anticipated, resulted in a $3.3 million impairment charge. Given the non-cash estimate based nature of this charge, we have excluded it from our adjusted income and earnings. Accordingly, our adjusted losses increased to approximately $0.8 million with lower receipts from our previously released licensed film and the change in our distribution model for film. Overall, our adjusted profit contribution declined by 2% or $1.2 million. Increased profits from the launch of our new video game, WWE All Stars and $2.2 million in incremental profits from WrestleMania were offset by the impact of lowering home video sales and the absence of domestic rights fee from our NXT and WWE Super Stars program.

Adjusted gross profit margins declined to 39% from 42% due to increased revenue from our film segment without a corresponding increase in profit and increased investment in our WrestleMania pay-per-view.

For the quarter, adjusted SG&A expenses decreased 4% to $29 million, due to reductions in accrued management incentive compensation and in our accrued reserve for bad debt. These adjustments more than offset increases in marketing and salary expenses.

Page 9 of our presentation compares the quarter over quarter results and provides a summary of changes by business. As shown, adjusted operating income declined 2% to $22.9 million, driven by the reduction in our adjusted profit. Adjusted net income, as referenced on page 11, increased approximately 3% to $15.5 million, primarily based on lower realized losses from foreign exchange transactions as reported in other expenses.

Page 12 of the presentation contains our balance sheet which remains strong. On June 30th we held nearly $185 million in cash and investments with virtually no debt. Page 16 shows our free cash flow. On a year-to-date basis we generated $32.5 million in free cash flow, including $7.8 million in the current quarter.

Through the first six months of the year, our free cash flow increased approximately $10 million from the prior year, driven by the timing of our feature film production activities and by changes in our tax position. In the current period we spent $18.3 million less on feature film production and received a $9 million federal tax refund. The positive impact of cash flow from these factors however, was partially offset by lower operating results and the timing of a $7.5 million advance from a licensee which was received in the first quarter of 2010.

Our cash flow demonstrates how we have slowed our investment in films over the first half of the year, consistent with statements we made in previous earnings calls. After validating our approach and making some meaningful changes, we are planning to invest an additional $10 million to $15 million over the remainder of this year in our films business.

To be clear, we have not been pleased with the rate of return that we have achieved from this business. We have made a net investment of nearly $120 million to produce a slate of about 15 films, which have generated a lot since inception and though expected to surpass breakeven by a small margin, would fall well below our internal hurdle rates. However, we believe there are compelling reasons for WWE to participate in the movie business. These include taking advantage of our core competencies, which are creating original content, smart and efficient marketing and global distribution in traditional and emerging channels.

Our film products can extend the reach of our super stars to new audiences well beyond our core fans. Further, film projects optimize our talent utilization by enabling our super stars to participate in films with WWE. And finally, producing a diverse portfolio built a library that can generate value across our global platform in perpetuity.

We are confident that we can execute certain changes to our approach to film that will increase our upside potential and decrease both our performance and distribution risks. Key elements of the revision include increasing emphasis on genres with greater paid TV and international field, using coproductions to reduce our equity investments per film and preselling international distribution rights by the completion of a particular film project. Based on these changes, we believe we can generate returns that exceed our cost of capital.

Looking ahead, we remain cautious about our short-term business outlook and optimistic about our long-term prospects. In addressing the transition in our talent base, we believe we've made important progress. The continued success of our talent development and creative initiatives will be a key determinant of our live event, pay-per-view and overall performance over the remainder of this year. Other critical factors include the decisions we make regarding our original program and our efficacy in improving our home video sales.

In executing our long-term strategy, we remain highly focused on developing new content and pursuing additional forms of distribution such as the WWE Network. Our discussion with numerous stakeholders reinforces our view that we can transform our business and create meaningful value for our shareholders.

That concludes this portion of our call and I'll now turn it back to Michael.

Thank you George. John, we're ready now. Please open the lines for questions.

(Operator instructions) Richard Ingrassia, Roth Capital Partners.

Vince, obviously the Rock gave you a nice pop at WrestleMania 27; how much more can he be involved over the next 12 months say and is there an opportunity down the road to continue to bring back popular retired stars to try to drive audiences to the new product?

One of the keys you hit on was to bring back some of these established stars from years ago to capture what we call a lapsed audience, to reintroduce them to our current stars and reintroduce them to invigorate our traditional titles, Monday Night Raw, things of that nature. We do have multiple pay-per-views lined up with Rock, not just the next WrestleMania, so to answer your question there.

Now UFC says it's looking for a cable network or to start a cable network; do you really care?

No. They have nothing to do with us. In fact, I think they fell on their butt recently, trying to do a network with NBCU Comcast and I don't know if it makes any sense for them. I can't speak to that, but it makes a great deal of sense for us. They're totally different than we are. We're in the entertainment business, which gives us far more leverage as far as networks are concerned.

Again, I mentioned that this is the most compelling rollout network, in my view, in history, notwithstanding the new entertainment and the new programs that will be a part of those as well as take advantage of what I call our archival footage, which has been seen only once anywhere. There's tremendous value and with our new programming as well, whether or not we can take the entire network and transplant that to other international nations, I'm not certain if we can transplant the entire network and quite frankly, we might be able to.

But aside from that, if we can't, all this new programming that we're going to be doing that's associated with a network also is going to be available, so it's pizza by the slice as well. This opens up tremendous opportunities for us with our WB network, notwithstanding the amount of income we think we're going to make domestically; we think from an international standpoint it's going to be huge.

I did mention we've been sitting on these rights, NXT and Super Stars and we're now ready to capitalize on those as well as a new 8 o'clock live live show which we think is going to have tremendous interest and revenue to the company.

I don't know if it's a question for you or for George, but Mattel sounded pretty fired up on their call about product sales opportunities at Summer Slam and also obviously looking ahead to 28. Any early indications on your side for attendance and pay-per-view at Summer Slam?

We think we're going to do extremely well on Summer Slam. Likewise, I'll give you some idea of indication for next year's WrestleMania, we have what's known as our travel packages which we go way out in front, in which we offer the service for not just tickets for the actual pay-per-view but also tickets to the night before, which is Hall of Fame and tickets to the Monday Night Raw following that, sort of an overall service, and that sold out in two days, where it normally would not withstanding the potential of not selling out, for instance last year, it would take us months. We think that's a really really strong indication of the demand for this year's WrestleMania.

Just two quick questions for George and I'll get off here. Gross margin breakdown, you don't have to give specifics, but obviously you took a hit on films there. But to your minds was it low for any particular onetime reason in any other segment?

I think if you look at the gross margin specifically, it's a business mix issue. So you have some revenue increase, roughly $4 million or $5 million in the film business, but even excluding the impairment, you're talking about a year over year decline of about $3 million in profits. If you back that all out, you essentially have flat gross margins.

Then the last one is just on the Walmart retail exclusive; any margin benefit that you can realize there?

You're talking specifically about the film business?

Films.

I think Vince mentioned it or I mentioned it in the script; part of the company's DNA is to fail forward, so keep moving forward and keep learning and keep tweaking and the self-distribution model, one of the things that we feel real good about has been the DVDs at Walmart and then post the exclusive period just broadly at retail. So we feel really good about that and that's probably an area that doesn't need a lot of tweaking. So there's been some margin expansion there for us. We're going to continue to look at that going forward.

Our overall relationship with Walmart continues to get better and better. It's really good now, but our core competencies fit theirs extremely well.

Michael Kupinski, Noble Financial.

I just had a couple of quick questions. One is, on your international revenues, can you help me understand the economics of the international venues, in particular in this quarter you stated that the weak attendance was offset by minimum revenue guarantees; is there any risk in your international revenues going forward by the prospect of your international partners maybe not making as much money as they would like to on some of these events? Can you just kind of frame that for me, what the outlook might be?

For the most part Michael, our international touring mimics our domestic touring in terms of the commercial arrangements, where we're taking the risk on the ticket sales and then on the production costs. In some markets and usually in newer markets that we'll first penetrate, we'll go in and do what we call a flat deal and we refer to that in our Qs and our Ks and those essentially are a guaranteed amount with some revenue share over and above. We don't tend to do that continuously in the same market. After we've established ourselves then we just move back to the traditional model.

So that's the nature of the beast. We had a couple of those this quarter. To answer your question directly, we're not concerned about that international poses some unique risk in terms of our attendance. We had a great Latin America tour in the first quarter specifically in Mexico and we continue to see international a nice area for growth for us.

And we've made some changes from a leadership standpoint international, which we think are going to benefit the company greatly.

In your average ticket prices for domestic significantly rose year-over-year, even if you factor in WrestleMania; can you talk about the dynamics of what's going on with the domestic ticket prices right now?

Well, we mentioned it before; pricing, especially in some of our more mature businesses, is part of kind of our efficiency quadrant. We focus real hard on looking at pricing and costs and so on. And then the light event business a way to raise the average selling price of the ticket is to look at the elasticity of each of the different ticket price levels and we're almost inelastic at the high priced seats, so we've moved those up a little bit and that's driven the average ticket price up. And we know has not resulted in any decline in attendance because we can look at the attendance by ticket price tranche, so we feel very good about that.

Obviously the average ticket price is depending on different pricing levels; can you give us an idea of how much you've raised the prices then in the quarter?

It depends and it wasn't just in the quarter. We've been doing it for a while but we continue to tweak it. But in the highest price tickets it will be anywhere, depending on the market, between 5% and 15%.

And I would imagine that then we should be modeling that into subsequent quarters. Year-over-year, as you head into the third quarter, what would be the percentage increase then would you say?

It's a little bit hard to gauge, but I will say that as we begin to comp what we were doing last year, because we started that last year, the year-over-year impact though gets smaller and smaller.

Arvind Bhatia, Sterne Agee.

Two questions, first one on the consumer products side, given some of your commentary on the video games and toys, etc. What would be a good expectation for the full year in that particular line, both revenue and profit contribution? And second question is on the film business, the 10 to 15 million I think is the investment I heard you talk about for the balance of the year, help us understand going forward let's say 2012 is that a good run rate or just how should we be thinking of that and what kind of ROI are you planning for that would be satisfactory?

I think the back half of the year investment reflects kind of a pro rata for what we would be looking to do on a full year basis going forward, but obviously that depends on a lot of things. Capital is fungible; we've got a lot of opportunities. Vince talked at length about the network.

So we'll evaluate that on an ongoing basis but I think what you heard us talk about for the back half of the year is probably a good proxy for what we think we need to do in that business. I mean, as you know, it's a portfolio business, so if you're going to be in it, you have to produce enough of product to drive your expected average return to a high enough level. You can't kind of do one or two of those. We feel you have to deploy a meaningful amount of capital to be in the business.

To your first question, we don't give guidance on specific businesses. We talked about the fact that we're happy with Mattel. We were flat in the second quarter, up in the first quarter. As you know, we report on a lag, based on when we receive statements from our licensees, so we have the Christmas holiday in Q1 of this year, so we'll get the Christmas sales this year in Q1 of 2012. But if you look at what we've done year-to-date in those businesses, I think that's a fairly decent proxy from a year-over-year basis what we think going forward. But we don't give specific guidance.

Any commentary on satisfactory ROI in the film business?

On an average expected return, risk adjusted, and it is a risky business. We think we have to shoot in mid to upper teens has got to be our target, obviously given that we're heavily equity weighted on the cost of capital, we're in the 9% to 10% range, so to exceed that on a risk adjusted basis we want to shoot for the mid teens.

Robert Routh, Phoenix Partners Group.

Good quarter. Just two quick questions. First, when you talk about the library and obviously you guys have a huge library with a ton of footage and I don't think many investors are aware of the actual size and how many hours you have. Could you kind of go over quickly just how many hours of footage you have, how big the library is and then what rights you do have? Do you have all rights; analog, digital, home video, streaming or have any of them been sold off? Could you give us a sense as to what the difference is, just ballpark between the book value of that library and what probably a fair value would be for that library, if you were to sell it? Not that I think you will, but just kind of a hidden asset.

On the first one of those, and I agree with you, I think it's probably the most undervalued asset the company has. We've got roughly 100,000 hours of footage. Last year we digitized roughly 30,000 hours of what we call master program footage; about 25% of that in HD. That's a core of our monetization strategy moving forward and a core of the network programming strategy as well, even though for us the library is not something that you just show what was shown before; it's about taking that and making it really compelling by introducing current superstars and bringing that up and also utilizing Vince mentioned the interactivity that we have.

A lot of people sometimes don't know that we've got about 35 million FaceBook fans today and if we view the WWE Network as a great way to engage with our fans on a variety of ways. So the library as a whole, we think has tremendous asset value. The book value of it is in the single digit millions and we think it's got significantly more value than that.

And likewise we do own all of our rights and that's one of the advantages that we have with current programming as well as past programming.

That's what kind of what I thought, because obviously given the low share count that you have and the book value, it seems like investors are clearly missing that there's a hidden asset there, if you were to monetize it. It does not reflect in the share price. Great. Second question is, given you mentioned your cost of capital and given where the stock price is and the dividend yield that you have now, is there any price at which you'd consider going private or if a larger entity was interested in partnering with you, similar to Liberty Media Berkshire Hathaway style, kind of you run your own show but being part of a larger organization; is there any level where you'd consider doing that?

No.

(Operator instructions) Brad Safalow, PAA Research.

First question, some of the third-party data that we track suggests that there's been a pretty material shift in terms of the popularity of the Creative really in the last couple of months. It sounds like the most recent pay-per-view somewhat reflects that. Are you seeing that we can obviously track the ratings on a weekly basis, but are you seeing that in your attendance as well and do you think that the momentum you have on the Creative currently will flow through for Summer Slam and the other pay-per-view that you have upcoming?

Yes, we do. Again, it's always a mix of talent and their stories. It's important to build strong characters and then if you build strong characters and put them in a compelling antagonist/protagonist storyline, then it follows through at all sources of income; live attendance, pay-per-view, you name it. We are happy that we have somewhat of a new slat, which always happens, quite frankly, and again it speaks to the longevity of the brand. So it's important that you have new creative programming and we think we are at a point of takeoff on many things like that.

I want to make sure I understand exactly what you're saying about NXT and Superstars; is this a third quarter event where you're going to get some rights fees or is that a fourth quarter event?

We're going to evaluate. What we said all along is we know the value of our programming. There's a lot of moving parts going on, including the networks, some other content deals we're working on. So our goal, we're platform agnostic but not economics agnostic, so our goal is to maximize our production capacity in our original programming and something will happen we believe in the third or fourth quarter this year around that.

And in terms of the actual network timing it sounds like you guys have kind of finalized your go to market strategy and now you're going to have a sequence of meetings. The actual launch of the network has the timing changed in your expectations surrounding that at all?

I think the last time we were public was on the first quarter call and at that point we said we were going to launch between 12 and 18 months and I think internally we feel that's the right timeline and that hasn't changed.

Then there've been some reports in the press, Vince that you recently met with Dana White, the President of UFC; can you comment on the purpose of that meeting and whether you would consider partnering with them at all in a network?

Absolutely not. Again, there's no partnering with them in any conceivable way. If it's contemplated, I don't think it would work. Again, we're in the entertainment business; they're in the sports business. There was a meeting and the meeting quite frankly was more social than anything else, you know, and comparison, what are you guys doing with pay-per-view and some of the things we do have in common, what are they doing - more of a social meeting than anything else.

We have no further questions at this time. I'll turn it back to you Mr. Weitz.

Thank you. Appreciate everybody participating in the call today. If you have any questions, please do not hesitate to call us or contact us. You can reach me, Michael Weitz at 203-352-8642. Thank you.

Thank you ladies and gentlemen, this concludes today's conference.