TKO Group Holdings Inc (TKO) 2018 Q1 法說會逐字稿

Hello, and welcome to the webcast WWE first quarter earnings conference call.

We have just a few announcements before we begin.

(Operator Instructions)

I will now turn the call over to Michael Weitz, SVP, Financial Planning and Investor Relations for WWE.

Please go ahead.

Thank you, and good morning, everyone.

Leading today's discussion are Vince McMahon, our Chairman and CEO; as well as George Barrios and Michelle Wilson, our Co-Presidents.

Their remarks will be followed by a Q&A session.

We issued our earnings release earlier this morning and have posted the release, our earnings presentation and other supporting materials on our website, corporate.wwe.com/investors.

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 both 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.

Thanks, Michael.

The numbers pretty much speak for themselves.

It was a pretty strong operating and financial performance.

As a result, we're, as you know, raising our guidance for the full year.

Raw and SmackDown, along with all of our social and digital media, continue to push a lot of those, obviously, in terms of our performance.

Raw and SmackDown helped, no doubt, our USA Network finished 2017 has continued for the 12th consecutive year as the most watched ad-supported cable entertainment network.

We like to think we have something to do with that.

During Q1 -- it's an amazing stat, during Q1 2018, digital video views increased 56% to 6.7 billion.

Those numbers are hard to wrap your arms around really.

It's such a huge increase and 6.7 billion, that's massive.

Our total hours consumed increased 69% as well across all digital and social platforms.

We remain the #1 Sports Channel on YouTube, and we had 50 million views, which even broke our record today after WrestleMania on YouTube.

WrestleMania broke the record for Superdome's highest entertainment -- grossing entertainment event.

And we hit a 2.1 million total subs for our WWE Network following WrestleMania, it's up about 9% over the year.

And we established a 10-year partnership with the Kingdom of Saudi Arabia and had our first event in Jeddah on April 27.

And all of that [and most] everything else, at the moment, looks pretty good.

Thanks, Vince.

So there are several key topics, which we'd like to review today.

It includes our perspective on financial performance, the progress of key strategic initiatives and our business outlook.

During the quarter, we delivered strong financial performance, and specifically, we generated adjusted OIBDA of more than $35 million, compares favorably to revised guidance as provided on April 9, 2018.

Moreover, we achieved a 40% increase in adjusted OIBDA.

That was driven by the escalation of content rights fees, higher advertising sponsorship sales, as well as continued growth of WWE Network.

These growth factors more than offset the decline in our licensing and consumer products business attributable to the adoption of a new FASB standard for revenue recognition, ASC Topic 606.

As expected, the adoption of the standard reduced first quarter revenue by approximately $10 million and adjusted OIBDA by $7 million.

Excluding this impact, adjusted OIBDA would have increased 68%, driven by the increased monetization of content, as reflected in our Media segment.

To review our business performance in the quarter, let's turn to Page 4 of our presentation, which shows the revenue, operating income and adjusted OIBDA contribution by segment as compared to the prior year quarter.

As a reminder, the presentation of our first quarter results reflect several changes in our financial reporting.

It include a revised business segment structure, modification of our definition of adjusted OIBDA, which now excludes stock compensation expense, as well as aforementioned accounting change.

Looking at our Media segment, adjusted OIBDA increased 74% or $18.5 million, driven by a 10% increase in revenue and lower operating expenses.

Revenue growth of $12 million was primarily due to increases in core content rights fees, as well as higher sales and advertising and sponsorship across media platforms.

WWE Network also contributed to the growth in profits with a 5% increase in average paid subscribers to 1.56 million and lower operating expenses.

The latter derived from creative decisions related to our network content, such as the scheduling of Holy Foley, which aired in the prior year quarter.

The increasing monetization of content, as evident in the first quarter, reflected some important operational achievements.

These included the continued production of our flagship program, the creation of the highly appealing new content, and the robust consumption of our content across all platforms.

On television, we celebrated the 25th anniversary of Monday Night Raw, a ratings juggernaut, which remains the #1 show on USA Network.

In fact, Raw has been the highest-rated program on its host network for 20 of the past 25 years.

Separately, we completed the seventh season of the highly successful series, Total Divas, and announced the third season of Total Bellas, which is coming up premiering on Sunday, May 20.

Both these programs air on the E!

Network.

On our direct to consumer streaming service, WWE Network, we added more than 60 hours of original content.

This, of course, included the continued production of our NXT Takeover events, which brought more live in-ring content for fans, and new episodes of the series, Ride Along, which provides an outside the ring perspective of our superstars' lives on the road.

And coming to the WWE Network are the return of both the U.K. Championship Tournament and the Mae Young Classic, as well as a new season of Camp WWE.

On social and digital platform, consumption of WWE content increased dramatically.

As Vince mentioned, digital video views increased 56% to 6.7 billion, and fans watch more than 240 million hours of content, representing a 69% increase from the fourth -- first quarter last year.

Contributing to the growth in digital consumption, we launched Mixed Match Challenge on Facebook Watch.

This show is a live in-ring series, which has generated more than 35 million views to date.

The power of our brands to engage a broad global audience continue to garner an increasing level of interest from the advertising community, which fueled a 30% increase in our sponsorship revenue.

The growth in revenue reflected in part by our ability to monetize on YouTube.

Over the past 12 months, we have also renewed integrated deals with Rocket League, Cricket Wireless, Geico, and of course, Mars/Snickers who was the presenting sponsor of WrestleMania for the third consecutive year.

All of these partners took advantage of our reach across all of our platforms.

As added proof of the compelling nature of our content, last Friday, we held one of our largest events ever outside the United States, with a sold-out crowd at the Greatest Royal Rumble event in Jeddah, Saudi Arabia.

The April 27th event marked the successful beginning of a 10-year partnership with the Kingdom of Saudi Arabia.

Turning back to our segment performance.

Adjusted OIBDA growth from our Media segment was partially offset by the impact of ASC 606 on our licensing business.

Excluding the impact of this change, adjusted OIBDA from consumer products declined slightly from the first quarter last year due primarily to lower royalties from the sale of toy products.

Despite this result, we remain one of the Top 3 brands in the U.S. action figure category while developing new licensing partnerships, such as with Carl's Jr.'s to promote kids meals and expand the presence of WWE among children.

We also continued to increase the penetration of our mobile games.

As of quarter-end, we had more than 70 million installs and an average of over 800,000 daily active users across our game portfolio.

Our new kids-oriented mobile game, WWE Mayhem, now has more than 9 million installs and recently earned the Editor's Choice award on Google Play.

Our new kid-oriented mobile game, WWE Mayhem now it's more than 9 million installed and recently earned Editor's Choice award on Google Play.

And our Live Events segment, shown on Page 7 of our presentation, adjusted OIBDA showed a modest decline from the prior year quarter; that decline was primarily due to lower stadium capacity at our Royal Rumble event, which had a corresponding impact on attendance in ticket revenue.

Page 8 of our presentation shows selected elements of our cap structure.

As of March 31, 2017 (sic - see slide 8 "March 31, 2018"), WWE held approximately $285 million in cash and short-term investments.

Additionally, we estimate that WWE has approximately $100 million in debt capacity under the company's revolving credit facility.

As we've indicated in previous calls, we believe this structure enhances our ability to execute our long-term growth strategy.

Our free cash flow was roughly comparable to the prior year quarter, as improved operating performance was offset by unfavorable timing and working capital.

Looking forward, we are now projecting a meaningful increase in revenue based on the distribution of new content in some international markets, as well as higher rights fees in existing content agreements and the continued growth of WWE Network.

In fact, for the second quarter 2018, we're now projecting adjusted OIBDA of $30 million to $34 million.

This range of results would compare to adjusted OIBDA of $24 million in the second quarter 2017.

For the second quarter of this year, we also estimate average paid subscribers of approximately 1.77 million, representing an 8% increase from the prior year quarter.

Achieving this range of second quarter performance, which I just referenced, would result in adjusted OIBDA for the first half of 2018 that represents growth of between 30% (sic - see slide 10 "32%") to 40% from the prior year period.

Based on this projected growth and expectations of strong performance over the remainder of the year, we are raising our full year target for 2018 adjusted OIBDA to least $150 million, which would be an all-time record and exceed our previous guidance of at least $145 million.

Over the remainder of the year, our key strategic goals remain unchanged.

We'll continue to focus on determining our distribution strategy in the U.S., U.K. and India for Raw and SmackDown, creating new content, investing in data and technology, and deepening our international growth opportunities.

As we continue to transform our business, we expect to achieve record revenue, record profits and record subscriber levels.

So that concludes this portion of the call, and I'll now turn it back to Michael.

Thank you, George.

Gwen, please open the lines for questions.

(Operator Instructions) And we'll go first to Curry Baker with Guggenheim Securities.

I know you can't really comment on the specifics of the ongoing U.S. TV rights renegotiation, but can you maybe share your thoughts on how undervalued you see your rights currently under the current contract?

We're aware of the audience delivery metrics, but is there anything else you like to point to?

And maybe in what ways do you see yourself as better positioned now in 2018 to achieve something closer to fair value compared to 2014?

Any thoughts would be helpful.

And I look at -- as we said before, Curry, we're expecting to announce the distribution plans for Raw and SmackDown in the U.S. sometime between now and the end of September.

Other than that, kind of like you said, the data is out there available for anyone to see and then they can draw their own conclusion about the value of the content, but we're not going to comment on it.

Okay.

Maybe just one follow-up then.

Sponsorship and advertising revenue at Media has been growing around 30% in the past couple of years based on the trending schedules you guys provided.

Can you talk a little bit more about the drivers of this growth and how sustainable you see this growth going forward?

The growth is really driven by 2 parts, the first are these integrated sponsorship agreements that we've mentioned those with our partners like Mars, Snickers, Geico, Cricket Wireless, Rocket League; and what we've been able to take to the market is truly unique in that, you can activate your brand across all of our platforms, whether it's YouTube, Facebook, our own wwe.com, WWE Network.

So the ability to deliver a cross-platform solution to brands has been working incredibly well.

Beyond that, as you know, WWE has unique ability to create content for those partners.

So our ability to create integrations or almost an analogous to branded content, if you will, with KFC where we're taking their brand campaign and making it our own.

It's incredibly valuable because it's an organic integration of their brand into our world, which, as you know, the scale of our brand delivers that message to so many of their consumers.

So that's been very successful for us.

We continue to grow on that front.

We see renewals picking up.

So feeling very good about that.

The second part of it, as I mentioned in the comments, is our ability to monetize on these digital platforms such as YouTube, which again becomes a bigger part of our overall revenue going forward.

And we'll take our next question from Eric Katz with Wells Fargo.

Michelle, can you discuss in any more detail the incremental revenue for Q2?

Not sure if you want to quantify it.

But I'm also curious if some of that's related to timing for the new revenue recognition standards that hit Q1 in consumer products?

Yes.

The ASC 606 impact will be felt more in Q4 because we'll then be aligning the recognition of our licensing revenue with the retail revenue for our partners.

The Q2 guide, we're not going to get into a number.

A significant portion has to do with the recently signed deal in Saudi Arabia, the 10-year partnership, but we're not going to get into the specific numbers on that.

And regarding that partnership, do you have any expectations, or how many events you expect to hold on an annual basis?

I think we're still working through that, Eric.

It's early days.

We're really excited about the partnership.

Obviously, I know you are a network subscriber.

So if you go watch the Greatest Royal Rumble, it was pretty amazing, kind of put chills on a lot of our spines watching it, frankly, but the whole -- a lot of the logistics around the form that the partnership will take, we're still working through that, but we're super excited.

And maybe just different [kind of] question.

You guys are starting to generate more free cash flow.

At what point would you consider increasing the dividend again?

Yes.

So I think what we want to do, I think we've mentioned it before on the call, Eric.

We want to get through the distribution plans globally for Raw and SmackDown.

We talk a lot about the domestic plan, but certainly, our plans in India, U.K. and remaining markets is really important.

Once we lock that -- all of those down -- and we said, we expect to announce India sometime in the first half of next year, once those are locked down, we think we will be able to give a broader financial and operating framework longer term for WWE and how fits into its strategy.

And within that, we'd address capital structure as well as return of capital strategy, but we don't want to do that today.

And we'll take our next question from Eric Handler with MKM Partners.

Yes.

So just looking at your full year guidance, if you're expecting growth in the first half for adjusted OIBDA of 30% to 40%, that gets me to about minus 4% for the back half of the year.

Are there any big swing factors that would -- and that's to get to the at least $150 million number?

Is there any swing factors in costs or anything we should be thinking about that would cause adjusted OIBDA to decline in either the third or fourth quarters?

And I have a follow-up.

Yes.

I think when you look at the back half of the year, check the math again, we're expecting increase.

We can get to at least $150 million without increases in the back half, so there's not a decline.

And we expect the growth to be driven by a lot of the things that have driven the growth here early on; continued growth in the Media segment, from digital advertising, from subscription revenue on a year-over-year basis, as well as the continuing escalation in our content rights deal.

So that kind of will drive the back half.

Understood.

Okay.

And then with consumer products, so now your fourth quarter is going to be bigger; and just as a guideline, we took out nearly $10 million of revenue in the first quarter and about $7 million of adjusted OIBDA.

Is that a -- is that something -- is that a good number to use to shift into the fourth quarter?

Obviously, [that have] a perspective on what you thought about are key categories year-over-year, the performance at retail.

But generally speaking, I think it's a good starting point to do that, and then you can layer on your own perspective on top of that.

Great.

And then just one last question.

In terms of your unallocated corporate expense; in 2017, it was about $70 million.

Can you just give us a sense of where you think that number goes for '18, just because we haven't really had a good modeling perspective there?

And then should the allocation of the allocated corporate expense stay similar to what we saw in 2017?

Yes.

On the first part, which is the [purer] corporate expenses, you'd see increases there that are aligned with cost inflation.

The primary component is staffing, which tends to be a little higher than other fixed cost for us, the growth in there, but that's generally what you see for the full year, might be some timing bumps.

In the cost that used to sit in that segment that we're now allocating out to the operating segment, those are areas we're going to continue to invest in because those would be things like talent, international resources, investment in data.

So -- and those are areas I mentioned in the prepared remarks, we are going to continue to invest in.

And so I would expect those to grow at a much faster rate than just inflation because we think there is a long tailwind for us.

We'll go next to David Karnovsky with JP Morgan.

Now that the Mixed Match Challenge is complete, can you discuss the performance of the series, maybe how it fared relative to your initial expectations?

I'm curious to know what metrics or even qualitative points you used to measure success.

And would you expect to do similar content deals with digital platforms ahead?

Yes.

So obviously, Vince mentioned, Michelle mentioned the number of views in Q1.

Obviously, if you trend that out over the last 5 or 6 years, you've seen this kind of incredible growth rates.

We think it's strategically important.

Frankly, if we put the partnership in Saudi Arabia in a broader context, those investments we've made over the last 10 years in driving engagement on social and digital platforms.

As you know, Saudi Arabia is one of the highest per capita, if not the highest per capita user of YouTube in the world.

Partnerships like that evolve, because of our ability to engage 24/7 with our audience.

So I would keep that in mind, so it's not a one-off.

Okay.

And then just how should we think about the contribution of Greatest Royal Rumble in Q2 to your financials?

I mean, do you have any way to frame the revenue contribution?

And should we think about this as positive on an adjusted [EBITDA] basis for this year?

Yes.

I mean the guidance we gave for Q2 adjusted OIBDA growth includes that event.

So -- and it is positive.

We're not going to give the specifics, but it will have an impact both on the revenue -- a positive impact on both the revenue and the adjusted OIBDA line.

We'll go next to Ben Swinburne with Morgan Stanley.

Couple of questions.

You mentioned ability to monetize on YouTube, I don't know if that has improved if anything specific has happened to allow you to better monetize that view.

I wonder if you could talk about that.

And generally, are there things you can do to drive up ARPU on viewing on YouTube?

Obviously, YouTube controls a lot of ad inventory.

But what is the opportunity there and did anything specifically happen in the quarter that's helped that revenue run rate?

Yes.

So, yes, (inaudible) 2 things happening.

Number 1 is the overall level of engagement that we can drive, that's number 1. Number 2 in the sell-through rate and YouTube largely controls.

Remind you that almost 80% of our consumption is happening outside the U.S. and sell-through rates vary by region.

So the U.S. sell-through rate, for example, is very different than the sell-through rate for YouTube inventory in India.

So you have consumption that's certainly we control, we drive a lot of that.

YouTube's algorithm obviously impacts that.

The second is the sell-through that's macro economically driven, and the third is the ARPU.

And so we think that there's tailwinds across all 3 of those over time, and I can't break it out specifically, but we think all 3 of them have tailwinds.

And also, Michelle mentioned the integrated element of how we think about sponsorship and advertising, how we package ourselves that YouTube inventory has changed over time, which then has driven up the ARPU that -- and our ability to sell the value has improved over time as we've gotten smarter about it.

Is there a way you guys can increase how much of the inventory you sell versus YouTube?

And does that create an opportunity for you to better monetize?

Or is it a relatively static situation?

No.

What we -- if we can add value to our customers, we're going to want to sell as much of that as possible ourselves.

And we have access to that inventory, so there's -- we can sell as much as we can package and put in the market.

So that -- as to George's point, that's been a key strategy of us adding value to those integrated packages, it's our ability to target our YouTube audience.

If you're familiar with how Google reserve sells, you're buying an audience across the demographic where you buy through WWE, you're able to specifically target WWE's YouTube audience.

So there is value in that with our sponsors and that is how we're packaging that in.

That's helpful.

And then just one follow-up, I don't know if you can comment.

But to what extent WWE will be involved in the U.S.A.

upfront coming up here, the NBC cable upfront in the next couple of weeks?

Yes.

The NBC Upfront is on May 14th, and WWE will absolutely be a part of that upfront representation.

I don't want to steal their thunder on who will be on the stage, but suffice it to say that Stephanie McMahon, our Chief Brand Officer, will be leading the charge on the stage for WWE, and we will be, as I mentioned, our talent will be an important part of their upfront presentation.

Ben, you should get a ticket, I think you'll enjoy the show.

I will be there.

Sounds good.

Talk to you soon.

And we'll go next to Laura Martin with Needham.

So great numbers.

You guys love raising guidance.

So I want to talk about data because I know you guys are hiring data analysts and one of the key positives of having a direct to consumer player is you get a lot more data.

So I'm interested in 2 assets of data specifically.

One is, as you think about the last 90 days, can you please regale us with impressive steps you're taking on what you're doing with data lately, and then overlay the GDPR, which is about to go into effect in Europe and how that gates your ability and/or the testimony of Zuckerberg here, whether you think that we're going to get tighter data lockdowns here in America that would negatively affect your competitive advantage of being able to use data more than a lot of your competitors?

Yes.

On GDPR, obviously, goes into effect here in the next couple of weeks.

We've been prepping for that for the last year or so.

And as you know, what it really does is gives each consumer more control, which I think is great.

Ultimately, we're using data.

It sounds a little corny, but it's how we use to put more smiles on people's faces, right.

The more we understand about what they like, the more we can give them more of what they like.

So that really is what we do with the data, and our hope is that our fans enjoy it and they're willing to share -- continue to share our fans in EU.

So that's on GDPR.

On regaling you, over the last 90 days, I would say, it's funny.

This kind of journey that we're on and in a lot of ways when you look at the functional level in the organization, the discussions that we have about how do we do better content, how can we engage our fans more deeply, everything is now subtended with some level of data, where 5 or 6 years ago, you had less of that, just because we didn't have the data available.

So I don't think I can regale you.

All I can tell you is that every day throughout the different physical locations of WWE, what we understand about what our consumers love about us, or what they don't love is in every discussion so.

Next time, I'll prep and then be able to regale you.

And then maybe, Michelle, one for you.

I mean, I feel like every time you guys get on this call, the brands get more and more impressive.

And so what I'm wondering, Michelle, is when you think about the multiplatform reach, do you have a sense that you are getting more and more brands because you can be multiplatform, you have a lot of data about who's viewing your content, and people are jumping on board, the WWE [brand and] accelerating rates as people abandon the cable universe, maybe, is that benefiting you?

I don't know about the second part of your hypothesis.

I think the first part is accurate in that the brands that are coming to us and working with us have clearly seen the benefit of the REITS that we have not only in the U.S. but on a global basis, as George mentioned, where a lot of our consumption is happening outside the U.S. So I think it's really driven by the scale and reach that we deliver.

Beyond that, I think our ability to deliver it in a very turnkey fashion.

As you know, we're one of those unique properties that we create our content, we own our content, our talent, our IP available to work with the brands that we sign on.

So that's a unique market proposition that a lot of other entertainment properties or sports properties can't deliver the way WWE can.

So its scale is going across platform and our ability to create unique organic content that is relevant to our audience that represents their brands.

So, to me, that's our unique selling proposition, and I think the market has now recognized that and those are the types of deals we're doing in the brand.

Again, you've seen it also from an advertising perspective, we've been public about the fact that NBC Universal has now a roster of over 200 advertisers on Raw and SmackDown, and those are blue chip companies, again recognizing the value of ads running in the WWE programming.

So all of that has really come to fruition for us.

Okay, great.

And last one for me is mobile games.

There is a 70 million number installed and a 90 million number installed.

So could you -- it feels like mobile games is an area like e-sports, it feels like this is an area that really talks to your consumer.

Can you talk about your longer-term plans regarding gains and how it ties -- it seems like it's really relevant to your core audience and how you think the economics could play out, specifically coming from like these video games franchises, both mobile and consoles.

Yes.

Just on the first one, just to get the numbers right.

The 70 million is the overall installs for all the games, and it wasn't 90 million, it was 9 million for one of our latest game, which is WWE Mayhem.

But like we said in the prepared remarks, we're all fighting for time and engagement across all these platforms.

Mobile gaming is another platform.

Obviously, it's incredibly popular and a lot of time is spent there.

So I think, year after year, you're going to see us grow that portfolio of games.

We'll go next to Brandon Ross with BTIG.

Just on the network, the acceleration of network subs really didn't come in the quarter, it came at WrestleMania, but you haven't broken that out between domestic and international, I'm just curious if that reacceleration was broad-based, or if it was driven by more international trends or domestic?

I'm trying to figure out what markets are really accelerating your growth there.

And then I have a follow-up.

The mix between domestic and international wasn't fundamentally different than it's been in the past.

And so, as you know, Brandon, we've simplified the KPI across the business, including the Network and we're going to keep it like that, just because we think it -- otherwise, there's too much information, and I think you missed the overall trends.

But generally on the WrestleMania cohort, wasn't fundamentally to similar mix.

Great.

And then, I mean, obviously, you've laid out the timeline for the U.S. renewal for Raw and SmackDown between now and September.

Can you talk about the factors in determining where, in that range, that will fall?

And I guess somewhat related, it seems like a lot of your current partners in big markets and potential new partners are involved in some kind of M&A.

To what extent is that affecting your negotiations and the timing of when you may announce deals?

Yes.

So on the first part, put that in the same bucket as Curry's question, we're not really going talk about or characterize what discussions we're having or with whom.

So put that aside, regarding the consolidation or potential consolidation in the media industry, I think, for the most part certainly the U.S. deal, and my guess is probably the U.K. and India are going to get -- we'll figure those things out prior to any of these events getting regulatory approval or some of the more recent ones, but we don't think it's impacted our discussion and all the impact kind of WWE materially one way or the other.

We'll go next to Daniel Moore with CJS Securities.

No need to regale here.

I'm all good.

I do want to focus on the Network.

Average paid subs is up about 5% in the quarter; direct Network related revenue up about 3%.

So just wondering in terms of the direction is that just a function of timing, any other factors there and one quick follow-up.

Do you mean why we see year-over-year growth increasing from Q1 to Q2, is that the essence of the question, Dan?

Really just -- unless I'm looking at the numbers incorrectly, a little bit more growth in the average paid subs than in the Network or direct Network related revenue in Q1.

So I guess average revenue per sub down a little bit?

Yes.

And remember in that revenue line, there's 3 things going on.

By far the largest one is the pure direct to consumer subscription business at $9.99 a month, but we also, in some markets, license the Network content, so there the ARPU isn't $9.99, it's a function of how many subscribers and what the license fee is.

And we also have our transactional pay-per-view revenue.

So that's why you don't see a direct correlation between the sub growth and the revenue growth.

So those are the 2 kind of impacted somewhat.

Right.

Pay-per-view (inaudible).

Okay, got it.

And then lastly, a really nice uplift, the reacceleration in just total subs around WrestleMania.

Any thoughts if we think about net churn or decay between now and the rest of the year relative to last year, given we're at a higher starting point?

I don't know if there's any guide you can give, but I thought I'd ask.

Yes.

I mean that we've said before, we tend not to get too caught up in one quarter's number.

We think this is a great business, it's a large business for us now, it's very profitable, has high operating leverage, and strategically it becomes a hub of our DTC strategy.

So that's kind of the way we think about the Network.

In the last call, we said that we thought the subscriber growth would be higher towards the back half.

Certainly the performance we had at WrestleMania kind of helped support that.

So that's all the forward guide we've given so far in subs.

We'll take our next question from Evan Wingren from KeyBanc Capital Market.

On TV ratings, we could see that your linear consumption grew here in the States in 1Q, which is obviously drastically different than the universe.

But can you give us a sense about the similar metrics in the U.K. and India and recent history and to what the overall viewership of your content looks like there relative to those respective markets do?

Yes.

We're not public with the ratings data other than the U.S. What we have said is, in India, we're one of the largest consumed sports in the country, we get placed in the sports category, and by far the largest Western content, i.e., compared to the NBA or NFL or UFC.

So we're right behind the IPL and Kabaddi, so Cricket and Kabaddi.

So that's what we have been public with.

Okay.

And then just one follow-up on commentary tiering from WrestleMania, can you just give us a high-level view on how you think about balancing content availability and price in that equation?

I guess, particularly in the context of using a lower cost tier, is an incremental subscriber acquisition channel and to improve your overall data capabilities, while I guess not cannibalizing your higher-end premium consumer.

Yes.

And I think, you should think about the tiering opportunity, both the lower tier and higher tier, they -- it's part content and it's part features, benefits and experience that we can kind of bring to bear.

So it's not just the content.

Specifically, on the content, I mean, we've had -- we have a long history of tiering content.

It used to be pay-per-views and TV.

Today, it's tiering across multiple platforms, direct to consumer, social and digital, traditional Pay TV bundle.

The tiering -- I mean, the tiering for the Network especially is just another subset of that, it's deciding which content fits where.

I think what Michelle said, we're lucky is that we have this kind of incredibly passionate fan base, we have the capability to create a lot of new content in a lot of different genres.

So it gives us a pretty big toolbox on how to address your question.

So we're not going to say what that is, but I'd keep in mind that it's not just content and that tiering, it's features and benefits and also access to different parts of WWE tickets and products and so on that all make up the composition of the tiers.

And like you said, we think there's an opportunity.

I mean, today we have a free tier if you will.

It's -- if you go to wwe.com on your browser or within the app, there's free content we provide today to our fans.

We think we can really take that to another level and then that does create a nice opportunity for feeding the subscription service.

So that's how we're thinking about it.

(Operator Instructions) We'll go next to Mike Hickey with Benchmark Company.

Just one quick one, sorry if I missed this, [of the drivers] but your digital video views up 56% and hours consumed up 69%, what's driving that and why don't we see, I guess, a more obvious bridge from that activity to driving, I guess, your overall subscriber growth in the Network?

And so there is a couple of elements and it got addressed in one of the questions earlier.

What drives the dive in engagement, which is those views and the time spent is, we create more and more content, we get smarter and smarter about what content to create, so we think that has a big part in driving that.

Second element is every day there's more people who have connectivity to the Internet around the world, so that helps.

And then the third part, it's a little bit out of our control, become the algorithms on these third-party platforms and which types of content they're favoring.

And as you know, that can change, so that can impact it positively, sometimes it's actually a little bit more of a headwind, but those are the factors, [parsing them up] becomes a little bit more difficult.

And then, I missed the second part, Mike, of your question.

Yes.

I guess, second part was why don't we see, I guess that activity growth -- driving growth in your Network subscriber base?

We actually do, yes.

In our social and -- we have an attributing model internally where we're measuring the efficacy of any paid media we as well as the use of our own assets.

And social and digital platforms are a big part of driving that.

So they're working now.

Michelle says we could be better at it, and I agree, so we're kind of continue focusing on that, because we do think there's even more opportunity given the scale, but even today, when you look at the growth of Network, a very large part of it is driven by that -- those platforms.

Fair enough.

I mean, that's -- I guess [I'm more certainly looking at 57%] growth, and then obviously a subscriber growth is fairly [uneven] compared to that.

So I guess, that bridge, I was having trouble understanding.

On your revised historicals, can you give us your core content rights fees for 2014?

In total, we haven't published those, Mike.

We went back 3 years, we did publish the top 7 deals, so you can kind of get a sense there and the relative scale of -- you can see the top 7 deals [public] in '14, '15 and '16, you kind of see the relative relationship.

We thought going back 3 years was enough.

Fair enough.

I guess if we're looking at a potential step up (inaudible) coming up here that would be the historical we'd want to look at or no?

Well, look, like I said, the top 7 deals, which as you can see from the numbers is the preponderance of the total, you could kind of get an idea because we have them public on the '13 -- actually '13, '14 and '15 for those deals.

So you can kind of see what happened in the last renewal cycle for those larger deals.

Okay.

Last question.

Just curious your perspective, I guess, post Saudi Arabia here maybe (inaudible).

I guess how you balance on one hand, leaving the charge on women's right and women's revolution and doing a business in the region that is maybe not so much readily charged here in terms of women's rights.

So I think everyone is familiar with the fact that we obviously have been very vocal about our female performers and obviously rebranding them to WWE Superstars, we feel really good about our continued commitment to that front.

As you know and we know there are many countries around the world where we perform, where again we're respectful of the cultures that are there, but we certainly hope to be part of the change moving forward.

I think some of you know in advance of our event in Saudi Arabia, we had the first ever women's match in the Middle East in Abu Dhabi.

And having heard the stories there is not there personally but when you hear our 2 female performers Alexa Bliss and Sasha Banks talk about that experience and looking into the audience and seeing little boys and little girls and the crowd actually chanting this is hope.

For us, we believe that, over the long term, that we will be part of the change that will happen in some of these places.

But again, we have to be respectful of the cultures where we perform and we plan to do that.

So again, over time, it's a 10-year partnership.

And as George mentioned, we have a significant foundation in the Middle East, not just men but women as well.

And we're proud and happy with how the event went, and we'll continue to treat those cultures respectfully while hoping to be part of some of the change that will be taking place.

And we'll go next to Jason Bazinet with Citi.

I just wondered if I could ask a question on international.

Do you guys mind refreshing us on where you see the biggest monetization gaps by country and how you think about that?

I don't know if I'd say monetization gaps.

I think just because of the scale of the country, the GDP and per capita GDP growth, both historical and expected, and our ability to entertain those fans.

India is -- we find as a pretty unique opportunity.

Obviously, it means that we've got to keep putting smiles on people's faces there, and that's harder than it sounds for the future, but I think there's just some macroeconomic elements that make that country particularly interesting.

Other than that, Michelle mentioned the Middle East had some similarities.

When you look at it in total, pretty good GDP growth, a lot of engagement.

Pretty large when you look at it in its totality.

So those are interesting as well.

And Latin America, obviously it's a part of the world where the content really resonates as well.

So I would say the biggest challenge we have in that finding opportunities, it's prioritizing them.

So it's a good problem to have, but probably we spend a lot -- more time thinking about that, Jason, because there are a lot of opportunities.

Gwen, do we have any more questions?

There are no other questions at this time.

Thank you, everyone.

We appreciate you listening to the call today.

If you have any questions, please don't hesitate to contact us.

Thank you.

Thank you, everyone.

That does conclude today's conference.

We thank you for your participation.

You may now disconnect.