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Text: Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer.
Their remarks will be followed by a Q&A session.
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.
You should know that all comparisons are versus the year ago quarter unless otherwise described.
We generated solid second quarter financial results as we focused on fan engagement and increasing efficiency in our content production.
We have positive trends in our OIBDA and the demand for our live event ticket sales as well as our television ratings and digital consumption.
Live events that have aired through July 26 have been at closure at full capacity.
We have advances for our live events that looked excellent including I might add SummerSlam,, which will be the largest SummerSlam event we've ever had here in the United States.
Television ratings for our initial shows were up significantly.
First-time we played before large crowd on July 16, it was up 42% increase in 18 to 49 demo, which was extraordinary, Raw of 15% as well.
In the quarter, we implemented certain organizational changes that will also increase efficiency and our content production on the post event.
I'll give you a little bit more information on that.
Looking ahead, we believe we can take advantage of the evolving business environment as we always have crowd engagement developing business and will drive growth.
Do you want to go, Nick?
Nice to speak with you all again.
As always, we'd like to start with some industry perspective.
In our last earnings call, we discussed how earlier this year the NFL, NHL and Major League Baseball realized substantial increases in the rights fees for their license programs even with lower linear television ratings.
The NFL saw media rights increase of 79%, the NHL more than tripled its media rights AAV and Major League Baseball is getting a higher per game rate as part of its new Disney deal.
The second quarter was another busy quarter with deal activity.
A number of rights holders closed media rights deals that saw substantial increases or their product, both in their home market, as well as in other territories.
Also in this quarter, we saw a number of private equity firms invest in sports teams, primarily based on the assumption that there was growth opportunity yet to be realized for their media rights.
Additionally, Steph and I would like to touch on the growth opportunity that exists in our sponsorship segment.
We will end by updating all of you on a number of WWE deals from this quarter that have led to new revenue streams.
The top Spanish soccer division, La Liga, closed an eight-year deal with Disney in the United States with an estimated AAV of $175 million, which represents a 35% increase from their prior deal with ESPN.
Wimbledon recently announced its 12-year extension with Disney in the U.S. and a three-year extension with the BBC in the U.K. Both deals saw significant increases.
Also in this quarter, private equity from RedBird Capital announced that it was acquiring a 15% stake in an Indian Premier League cricket team valuing the team between $250 million and $300 million.
Part of the rationale for this investment stems from the rising value of media rights for live sports content globally.
We're confident in saying this because we are seeing similar growth for our own international deals.
Just last week, we renewed our deal in Australia with our partners at Foxtel securing an increase for package of rights in that territory.
As we begin our efforts to license WWE Network internationally, we are encouraged by the trends we saw this quarter and are confident we will continue to see success as we engage with our partners internationally.
More on that to come in the future.
As Vince mentioned at the top of the call, ratings are up across all of our shows following the return of live fans.
Stephanie will provide more details on the ratings growth shortly.
Allow us to discuss Peacock for a moment.
Four months into the Peacock partnership, we are seeing the benefits of a streaming partnership with a platform that has broad distribution and continues to grow.
Since moving to Peacock, viewership of our pay-per-view events have increased with Backlash up 26%, Hell In A Cell up 25%, and Money In The Bank up 46% from the prior year performance on what was the stand-alone WWE Network.
These viewership numbers are also up considerably from our pre-pandemic WWE Network numbers.
As you recall, when we announced the Peacock deal, we said one of the key reasons for the partnership was to bring the WWE product to a wider audience than those subscribed to WWE Network.
We expect viewership of WWE to continue to increase, particularly as Peacock rose its base of users.
We also wanted to discuss our return to live event touring with you.
As many of you know, we made our return to live event touring on Friday, July 16 with SmackDown on FOX from Houston, Texas.
One nuance to know here.
This was not a return to live events for us.
We held live events with fans via video screens throughout the pandemic, not one week of production missed.
So, again, this is really our return to touring with live fans, felt great for the fans, for our Superstars and for our business.
Normally, we won't walk you through the specifics of events; however, today, allow me to give you a taste of how our live events are performing.
On Friday, July 16 at the Toyota Center in Houston, Texas, we sold out.
This event was the highest-grossing non-pay-per-view event in WWE history in Houston.
Our merchandise sales for that night almost 50% greater than they were for our last event in Houston.
Please keep in mind that these merchandise figures come off of a phenomenal e-commerce sales period throughout COVID.
Two nights later at Money In The Bank on Sunday, July 18 at Dickies Arena in Fort Worth, Texas, we sold out.
This event was a highest-grossing non-WrestleMania event in WWE history in the Dallas-Fort Worth area.
Our merchandise sales for that night, almost the 100% greater than they were for our last event in the area.
These two arena sold out prior to John Cena surprise return at the end of the second show, the end of the Money In The Bank show that is.
The very next night, Monday, July 19 at American Airlines in Dallas, just down the road from Fort Worth, with a highest paid attendance in Dallas in over three years, our merchandise sales for that night almost 50% greater than they were at our last 2019 event in the Dallas-Fort Worth area.
Our next live event, SmackDown, this past Friday from Cleveland.
This event was our highest grossing non-pay-per-view gate in WWE history in Cleveland.
Our merchandise sales for that night over 60% greater than they were at our last event in Cleveland.
That same night, this past Friday, we also made our first-ever appearance for either our Raw or SmackDown brands at a music festival in the U.S. Rolling Loud, the preeminent hip-hop music festival, which was in Miami, over 230,000 paid attendees over the course of that three-day event, two WWE matches including our SmackDown women's champion, Bianca Belair coming off of her and Sasha Banks' ESPY win for best WWE moment in front of over 75,000 fans on Friday night, almost all under the age of 25.
We saw strong merchandise sales there as well.
The next night, we held our first non-televised live event since the pandemic from Pittsburgh.
This was the highest-grossing non-televised live event gate in WWE history in Pittsburgh, 95% of tickets sold.
Our merchandise sales for that night, more than 25% greater than they were at our last event in Pittsburgh.
And the night after that, another non-televised live event from Louisville, Kentucky.
This was the highest-grossing event at the KFC Yum Center in WWE history and a highest paid attendance for a non-televised event in Louisville in over five years.
Our merchandise sales for that night, more than 25% greater than they were at our last event in Louisville.
On Raw this past Monday, just three nights ago from Kansas City, Missouri.
This is our highest grossing WWE non-pay-per-view event in Kansas City in 14 years.
Our merchandise sales for that night were almost 50% greater than they were at our last Kansas City event.
Also in the quarter, we added the ability to purchase merchandise via our app for in-venue pickup or to be shipped from the venue to any location you choose.
Also, as you may recall, as part of our 2021 Live Events Calendar, we announced that SummerSlam would be taking place for the first time from an NFL stadium, from Allegiant Stadium in Las Vegas on a Saturday night, August 21.
Saturday is a new Night for us in terms of a pay-per-view event.
Without a main event or even a card announced, we have sold over 40,000 of 45,000 tickets and we'll have a record gate for a non-WrestleMania event.
From Rolling Loud, which I previously mentioned, Bianca Belair also announced with Atlanta Hawks Superstar, Trae Young that we'll be having a New Year's Day pay-per-view this January 1, again, a Saturday from State Farm Arena in Atlanta, Georgia, Atlanta expects over 300,000 visitors for New Year's weekend.
New Year's Eve is a Friday this year.
The college football playoff championship games are on that New Year's Eve, December 31, Friday.
The NFL, which traditionally goes on Saturday nights, when the college football regular season has ended, is not going on Saturdays late season with its new 18-week regular season.
So, we saw what we think as an opening on the sports calendar and we believe ticket sales and viewership will both be indicative of that.
We look for us to announce the rest of our 2021 calendar and most of our 2022 pay-per-view calendar shortly.
Another area where we are growing and believe we will continue to grow as our sponsorship business, Stephanie and our global sales and sponsorship team have delivered over 20 new and existing sponsors so far in 2021 with many of them Blue Chip companies and executed on a number of innovative activations that really only can be done by WWE.
We're bullish on this segment and we're confident brands looking for unique ways to reach consumers will see our record of success and seek us out.
One thing to note, we announced our first ever ring announcer competition on TikTok, sponsored by Pure Life Water where anyone can submit how they would announce one of our Superstars on their ring walk.
The winners will be the ring announcers for match at SummerSlam.
So far, there have been over 9 million views of the TikTok announcement and thousands of submissions.
Stephanie will have more on sponsorship and a few other items shortly.
As we look ahead to SummerSlam, we're planning our second NFT drop leading into SummerSlam this time with John Cena.
This follows our successful NFT launch with the Undertaker of WrestleMania.
As you're all aware, NFTs trading cards, memorabilia, all incredibly popular right now.
With our wholly owned intellectual property, we are uniquely positioned to capitalize on this growing business.
Last, we announced this past Monday that we partner with Jason Blum in Blumhouse on our first scripted dramatic mini series.
The United States of America versus Vince McMahon, which will tell the story of the federal indictment of our Founder and CEO by the United States Attorney's Office in the Eastern District of New York.
The 30th anniversary of that not-guilty verdict and acquittal was just last week.
We're excited for this story to be told.
This is an exciting time for our business.
Although we don't know precisely what the future holds, the return to our live event touring positions us at an inflection point in terms of our potential fan engagement and financial performance.
As Nick mentioned, we return to live event touring with fans in attendance on July 16 for the first time in well over a year.
As a smaller side, Triple H and I went outside to greet our fans in person before doors opened at the Toyota Center in Houston and the feeling was overwhelming.
And the energy and excitement has only picked up, especially with the return of one of our biggest superstars, John Cena, kicking off what we have branded the Summer of Cena, taking us into SummerSlam.
Our partners NBCU and Fox supported our return with different campaigns airing across their respective platforms and programing.
From a production standpoint, WWE applied key learnings and techniques from producing virtual and physical television to upgrade our audio and visual experience, including the use of a 40-foot-tall by 80 foot wide state of the art curved LCD display for superstar entrances.
In addition, we are utilizing Epic's Unreal Engine 3D creation tool to generate a wide variety of augmented reality elements and surroundings, bringing our superstars to life in ways we have never done before.
Costs associated are on par with 2019 per episode costs on average and we have seen the results translate into linear viewership.
As Vince was mentioning earlier, the July 16 episode of SmackDown generated a 21% year-over-year increase in total viewers and a 42% increase in the coveted 18 to 49 demo.
Similarly, the July 19 episode of Raw generated an 8% year-over-year increase in total viewers and a 15% increase in the 18 to 49 demo.
Strong demand for live event tickets and the increase in television ratings builds upon favorable trends in key operating metrics evident in the second quarter.
TV viewership continued to remain stable, maintaining a trend that began when we transitioned out of the performance center and invested in WWE ThunderDome at the end of August.
From that time to the end of the second quarter, Raw ratings have increased modestly and SmackDown ratings have increased 7%.
Since the return of our live audience, however, Raw ratings are up 22% in the 18 to 49 demo and SmackDown ratings are up 20%.
In the quarter, digital consumption increased 5% to a quarterly record of 394 million hours and video views increased 13% to 11.2 billion as compared to a prior-year period that benefited from COVID-19 related viewing trends.
The growth included a three-time increase in Facebook hours and a two-time increase in views as viewers demonstrated interest in current and past events.
WWE is also driving value outside of our in-ring programing.
We saw solid performance for A&E's WWE biographies and Most Wanted Treasures series increasing A&E's Sunday night performance by 90% in the 18 to 49 demo and increasing total viewership by 21%.
Whether it is with Hearst Communications via A&E, Fox, Comcast, Netflix or Facebook, WWE continues to make a positive impact for our partners.
Additionally, WWE sales and sponsorship revenue increased 43% year-over-year.
As I mentioned during our last call, brands are looking for unique ways to engage with their consumers that goes well beyond generating impressions.
WWE is perfectly positioned to do just that with an ability to create customized content experiences across multiple lines of business and utilize WWE superstars that resonate with target audiences.
A recent example includes a full on zombie invasion to promote Netflix's original production's Army of the Dead as the presenting partner of WrestleMania Backlash.
The show opened with a cool video mashup of Army of the Dead and WWE storylines, narrated by WWE legend Dave Bautista who is also the star of the film, setting the tone for the night.
Zombies randomly appeared in backstage scenes and popped up as a part of the virtual audience, only to then have zombies actually surround the ring and be a part of the action when Miz faced Damian priest.
The results speak for themselves.
In addition to generating over 0.5 billion growth impressions, we saw 25 million content views across digital and social and three of the 14 trending topics from that night were directly tied to the integration.
The cultural impact and disruption during and after WrestleMania Backlash played a significant role in the film's quicker sent to becoming one of the top 10 most-watched movies in Netflix history.
Coming off the heels of our fall 2020 partnership announcement with Credit One Bank, we officially launched the WWE Championship Credit Card this past June, giving card members the opportunity to show their affinity for WWE while earning cash back rewards on everyday purchases.
Recognizing our ability to reach consumers, we recently completed a deal with Blue Triton brands, the corporate parent of Pure Life water, the official water of SummerSlam.
Pure Life is activating in multiple ways across WWE's portfolio tied to SummerSlam including sponsoring the aforementioned SummerSlam ring announcer TikTok challenge, providing product to WWE community partner events and sponsoring our summer slam after party, which we announced yesterday, will be hosted by celebrity and comedian, Tiffany Haddish in support of her foundation, the She Ready Foundation.
In the quarter, we also released our 2020 community impact report to nearly 5,000 global partners.
The report highlighted our various initiatives through the pandemic including generating 12.5 million in kind media value and over 650 million impressions for our community partners as WWE continues to deliver on our mission of putting smiles on people's faces.
In our view, WWE is well positioned to continue to elevate our brand, grow our business and engage new and existing consumers across media platforms.
Today, I'll discuss WWE's financial performance.
As a reminder, all comparisons are versus the year ago quarter unless I say otherwise.
In the second quarter, WWE generated solid financial results as we focused on driving fan engagement, strengthening our organization and increasing efficiency in our content production.
Total WWE revenue was $265.6 million, an increase of 19% reflecting the increased monetization of content across platforms, including growth from the staging of WrestleMania with ticketed fans in attendance.
Adjusted OIBDA declined 7% with $68.1 million, primarily due to higher television production expenses associated with the staging of WWE ThunderDome and to a lesser extent WrestleMania at Raymond James Stadium, both of which were produced in our performance center a year ago.
In addition, adjusted OIBDA was impacted by increased personnel expenses as our employees fully returned from furlough by the end of 2020.
Finally, during the quarter, we combine WWE's television, digital and studio teams into one organization for a more unified content strategy and more streamlined content production.
The related severance expense of $8.1 million dollars has been excluded from adjusted OIBDA as a material non-recurring item.
Looking at the WWE Media segment adjusted OIBDA was $86.2 million, a decline of 5% as increased revenue and profit from WWE's licensing agreement with Peacock and the escalation of core content rights fees were more than offset by increased production expenses.
Despite what continue to be a challenging environment, WWE produced a significant amount of content, more than 680 hours in the quarter across television, streaming and social platforms.
At the start of the quarter, we transitioned WWE's ThunderDome from Tropicana Field in St. Petersburg, Florida, Florida to the Yuengling Center in Tampa Bay.
Recall that in the second quarter of 2020, we were producing a BareBones Production out of our performance center in Orlando.
While our operating results continue to be impacted by the year-over-year increase in production expenses, associated with live streaming nearly 1,000 live virtual fans into our show, we also continue to achieve greater production efficiencies relative to our own expectations.
With the return to touring in July, we expect that production expenses for Raw and SmackDown will continue to decline on a sequential quarter basis, approximating their average per episode costs in 2019.
This is a tremendous feat from our television production team, which created the award winning ThunderDome environment using state-of-the-art technology, all while producing shows every single week throughout the pandemic with a constant eye on efficiency.
Live events adjusted OIBDA was $1.1 million, increasing $5.3 million due to an 8 times increase in revenue with the staging of WrestleMania.
This premiere event entertained ticketed fans and an audience of over 50,000.
Recall that in the year ago quarter, we staged no live events with ticketed fans.
As we have said, we are thrilled by the return of regular ticketed events.
Currently, for our announced return schedule, we anticipate ticket demand and profit per event that is least on par with 2019.
The improved performance reflects heightened consumer demand and a more analytics efficiency-oriented approach by our Live Events team in the scheduling, routing and staging of our events.
The modest decline in sales on our e-commerce site, WWE Shop, reflected a tough comparison to strong COVID-related sales in the prior year quarter.
As a reminder, in the second quarter last year and in each quarter through year-end 2020, growth in e-commerce revenue nearly offset the absence of venue merchandise revenue due to the cancellation of live events.
In previous earning calls, we have discussed how the introduction of new products such as new toys, title belts and mobile games has generated growth in WWE's Consumer Products business.
This quarter, I'd like to focus on how we're applying technology to enhance product sales.
During the quarter, we introduced a new branded app at WrestleMania for pre-ordering merchandise.
The app enables our fans to order merchandise before as well as during the event and to pick up merchandise at a specific location within the venue.
This means that at key upcoming events such as SummerSlam, we can expand the sales window and increase sales volumes without significantly increasing the number of transaction sites.
During the quarter WWE generated approximately $13 million in free cash flow, declining $54 million primarily due to the timing of collections associated with network revenue and to a lesser extent lower operating performance.
During the second quarter, WWE returned approximately $28 million of capital to shareholders including $19 million in share repurchases and $9 million in dividends paid.
To-date, more than $177 million of stock has been repurchased, representing approximately 35% of the authorization under our $500 million repurchase program.
As of June 30, 2021, WWE held approximately $443 million in cash and short-term investments.
Debt totaled $220 million including $198 million associated with WWE's convertible notes.
The company has not drawn down on its revolving line of credit and estimates relative debt capacity of approximately $200 million.
And finally, a word on WWE's business outlook.
In January, WWE issued adjusted OIBDA guidance of $270 million to $305 million for the full year 2021.
During the second quarter, key performance metrics demonstrated positive trends and we continue to realize better than expected television production efficiencies, stronger sponsorship sales and heightened demand for live events.
However, we are not adjusting full year 2021 guidance at this time given ongoing caution regarding the potential impact of COVID-19 and its variance on WWE's operations.
For the third quarter 2021, we estimate adjusted OIBDA will decline.
Incremental profits from the return to live event touring and the growth of content rights fees will be more than offset by increased television production and other operating expenses.
As a reminder, the majority of the third quarter of 2020, we remained in our performance center in Orlando, Florida, the site where we have the lowest production costs.
We did not move into WWE's ThunderDome until the end of August 2020.
So, beginning in the fourth quarter of 2021, we expect more favorable year-over-year comparisons of television production expenses, as well as sustained profit from our return to touring.
However, given the ongoing uncertainty regarding the potential impact of COVID-19 and its variants, we are not receiving more specific quarterly guidance at this time.
Finally, turning to WWE's capital expenditures.
As mentioned last quarter, we anticipate spending on the Company's new headquarters as we restart this project in the second half of 2021.
For 2021, we've estimated total capex of $85 million to $105 million to begin construction as well as to enhance WWE's production and technology infrastructure.
The increase in capital expenditures for 2021 reflects the acceleration of certain construction spends, as the overall cost of construction has not materially increased.
The total net cost of the Company's new headquarters through completion and net of tenant incentive tax credits and other capital offsets is estimated within a range of $160 million to $180 million.
In the second quarter, WWE generated solid financial results as we prepared for WWE's return to live event touring.
Positive trends in WWE's key performance metrics and expectations of sustained performance, reinforce our belief that continued innovation can enhance WWE fan engagement and drive the value of our content and products.
Please open the line.

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compname reports q2 revenue of $265.6 mln.
q2 revenue $265.6 million versus refinitiv ibes estimate of $254.4 million.

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