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Operator
Hello, and welcome to the webcast entitled WWE's third quarter earnings. We have just a few announcements before we begin. (Operator Instructions) As a reminder, today's call is being recorded.
I will now turn the call over to Michael Weitz, SVP, Financial Planning and Investor Relations. Please go ahead, Michael.
Michael Weitz - SVP, Financial Planning & IR
Thank you, and good morning everyone. Welcome to our third quarter 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 other supporting materials on our website ir.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 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 our earnings release and presentation, which are available on our website. Finally, as a reminder, today's conference call 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.
Vince McMahon - Chairman & CEO
Good morning, everyone. Just a few notes I'd like to make reference to. Our revenue as you know is $164 million. It's on par with Q3 of last year, about an 8% increase and we delivered our results in line with our guidance, albeit on the lower end of our guidance. We remain very bullish on our long-term opportunity with our WWE Network and the ability to distribute our content directly to our global audience. The network itself had 1.46 million average paid subs over the quarter, which is about 24% higher than last year's Q3.
As far as television ratings are concerned, our brand extension, we think, continues to work very well. As far as SmackDown is concerned, as you know, we went to a live format. Its live format is about twice the ratings in the same timeslot, a year ago, and it's about 16% above what we were doing with SmackDown on a taped basis on Thursday nights on USA.
Nonetheless, the increased value of our broadcast programs as well as increased value over all platforms, the strength of our brand continues to be exhibited any number of ways. NBCU, for argument's sake, secured 50 new blue chip advertisers over the last two-year period and growing. We think that's a really good sign.
We also completed a content distribution deal in Germany with ProSieben which continues to grow the value of our programing on an international audience standpoint. Again, as far as value is concerned, on social and digital platforms, our content had 11.5 billion video views for the nine months leading up to where we are now, which represents a 71% increase from 2015, that's extraordinary. And many sites are picking us up as a result of that, ESPN, any number of them now, which again everyone is recognizing the value of our programing and taking advantage of it.
As far as looking ahead on 2017, we're anticipating continued growth in our network as well as overall revenue and profits to record levels. And speaking of the record, our goal to invest and achieve earnings growth reaching an OIBDA of $100 million, which will be an all-time high for 2017. Again, it represents the confidence we have in our future.
George Barrios - Chief Strategy and CFO
Thanks, Vince. Several key topics which I'd like to review today. These include management discussion of our financial performance, the progress of key strategic initiatives and our business outlook. For the third quarter, we achieved revenue comparable to last year's record third quarter and our financial results were in line with our guidance. Our performance to-date reflects the execution of our strategy to grow our direct-to-consumer WWE Network, enhance the appeal of our television programing, engage our fans on digital and social platforms.
The growth of our key operating brand metrics demonstrates successful execution of this strategy. WWE Network averaged 1.46 million paid subscribers for the quarter, in line with guidance -- although, as Vince mentioned, on the low end -- and represented a 24% increase from the third quarter last year. Since we transitioned SmackDown to a live format on USA Network in July, SmackDown generated average household ratings more than double the same timeslot last year, and 16% above the ratings when it aired on Thursday.
As Vince mentioned, our digital engagement metrics continued to grow. For the first nine months, consumption of WWE content increased 71%, more than 11 billion video views across Facebook, YouTube, WWE.com. And social media fan engagements measured across all our social platforms increased 43% to 873 million. These outcomes highlight the tremendous strength of the brand, and we believe the potential to capitalize on this strength to drive long-term growth.
To review our performance in the quarter, let's turn to page five of our presentation, which shows the revenue and OIBDA contribution by business as compared to the prior year quarter. We generated revenue of $164 million, which was on par with the record third quarter last year.
You should know that the prior-year performance included $14 million in revenue associated with our licensed reality series Total Divas and Tough Enough. These shows aired 21 episodes in the prior-year period. These episodes did not have a material impact on prior year OIBDA results. There were no such episodes airing in the third quarter this year. Therefore, excluding the prior-year impact of Total Divas and Tough Enough, revenue increased 8%, driven by the contractual escalation in TV rights fees in our key distribution agreements and the year-over-year increase in WWE Network subscribers.
OIBDA increased $1.1 million, as the growth drivers I just described were partially offset by a decline in licensing profits and investments in key areas, including content, technology and our global operations. Changes in foreign exchange rates did not have a material impact on our revenue.
As shown on page six of our presentation, network segment revenue increased $4.2 million dollars with growth in subscription revenue to $42.8 million as the network's customer base increased 24% to an average of 1.46 million paid subscribers. Network segment OIBDA was essentially unchanged from the prior year quarter as the growth in subscription revenue was offset by increased program production costs, including a $3.2 million allocation of production expenses shared between our network and television segments.
We continue to increase the global distribution of WWE Network, as measured on a year-over-year basis. The network had 1.49 million total subscribers at quarter-end including 1.07 million paid US subscribers and 373,000 paid international subscribers. WWE Network content continues to drive viewer engagement. We remain on track to add more than 300 hours of original content to the network's featured programing in 2016 and we also expect to add approximately 2,500 hours of archival content. At year-end, this would result in an on-demand library of nearly 7,000 hours, or four times the size of the library at the network's February 2014 launch.
Profit from the licensing of television content increased $6 million, reflecting both the higher rights fees in our key distribution agreements and the allocation of shared production costs to our network segment that I just described.
On page 9, licensing profits declined $2.5 million based on a 22% decrease in licensing revenue attributable to the timing impact of a lower effective royalty rate for our franchise video game and lower sales of toy products than in the prior year quarter. As a reminder, the lower effective royalty rate derived from an increasing rate structure of the 2015 year as compared to a flat structure this year. For the full year, we expect the rate for 2016 will be comparable to the average rate for 2015.
Corporate and other expenses increased $3 million to $44.8 million, reflecting investments, branding, data and technology and certain talent initiatives. In terms of WWE's overall performance, changes in other business segments were largely offsetting and as such did not have a material impact on consolidated results.
Page 10 of the presentation shows selected elements of the capital structure. As of September 30, 2016, WWE held $68 million in cash and short-term investments. We estimate that we have approximately $150 million in debt capacity under the Company's revolving credit facility.
Through the first nine months of the year, free cash flow declined approximately $20 million due to the increased payout of management incentive compensation, higher capital expenditures, primarily related to the purchase of the facility and the timing of working capital, which we expect to reverse over the next several months.
Looking at the fourth quarter -- over the prior quarter, our financial and operating results continued to reflect our progress in transforming our business model. And so for the fourth quarter, we project average paid subscribers of approximately 1.4 million plus or minus 2%. This represents a 13% increase from the fourth quarter, 2015.
We also estimate fourth quarter 2016 adjusted OIBDA of approximately $20 million to $24 million. This range represents an expected year-over-year increase primarily due to increased monetization of our video content and more favorable year-over-year comparisons in our fixed cost base. This performance would result in 25% growth in average paid subscribers to 1.42 million for the full year and would yield 2016 adjusted OIBDA of $80 million to $84 million, consistent with our previous business outlook and represents adjusted OIBDA growth of 16% to 22%.
Now looking on to 2017. Over the past few years we placed increasing strategic emphasis on optimizing the value of our content, developing digital and technology platforms and expanding our global presence. Execution of these initiatives has been strong and our results demonstrate the successful transformation of our business model. Every day we become more digital, more global and more direct-to-consumer.
Looking ahead to 2017, we expect to achieve another year of record revenue. As Vince mentioned, we've targeted adjusted OIBDA of $100 million. This would be an all-time record and represent approximately 20% growth from where we expect to finish 2016. Supporting the continued growth in our revenue and profit, we anticipate contractual increases in television rights fees and expect the level of WWE Network subscribers will continue to increase on a year-over-year basis.
As we believe there is a significant long-term growth opportunity for WWE, we plan to continue to invest in key areas to optimize both our long-term performance but also drive short-term results. Given the current scale and leverage of WWE Network, subscriber increases have the potential to drive meaningful growth in revenue and profit. Even if subscriber growth decelerates from 2016, we define success by the achievement of sustained year-over-year increases over the long-term. With such growth, we believe we can achieve our target record financial results in 2017.
In addition to supporting our 2017 financial objective, the continued growth of WWE Network enables us to deliver a wide range of content and strengthens our engagement with a broadening audience of our most ardent fans. Importantly, it also provides us with the flexibility to adapt to the rapidly changing media landscape around the world.
So that concludes this portion of the call. And I'll now turn it back to Michael.
Michael Weitz - SVP, Financial Planning & IR
Thank you, George. Denise, we're ready for questions now. Please open the line.
Operator
(Operator Instructions) Evan Wingren, Pacific Crest Securities.
Evan Wingren - Analyst
Hey, George. Would you be able to just walk us through the variables that caused the sub result this quarter to come in at the low end of the range relative to your expectations, and then sort of walk us through your assumptions of what you're seeing that would cause the incremental decline in subscribers in the fourth quarter?
George Barrios - Chief Strategy and CFO
In terms of the first part of the question for Q3, the gross add number, and as you saw in the material we did about 388,000 gross adds in Q3, compared to 450,000 last year. That was the number that came in at the low end of guidance. And so then you have a couple of things as we go into the fourth quarter.
Number one, it's a subscription business, so the impact on Q3 kind of cycles forward a bit, so you have that versus last year. And then as far as the expectations for those gross adds, we tuned it a bit given the performance we saw in Q3. We're still doing big numbers obviously in terms of gross add, but a little bit less than last year. That's really the primary driver.
Evan Wingren - Analyst
Yes. And when we think about the gross adds down 15%, and sort of step back and away from sort of the 90-day window and think about the longer-term projection you guys have of reaching 3 million to 4 million subs. I guess how do you get comfortable with that level of gross add decline in the context of reaching those longer-term goals? And I guess would you caution us maybe to not extrapolate those -- that level of declines going forward, is that how you think about it? Or some color there would be helpful.
George Barrios - Chief Strategy and CFO
Yes. Obviously, we're guiding 13% year-over-year growth. I think to the first question, over the long-term, as long as we continue to grow the network year-over-year, we're still confident we can get to that 3 million to 4 million. I think to your point in the short-term, in that 90 days, 180 days, 270 days, I think there are going to be ebbs and flows along the way, I think that's fairly natural for subscription businesses as you build them. The product will keep getting better, the content will keep getting better, or the way we market it and package it. We'll keep getting better and more creative.
But I think there will be ebbs and flows. And certainly at the end of the day, we're content business, so the attraction matters as well. And while we always feel great about what we're doing, some days are better than others. So over the long term, we still feel real good about it and, to us, the metric that we'll look at is, are we increasing year-over-year. In the short term, I think you're going to see times when you're little bit better than you expected and -- like we saw in the third quarter -- times when you're on the low-end, what you expected.
Evan Wingren - Analyst
All right. Thanks for taking my question.
Operator
Eric Katz, Wells Fargo.
Eric Katz - Analyst
Good morning, guys. Last year with the guide for OIBDA, you also gave some sort of soft expectation for subs growth and the incremental investments. I was wondering if there is anything you can provide for 2017 as well. I'm sort of thinking about the $15 million to $20 million of these strategic initiatives for 2016; if you strip that out, you kind of get to somewhat close to a normalized OIBDA of $100 million for 2016. So just trying to think about the variables for 2017.
George Barrios - Chief Strategy and CFO
Those expenses that we added in 2016 and I've talked about them before, primarily around new content across all platforms, not just the network. Our data and technology stack, again supporting all platforms, not just across the network. And then investing globally in a variety of ways, whether it's marketing efforts, sales efforts, localization of content, again across all platforms. Those will continue in 2017.
I think your question, Eric around additional investment, I think that will get fleshed out during our -- as we build the operating plan for next year. But we feel comfortable that with continued growth in subscribers, which we expect, as well as the contractual increases in our licensed content, that we'll be able to both invest, figure out to what levels and still deliver on the $100 million. But we're not going to give a number on the investment for 2017 because we're still fleshing that out.
Eric Katz - Analyst
Okay. And one thing that's sort of come out in at least my emails is I noticed you guys put out a survey recently of walking through different tiers and pricing for different levels of service for the network. I guess, would you be able to talk through the thought behind the survey and why now? Is this something you consider both domestically and internationally?
George Barrios - Chief Strategy and CFO
Yes, I mean, we've done this before, Eric, to varying degrees. So we're always kind of talking to our audience for a variety things: what type of content would they be interested in, what type of other services on the network would be of value to them; and then to the point you made in terms of different content offerings and is there incremental value there that we can deliver to them.
So we're always doing this. I wouldn't read too much into what you just mentioned, it's just part of kind of running the business and trying to get smarter and frankly being as connected as we can be to the audience, because at the end of the day we're going to do what they really find valuable.
Eric Katz - Analyst
Okay. Thank you.
Operator
Daniel Moore, CJS Securities.
Daniel Moore - Analyst
I wanted to maybe talk a little bit about the guide. First, given, any more specificity -- I guess it's an echo of the last question -- you might provide in terms of a range around net subscriber additions for 2017? And as a follow-up, if it happens to come in softer for whatever reason, are you prepared to sort of cut costs to protect the $100 million OIBDA guide? How I guess, -- how comfortable or confident are you in that piece of the guide?
George Barrios - Chief Strategy and CFO
We're not going to give any more guidance on the sub numbers for 2017, other than saying we expect them to grow year-over-year, although it could be at a lower rate than we saw in 2016 on average. So, I'm not going to talk about that.
As far as the -- as I answered before, I think our expectation is that the revenue growth, the decisions we'll have to make really are on to the levels of investment, so as opposed to taking cost out. But having said that, we're putting the number out; obviously we strive to meet or exceed our commitment as part of the culture of WWE, but we take it seriously when we put the number out.
Daniel Moore - Analyst
Very helpful. And the second, the follow-up leads to exactly into that is, of the buckets of increased incremental investment that we've had this year and indeed, going back to 2015, are there any areas that perhaps aren't generating quite the return you had hoped and therefore you might consider dialing back a little bit?
George Barrios - Chief Strategy and CFO
Yes. So some of the returns are easier to measure in the shorter term, right? So I think the success of these investments get measured over different time frames.
So as an example, we've been adding more and more people on the ground in different local markets. We think that's working great. And I think Vince mentioned our new deal with ProSieben and that's the financial element, but also if you look at the viewership in Germany, which to remind everyone is Europe's largest economy, that to us is directly related to the investments we've made locally.
So, that's just one example. I'm not going to go through the litany. But that's one example where we feel real clear line of sight in the short-term.
I think when you look at, for example, investments in data and technology, we see the benefit in helping us manage our business day-to-day. So for example, evaluating the success of the type of programing on WWE Network, and that business is where we have the richest data. But the real benefit of the investments we're making are going to be felt over time.
So on the tech stack, the ability to be able to deliver more and more content direct-to-consumer, to any broadband connected home in the world and in a variety of business models, whether it's ad supported, subscription supported or some hybrid or transactional. We won't see the real value of that, today or even 2017. We believe you'll see the real value of that over the long-term.
The content, again, the value there, it depends on which platform. So when we're creating content for YouTube or O&O we see the monetization there very clearly and that's working. When we create the content for the network because the value there is both in bringing new people in and for retaining them the direct value of one piece of content is hard to measure; it's the entirety. But what we can do is measure the engagement and that's already -- we know what's working, what works better than other and it's kind of shaping our investments into the future.
So I know it's a long answer, but it's so important because it really is about how we view the next 5 years to 10 years, and what we feel is important. So we can see the direct impact very much in some things in the short-term and then others we just really believe in the long-term opportunity, and we're going to continue to do that. We'll obviously tweak as we go. But right now we feel really confident about where we're investing.
Daniel Moore - Analyst
That's helpful. And last one and I'll jump back in queue. Switching back to the network TV agreements, on the one hand, obviously your ratings continue to hold up exceptionally strong and you're a broader acceptance in terms of the advertising community as Vince alluded to. On the flipside, cord cutting and cord shaving is accelerating.
So when do you start -- I know, we're still a few years away. But when do you start the conversations around renewals for the TV agreements and maybe your confidence that you'll be able to renew comparable terms. In the past it's always been about what type of uplift you can get. But are you comfortable that you can kind of protect what we have today?
George Barrios - Chief Strategy and CFO
The only thing that we're public about in terms of timing is that the US, the domestic deal expires at the end of September, 2019, and the UK deal and our deal in India expire December 31, 2019, so one quarter later. And as we said before, those are three largest licensed content deals. That's all we're going to say about timing.
As far as, your point on cord cutting. I think somebody I respect a lot always says his crystal ball is a little cloudy. So, I would say I think everyone's crystal ball is a little cloudy in terms of the pay-TV ecosystem.
What's really important for us is that we have an incredibly strong position on AVOD, which we do, that we have incredibly strong position on SVOD which we do, and that we have an incredibly strong position within the bundle or pay-TV, which we do. When you look at the cumulative hours that WWE generates of first-run viewership across the 250 live hours that we produce, we're up at the top of the list. So that's a fact.
So we feel good about our position in all three platforms. Kind of guessing ahead as to what's going to be the best place for our content to be, I think we'll make those decisions when the time comes. But it's obviously the most strategically important part of WWE. Not only is the content the key part of indirect monetization or promotion to all our other lines of business, but it's also the biggest driver of direct monetization.
We think a lot about that question and our view is, we're going to be prepared and we want to be successful on all three along the way. So in essence, we control our own destiny.
Daniel Moore - Analyst
Thank you for the color. As always.
Operator
Brandon Ross of BTIG.
Brandon Ross - Analyst
Thanks for taking the question. I have just one question, and it's for Vince. So the AT&T Time Warner deal has once again highlighted the value of content after we had the DreamWorks and the UFC deals earlier in the year at pretty significant premiums and multiples. So to unlock the most shareholder value, why does it not make sense to consider a sale at this point while values are so high?
And then even beyond shareholder value, do you think you could more effectively unlock the opportunities that you have in front of you, if you were part of a much larger media company?
Vince McMahon - Chairman & CEO
Again we are open to anything, but I think that controlling our own destiny is so important and I don't know how much you lose control over that by being absorbed or sold or what have you. But again we're open to anything.
We're business people. So it's not a question of, if the right deal came along, it's one of those things where it's deal you couldn't refuse, we're listening. Otherwise we're creating our own content, which is extremely valuable as George said over all platforms, and that's important. The old content is king is true, maybe truer today than it's ever been. So we're open for business.
Brandon Ross - Analyst
So if there was a deal that had a structure that effectively allowed you to manage your own destiny, would that be attractive to you?
Vince McMahon - Chairman & CEO
We're open for business.
Brandon Ross - Analyst
Thank you.
Operator
(Operator Instructions) Dan Medina, Needham & Company.
Dan Medina - Analyst
Just a quick question, some of my other questions have already been answered, and great color on the Time Warner from Vince. My question is that as you continue to expand overseas, is there any sort of programing or any kind of concepts that you're finding that might be -- that you could bring back here into the States?
George Barrios - Chief Strategy and CFO
Yes. Look I think Dan, more and more we're localizing content for different geographies. So that's -- and that's really accelerated over the last three years or four years, and again across all platforms. So it's on traditional payTV, digital. And we're continuing to evaluate the localization of network content. As we do that, the opportunity to create indigenous content in some markets, not in every market, in some markets is also coming into focus for us.
So, obviously not going to make any announcements today, but I think it would be fair to speculate that, if you stop here two years from now and look back, you'd say: oh, WWE did some pretty interesting things creating new types of content in these local markets.
We keep stressing it but the marrying of this global brand, when you look at our digital and social metrics and that 70%, 75% of all those numbers that Vince quoted are outside the US. So the global brand and to be able to reach that brand now, either super direct through our network, right, our DTC platform, or maybe just a slightly less removed but still pretty directly on third-party digital platform, we think that's an incredible opportunity. I mean, we really think it's an incredible opportunity. So yes, we're going to be doing more and more of what you described.
Dan Medina - Analyst
Great. Thank you.
Operator
Eric Katz, Wells Fargo.
Eric Katz - Analyst
Hi. Thanks again. So just piggybacking off the international a bit more. You guys didn't launch in any additional countries during the quarter and we noticed that the sub figure is a bit flattish for international. So I was wondering if there is any thoughts behind why you believe there might not have been an organic lift, or is there anything you're working on to maybe kick-start the international growth and maybe accelerate it? And then I guess beyond that, any update on the launch in China would be appreciated.
George Barrios - Chief Strategy and CFO
The reason there wasn't an announcement on any countries is because there are none left other than China, which was the last part. Yes, we're continuing to look at that market.
Obviously Netflix made some news recently when they kind of were pretty vocal about that direct-to-consumer probably won't work in China, that they may license some of their content there. So we're just in essence evaluating what's the best way to get our network content to our Chinese audience, but nothing to announce yet, just continuing to work on that. And I think we'll figure something out here in the next several months.
As far as the year-over-year growth, internationally, the reasons really are not fundamentally different than domestically. If you look at our gross add cadence, last year we did 40% of the gross add in Q1, right, which because that's the quarter WrestleMania was in. If you actually looked at the month, you'd even see a more concentration, because our events are the big drivers of our gross add.
So because of that, though, because of that seasonality in gross add, as you apply your average churn to the bigger base throughout the rest of the year, just the way the math works, you begin to kind of flatten that number out a little bit. So, it's a long-winded way of saying WrestleMania -- our expectation is, will drive another big gross add lift, which then should lift both the domestic and the international number.
Eric Katz - Analyst
Okay. Thank you.
Operator
Robert Routh, FBN Securities.
Robert Routh - Analyst
First, given the recent news events about AT&T buying Time Warner, and then Starz and Lionsgate getting together, and then AMCX take a big interest in RLJE to get the library and get into streaming. I'm wondering if you can comment a little on your thoughts about these transactions in the media industry. What do you think, it's good or bad for content producers, especially the AT&T, Time Warner deal that's been proposed?
And also, what does this say about the value of unique content? Given the content you have is definitely unique whereas most of the other stuff isn't. It would seem to me that all this flurry of activity means that what you have is much more valuable in reality than the market seems to suggest because only you have it. I just would love your opinions on these deals and how you look at them.
George Barrios - Chief Strategy and CFO
Those are big questions, Rob, obviously, with no clear answers. Look, our view when these transactions happen, and again whether they're happening in the US or any other market we're in, what's really important to us is there is a vibrant kind of competitive market for content. And as long as that exists, to your latter point, our numbers are our numbers. They're pretty powerful and it's public and everybody can see them. Everybody can see the engagement metrics, everyone can see the consumption metrics, everybody can see the ratings numbers.
And again, I'm just speaking about the US and India, UK and Germany. So as long as the market dynamics are such that that it's competitive, we feel that we bring a ton of value to a partner when we license content to them and therefore, we feel that we'll do well economically.
I think the last -- you had a middle point there about the value of content and you rightfully point it out. In some cases, we're talking about aggregators of content coming together, or aggregators of content coming together with distributors of content.
We're fundamentally different in the value chain. We are the creators and owners of the content. And as creators and owners, back to those three platforms, we think that gives us a pretty good position, whether we're distributing on third-party AVOD platforms or our O&Os, whether we're distributing within a bundle. And whether that bundle is a traditional facilities based bundler or a virtual bundler, we think we bring value there. Or whether we're going direct to consumer.
So the fact that we create it and own it obviously is a super differentiating factor compared to a lot of the people you mentioned in terms of coming together, which for the most part tend to be aggregators and then distributors. So we feel good about where we stand.
Brandon Ross - Analyst
Okay, great and then just two more if I may. First, the easy one is obviously when you guys renewed with NBC Universal, it was kind of couched as a partnership, as more than just a television distribution deal. Given that, could you talk a little bit about what other opportunities you could do with Comcast NBCU, be it on the theme park side or in any other area? Given how big they are and how good they are with what they do, and how good you are, what you do, it would seem there a lot more opportunities that have yet to be explored.
George Barrios - Chief Strategy and CFO
Yes, I mean, we like to think of our -- when we license content to any partner around the world, so whether it's BSkyB in the UK or Fox in Latin America or OSN in the Middle East or Zee in India, soon to be Sony, it looks like, but whatever partner, we tend to look at it as more than just we're going to license your content and then step away. We've never done business like that. Actually the way we view it is we're going to license the content and then we're going to work with you really, really closely to make it as valuable to you as possible. Obviously, we benefit as well. But the real focus is working with our partners to make them as successful as possible utilizing the content.
So that's what we do with NBCU. Look, I think it's fair to say over the last three years -- and we've had a long partnership with NBCU or its predecessor organizations, but Vince mentioned the 50 blue chip advertisers over the last two years. We think that's a little bit of a sea change and I think it reflects probably on both our parts an even stronger commitment to working together to accomplish what I said before, which is driving up their business. So we think they're really excited about what the last two years have brought; we are too. We're really happy for them. And obviously that accrues to our benefit eventually, we think, but the partnership has been great.
As far as theme parks and so on, as you know we're going to be in Orlando at the Citrus Bowl next year for WrestleMania. As you know it's more than just a one-day event, it's kind of a weeklong extravaganza. So my guess is, stay tuned; we'll probably mention a few things about what we're doing with NBC Universal around that.
Robert Routh - Analyst
Okay, great. And along those same lines with the same question, given the partnership you have there, would you be averse to a potential investment in WWE or a stock swap between Comcast and WWE where each owned equity in each other, to kind of solidify the relationship? Is that something you would even consider or is that off the table?
George Barrios - Chief Strategy and CFO
I'll quote Vince, we're open for business. I mean I don't know, a better way to say. That's kind of the way we view everything, is what's best for the brand long-term and short-term. So yes, so the short answer to your question is, of course, we would.
Robert Routh - Analyst
Okay, great. And then just a final question is obviously the WWE Network has grown incredibly fast, it's done incredibly well. But as we all know, there's a law of diminishing marginal returns as it gets bigger and bigger; it's harder and harder to add the incremental subscriber. Have you considered or would you consider kind of a reverse bundling type proposition where you said the next 500 people that subscribe and commit to a year, gets a free ticket to WrestleMania or what have you, and then anybody else who doesn't get that, gets a free video game or something like that?
It would seem, given the diverse socioeconomic backgrounds of your fan base, there'd be a ton of people that will be interested in such a deal and sign up for a year. And of course you don't want anybody getting nothing, but it would seem doing something like that, giving a ticket to a live event in their area or the WrestleMania for the first 200 or 500 and everybody else gets a free video game or some piece of merchandise if they commit to a year or six months, as it's kind of a way to get people that are on the fence to not only subscribe to the network, but also commit to being there for a full year rather than signing up during WrestleMania and SummerSlam and then cancelling. Is that something you guys been maybe pondering or would consider?
George Barrios - Chief Strategy and CFO
Rob if I didn't know you better, I would assume that you were applying for a job in our subscription marketing group. Because I think some of those ideas I have seen on lists somewhere. So, look I said it before, so get out of the in-the-moment financial results or the operation of the network, which is great, like as you mentioned, it's our second biggest business and we got there in two years, it's our second most profitable business and it's our fastest growing business so far in 2016. So that feels good.
Strategically over the long-term, and you touched on it, we think the network becomes the hub of how we interact and connect with our most-passionate fans. And you mentioned a few of the examples and so the answer is yes, we're definitely considering that.
And then also as I mentioned strategically, it also gives us a direct connection to those fans around the world to any broadband enabled home, where you can watch it on the big screen, little screen, cast it to the big screen, however you choose to do it. So, strategically those are the real drivers of value we believe in the network.
But a lot of the examples you brought out, you're going to see things like that. Again I'm not going to make news, but here in the next few months, I'm sure you'll see something and go, oh yeah, that's exactly what I was thinking might make sense. But we're going to do it smartly, and we'll do it iteratively.
What we don't want to do is confuse our audience. The product itself is the experience, and the simplicity of it is really important, so we want to be smart about it. But I think you'll see some experimentation around the topics that you mentioned.
Robert Routh - Analyst
Great. Great. Yes, because the one big thing obviously investors worry about is churn at the network, but you have a very loyal fan base. But some of them have limited incomes, others don't, so anything that comes with it, if you commit to a year or whatever would seem to keep them, make the sticky. And even though it would hurt the margin a little bit, on the margin it would actually be material, I would think, to ] the cash flow and make them happy. So, just makes sense. Thank you very much.
Operator
(Operator Instructions) Evan Wingren, Pacific Crest Securities.
Evan Wingren - Analyst
Yes. Just one follow-up for me on the gross addition number that we talked about earlier. I guess, the one thing we didn't ask you about was what you think is driving the declines in the third quarter and the implied guide for the fourth quarter.
George Barrios - Chief Strategy and CFO
Yes. I think the reason we give a range around on the guide gets to the point of normal variability. It's really hard to point it out precisely. So we kind of look at historical levels, and use that to inform our model for projections. But we know there is variability, that's why we put a range around it.
About the specificity of your question, I would rather stay away, out of that, because I would be guessing more than providing the answer, so I'll leave it at that.
Evan Wingren - Analyst
Okay. So just no really unique factors that you'd call out; more of just a trend that you're looking at.
George Barrios - Chief Strategy and CFO
That's right. We had people talk us about, well, was the attraction maybe not what you expected, is it the political season that's kind of drowning out people's attention, is it the Olympics back in August? So everybody has got theories, it's hard to kind of point it out, which is why I want to stay away from kind of attributing to any of those. It's more just based on the data.
Evan Wingren - Analyst
Thank you.
Operator
Brandon Ross, BTIG.
Brandon Ross - Analyst
Thanks. Just one more for me. So you guys have worked with MLBAM since you've launched the network. Now that Disney has come in and acquired a big piece of them, how do you think about your future and your relationship with them going forward? And if you continue to work with them, are there bundling opportunities that you see potentially with some of the other MLBAM partners?
George Barrios - Chief Strategy and CFO
Yes. Look, they've been a great partner with us. And their proficiency is a big part of the success of WWE Network. That's why we're the fifth largest SVOD service coming out of the US. And so what they do, they do well and they've been a big partner.
As far as the Disney investment, we'll just let our eyes kind of evaluate over time like we would do with any service provider and we'll see how well the work gets done, how fast, how good it is, and then we'll just judge using those metrics what we do moving forward. So that's kind of our perspective on BAM.
I think the bundling question is outside of BAM. I think that becomes more of a question, does it make sense? And whenever we look at -- and we have looked at, Brandon -- bundling opportunities in a variety of different ways, there's three things we look at.
Number one, the economics; do we think they'll be accretive? Number two, the customer information. As I mentioned before, every day we get more global, more digital and more direct-to-consumer and we love the direct-to-consumer businesses that we have, not just the network, but our e-commerce business. Our O&O business, our selling of tickets direct-to-consumer -- through third parties, but where we have the customer information.
So economics, number one, unbundling; number two, customer information; and number three being the viewership and engagement metrics. We are so much smarter about the content on WWE Network because we can measure the engagement in so many different ways, not average viewers, not a ratings metric, but real deep metrics: start/stop times, repeatability of the content, viewership to completion. That really gives us more insight into the success of the content than we get on any other piece of content we do.
So, economics, customer information and engagement data. If we could get offers where we think that makes sense, yes, bundles could definitely be a possibility.
Brandon Ross - Analyst
Thank you.
Operator
(Operator Instructions) And there do not appear to be any further questions at this time.
Michael Weitz - SVP, Financial Planning & IR
Thank you everyone. We appreciate you listening to the call today. If you have any questions, don't hesitate to contact us. Thank you.
Operator
That does conclude today's presentation. Thank you for your participation, you may now disconnect.