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Hello, and welcome to the webcast entitled WWE First Quarter Earnings. We have just a few announcements before we begin. If you are logged in to the webcast, please note that the slides will not advance during the presentation. You will only see the title slide. Please download the full slide presentation via the Resources widget at the bottom of the webcast screen. Also at the bottom of your screen you will find a Help icon for technical assistance. (Operator Instructions)

I will now turn the call over to Mr. Michael Weitz, SVP Financial Planning and Investor Relations. Please go ahead, Michael.

Thank you, and good morning, everyone. Welcome to WWE's first quarter 2014 earnings conference call. Leading today's discussion are Vince McMahon, our Chairman and CEO, and George Barrios, our Chief Strategy and Financial Officer. We have posted our presentation for today's call and a detailed financial (inaudible) on our website, corporate.wwe.com.

As you review these documents, please note that the launch of WWE Network coupled with the continued convergence within the media landscape has resulted in a change in the Company's management reporting. These changes necessitated a change in the Company's segment reporting to align with management's operational view. These changes are outlined in our press release and filings with the SEC. For your reference and to evaluate trends in the business on a consistent basis, we have posted a pro forma trending schedule covering the period from 2011 to present on our website.

Today's discussion will include forward-looking statements. These forward-looking statements reflect our current views, are based on various assumptions, and are subject to risks and uncertainties disclosed from time to time in our SEC filings. Actual results may differ materially and undue reliance should not be placed on them.

Additionally, the matters we will be discussing today may include non-GAAP financial measures. Reconciliation of non-GAAP to GAAP information is set forth in the notes to this presentation, which is available on our website at corporate.wwe.com.

Finally, as a reminder, today's conference is being recorded and the replay will be available on our website later today.

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

Good morning, everyone. To give you some idea of the perspective of our performance in Q1, our key metrics, live events as well as television ratings, were pretty much flat. We've had lower results from licensing, principally from the video game contract structure which, quite frankly, George will be able to give you some color on, and [improved] results from our WWE Studios in terms of the performance of the call.

Everyone, of course, is aware of our launch of our WWE Network, which we launched on February 24. As of April 6, we had 667,000 subscribers. That's in addition to a pay-per-view audience, as well, of some 400,000, so there's a combination -- that's all domestic by the way. The combination of that would put us over 1 million buys which is the best we've done perhaps ever as I recall in terms of WrestleMania buys. So WrestleMania looks pretty darn good as well as the launch of the network.

And speaking again of the network, it's been well received by fans as well as industry experts. We continue to state that we will meet our 1 million subscription by the end of the year. We just actually in terms of distribution -- Xbox One came on board. Amazon Fire TV and smart TVs will continue to come online shortly. In terms of rolling out of our international markets with the network, we are formulating plans and execution for that.

Our content licensing agreements, as far as India is concerned, we're in the middle of negotiation there, which should be big for us. Domestically, we'll be announcing in several weeks what we're doing domestically as we complete some of those negotiations.

In terms of achievements, we announced as well that TELE 5 as well as [Prociva] -- these are television outlets in Germany which we're going to have a much broader perspective and much broader distribution over in Germany, which turned that into even a much better market for us as it has been in the past. We launched Slam City which is an animated short form series for kids successfully.

We, as well, have continued to renew our relationships and partnerships with some blue chip companies like Pepsi and General Mills. Of course, we recently had a movie release of Scooby-Doo and Oculus. They're expected to meet or in all likelihood exceed targeted profit, and we continue to execute our strategic initiatives in a way that transforms our business.

George, I'll send it over to you.

Thanks, Vince. There are several key topics which I'd like to review today. These include management discussion of financial performance and the progress of our key strategic initiatives. For the first quarter, our financial results exceeded our guidance as our net loss of $8 million compared favorably to a targeted loss of $12 million to $15 million.

Our results as measured by OIBDA declined $18.5 million from the prior year quarter as we launched WWE Network and realized a reduction in video game royalties at least in part due to timing. I'll explain more about the nature of this impact momentarily.

The quarter was highlighted by the launch of WWE Network on February 24. The network became the first ever 24/7 streaming network that combines linear programming which showcases our premium content with a massive on-demand library, or as we like to think about it, it's like Netflix just better.

The remarkable depth of programming and easy to use interface has been embraced by fans and applauded by industry observers. Following the broadcast of WrestleMania on April 6, we reported that the WWE Network had attracted more than 667,000 subscribers, a remarkable feat in just a 42-day period.

On an annualized basis, the 667,000 subscribers reported would represent approximately $80 million in revenue which is roughly 30% more than the average revenue of our domestic pay-per-view business over the past three years.

Regarding future subscriber growth, we expect a gradual ramp up over time as consumers change behavior and adopt new technology, particularly as new platforms increase the size of the addressable market. As such, we believe the network's on track to achieve 1 million subscribers by year end and 2 million to 3 million subscribers at steady state.

The recent performance of WrestleMania which yielded nearly 400,000 domestic pay-per-view buys demonstrates a meaningful base of potential subscribers. With a keen interest in WWE, it could be converted to the network over time.

To attract subscribers, we'll execute a five part strategy that includes creating new content, entering new geographies, expanding distribution platforms, developing new features, and executing high impact marketing campaigns. New content coming to the network includes Monday Night War, WWE Countdown Season 2, and Tough Enough to name a few.

Over the next few months, we expect to launch on several platforms including Xbox One, which we announced yesterday, Amazon Fire TV, and select smart TVs. In the near future, we'll also plan to deliver new features, such as bookmarking capabilities to leave and resume play at a later date and playlist tools to identify favorite content.

We're now highly focused on expanding the network in the U.S. and international markets. Our comprehensive consumer research demonstrates that more than 50% of TV homes across WWE's top global markets, or about 120 million homes, report some level of affinity for WWE content, and among these WWE homes, more than 80 million are classified as active representing more than 170 million passionate and casual fans. Moreover, we believe that we have the potential to reengage some portion of the 40 million homes with [lapse spans] in these markets.

In our view, taking advantage of WWE's tremendous brand strength to expand the network globally will provide a platform for driving long-term growth over the next several years.

To review the key drivers of our performance in the quarter, let's turn to page 5 of our presentation, which lists the revenue and OIBDA contribution by business as compared to the prior year quarter. Total revenues increased by approximately $2 million based on the increased monetization of content and improved performance from our movie business. These increases were partially offset by lower video game royalties.

Network revenues, which include revenues generated by WWE Network, pay-per-view, and video on demand, increased 15% to $18.4 million as the ramp up of network subscribers and subscription revenue more than offset a decline in pay-per-view revenue.

WWE Network generated $4.4 million in subscription revenue with approximately 495,000 subscribers at quarter end and a retail price of $9.99 per month.

Following the broadcast of WrestleMania 30, which aired live April 6 on WWE Network and on pay-per-view through cable and satellite providers, the Company announced that WWE Network had reached over 667,000 subscribers.

The $4.4 million in network subscription revenue was partially offset by a $1.3 million decline in pay-per-view revenue. Pay-per-view revenue declined 9% to $13.8 million driven by a 10% decline in buys for our Royal Rumble and Elimination Chamber events with weaker performance in some international markets.

Home entertainment revenues increased $3.5 million to $10.5 million reflecting adjustments related to prior year sell-through estimates and contractual guarantees. Specifically, the quarter reflected the recognition of a $2.5 million minimum guarantee related to 2013 sales and a $2.2 million adjustment for higher current sell-through rates than anticipated for our late 2013 releases.

As a result of the latter adjustment, returns represented 24% of gross domestic retail revenue as compared to 49% in the prior year quarter. These factors were partially offset by a 17% decline in the average effective price to $7.88 and an 11% decline in units shipped.

Television revenues increased 8% or $2.9 million primarily due to the second season production and monetization of Total Divas which began airing in March 2014 with no comparable program in the prior year quarter and contractual increases for existing programs. Additionally, the increase in television revenues reflected one addition episode of RAW in the U.S. due to an additional Monday in the first quarter of 2014 compared to the first quarter of 2013.

Revenue from our movie business, WWE Studios, increased $2.4 million from the prior year quarter. The growth was primarily due to the strong performance of the call, which was released theatrically in March 2013. WWE Studios' movie portfolio generated income of $1.6 million in the quarter, compared to a loss of $5 million in the prior year quarter, which included $4.7 million in film impairment charges.

Recent movies such as Scooby-Doo, WrestleMania Mystery, released direct to DVD in March, and Oculus, released theatrically in April, have delivered strong performances that are in line with our expectations. The Company's movie releases since late 2012 are currently expected to generate an IRR of over 15% exceeding WWE's cost of capital.

Live event revenues increased 3% or $0.7 million from the prior year quarter primarily due to an increase in the average effective price across our events in North America. Average ticket prices at our events in North America increased 6% to nearly $42 attributable in part to changes in venue mix and to a lesser extent the introduction of VIP ticket packages, which were initiated in the second quarter last year.

Average attendance of 6,400 fans at our North American events was essentially unchanged from the prior year quarter. The impact of staging three additional events in North America was essentially offset by the timing of three fewer events in international markets.

Offsetting the increased monetization of content and growth from WWE Studios, our licensing revenue declined $10 million from the prior year quarter. This decline reflected lower video game royalties which derived predominantly from the transition to a new video game licensee, Take Two Interactive. Entering a new relationship with this licensee at the start of 2013 led to contractual changes in our distribution agreement. These changes included staggered royalty rates that increase with higher levels of cumulative video game retail sales throughout the year. As such, current quarter royalty rates were lower than [what] prevailed one year ago.

Importantly, estimated North American unit sales and retail revenue for our franchise game were effectively unchanged versus the prior year period and compared favorably to a 33% industry decline in current generation software sales.

Now while some portion of the current rate variance may be due to timing, our current forecast contemplates that pricing pressure could dampen video game revenue and thereby potentially impacting overall royalty rates for the full year. Additionally, impacting the current quarter decline, video game revenues in the prior year quarter included a $2 million one-time benefit associated with the termination of our former video game licensing agreement with THQ.

Corporate and other expenses increased $5.3 million to $37.7 million from the prior year quarter. As defined, these expenses include certain sales, marketing, and talent development costs which have not been allocated to specific lines of business. The increase in corporate and other expense during the quarter was driven by a $2.5 million increase in professional fees and increased salary and personnel expenses to support key business objectives.

Head count increased 5% primarily to build our talent development and international infrastructure. Overall, Company salary expenses increased $2.7 million with an 8% increase in head count.

Operating income before depreciation and amortization, or OIBDA, declined $18.5 million primarily due to lower results from our video game licensing, WWE Network launch costs, as well as continued investments to support key business objectives. An $11 million decline in licensing profit stemmed from the transition to a new video game partner including contractual changes in the Company's video game licensing agreement, and a $3.4 million benefit to the prior year quarter associated with the termination of a prior video game licensing agreement.

The launch of the WWE Network resulted in an $8.6 million negative impact to OIBDA from the ramp up of customer service, programming, and marketing costs. The resulting decline in operating profits for the quarter was partially offset by improved performance from our WWE Studios including the absence of current quarter impairments and the revenue driven growth in the home entertainment businesses as described earlier.

Net income declined $11 million reflecting the decline in OIBDA results. Our effective tax rate was 36% compared to 37% in the prior year quarter.

Page 12 of the presentation contains our balance sheet. As of March 31, 2014, the Company held $87.3 million in cash and short-term investments and currently estimates debt capacity under the Company's revolving line of credit to be approximately $90 million.

Page 14 shows our free cash flow, which reflected a $13.6 million use of cash in the quarter. This use of cash was driven by the operating loss in the quarter, including expenditures to launch WWE Network and associated content development as well as spending to produce feature films.

As stated previously, the outcome of our content negotiations and the rate of subscriber adoption to the network are important components of our 2014 and future financial performance.

Regarding our TV licensing agreements, we are continuing to negotiate with potential distribution partners in the U.S. and India. Given that we are currently in discussions, we will not be answering any questions today about the status of these negotiations.

Over the past several years, we've invested in people, content, and technology and we continue to believe the successful execution of our key initiatives to potentially result in doubling or tripling our 2012 OIBDA results to a range of $125 million to $190 million by 2015. We'll provide more information and further guidance for 2014 and 2015 as appropriate.

For the second quarter of 2014, we expect net income to decline sequentially from the first quarter this year by a range of $7 million to $10 million resulting in a net loss of $15 million to $18 million. The decline in earnings reflects increased live event profit due to WrestleMania 30, which are expected to be more than offset by network costs, seasonal decrease in licensing business, and lower results from home entertainment reflecting especially tough comparisons to our first quarter adjustments discussed earlier.

Importantly, we view the WWE Network as a major source of long-term earnings growth well beyond 2015, and we're planning to initiate the network's global launch later this year. To track the progress of this key initiative, we plan on reporting network subscribers on a quarterly basis.

Looking ahead, we believe that the expansion of a global WWE network can drive long-term growth and generate economic returns that better reflect WWE's tremendous global appeal and brand strength.

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

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

Thank you. We will now begin the question and answer session. (Operator Instructions)

Daniel Moore, CJS Securities.

Good morning. Thanks for taking the questions.

Good morning, Dan.

Curious, does your Q2 guidance imply given all the moving parts an increase in revenue year-over-year or -- just trying to get a little better handle there.

Year-over-year or sequentially, Dan?

Year-over-year.

We're going to stay away from giving revenue guidance, but it'll be in a fairly tight range to last year.

Got it, and then looking forward, I know you're not giving guidance, but is Q2 -- can we think about that as sort of a short-term peak in terms of investment spend relative to the network in the short run or do you expect growth related investment spend to continue to grow as we get into the back half of the year in early 2015?

From a fixed cost perspective, we're close to steady state on the network, so it'll be more marketing cost, customer service, some of which are variable, the marketing, especially, on the one-week free trial, but from a fixed cost perspective, we're pretty much there.

Big change, and it's in the network segment, is the cost related to producing WrestleMania sequentially. Right? So that now is part of the network segment, so you see a big -- you'll see a big bump in those production costs, and that's a seasonal element.

And how about things like marketing and promotion and those -- obviously, you had pretty strong -- are those lumped in to that production cost? Just trying to think about how -- when we see Q2 numbers, how they might ramp -- those costs might ramp going forward.

Yes, the marketing costs pretty much we'll see won't have as much of a seasonable impact. So it's not that they're ramping up. What we see in the second quarter is those production costs for WrestleMania but most of the other fixed costs will -- you won't see as much of a seasonal impact.

Okay, and obviously you made great strides and on track to hit or exceed the million subscribers by year end. Can you give us a sense of what your -- what a range of expectations would be for subscribers perhaps for 2015 that's embedded in your OIBDA guidance range?

At this point, we're not going to do that. I mean, what we've said, obviously, is that $2 million to $3 million at steady state is transformational and it's that $50 million to $150 million of incremental OIBDA even net of pay-per-view cannibalizations but we really haven't put a time stamp on that.

And I'll try one more and jump back in queue. The international, sounds like you are on track or maybe a little ahead of schedule. Remind us what some of those first markets will be looking to rollout in Q4, and do you expect the international rollout to be dilutive or neutral or accretive in 2015?

So what we've said publicly is that we will launch by the end of 2014, early 2015 in the U.K., Canada, Hong Kong, Singapore, Australia, New Zealand, and the Nordics, and we feel really comfortable that we'll get those -- at least those launches done in that time frame.

As far as whether it's dilutive or accretive, what we've said publicly is that you require about 250,000 subscribers to break even and then it's accretive after that, but we haven't put a time on that either.

Got it. And I'll sneak one more in. What are your expectations for churn with regard to the network and when do you think given that, obviously, you just launched, when do you think you'll have the first meaningful expectations that those are on track or even perhaps a little conservative?

Yes, I think it'll -- we've modeled our churn assumptions looking at the industry, so as much information as we could get from -- because there's different levels of churn. There's the overall MVPD churn, there's the actual service churn, so we've looked at things like HBO, we've looked at things like Netflix, and used that for modeling purposes, which puts you in that 6% to 8% a month range. I think we've still got a ways to go before we know enough to say are we below that or above that on an ongoing basis. Right now, it's pretty lumpy.

Got it. I will resist the temptation to ask you about the negotiations and congratulations on getting the network up and running and I'll jump back in queue.

Thanks, Dan.

Laura Martin, Needham.

Hi there. Can you hear me okay?

Yes, we can, Laura.

Great, great. So, Vince, one for you. First of all, I loved your positioning of the Netflix alternative [does] better because I cover Netflix and I love the fact that you own all your content rights. Sounds like you'll be in more international markets than they are after five years by the end of 12 months so kudos for owning all your copyright there, Vince.

My question is on the 2 million to 3 million subs, I'm curious, Vince, as to how you get to that number given I thought what I heard you say there's a market size here of about 140 plus about a 40 million lapse. It feels like the [dam] could be bigger, like why can't you get to 6 million subs? Could you just kind of size for me how you're getting to that 2 million to 3 million subs globally as your final number?

A little bit of apples and oranges. The 2 million to 3 million that we've been public with, Laura, is domestically, and those other numbers I mentioned were internationally. And what we've said is for the countries that I mentioned, those eight countries including UK and Canada and so on, that the opportunity in those countries was somewhere between 500,000 and 750,000 subscribers at steady state.

Now get -- specifically on the 2 million to 3 million domestically, as we've said before, we've done a lot of consumer research in all these countries to get an understanding of both the size of our fan base, the level of affinity of that fan base, and then their appetite for the network, so the numbers are just based on primary research we've done.

So, Laura, to answer the question, the 2 million to 3 million I believe is very conservative.

Right, and if you look at any other form of media, international is at least as big as the U.S. so I would guess whatever you get in the U.S. over time will be doubled by the offshore number. So, I'll be shocked. I would actually make you guys a big bet that it's a lot more than 500,000 outside the U.S. if you get 3 million in the U.S. That'd be my bet. But that's helpful. I appreciate that. And really great numbers, you guys, and great job launching a forward-looking OTT network. I think it's going to work out great for you guys. So keep it up.

Thanks.

Thanks, Laura.

Jamie Clement, Sidoti & Company.

Good morning, gentlemen.

Hey, Jamie.

Hey. Can you talk -- now that the U.S. launch has been done, can you talk a little bit more, and you've alluded to some of these things on past calls, but some of the operational nuances of launching internationally, I think where most of us sit, we'd say oh, well, it's pretty much just the same thing. It's clearly not though, so do you have to think about things on a country-by-country basis, region-by-region basis, and within those regions, what are you -- what are the kinds of things that you're aware of that we should be aware of as we think about the international launch.

You know, Jamie, we're still working through all those things, so I'm not going to get into a lot of color because our -- again, we're working through it now and learning. What I will say, we talk a lot about social media and those 300 million touch points and how valuable they are to understand our consumers. One of things that -- and more than half of those 300 million are outside the U.S. -- one of the things that's come through loud and clear is people want it as quick as they can get it, so we've taken that into consideration and you'll be hearing more here in the weeks ahead.

All right, but from a marketing perspective or like a -- kind of how you market and advertise it -- I mean, thematically would you expect it to be kind of similar? I mean, because at the end of the day, the core of your product is still in ring.

Yes, I think so, Jamie. Look, if you're a WWE fan and you're one of those 80 million active, they like what we do and we know they like it and so I think there's a common message.

Okay. Fair enough. Thank you very much.

All right, and welcome back by the way.

Thank you very much. I appreciate that.

Andrew Peranick, Bastogne Capital.

Kind of walk through a little bit of the network numbers again. Obviously, you talked about the annualized $80 million of revenue at the network right now. Based on some of the earlier slides from the January presentation of break even at $1 million with 1 million subs with 60 million of cannibalization, as well as comments that I believe you made in an interview regarding the network itself pre-cannibalization getting to break even to profitable with 400,000 subs, it's leading me to a gross margin of about 80% to 85%, call it 83%, on the network. Does that sound about right?

Yes, I'll use a different term. Variable margins sit around there so the network revenue [less the direct cost] and/or splits depending on which platforms we're on, you'll [see it] somewhere between 80% and 90%.

Okay, and by that math, there's around $40 million of fixed costs, assuming --

That's right.

Okay. So then if I do that math then right now, pre-cannibalization at $80 million of revenue, the network itself, again, pre-cannibalization, is generating about $26 million of EBITDA?

Yes, so to the question you're saying, if you pulled out the pay-per-view element, we view the network break even as around $400,000. Your point, if we have those 670,000 for a full year, the math is general -- you're generally correct in that math. We think the pay-per-view cannibalization is an important part of looking at it which is why we've included it in the network segment, those revenues and costs, but the math you're doing is [directionally] correct.

Okay, and I agree, so then my next question will then be on cannibalization. I think we talked about this in the past, how in all three scenarios, 1 million to 3 million domestically, you kept it at 60 million. I'm assuming then that includes zero pay-per-view buys including zero pay-per-view buys for WrestleMania?

That's right. So, when we put those numbers out just because we wanted to show the most conservative on the cannibalization, that's what those numbers entailed and obviously we had more than zero buys. So, if you wanted to look at that break even number with those pay-per-view buys, it's obviously going to be a little bit less than those million subscribers we talked about.

Right. Okay, so then, I guess, kind of what I'm really trying to dig into here is to understand in that bucket of $60 million, as I look back in terms of 2012 EBITDA from pay-per-view, it was about $45 million. It was about $35 million for 2013. Can you give me what the number is of that $60 million that you -- is considered pay-per-view full cannibalization? And a sub question to that would be is that the total number that you took out or is part of that international that's not factored in the $60 million? How should I think about that?

Yes, so you shouldn't obviously look at EBITDA because EBITDA includes a ton of fixed costs that are still with us to produce the show, so you have to look at the variable margin on pay-per-views domestically. So if you lose all the domestic pay-per-view, if you look historically, that's been about $65 million. You've got about an 80% or 85% variable margin. You're down into the 50s on variable margin that you would lose, and we also knew it would impact our [SVAD] business. Obviously, we shut it down, so it impacted it quite a bit, and it -- we also assumed potentially in some of our other businesses. Not 100% sure where, but we put some in for that. So, that's how the $60 million came about.

Okay, so roughly $50 million of the $60 million then is pay-per-view?

A little bit more than that, but yes, roughly.

Okay, and did you give or do you mind giving a rough idea of what the domestic buys in pay-per-view were for WrestleMania last year?

Yes, we published that. It was $720,000.

Okay, so roughly you lost 700 -- so call it 50% of the pay-per-view buys --

A little bit [less] than that.

Okay, so if I was to basically then just extrapolate that across the board and say -- where I'm going with this is assuming that if you didn't add one single subscriber from where you are right now and the pay-per-view trend stayed the same as for WrestleMania considering you're growing the market, cannibalization then would come down by about $25 million so we would be looking at $35 million of cannibalization and you're basically on a consolidated basis at 670,000 subs losing about $10 million right now and you get to break even then on that math of somewhere between 750,000 and 800,000 subs?

Andy, we're going to have to follow-up with you on that because I lost you about halfway through the computation.

Okay.

And I thought I was good at numbers.

No, you are. Effectively, what I would ask on a higher view level is clearly 750 last year, 150 million plus domestically for WrestleMania, you're growing the market. So, effectively what I'm trying to get to is that that $60 million looks pretty conservative in terms of cannibalization and that break even number on a consolidated basis is lower than 1 million subs.

So, I'll say two things on that. Everything else being equal, at 660,000 to maybe 1 million subscribers, you may be right. I'm not sure you'd be right at 2 million to 3 million, but the other element, everything is not necessarily equal. We know for a fact that DirecTV is not taking our next pay-per-view, and frankly we're not sure who will and won't from this point forward. So there's two people that need to agree to have a pay-per-view business. It's not just in our hands, so that's another thing to keep in mind.

Okay. I don't have Dish, but I think, Vince, I think it was you that made the comment at the shareholder meeting that if I was to call their customer service that they would direct me to the network. Is that correct? Is that still happening?

That's right. Dish hasn't made a public statement, so I don't want to say, but if you do call customer service as we have, that's right, they're pushing you to the network app so I think it's a good indication.

Okay. Great. All right, and then just one last question and then I'll leave you alone and we'll follow up offline, but in terms of the revenue numbers, none of this includes any advertising dollars. Is there any thought as to when you may see some additional revenue in the network through advertising?

Yes, we haven't been public as to a timeline, but obviously we're looking at the overall business model and evaluating what makes sense for our consumers, the experience, the business.

Okay, great. Thanks a lot. I appreciate it.

You got it. Thank you.

Joe, we're ready to take the next question.

Robert Routh, National Alliance.

Yes, thanks and thanks for taking my question. First, as far as original programming, obviously, you guys have a great franchise or the best franchise in wrestling-related content and your first non-wrestling, I guessed, based show, House of Legends, did premier on the WWE Network. I'm just curious just going forward how much you plan on spending in non-core wrestling-based content on the programming side and then whether you plan to capitalize that or expense it as incurred. So, is it going to be reflected on the balance sheet or not just in terms of what your goals are there as far as programming?

Yes, so, not going to talk specifically about what percentage or the cost around non-in-rink shows like Legends House. We'll say that Legends House is doing great on the network. It's been our number 1 or number 2 show in viewership since its launch, so we're really excited about that. It's a great show, and I think we had a national media outlet say that it's must-watch TV, so we're excited about all of that. To your more technical question, what we're doing with the shows that first run on the network like Legends House is as they're being developed, we capitalize them and then we expense them 100% on first airing. So we don't have an ultimate model on them so we're taking a pretty conservative approach. So it'll on the balance sheet for some period of time and the timing of whether it gets expensed in the same year or not depends on when it was created versus when it gets shown.

Right. Right. Great, and as far as how many original programming shows, can you give us any sense as -- because all you need is one House of Cards or one Game of Thrones and obviously subscriptions to WWE Network could go off the charts, especially if DirecTV and others aren't carrying the pay-per-views. You combine that with a hit show like what HBO has done and some of the others, I'm curious as to how many shows ultimately you think you could have by the end of the year (inaudible).

Well, so far we've had WWE Countdown, which is another of the top rated shows on our network and Legends House and then as I mentioned in the script, coming is Countdown Season 2, Monday Night War, and Tough Enough, so there's three more. So, we obviously know well the value of compelling original programming, so we're really focused on creating that.

Okay, great, and just one follow-up question. Obviously, a lot of investors are unclear as to how to value WWE. Some do it as a multiple of EBITDA, OIBDA, free cash flow, they try to look at earnings. How do you think that investors should look at the company? How do you look at it internally from a DCF point of view, a multiple of one of these metrics, or is there some other way to really capture the true value of what WWE has, both what you can see on the balance sheet as well as the tons of value you have that is not reflected on the balance sheet because of things that were expensed as incurred, things like that. How do you think we should look at your company for valuation?

You know, it's -- first of all, I'd say I look at all of the metrics that you mention and I think they all add some level of value, but February 24 was not only a big day because we launched this incredible innovative product, but it is a pretty significant pivot in the business model. I mean, kind of piggybacking on what Laura said, we have a big, global audience. This is a global platform. We're going global with it quickly. So you have a platform for some pretty significant, long-term growth if we're successful. I think similar to Netflix, the pivot in the business model may be more of a valuation at this point, and I may not have said this a year ago, per subscriber. I think that may be the way to move.

Okay, fair enough, and just one final question. Given that it is very difficult to value the different parts of the business separately because they're all to leverage off each other to create value for the whole of the company, would you consider selling equity in the WWE Network to a partner if somebody was interested in doing such as long as you continue to maintain control or is that something that's off the table, you wouldn't even consider if [ACU] or Viacom was interested in purchasing a minority stake in the WWE Network for whatever purpose? Is that something you'd consider?

You know what, Rob, you probably know us well enough. We're creative people. We'll consider anything if we think it makes business sense, so we never push anything off the table, but I will tell you this. We have a high value that we're placing on the WWE Network.

Fair enough. Fair enough. Great. Thank you very much.

Brad Safalow, PAA Research.

Thanks for taking the questions. Just a question on G&A. Are we, or is the company at this point, at kind of a steady state level given all the investments you've made in the first quarter or do you think with international some of the marketing you're doing there that it will increase sequentially from the first quarter levels?

I think you'll see a little bit of increase. We're still investing internationally, Brad. Especially as the network goes global, that'll be something we need to do to support its growth. And just to be clear just because you mentioned it, in that corporate and other, you essentially have half the cost as pure G&A, legal, finance, HR, IT, and the other half coming primarily from four areas, our talent development, our international, our integrated sales team. So those are the big areas that sit in there. And our marketing team. We can't logically allocate back to all the other segments so those are the big drivers. And those are real important to driving the overall business for us.

Okay, and can you comment on what percentage of subscribers signed up for automatic renewal on the network?

Yes, we haven't been public with that, Brad.

How was it relative to your expectation?

You know what? It was one of those things that we -- there was no data point or benchmark, so it wasn't something that we really thought much about. Obviously, the more we got, the better it was but it wasn't like we had a benchmark where we could plug that in, so we're not going to say anything public about that.

Okay, and just so I can take the correct conclusion from the earlier line of questioning surrounding the [notion] level of profitability, you were talking about an incremental contribution margin of 80% to 85% exclusive of periods when you have investment for a launch in a particular country. Is that correct in terms of additional subscribers?

Yes, I think -- and it'll depend. One of the unknowns is really the -- how many subscribers come through the platforms and things like Apple TV, for example, and how that evolves over time, but I would say right now that 80% to 90% is a good number for incremental subscribers.

And just a question on cost allocation because you've now put pay-per-view into this kind of one line item for network, which I understand pay-per-view eventually goes away, how should we think about the composition of talent-related costs in that line item?

Yes, for right now, what we've done is the talent-related cost that existed in pay-per-view exists in this current segment as well and we're pretty much unchanged from an absolute perspective.

Okay. And in terms of -- I don't know if you've commented on this, but historically, talent is at a kind of compensation -- an element of that compensation tied to pay-per-view buy rates and things like that. What is the model going forward?

Yes, we haven't commented publicly on that.

Okay, then just a question not on the [rights fee] negotiation because I know you're not going to comment, but we've seen a lot of variability in the incremental margins or really just in the absolute margins surrounding the TV business, can you comment on what the incremental margin will be on whatever deal you negotiate at the U.S., UK -- obviously, the UK is done -- India, as we go forward on the increase in revenues?

Yes, we're not going to comment on that today but what you have seen in that and it's astute picking it up on the moving of the margins is because when we do a show like Total Divas, you get a fairly significant increase in revenue but it's a very slim margin. Now, the opportunity is long term as you exploit it because we own the copyright so we can exploit that over the long term, but in the period that it's produced and aired, it's actually a fairly tight margin. So it does impact the overall TV licensing margin.

Okay, and then just a question on whenever you announce a domestic deal, is this -- in terms of what we should expect, are you actually going to host a call or are you just going to have a press release? Are you going to have a detail from the contract? What should we expect to see?

Yes, like I said in the prepared statements, we'll give more guidance when it's appropriate.

Okay, I'll turn it over. Thank you.

Thanks, Rob. Brad.

Lance Vitanza, CRT Capital Group.

Hi. Thanks. So media companies with no debt are something of a rarity in my experience, and I'm wondering if you could share with me your approach to the balance sheet and is there perhaps an opportunity at some stage to take on some leverage and improve returns to shareholders or how you're thinking about that. Thank you.

We haven't commented on capital allocation or future capital allocation. Obviously, if you look historically given our dividend, we've been fairly aggressive returners of capital. So that's what our public statement's been.

Joe, we're ready for the next question.

Daniel Moore, CJS Securities.

Thank you again. Is there a revenue sharing component to the Xbox agreement similar to Apple, and would you expect it when you launch with Amazon Fire TV? What would be the terms there, as well?

Yes, I mean, we're not going to get into specific terms of different agreements, but all of these platforms have different models that they propose and then you negotiate through them. Obviously, Apple, given their scale and size, is the most well-known. If you do something in app, it's 70/30. If you do it out of app, it -- the company keeps all the revenue. And all the other ones have things like that but they're all different numbers, and we're not going to comment on other ones because they're not as public.

Okay. Thank you.

Joe, we're ready for the next question.

And at this time, I am showing no further questions. I'll now turn the call back over to Mr. Weitz for closing remarks.

Thank you, everyone. We appreciate you listening to the call today. If you have any questions, please do not hesitate to contact us, me, Michael Weitz, or Laura Kiernan at 203-352-8600. Thank you.

And thank you ladies and gentlemen. This concludes today's conference. Thank you for your participation, and you may now disconnect.