Vince McMahon Reveals Huge Decline in WWE Video Sales, The ‘New’ John Cena & more

– The WWE held their fourth quarter investors conference call today. Chairman and CEO Vince McMahon and CFO George Barrios were on hand for the call today; here were some of the topics covered…



Vince open the call by praising their performance over the year, but noted some things in the fourth quarter that they were not happy with. He specifically noted the decline in live event attendance and the huge 40% drop in home video. He then talked about their continued international expansion, noting they just ran their first show in China, and they have signed new TV deals in Brazil and Russia. He feels that they have turned the corner in terms of talent development, and how we would be seeing older stars mixed in with new ones at Wrestlemania, stressing we would see talent in main events that had never been in Wrestlemania before. Vince said they have been in discussions with Verizon about the WWE Network, and that the company is continuing to expand, not just internationally, but by changing the model and moving into new areas.

George Barrios reviewed the financial numbers, and mentioned retail declines as being the issue with home video, and talent development as the cause of the live event drop. On the dropping PPV buys, it was noted that the increase in the price of PPV events helped offset the decline. Increase in TV revenue was put over, and the move of Smackdown to SyFy was also mentioned. Mattel was praised for an increase in toy sales. Video game sales went down, and they noted an overall drop in the video game industry. They feel the new Superstars video game will bring sales back up. The new WWE Films model was discussed, with them saying that they see their direct-to-DVD releases bringing in money over time. They will continue to monitor the new film model, and stated they feel it brings WWE to a new audience and builds the WWE brand. Barrio stressed the increase in TV revenue, the success of the toys, and their own financial discipline.

Vince feels that they are on the rise in terms of the talent cycle. He said that early indications from the Royal Rumble are that it is already happening, but he sees Wrestlemania as a major launching point for the new talent.

Mexico is now the second largest market for PPV buys outside the U.S. for the company. Last year, there were no PPV events in Mexico.

The first quarter of 2011 will reflect the first holiday toy sales since joining with Mattel.

Vince stated that in 2011, they will run roughly the same number of live events, but likely more international events than last year.

On the dividend, Vince said it would be evaluate don a quarter by quarter basis.

When asked about managing costs going forward and their long term earning growth strategy, Barrios said they feel good what they are doing on the cost side and that they worked to get leaner in 2008 and 2009.

A caller asked about the previously announced WWE Media Center, which has not been built yet. Vince said that it was the plan, but that it was a matter of costs, and that the one they have is good enough for now. They are going to wait on the network before they expand the studio.

On the WWE Network, Vince stated that they are moving forward and that they just had a meeting with Verizon. He put over their relationship with Comcast, who just bought out NBC Universal. He also thinks that there will not be a ton of cost to run the network.

Vince was asked about who the next “John Cena” would be. He then put over The Miz, Randy Orton and Alberto Del Rio. He then noted that fans are starting to buy into the newer characters, and that the fan reactions at live events are a barometer for them.

Due to the economic make ups of the cities, Vince says that Atlanta’s WrestleMania will bring in more revenue than the one in Phoenix last year.

Vince stated that they would be using celebrities on a more “selective basis” and that going weekly with stars forced them to go with secondary stars. He also admitted that that using celebrities every week took time away from their own stars. Bottom line is that they want to do it less often, and focus on bigger stars when they do bring them in.

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