TKO Group Holdings Inc (TKO) 2018 Q3 法說會逐字稿

Hello and welcome to the webcast entitled WWE Third Quarter Earnings.

We have just a few announcements before we begin.

(Operator Instructions) Today's call is being recorded.

And I would now like to turn the call over to Michael Weitz, SVP, Financial Planning and Investor Relations.

Please go ahead, Michael.

Thank you and good morning.

Welcome to WWE's Third Quarter 2018 Earnings Conference Call.

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 we have posted the release, our presentation and other supporting material on our website, corporate.wwe.com/investors.

Today's discussion will include forward-looking statements.

These forward-looking statements reflect our current views and 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 a replay will be available on our website later today.

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

Thank you, everyone and good morning.

We are continuing to effectively execute our strategy during the quarter and deliver results that exceeded our guidance.

We continue to focus on deepening the engagement of our audience, increasing the production of original content across any number of platforms.

For instance, we've launched another reality show, Miz & Mrs, on USA Network, which was a big success.

We have a Mae Young Classic, which is on WWE Network, which gets to the development of new talent -- constant new talent coming in.

And we also have Mixed Match Challenges, where we work with Facebook with a second season.

So we're pretty much able to fit almost any place and do any of this in any capacity.

So we continue to demonstrate our brand power.

We held the 1,000th episode of SmackDown Live, and that is an extraordinary milestone, only exceeded by Monday Night Raw, which is a bit higher.

In October, we had a huge event over in Australia.

We had approximately -- we reported 70,000 fans.

It's the highest attended event outside the U.S. in the past 25 years.

And we're looking forward to [WWE] Evolution, which is our first-ever, all-women's pay-per-view; and then, Crown Jewel on November 2, I think.

Generally speaking, we're pleased with our performance, and we're on the path to achieve record revenue, record adjusted OIBDA and record subscribers.

Thanks, Vince.

Several key topics which we'd like to review today.

This includes management's discussion of our financial performance, the progress of key strategic initiatives and our business outlook.

During the quarter, we delivered financial results that reflected the continued implementation of our strategy, developing new content and expanding the foundation for deepening our fan engagement.

We generated higher content rights fees, increased advertising and sponsorship sales and continue to grow our direct-to-consumer WWE Network.

Our results do reflect increases in fixed costs, including the impact on investing in certain business initiatives and higher management incentive compensation associated with our expected overperformance this year.

Based on our execution, we achieved adjusted OIBDA of $35.8 million, exceeding the high end of our guidance.

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

Looking at our media segment, we achieved a 9% or $11 million increase in revenue.

Revenue growth was driven by higher rights fees [in] core content agreements and the production and monetization of new content.

Examples of this new content, as Vince mentioned, included the launch of the original reality series, Miz & Mrs, and the eighth season of Total Divas.

Additionally, the growth in media revenue reflected increased advertising and sponsorship sales and the continued growth of WWE Network.

Average paid subscribers to WWE Network reached nearly 1.7 million, increasing 9% from the prior year quarter.

As a reminder, our reality series are typically characterized by lower margins than our live in-ring program.

As a result, the growth in revenue was largely offset by increases in production costs associated with the change in product mix as well as by the impact of certain business initiatives and the accrued management incentive compensation.

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

First, during the quarter, we produced more than 400 hours of content, monetized new opportunities across platforms and worked to optimize our future distribution.

Monday Night Raw and SmackDown Live remained the highest-rated programs on USA Network, which also broadcasted the 1,000th episode of SmackDown just last week.

Extending our reach on television, we completed our third drama-filled season of Total Bellas, launched the funny and entertaining series, Miz & Mrs, and premiered the eighth season return of our successful series, Total Divas, also on E!

On our streaming network service, WWE Network, we expanded live in-ring content and original programming, which continued to drive our viewer engagement.

Among the network's most viewed programs during the quarter were SummerSlam, which is one of our marquee pay-per-view events and the Mae Young Classic.

This women's tournament will culminate in the finale at our first-ever women's pay-per-view event, as Vince mentioned, WWE Evolution, which takes place this Sunday and will be in front of a sold-out crowd.

Based on NXT's continued strong performance on WWE Network, we also launched a new weekly series, NXT UK.

Additionally, we staged WWE Super Show-Down, which was among the most viewed programs to date in 2018.

On social and digital platforms, consumption of WWE content continued to increase dramatically.

Through the first 9 months of the year, digital video views increased 61% to 22.9 billion.

And fans watched more than 840 million hours of content, representing an 81% increase from the 9-month period last year.

Contributing to this growth, we produced more than 170 hours of social and digital content, including, again, as Vince mentioned, the second season of Mixed Match Challenge on Facebook Watch.

To date, in 2018, we have produced nearly 1,200 hours of original content across platforms.

Looking ahead, we expect to increase our production capabilities and deliver a larger share of localized content for our international markets.

We believe this will further engage and grow our global audience.

Turning back to our segment performance.

Adjusted OIBDA from consumer products declined from the prior year quarter primarily due to a new FASB standard for revenue recognition, ASC Topic 606.

The adoption of that standard adversely impacted licensing revenue by $2.6 million.

As a reminder, we expect it will result in growth in the upcoming fourth quarter.

During the current quarter, we continued to develop new product.

As an example of our progress, we introduced WWE Custom Tees, a new component of our e-commerce strategy, WWE Shop.

With this new offering, fans can select WWE apparel to reflect their preferences for color and style.

Also capitalizing on consumption trends, we continue to increase the penetration of our mobile games.

At quarter end, we had more than 95 million installs across our game portfolio, led by WWE Champions and WWE SuperCard, including our newest game, WWE Mayhem, which recently surpassed 15 million installs.

Notably, WWE Champions generated an equal growth following the recent addition of the women's division to the game.

As shown on Page 7 of our presentation, adjusted OIBDA from our live events declined $3.4 million primarily due to a reduction in ticket sales.

Average attendance declined 8% in North American events and 18% in international events.

Additionally, our international events were impacted by 13% reduction in average attendance.

These changes in average attendance and price were due in part to changes in the mix of venues and territories.

During the quarter, we continued to stage large-scale events for delivering live action-packed entertainment to our fans.

SummerSlam Weekend attracted more than 40,000 fans to the Barclay Center in Brooklyn, New York.

And most recently in October, WWE Super Show-Down, which featured the largest roster of WWE Superstars to ever appear in Australia, became the highest-attended event for WWE outside the U.S. in the past 25 years, attracting more than 70,000 fans.

We held these events to continue to strengthen our diverse talent base.

Towards that objective, we announced that we will hold our first-ever talent tryouts in Germany and Chile to attract talent from across Europe and Latin America, respectively.

In terms of our overall performance, you should note that the quarter's tax provision reflects a $20 million benefit associated with our recent stock vesting.

Scale of the adjustment is due to the significant increase in the stock price.

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

As of September 30, 2018, WWE held approximately $316 million in cash and short-term investments.

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

Year-to-date, we generated approximately $100 million in free cash flow as compared to $23 million in the prior year period, growth driven by improved operating performance and some favorable changes in working capital.

Partially offsetting the increase in free cash flow, the company paid $51 million of payroll taxes associated with the annual vesting of our equity awards.

The scale of this amount, reflected as a financing activity in our cash flow statement, was also due to the significant increase in the company's stock price.

To date in 2018, we've achieved a 12% increase in revenue to $658 million and a 20% increase in adjusted OIBDA to $114.5 million.

For the upcoming fourth quarter, we estimate adjusted OIBDA of $45 million to $55 million.

Fourth quarter 2018 estimate assumes meaningful revenue growth based on the escalation of content rights fees, favorable timing of licensing revenues associated with the implementation of ASC 606.

Additionally, for the fourth quarter 2018, we project average paid subscribers to WWE Network at approximately 1.56 million to yield growth of about 8% for the full year.

Our projected fourth quarter financial performance would result in full year 2018 adjusted OIBDA of $160 million to $170 million, which would be an all-time record consistent with our previous guidance.

Fourth quarter and full year 2018 guidance that I just referenced, predicated on the staging of an event in Riyadh, Saudi Arabia on November 2. As referenced in our earnings release, this was a difficult decision.

Looking ahead, we are currently developing our operating and financial plans for 2019 and subsequent years.

Given the substantial revenue growth provided by our new U.S. distribution agreements, we've targeted adjusted OIBDA of at least $200 million for 2019, during which the new agreement's rates are effective for the last quarter only.

We recognize the transformative nature of these agreements and expects to provide additional long-term perspective regarding our strategic, operating and financial plans after our distribution strategy in international markets, including the U.K. and India, have been finalized.

As a reminder, we currently expect to finalize our content distribution plans in the U.K. by year-end 2018 and in India during the first half of 2019.

As we've said before, our distribution strategies in this markets could be determined either before or after these dates.

Therefore, current estimates shouldn't be considered a guarantee of when these announcements will be made.

As you know, we don't disclose the financial terms of individual agreements but we plan on providing perspective on the aggregate impact of these strategies.

As I've said before, our key strategic goals remain unchanged.

We'll continue to focus on determining our distribution strategy in our key markets, creating new content and investing in our data and consumer product technologies, developing our international growth opportunities.

We believe, executing this strategy will further engage our global fans, deepen the moat around our business and enable us to focus on our significant growth opportunities.

Our execution in the context of ongoing media industry trends creates a foundation for sustainable long-term growth and increases the shareholder value.

That concludes this portion of the call.

And I'll now turn it back to Michael.

Thank you, George.

April, we're ready for questions.

Please open the lines.

(Operator Instructions) And we'll first hear from Brandon Ross of BTIG.

First, for Vince.

Saudi Arabia has obviously become financially an important market for you over the long term.

How do you think about the puts and takes of that relationship?

And maybe if you could take us through your thought process in deciding to keep the event on.

And then, I have a follow-up.

We're not going to talk a lot about that.

It's a very sensitive subject these days, naturally.

And I think our statement pretty much said all I want to say about that today.

Great.

And then, George, the brand engagement has been great.

Numbers, obviously, have been good.

But the one area of revenue weakness the past few quarters has been on the Live Events side.

Can you just help us with what's behind that?

And if it's any kind of -- anything to read into vis-à-vis the health of the overall business?

I'll take that, Brand.

The Live Events standpoint is and always has been a barometer as to how well we're doing.

Notwithstanding that, we threw around this word, reimagine, a lot.

But we know what's wrong with our live events, and it's somewhat of a -- I don't want to call it necessarily antiquated presentation but we know how to fix things.

If something is wrong and you don't know how to fix it, you're in trouble.

We know how to fix that.

And we're reimagining those live events very, very shortly.

You'll see a pretty big turnaround, I think, in short order.

Great.

And then, just finally, you've spoken a little bit in the past about the academy model and your plans to create local performance centers and local market NXT leagues around the world.

I think you have already gotten started in the U.K. Can you just kind of update us on how that's gone?

And what markets you see coming in the future?

And how you expect those to impact the company?

Yes, I mean, we've got the beginnings in the U.K. And we talked about it before, we see a lot of engagement actually from around the world on the content we're creating there.

And as we've said before, the strategy -- the academy model strategy is about widening the pipeline of talent.

I think that's incredibly beneficial as we create more content.

Number two, direct monetization around those academies, whether there's events, product or media.

And probably the biggest opportunity, strategically, is deepening the brand with a 24/7, 365-day presence in these markets.

So eventually, if we're successful and if the model proves as powerful as we think it can be, you'll probably see academies in all major regions in the world.

We don't want to talk about kind of how we're going to stagger them but as you know, we've got a lot of popularity in Latin America, Southeast Asia, including India.

We're growing our popularity in China.

We've obviously got a big fan base in Western Europe.

So I think if the model is as powerful as we think it can be, our hope is one day we'll have academies throughout the world.

Next, we'll hear from Curry Baker of Guggenheim Securities.

If I look at 4Q, you seem to have a lot of positives relative to last year, a higher subscriber base, TV contract step-ups, the Saudi event, the accounting change reversing favorably as well as Season 2 of the Mixed Match Challenge.

With all that, it's pretty easy to get to the high end of your guide.

Can you maybe walk us through and provide some color on any offsetting expenses or any investment initiatives we should be aware of for the fourth quarter?

And I've got one follow-up, too.

Yes.

So I'll talk about them, Curry, but obviously, we're not going to guide to every line item on the P&L.

Incentive compensation will impact from a year-over-year basis, so we'll see that.

Given 3 elements: the overperformance on revenue this year versus our plan, the overperformance in adjusted OIBDA versus our plan, and as you know, we -- management incentive compensation also has a strategic scorecard on it.

One of the key elements on that strategic scorecard was the level of the domestic rights deal.

We exceeded even our own internal expectations or what was baked into the incentive comp plan at least.

So all of that leads to incentive compensation.

Then you hit on the second one.

As we've said before, if we're successful, we want the luxury of expanding revenue, driving the unit margins and then reinvesting a portion of that into things, like the academies eventually but still expanding earning.

So in the fourth quarter, we're doing some things.

And Vince mentioned the reimagination.

We've got actually several projects around reimagining different parts of our business.

And so you see that in the fourth quarter as well.

So those are the cost offsets to some of the positive revenue drivers you talk about.

Okay.

And one question on Season 2 of the Mixed Match Challenge, which is underway and expanded relative to Season 1. Can you share with us anything you've learned from the Facebook relationship with Season 2?

Any metric updates versus Season 1?

And I guess, if both you and Facebook are pleased with the results thus far.

How are you thinking about continuing to expand and build upon the relationship and monetizing this content opportunity?

Curry, I'll take that one.

Again, it's been a really positive relationship with Facebook.

Obviously, I think it's still somewhat early days for Facebook in terms of how to drive viewership into the Watch tab.

So we worked alongside of them directly with how to do that.

And again, it's logical to understand that given the sizable Facebook fan base that we have and the following that we have that moving those likes to watching in the Watch tab has been a journey and learning experience with them.

So second season is performing well.

Both sides are pleased with it.

I will say the learning is really, again, how we can move our fan base to that Watch tab and how we could leverage the scale of our following on Facebook.

So again, it's a journey that we are on together and we continue to learn.

As Vince mentioned, the nice thing about WWE is we've been able to create content that works for that platform specifically.

So we learned in the first season that the 11-minute episode, if you will, wasn't quite long enough for the engagement that we were looking for.

So we've expanded that.

That was one of the key changes to drive longer time viewed.

As we know, it's a key metric.

So we've seen that help in terms of expanding the episode length, if you will.

So more to come.

Vasily Karasyov of Cannonball Research.

One quick question on advertising and sponsorship revenue growth in the media segment.

It seems like it decelerated sharply and looks like it's the slowest rate of growth in a while.

So can you please tell us if there is anything onetime going on there or any kind of seasonality that's driving that?

And then, I have a follow-up on the fiscal '19 guidance.

Nothing structurally going on.

There's always timing because a significant portion of that revenue gets tied up into big sponsorship deals, and they aren't necessarily on the same calendar.

The biggest seasonality we do have is around WrestleMania, obviously.

But nothing structurally.

So we're really happy with the growth there.

And just to add to that on, again, continue to have solid performance there.

We've added some new partners that we haven't had in the past.

A few, I think, worth mentioning in the automotive category, we brought Hyundai on board as a partner around one of our community initiatives, which was around pediatric cancer during the month of September.

And Hyundai become a partner with us on that front.

So they've been an advertiser but we've been able to extend that relationship directly with us on our digital, social and an integration that we did.

So good news there.

In the gaming category, we brought on Riot Games as a partner with League of Legends.

Coca-Cola was a new partnership with us.

So again, we feel good about our performance in that area.

All right.

And looking at your guidance of at least $200 million in EBITDA for '19.

If I'm doing the math right, it seems to suggest that there will be an acceleration in expenses, excluding stock-based comp and depreciation.

And if I'm right, can you tell us what the major drivers could be of that acceleration in costs in '19?

Yes, it's what we talked about in the prepared remarks.

If you looked at everything within our kind of investment bucket, it tends to fall in creating new content that we've talked about, growing the global business as well as investing in our data and consumer product technology, WWE Network being a big part of that.

So those become the areas, and the types of things, again, some of the new content Michelle referenced, potentially an academy in 2019, improvements to the user experience on WWE Network.

So those are the types of things.

And again, the balance for us is how much of the growth that we're able to generate, do we invest for the long term versus harvest into current year earnings?

And a lot of the successes, and I know we said this before but I think it's important, the way we think about the world.

A lot of the successes that we're achieving today are not based on the actions we're taking today.

They're really based on the actions that we took 3 and 4 years ago leading to that.

And I think, similarly, what we're doing today, yes, will drive short-term performance but more importantly, it drives performance in 2022, '24, '25.

So I know that's a long time horizon but that's the way we think about it.

Next, we'll hear from Eric Katz, Wolfe Research.

We've seen some more chatter recently around the potential tiering of the WWE Network and some additional benefits on the higher tier.

Are we getting closer to this happening?

And if not, what data points would trigger you to move forward with this tier?

I guess I could make a flippant remark and say we're always getting a little closer to it.

It's like everything else.

When we do things that touch our consumer, we want to do it right.

Vince talked about reimagining the Live Event experience, reimagining the production of Raw and SmackDown, reimagining the network experience.

So we're hard at work at it.

Again, not to be flip, we are getting closer.

My guess is, it becomes a 2019 event.

Not ready to say exactly when though.

But yes, we are getting closer, and internally, we're pretty excited about it.

Okay.

Then, maybe just one follow-up to the previous on the '19 guide.

I know you guys are typically pretty conservative as we've seen through the raises this year.

But I was wondering, is there a certain amount of Saudi events expected in the guide for next year?

Yes.

We'll give more detail on what [depends] the guide coming up here in the next quarter call because we'll have a lot more granularity in our operating plan.

We feel comfortable with the $200 million, so we'll touch about around on that.

On your first comment, I'll tell you, we don't try to set conservative guidance.

That's not our approach.

Our approach is, in essence, to share our internal forecast.

I think, to your point, 2018, especially, there were a couple of things we didn't expect.

And that's caused us to raise our guide.

Also, it led to the management incentive comp being ahead of where we had forecasted it.

But just so you know and everybody on the call, we don't try to be conservative.

I know some people do -- conservative in our guide.

We try to give the range where we really think we're going to fall.

But to you point, this year, we've had to raise it a couple of times.

David Karnovsky of JPMorgan.

Just as a follow-up question to the network commentary.

Given the declining prices for data in India, how are you viewing the long-term potential for the network there, just given the popularity of your content, especially digitally in the region?

And could you potentially make your pay-per-view there exclusive to OTT?

I mean, we can do in essence whatever we want.

Those become choices.

As you know, today we license the pay-per-views along with Raw and SmackDown to our partner, Sony.

So the broader question is where you started, which is what makes sense?

And it's not one size fits all.

So we kind of look at it market by market, look at the platforms, look at consumption trends.

Obviously, in India specifically, since we're talking about India, mobile consumption is increasing at an incredibly rapid pace.

So we'll -- as we go through the renewal cycle and discussions, we'll think through the distribution strategy for all our content, which is why we use that term.

It really isn't about deals, necessarily.

It's about looking at all the content we create, Raw, SmackDown, Divas, NXT, scripted shows that we do, and just deciding what's the best play and balancing, engaging our current fans, bringing in new fans and monetization.

So we'll do that market-by-market, year-by-year.

And my guess is, it will change and there will be pivots in the strategy in different markets over time.

Okay.

And then, just a follow-up to Brandon's question on NXT.

How do you plan to measure success as you roll out the brand to various regions?

Is the goal to drive network subs, is it about TV revenue or events?

Or is it just about driving engagement in general?

It's all of those things, right?

It's -- how do we bring in more talent.

The more global we get, and every day we get more global in terms of consumption, the more beneficial it is for us to have a talent base that reflects that.

So that -- we'll measure that from our success of bringing in talent and bringing them to the core programming.

So that's one measure of success.

Second one is directly how we're able to monetize those academies, if you will.

And the third is what you just touched on is, how does that help deepen the engagement and grow the brand in these markets?

And today, again, the model may change, back to your other question but today, the way you measure that is the value of Raw and SmackDown in those markets.

In some markets especially, the subscribers are significantly more important than in other markets.

So it will depend on how -- what our distribution strategies are.

But yes, we think that third bucket of 24/7, 365 really anchoring ourselves in these market, yes, it might be a game changer for us.

Our next question comes from Eric Handler of MKM Partners.

A quick question on the WWE Network.

You've had NXT and 205 Live on the network.

You've now added NXT UK and you've been running the Mae Young Classic.

And I'm just curious, how important do you believe adding more in-ring content is to the long-term growth and adding subscribers for the WWE Network?

And then, along those lines, you had a lot of success with the women's business -- with the women's division both at Raw and SmackDown, and you now have Evolve (sic) [Evolution].

What would it take -- or maybe you can even talk about some of the metrics you're seeing with the viewership of the women's division.

So what would it take to add a 1-hour women's program to the WWE Network?

Well, I'll take that one.

So as it relates to in-ring, the great thing, as we've said since 2014 in launching direct-to-consumer, is we have an enormous amount of data that we can look at, and we've become smarter and smarter in terms of what's driving more hours viewed on our network.

And what we've learned is, one, pretty much every minute of content that's on the network has been viewed by at least one subscriber.

So our fans are going deep on the network and they're going broad.

At the same time, when you look at what's driving a lot of the volume, it is our in-ring content.

So whether it's our pay-per-view events or shows like 205 Live and NXT, what we've seen is the show NXT continues to be one of the top performers outside of our pay-per-view events.

And again, the more we dig in and we survey our current subscribers as well as prospects, it is the place they want to come for more in-ring.

So just when we think we've given them every piece of in-ring content imaginable, they tell us that they still want more, and the numbers support that.

So the launch of NXT UK, again, I think, the assumption is that it will build engagement in the local market, which is true, and we will see that.

But interestingly, the viewership has been across the board.

It's been strong in every market, and we're in 190 markets.

The consumption of the NXT UK hasn't just been our U.K. subscribers.

So again, we see that as a continued opportunity.

So localization will build deeper engagement locally, and that is logical.

But again, to assume that's the only place we're getting viewership, we're seeing that we're getting it across the board.

So on the road map, to your point on what else are we looking at, we've talked about a women's show.

Obviously, the Mae Young Classic is in the midst of it, Evolution on Sunday.

Again, the logical conclusion would be what is the right point in time where we have an all-female show?

So obviously, it's been discussed.

Nothing formal yet but that is on the road map as our other in-ring ideas.

Jason Bazinet of Citi.

Respecting you guys don't want to talk about Saudi Arabia, maybe I can ask this question.

Can you just frame for us what risks, if any, relate to Saudi Arabia that are outside your control?

In other words, is it the risk of federal sanctions, let's say, economic sanctions of some sort that you sort of get swept up into?

Or is there some other way to frame the risk?

Or maybe there's no risk?

We just think, the complexity of the situation, as Vince said, all our thoughts were encapsulated in the statement we made.

But are there analogues that you can point to, where there have been sort of economic sanctions imposed on a country that have swept up like a media company like yourself?

No.

(Operator Instructions) Next, we'll hear from Ben Swinburne of Morgan Stanley.

I have questions.

No comments, just some questions.

Maybe just on the U.K., with Comcast acquiring Sky -- you obviously know Sky well from a relationship there.

You know Comcast well and NBC here.

How does that acquisition, if at all, change how you're thinking about that market?

It doesn't change how we think about it.

Okay.

And then on the quarter, any comment -- I noticed -- I know there's pay-per-view inside the network revenue number.

Your subs were up, I think, almost 10%.

Revenue was up a couple percent, which implies maybe ARPU was down.

But what are the moving pieces in that ARPU number or pay-per-view number that could help explain that?

And any comment on how currency may or may not impact that?

I think you guys price in dollars, so maybe you could just clarify how the international network pricing works.

Yes, currency has a very small impact.

Primarily, it's in dollars.

The only region where that's not the case is in the U.K. So it's a small amount.

So it's not about currency.

The ARPU element that you mentioned is, as a reminder, there's 3 types of revenue streams within the network segment.

Primarily, it's the direct-to-consumer $9.99 product, U.S. product that's available around the world.

There's some pay-per-view.

And there's also places where we license the network for a flat fee but also reflect the subscriber levels that we get from our partners.

So the Middle East is a good example of that.

So there are places where the subscribers can grow then but because it's a lot -- the content is in essence licensed, the revenue won't grow, and it would have a negative impact in that case on ARPU.

So there's some of that in there as well.

We don't break all that out.

But those, when you see a difference from the $9.99, it would be some combination of those.

Laura Martin, Needham & Company.

My question revolves around, I think, something Michelle said, which is, did you say, Michelle, that you are up to 22 billion hours of social?

Was that the number you said?

Views.

Well, my questions revolve -- I'd love to learn more about the social drivers.

So is there a mix shift going on?

Is there a positive flywheel accelerating the social?

And of course, George, I'm going to push you on money.

What's the growth rate of the money that's coming from the social engagement?

That would all be great for me.

So on social, Laura, the views, again, as we have been at this for quite some time, our digital and social group that's run by Jayar Donlan, we continue to, again, in this area get smarter and smarter about how to drive time viewed, not just likes or followers but engagement.

So again, our content strategy continues to evolve around -- beyond just our highlights of Raw and SmackDown.

So again, that continues to drive engagement.

The compelling nature of our content and the fact that we continue to get better at it is what's driving that overall -- on video views.

And again, we mentioned the number of hours that we're doing, that continues to grow.

So it's a combination of volume and then the compelling nature of what we're putting out.

We just keep getting better at it.

Again, on the monetization, I know that you love asking us that question.

Again, we continue to see that grow.

And we -- the overall market, from TV advertising to digital advertising, we continue to see benefits there.

So...

Yes, the only thing else I'd add on the monetization and I also know it's probably not the answer you'd like to hear but for us, it's critically important.

The monetization from our success digitally gets manifested in different business lines.

So when we're able to secure a better distribution agreement for Raw and SmackDown, part of that is social and digital.

We know for a fact that one of the biggest feeders of the funnel for network subscriber is social and digital.

We know it helps on the product side.

So to kind of somehow diminish or put that aside, I guess, everyone can do what they want with that.

But for us, the way we think about it, is it's absolutely mission-critical, the indirect monetization.

(Operator Instructions) And it appears there are no questions at this time.

Thank you, everyone.

We appreciate you listening to the call today.

If you have any questions, please do not hesitate to contact us at WWE.

Thank you.

That does conclude today's conference.

Thank you all for your participation.

You may now disconnect.