TKO Group Holdings Inc (TKO) 2014 Q2 法說會逐字稿

Hello, and welcome to the webcast entitled WWE second-quarter earnings. We have just a few announcements before we begin. (Operator Instructions) I will now turn the call over Michael Weitz, SVP Financial Planning and Investor Relations. Please go ahead, Michael.

Thank you, and good morning, everyone. Welcome to WWE's second-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 issued our earnings release earlier this morning and have posted the release, our earnings presentation, and supporting materials on our website at corporate.wwe.com. 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 both our earnings release and in the notes to the presentation, which are available on our website at corporate.wwe.com.

Finally, as a reminder, this conference call is being recorded and a 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. When I look at our business, I always look at the key drivers. Used to be two, now there's three. Domestic attendance, television ratings, and, of course, WWE Network subscription.

As far as domestic attendance is up to 11% in the quarter and that's for the fourth quarter in a row. And that's pretty extraordinary when you consider that is the most pricely way to enjoy WWE domestic attendance.

In addition to that, television ratings are up, Raw 5%, SmackDown 3%. SmackDown, by the way, up seven out of the last eight quarters. And with television ratings up, that may be even more extraordinary than our domestic attendance being up.

Thirdly would be our 700,000 subscribers in the network, which we consider that to be a very strong base to build on. We have new market initiatives, distribution on new platforms, different payment options coming up. We've added compelling programming in addition, obviously, to the key aspect of the network, which are our monthly pay-per-views.

And by the way, we're making the network available globally on an OTT basis in 170 countries. That'll be -- making that available on Tuesday, August 12th. Some of those countries include Australia, France, Mexico, in the UK in October, and Germany a little bit later than that. But nonetheless, that's pretty significant for us of the global release on Tuesday, August 12th.

By the way, in Canada, we just did a ten year agreement. I don't know if you guys saw that press release this morning but a ten year agreement, which is a little bit different. And that's Rogers Communications in Canada, which is a combination of our core programming, SmackDown, Raw, et cetera, in conjunction with the network.

So that's a little bit different form they're doing. The network is much like a HBO model there. But it's a combined rights for both the network and our core programming.

In addition to that, having nothing to do necessarily with the network or domestic attendance or television ratings, we developed plans to improve our 2015 business outlook by some $30 million, which includes a 7% reduction in staffing and efficiencies across all of our operations. Perhaps something we should have done some time ago.

And generally speaking, that's it from a top line basis. And we remain very optimistic about the growth of our Company.

Thanks, Vince. Several key topics which I'd like to review today. These include management discussion of our financial performance and the progress of key strategic initiatives, as well as efforts to reduce our expense base and strengthen our business outlook.

For the second quarter, our financial results beat our guidance, which targeted a net loss of $15 million to $18 million. The quarter was highlighted by the ongoing ramp of WWE Network to 700,000 subscribers. As a reminder, following the broadcast of WrestleMania on April 6th, we reported that WWE Network had attracted more than 667,000 subscribers in just 42 days.

From April 6th through June 30th, we generated 161,000 gross subscriber additions, which net of churn resulted in approximately 33,000 net subscriber additions. Viewer data indicates that on average 91% of subscribers access the network at least once per week and use 2.5 devices to access network content.

Importantly, a recent subscriber survey indicates that approximately 90% of our total network subscribers are either extremely or somewhat satisfied with the network. These respondents cited the remarkable depth of programming including our pay-per-view events and historic archived content as a significant source of their engagement. We are very pleased with the performance of WWE Network.

Regarding future subscriber growth, we expect a gradual ramp-up over time as consumer awareness grows. And consumers change behavior and adopt new technology. To attract subscribers, as mentioned in our first-quarter call, we're executing a five part strategy that includes making the network available in new geographies, creating new content, expanding distribution platforms, developing new features, and executing high-impact customer acquisitions and marketing programs.

As part of this strategy, we recently announced a new ten year partnership with Rogers Communications, a leading media enterprise in Canada. The partnership still takes a launch of WWE Network through traditional pay-TV distribution versus stand-alone OTT distribution.

Rogers will make the network available as a premium channel through its own cable systems, with a preview beginning August 12th. And thereafter through other Canadian pay-TV providers outside Rogers' footprint.

The partnership also renews Rogers' license of our Raw and SmackDown television programs and grants Rogers distribution rights to the Company's pay-per-views. Although WWE Network in Canada will be distributed under a different model than in the US and elsewhere, the programming and content offering will be the same as the US product, consistent with our broader plan to make the existing network offering available worldwide.

As recently announced, the US version of WWE Network will be made available starting August 12th on an over-the-top basis in over 170 countries and territories. These include Australia, New Zealand, Hong Kong, Singapore, Mexico, Spain, Nordic countries and others. The network's expected to be live in the UK by October 2014.

In essence, this represents distribution in all of WWE's major markets except for Italy, UAE, Germany, Japan, India, China, Thailand, and Malaysia. Plans for these markets will be communicated at a later date.

Importantly, as we expand our reach, we will leverage the investments already made in the US by utilizing the existing English language US network product with a single feed, a universal VOD offering, and common plans and pricing. Over time, we'll localize WWE Network as appropriate.

Since WrestleMania, we've primarily relied on promoting the network on Raw and SmackDown television programs, in conjunction with our Summer Slam pay-per-view in August, which is one of our most popular events, we plan to step up the level of third-party advertising in order to continue driving awareness and subscriber acquisitions.

Of course, we continue to be excited about the new original content coming to the network, which includes Monday Night War and WWE Rivalries, the newest addition to WWE's program line-up. Both of which provide a documentary-style look at the greatest moments in WWE's history. We're launching WWE Network on several smart TV and Blu-ray platforms. And we plan to deliver new features such as resume play capability later this year.

The recent performance of WrestleMania, which yielded 424,000 North American pay-per-view buys and 690,000 global buys during the quarter, demonstrates a meaningful base of potential subscribers that may be converted to the network.

Our five part strategy for attracting subscribers, including our strategic partnership in Canada and making the existing network available worldwide, will facilitate the expansion of WWE Network and provide a global platform for driving growth over the coming years.

To review the key drivers of our performance in the quarter, let's turn to page 6 of our presentation, which lists the revenue and OIBDA contribution by business as compared to the prior year quarter.

Total revenue increased by $4 million, based on the increased monetization of our content. Revenue from WWE Network and increased television rights more than offset lower revenue from our pay-per-view home entertainment and digital media businesses.

Network revenues, which include revenue generated by WWE Network, pay-per-view and video-on-demand, increased 13% to $43.3 million as the ramp up of network subscribers and subscription revenue more than offset the decline in pay-per-view revenue.

WWE Network generated $19.4 million in subscription revenue, based on an average of approximately 665,000 subscribers, and a price of $9.99 per month. The $19.4 million in network subscription revenue was partially offset by the $13.2 million decline in pay-per-view revenue.

Pay-per-view revenue declined 36% to $23.8 million, driven by an overall 32% decline in buys and a 6% decline in revenue per buy. There were four pay-per-view events in the current year quarter, as compared to three events in the prior year quarter.

So on a comparable basis, pay-per-view buys declined approximately 41%, reflecting the availability of our pay-per-view events on WWE Network in the US and weaker performance in some international markets.

The decline in revenue per buy reflected a change in the mix of buys with a higher proportion of buys from international markets, 43% as compared to 33% in the prior year quarter.

Television revenues increased 13%, or $5.1 million, primarily due to the second season in production and monetization of Total Divas with no comparable program in the prior year quarter. As a reminder, the first season of Total Divas debuted in the third quarter of 2013. The growth in television revenues also benefitted to a lesser extent from contractual increases for our existing programs.

Revenue from our digital media segment declined $2.2 million, primarily due to the lower monetization of our webcast pay-per-view events on wwe.com, as these events also were available in the US on our network.

Additionally, the decline reflected lower advertising revenue. Key digital metrics such as unique visitors to the Company's website and mobile app, increased from the prior year quarter.

Home entertainment revenues declined $1.7 million to $5.4 million, reflecting a 40% decline in unit shipments, which was partially offset by an increase in the average price of our DVD and Blu-ray titles.

The decline in unit shipments derived from reduced shipments of our catalogue titles, which are typically characterized by lower prices and profit margins than new releases. As a result, new releases comprised approximately 70% of total units shipped, as compared to 45% in the prior year quarter.

Stemming from this change in product mix, the average price of our home entertainment titles increased 27% to $13.49. Live event revenues declined 3% or $1.3 million, primarily due to the stadium configuration for WrestleMania, which resulted in lower attendance for that event. WrestleMania was sold out in both the current and prior year.

Increases in average attendance and ticket prices for our other events in North America essentially offset the impact of staging 11 fewer events in the region. Generating an average attendance of 7,000 fans, the quarter marked the highest average attendance over the past four years. And as Vince mentioned, the fourth consecutive quarter that generated a year over year increase.

Excluding WrestleMania, average attendance increased 13% to 6,000 fans, and the average ticket price increased 7% to more than $44, predominantly due to changes in territory mix.

Ticket revenue from our international live events increased less than $1 million as an 11% increase in the average ticket price was essentially offset by an 8% decline in attendance to 6,100 fans. The changes in average attendance and effective ticket prices were predominantly due to changes in territory mix.

Revenue from our consumer products division declined less than $1 million from the prior year quarter and lower revenues from our licensing business was nearly offset by increased merchandise sales on our e-commerce website, wwwe.shop.

Licensing revenues declined $1.2 million from the prior year quarter, primarily due to the lower sales and effective pricing of our franchise video game. As a reminder, we transitioned to a new video game licensee, Take Two Interactive, at the start of 2013, which led to changes in our licensing agreement.

These changes included staggered royalty rates that increase with higher levels of cumulative video game sales. Based on sales to date, the royalty rate in the quarter surpassed the rate that prevailed in the second quarter last year, but remained lower on a year to date basis.

Our forecast for the full year contemplates that pricing pressure could dampen video game revenue on a year over year basis, thereby potentially impacting overall royalty rates for the full year. Prices are impacted in part by the mix of game platforms, as our franchised video game was not released on PlayStation 4 or Xbox One.

Offsetting this decline is licensing, e-commerce revenue generated by WWE Shop increased by $1 million. Online merchandise sales increased 29% to more than 81,000 orders, with increased use of our mobile platform. And a new distribution model utilizing Amazon in the UK.

Revenues from our movies business, WWE Studios, declined $0.4 million from the prior year quarter, due to the timing of results from the Company's portfolio of movies. Revenue recognized in the current year quarter was primarily associated with our 2013 slate of releases.

WWE Studios movie portfolio generated a loss of $0.2 million as compared to a loss of $0.4 million in the prior year quarter. Recent movies such as Scooby-Doo!, WrestleMania Mystery, Oculus, and Road to Paloma released in March, April and July of this year, respectively, have delivered performances that are essentially in-line with our expectations.

The Company's movie releases since late 2012 are currently expected to generate an internal rate of return, or IRR, of over 15%, exceeding WWE's cost of capital.

Corporate and other expenses increased $8.4 million to $42 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 included a $2.3 million increase in salary and benefit costs, and increased marketing expenses to support key content and brand initiatives, including strengthening our international infrastructure, talent development, and brand marketing.

Overall, Company salary and benefit costs increased $4.7 million with a 10% increase in head count. Operating income before depreciation and amortization, or OIBDA, declined $29.5 million due to the ramp-up of WWE Network, investment across WWE to support key content and brand initiatives, and profit declines from some of our non-network businesses.

The ramp-up of WWE Network accounted for $15.5 million reduction in OIBDA as the growth in subscribers and subscription revenue was more than offset by the loss of pay-per-view revenue and increased programming, customer service, and marketing costs.

Investment in WWE's content and brand initiatives resulted in an $8.4 million increase in corporate and other expenses, as I described earlier. In addition, the overall decrease in OIBDA reflected the decline in revenue from other WWE businesses, as we previously discussed.

Net income declined $19.7 million, reflecting the decline in our OIBDA results. Our effective tax rate was 36% compared to 38% in the prior year quarter. Page 13 of the presentation contains our balance sheet. As of June 30, 2014, the Company held $79 million in cash and short-term investments, and currently estimates debt capacity under the Company's revolving credit facility to be approximately $120 million.

Page 14 shows our free cash flow. For the first six months of the year, we used approximately $11 million. The use of cash was driven by the Company's operating loss to date in 2014 as well as spending to produce feature films.

During the quarter, we completed a comprehensive evaluation of the Company's operations, which identified opportunities to improve efficiency across all of our businesses. These measures include a 7% reduction in current staffing levels.

Based on these efficiencies, we are increasing our OIBDA outlook as compared to the outlook presented in our May 15 release by approximately $10 million for 2014, and by $30 million for 2015.

In conjunction with the implementation of these measures, we anticipate recording a one-time pre-tax restructuring charge of approximately $4.5 million in the third quarter of 2014, comprised of severance and other costs.

As stated previously, the level of network subscribers is a critical determinant of our financial performance. Given the lack of visibility regarding the rate of subscriber adoption, our presentation provides ranges of the Company's overall financial performance at different levels of subscribers for 2014 and 2015.

Ranges in the financial performance are shown on an adjusted basis, excluding one-time items such as the aforementioned restructuring charge, of which $2 million impacts OIBDA on an unadjusted basis.

Page 10 provides ranges of adjusted OIBDA at different subscriber levels for the third quarter 2014, as well as for the full year 2014 and 2015. As an example, if WWE Network achieves a 12-month average of 650,000 subscribers for 2014, this translates to an estimated overall 2014 adjusted OIBDA loss for the Company ranging from $35 million to $25 million.

The $10 million improvement in this range, as compared to the range specified in our May 15 outlook release, derives from the aforementioned expense reduction. Regarding 2015, you should note that each level of subscriber performance we have increased our 2015 OIBDA outlook by $30 million, as compared to our May 2015 outlook release.

As shown, the expansion of WWE Network subscribers could significantly raise the Company's earnings profile. Looking further ahead, we believe that successful execution of our WWE Network strategy can drive long-term growth and generate economic returns that better reflect our tremendous global appeal and brand strength.

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

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

Thank you. (Operator Instructions) Laura Martin, Needham.

Great numbers and thanks for all disclosure. A couple things. So, Vince, I'm very interested in these pricing directives it looks like you're going to go to. Do you think that the reason that we haven't gotten more robust over-the-top growth is because we need more pricing options to go month-to-month? Or what's your thought there about the role that pricing is playing in the growth of the over-the-top sub-basis?

Well, that's one aspect of it. As we grow and learn and what have you, we will be presenting, as described in our release, perhaps those pay initiatives as well as other payment options.

We want to make sure that we grow the network. But that's just one of the aspects of growing the network. There's so many more.

Okay. And I'm also surprised, last time we were on this call, we were talking about, like, seven US markets over the next 12 -- sorry. Seven English-speaking offshore markets in the 12 months. And then we opened the press release today and now we're going to be in 170 markets.

Could you talk about what changed your focus to go global so much more rapidly? And what the economics are of launching 170 countries versus the 7 countries that we were in May.

Well, what we're going to do here is that in terms of English, which of course that's the second language for everyone pretty much all over the world, it allows us to determine information from local markets. In that we will be in the future with some of these markets, obviously, catering to on a local basis.

This is an English version at English prices. So, again, allows us to get into some of these markets a lot quicker than we had before. And learn a lot more about the individual markets. So that when we go back in, assuming we would, go back in and offer an in-language version. We'll have a lot more detail.

And, Laura, on the economic element of it, as Vince mentioned, because we're not increasing the fixed cost to launch, obviously leverages pretty well. So it'll be driven by subscriber acquisition.

Okay. There's not more marketing expenses when you go into that more? Because you have to tell people you're (multiple speakers) --

There'll be some but it -- relative to a multi-fee model significantly less. So the marketing would be the one that you'd say there is an increase. But it's significantly less than doing multiple fees.

Okay. Very helpful. Thanks, guys. Great numbers. Thanks.

Thank you. Daniel Moore, CJS Securities.

Maybe just help us understand a little bit more about the churn in the subscriber base of about 128,000 subs. Given the initial six-month commitment had not yet expired, how does that compare to your internal expectations? And what were kind of the key drivers?

Yes, Dan, I'll take the second part first. As you know, any subscription business is going to have churn. By our estimates, subscription video services can be anywhere between 4% and 8% a month, which is a pretty significant turnover. So that's part of managing the business. And it's something that we anticipated in the business model.

To your -- to the element, obviously at this point there's no renewal churn, because that doesn't -- wouldn't start until August 24th. So it really is a payment billing-driven element churn.

We've got some assumptions on the renewal side and so we think that overall if our assumptions hold true on the renewal side, it'll fit within the business model that we've kind of developed. But it'll be determined -- we'll see here in a few weeks.

Have you changed the payment methodologies that you'll accept to address those?

Yes, we're working on some things at this point, but we haven't implemented them yet.

Okay. And I don't want to beat a dead horse, but one more on the -- just how it trended over the quarter. Obviously, you've -- given it's a payment issue, probably had a good chunk that within a month or so you kind of figured out weren't going to re-up or pay for the second month. Wondering if it slipped. How that trended over the three months that you have (multiple speakers) --

Yes, I mean, I'm not going to get into the daily churn numbers. But your supposition is right. It obviously is going to -- it'll be lumpy driven by the lumpiness in the acquisitions.

Interest rate. Right.

Okay. And one more, I'll jump back in queue. On the cost reduction, what was the catalyst that drove the decision? And typically I wouldn't see $30 million of cost savings from just $4.5 million of severance. So outside of head count, what are some of the other major buckets of cost savings that you expect to achieve?

Yes, on the first point, I think like Vince mentioned, it's part of the planning process. You take a look around the organization. I think over the last few years we've leaned towards speed and effectiveness of the implementation of our initiatives.

And this year we leaned towards driving some efficiency. I mean, when you've grown as much as we have over the last three years your eyes wide open that you're probably introducing some inefficiencies. You get duplication of effort and things like that. And you just get smarter and you learn. So that's really what drove it.

As far as the allocation of the line items, we're going to avoid giving line item guidance of where the savings will be. But we feel really comfortable we'll be able to achieve them.

But the lion's share is head count?

Yes, like I said, I don't want to give line item guidance. It's throughout. As you know, we -- there's a lot of partnerships in our model. So it kind of is throughout the operations.

Okay. I'll jump back in queue. Thanks.

Thank you. Brad Safalow, PAA Research.

Just first question, it sounds like you're telling us what we think is probably true on churn. That you witnessed the highest level churn post-WrestleMania. And then maybe we had some normalization of that post let's say as we got into May. Is that fair to say?

Yes. I mean, I think that's the best way to think about it, and we're not going to start giving daily numbers, it's the churn happened alongside the billing cycle. And so the billing cycle is a 30-day billing cycle.

So depending on when you acquired those subs it's going to be timed around the billing cycle. So generally you're right.

Right. So that's both true on a gross subscription that -- or a subscriber basis. But we're all thinking of percentage churn. So I guess the question is the percentage churn now, is it appreciably lower now that we're past the WrestleMania cycle?

The absolutely numbers are going to be lower because of the big acquisition. The percentages, we need some more data points before we have a real pure view. But our view is that the percentages will -- are somewhat stable. But the gross numbers are going to be higher just because of the lumpiness in the acquisition.

Okay. And then just a question on 2015. The $30 million variance relative to what you communicated in May, what -- how much of that is: Hey, we're -- you cut costs versus we're actually going to spend less than that -- the $30 million to $40 million bucket you talked about that was a combination of production, talent development, international expansion, and a few other things?

Yes, I think you'll see elements of both. But when you compare our 2015 expenses to where we're think we'll end up 2014, there'll be what I describe as a pretty significant decline in overall expenses, mid- to upper-single digits.

Okay. And then in your guidance for 2015, or really both 2014 and 2015, when we look at the network subs implied there, are you assuming that all of those subs will be what I call in a traditional -- at a $10 price point? Or is there some sort of mix assumption around how many people might come in month-to-month?

Yes, it's a great question. We don't have enough insight yet to have that kind of product mix view. So at this point at the -- we're assuming an ARPU that mimics the $9.99 price point.

Okay. And then there's a lot of concern about what churn might be as we get to end of August. And then into the three to four month window where maybe your call to action on the pay-per-view slate is not as strong as Royal Rumble, WrestleMania, Summer Slam. What are you guys planning on doing to perhaps change that?

I think it comes down to being really creative on the marketing side, having great attractions on the pay-per-view, continuing to deliver some of both the new content that we talked about, as well as expanding the VOD offering.

And then also driving awareness. We -- I'm not going to talk about numbers but we do a lot of work on trying to understand what the current awareness is. And we think that there's opportunity just to increase the awareness.

Okay. I'll jump back in queue.

Thank you. Jamie Clement, Sidoti.

Couple questions about consumer products. The pretty strong increase versus the prior six months in gross revenue per DVD shift. I know you talked about the mix between new releases versus catalogue.

But was that -- do -- refresh my memory. WrestleMania 30, does that carry a premium price compared to some of the other new titles that you put out? So in other words, in the back half of this year, would we potentially see a drop of a buck or two?

Yes. So a couple -- it's almost all mix. So the element of the one DVD that you mentioned, WrestleMania, is not what's driving it. It's really the mix of catalogue and new releases.

We are certainly not seeing improving pricing at retail. Again, it's a mix issue. So I don't want to give guidance of what the mix will be in the third and fourth quarter.

Oh, no, I was simply asking a question of -- was -- I mean, is WrestleMania -- is the average ticket on your WrestleMania DVDs? Or are they typically higher than your normal --

Yes. (multiple speakers)

-- new releases? Not materially? Okay. That is very fair. So just to clarify, the 170 new markets, they're going to be seeing what we're seeing here in the United States, right? I mean, it's going to see -- basically identical is what it sounds like, right?

That's right.

Okay. So in terms of customer service, that sort of thing, that just feeds into what you've already built?

That's right.

Okay.

The infrastructure we have should support it.

Okay. And last question, I don't know if you've had enough time to evaluate this. But as you look at -- I don't know, is there any trend that you have noticed as to when subscribers are subscribing?

In other words, do you notice a big pop on Monday nights during or after Raw when it's discussed? Or has it turned into a situation where it's maybe Friday, Saturday, Sunday of a pay-per-view weekend where you really see the bump?

Yes, there's certainly somewhat of a center of gravity around the pay-per-view.

That would make sense. Would that have been consistent with your expectations heading into all of this?

Yes.

Okay. Great, thank you for your time.

Thank you. Kim Opiatowski, Vertical Group.

I had one question with regards to the new partnership that you signed with Rogers Communications. Sounds very exciting. Why did you choose to go this route in Canada? It seems to be a bit of a step away from what we're doing here in the US. And how are the economics going to work there?

First of all, they're Canadians. They tend to look at things a little differently. And it's an overall mix. Now, I don't know that we're going to have that anywhere else we go. We might when someone combines our core television rights with network revenue.

I don't know -- it's interesting, though, that we have the flexibility to be able to do that as relates to the network. But I don't know that's necessarily going to happen anywhere else in the world. It could when you combine the two.

Okay. And how will the economics be different from the OTC network here in the US?

Yes, I don't want to get into the specific deal terms. Obviously, we're happy with the deal, which is why we entered into it. But the deal will have a component associated with our licensing of our core programming to Rogers. And it'll also have a component around the network. But I don't want to get into talking about the deal terms.

Okay.

It's basically an offer that we couldn't turn down.

Okay. Thank you very much, Vince and Michael. I'll go jump back in.

Thank you. (Operator Instructions) Daniel Moore, CJS Securities.

Just want to drill down a little on the new guidance in terms of OIBDA ranges at various subscriber ranges.

Previously you'd assumed 100% cannibalization from the pay-per-view business. Obviously with the Rogers deal and we're still seeing some pay-per-view business a tail for that for a period of time. Is there pay-per-view revenue included in the guidance for as we think about 2015?

No.

Okay. So that's full cannibalization still?

Yes.

Okay. And then just on the $20 --

I think, Dan, just to a finer point. Of all the countries I mentioned, there's cannibalization. I mentioned a list of countries that we're not going. So there may be some there, but it would be de minimis. Obviously, that's their -- those countries don't represent a significant portion of pay-per-view revenue.

Okay. And then the $20 per month, the sort of new rate, I assume there'll be a different price come April or whenever WrestleMania falls? Or is that -- have you thought through that at this point?

As Vince mentioned, it's one of the things we're looking at. Different price points. So we don't want to comment beyond that at this point.

Okay. Thanks again.

Thanks, Dan.

Thank you. Mike Hickey, the Benchmark Company.

Great quarter. Thanks for taking my questions. The -- I'm just curious on your new pricing schematic. I guess first just on your ongoing subscriber base, can you give us what percentage are set up for automatic renewal versus having to do it manually?

No, we're not going to give that number out.

Okay. And then if you're a new subscriber on this plan and you sign up for the six months, now, does that mean that you now have to pay $60 upfront? Or are you still billed 10 bucks per month?

So, if you sign up for a six month commitment you essentially have two options. You can get monthly billing recurring $9.99, or you can do one upfront payment. And we know for a fact that some people -- some consumers prefer to do the upfront payment. They don't like the recurring billing, which is why we introduced that.

Okay, got it. And then do you guys worry about losing that ongoing subscriber 10 bucks a month for -- or turning them into a one-purchase for just 20 bucks per month? Does that not give you any concern? Or maybe some background on why you think this is more of a win than a potential risk.

Yes, obviously a lot of thinking on that. And we think -- I mean, as Vince mentioned, a lot of this is -- we'll learn and we'll see how things work. But we thought $19.99 was the right balance of giving people a chance to have a smaller entry point but still managing the economics. But we will certainly learn.

And there may be other payment options in the future, too. We're just looking at all of it.

Okay. And the -- are you guys still targeting on the -- in domestic subs by year-end? Or have you revised that?

Well, what we've always said, Mike, as you know, is if we had a million by year-end we'd absolutely be thrilled. That would be incredible. And we would feel the same way.

Okay. And the last one from me. Obviously, some big growth here in attendance. I think that was a bit of a surprise and I think initially people had concerns that maybe the network would actually cannibalize attendance in the sense that surprised (inaudible) to actually view the content.

But do you see key reasons why you think this is going higher, Vince? And if you think it'll continue to churn positive for the remainder of the year?

I think people are excited about the attraction.

Okay. Thanks, guys.

Thank you. Jamie Clement, Sidoti.

Just one final question, gentlemen. Does Rogers have the right per this agreement and even the technological capability of being able to embed any advertising into the network stream?

So on the traditional distribution, we're still working through that with them. We didn't mention, but our plan is to eventually offer an authenticated version of the app in Canada. So you have kind of a similar look and feel as you would have here. And that advertising capability will be built into that.

Okay. Great, thank you very much.

Thank you. Brad Safalow, PAA Research.

Thanks. Just a couple of follow-ups. One, what is the status of the TV rights negotiations in India?

We're still working through the deal with our partner. Obviously, we've agreed to terms. We're working through the term -- the final points.

Okay. So that's -- is that something you actually will communicate what you have in the past or suggested on the mark-to-market?

Is that -- we would communicate when a deal's signed?

Well, that -- you obviously always communicate when the deal's signed. But give us a sense of, like, how much the increase was.

Yes, we never talked about that. We've already communicated the total increase of the -- of our major deal. So that'll probably be the extent of it. We don't get into the individual deals ever.

Okay. And then just as a reminder, for TV rights internationally, how many of those are up for renewal in the next 12 to 18 months?

Yes, that's something else, Brad, that we don't give guidance on. Other than the four major ones because of the unique point in time when they were all up fairly tight. But --

Okay. And then just to be clear, on the Rogers deal, the subs that are acquired via Rogers, will they be counted in the network number?

They will.

Okay. And then prior to this global roll out of the network, how many of those countries previously did not have access to pay-per-view events or did not have access to live pay-per-view events?

A lot. Well, given the scale, I mean, in essence, we're opening up the network. So a lot of those countries don't have pay-per-view because the infrastructure doesn't exist in the country.

So there may be an IP infrastructure but not necessarily a digital multi-channel infrastructure. So it's a lot of them.

Okay. And can you give us a sense from a pure viewership percentage, not ratings points, but just, like, nominal number of viewers. What are your top ten countries in terms of viewership of Raw and SmackDown outside of the US?

Yes, that's really, really hard because ratings data is much more difficult to obtain internationally. But in a lot of ways the markets we talked a lot about are the ones where we have a lot of great viewership. Canada, the UK, India, South Africa. So -- Mexico. You know, the places where we talk about us having an opportunity.

The other element is, depending on the market in some cases we've chosen to have a little bit narrower distribution. So all of that comes into play. But generally the big markets we talked about is -- are where we have a big center of gravity on viewership.

Okay. And then for Italy, Germany, Japan, India, China, Thailand, and Malaysia, is that a 12- to 18-month window where you think you'll have the network available for distribution? Or is it -- could be beyond that?

Yes. Look, my guess is you'll start seeing things in 2015 and 2016 for those countries as we finalize our plans.

Okay. Last question. What are your expectations surrounding the cash spend on TV and film production assets this year versus the rest of the year?

Yes. We haven't given guidance other than on the pure film side where we said generally we thought we'd be at around $20 million. So the capitalized TV assets, we haven't given guidance on that. Just the films.

Okay. Thanks. I'll turn it over.

Okay.

Thank you. Ladies and gentlemen, it appears there are no further questions at this time. Michael Weitz, I'll turn the conference back over to you for any additional or closing remarks.

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

Thank you, ladies and gentlemen, this does conclude today's presentation. You may now disconnect.