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» World Wrestling Entertainment CEO Discusses Q3 2010 Results – Earnings Call Transcript
In our discussion today, we will make several forward-looking statements, these statements are based on management estimates. Actual results may differ due to numerous factors as described in our presentation and our filings with the SEC. For any non-GAAP financial measures discussed on this call, reconciliation to GAAP measures can be found in our earnings release, and in our website presentation.Now as we have that exciting information out of the way. It's my privilege to turn the call over to Vince. Vincent K. McMahon Thanks, Mike, good morning, everyone. I’d like to make a note of our Q3 adjusted EBITDA growing at about 5% over last year notwithstanding a $5 million impairment on our films, but notwithstanding that we’re up about 5% profits largely attributed to home video and pay-per-view offset by an absence of television rights for about two hours, and a decline in sale of licensed products, especially toys, but nonetheless our event attendance is declined above 6%, a lot less than it has been, to about 4,900 on average. Pay-Per-View buys are slightly down as well about 4% a lot of less than in past. RAW television ratings remain flat to last year, which is good news. And most of our declines in key metrics support our view that we are gradually improving the general status of our overall financial health. We are – in speaking of which, we are continuing to implement that in our plans and continue discussion with multiple partners as far as our network is concerned. We’re still confident that we are in a really good place in terms of where we are with the network. We are anticipating some degree of operating expenses attributed to the network, some $4 million to $6 million coming up particularly in staffing. Capital expenditure is about $10 million to $15 million mostly in equipment and construction for our network. And we believe that, obviously we have finally turned the corner on where we are with our network, and we’ll soon be making a very big announcement as it relates to that.
So that we are generally speaking of where we are with the quarter this year. And notwithstanding that, again, we are taking advantage as we always do with all of our strategic opportunities as well as I’ve said before, including launch of the WWE Network, so with that we can achieve meaningful growth as far as that in other aspects of our company is concerned. George?George A. Barrios Thanks, Vince. I’d like to provide some additional perspective on the company’s third quarter results. Recorded at $5.1 million in impairment charges related to several films. These charges are non-cash in nature; I’ll view it as non-recurring and derive in part from forecast of future performance. To clarify trends in our business, I will discuss our performance on an adjusted basis including the impact of these items. On an adjusted basis, operating income increased 3%, and adjusted EBITDA increased 5%, highlighted by increased profits from our home video and pay-per-view operations. Although, these results benefited from timing, they also reflected real underlying demand for products, and as such we view these results as positive development. Such developments were nearly offset by lower sales of our licensed products, which experienced decline across all of our major product categories except video games. Our key metrics shows mixed results in the quarter, domestic pay-per-view buy has increased 3%, TV ratings for our flagship RAW program were flat and average attendance at our North American live events declined 6% from the prior year quarter. In general, trends in our metrics show modest improvement and support our views that the business is stabilizing and showing signs of improvement. For a more detailed review for our performance in the quarter, let’s turn to page six of our presentation, which was the revenue profit contribution by business as compared to the prior year quarter. Starting with our live events including merchandise sales of these events, revenue from both domestic and international markets was essentially flat to the prior year quarter. Read the rest of this transcript for free on seekingalpha.com