WWE
#Sure.
On the first part, we are going to do more events.
As we've mentioned before, once we executed our brand extension and we had separate talent rosters for Raw and SmackDown, it allowed us to add an event on Monday night, a SmackDown event Monday night, a broad live on Monday.
So that's going to drive the increase.
So the short answer is yes, there will be an increase in events.
We don't believe there will be a material impact in profits in 2017 because we're also dealing with a different stadium capacity for WrestleMania, which offsets some of the growth in attendance revenue that we'll see from the additional events.
So obviously, we set a record at AT&T, over 100,000.
The Citrus Bowl has a smaller footprint, so you have a year-over-year comp.
And then on the second element of your question where you talked about the profitability, we did increase our marketing spend in Q4 on the live events side, both for events in 2016 in the quarter, but also for 2017.
We had, obviously, a really successful Royal Rumble at the Alamodome with over 50,000 in attendance.
So you had some of the timing of that because even though it's for a January 2017 event, we expense it in the period.
So in essence, the answer to your question is the profit was impacted by timing somewhat.
So I'm going to correct the premise of the first question.
We didn't really predict the sub levels last year.
We gave in essence a hypothetical construct where we said if the sub levels fell within a certain range, here would be the range of our OIBDA.
To your point, it ended up those subs came in within that range, but we won't take credit for being so accurate.
We wanted to give people ---+ given that we weren't giving OIBDA guidance, give people a construct that they can lock into.
This year, we feel more and more comfortable in our ability to forecast sub growth, and that's why we just focus on giving the OIBDA guidance.
So we're not going to go into a full-year sub guidance.
We will keep doing what we do, which is in the quarter.
As far as Q1, we're not being conservative.
There's the mechanics of the sub growth when you have a good month of sub adds, as you would expect, for a really large amount like WrestleMania, on a smaller scale, Royal Rumble, the combination of future month sub growth versus the attrition that you see from that previous month has an impact.
So we're not being conservative.
As far as March, we're guiding to average daily paid, so any adds in March, the big gross adds coming in from the promotion would in effect average daily paid.
It will affect the total, but not the average daily paid.
You wouldn't see that in the Q1 guidance.
So there's some ins and outs there, but the main thing I would correct is that we are not being conservative.
We feel the forecast, the point we've given is as best visibility as we have right now.
On the first one, we're going to stay away from commenting on individual promotions.
<UNK> asked about the three-month, mentioned the Crunchyroll.
Again, like I said, you will see us do different things throughout the year, and probably more and more, but we're not ---+ we're going to stay away from commenting about individual ones.
We'll learn from them, and on the ones that work well, we will do more like them, and the ones that don't, we will do less.
As far as Amazon or any other third party, our perspective on doing deals like that really come down to three things: number one, the economics; number two, the sharing of the customer information; and number three, the sharing of consumption.
As we build a direct-to-consumer business that's anchored by the network, we are starting to see the immense value of having all that information.
It really makes us a lot smarter both on a business side and on the creative side.
So if we can't strike a deal with someone where we feel comfortable with the economics, where we're getting the customers' information, and where we're getting the consumption data, we're not going to do that deal.
It would be accurate to assume that we haven't gotten comfortable yet doing a deal like that across those three levers.
I don't want to really speak about one particular potential partner or not.
In addition to general corporate purposes, we've said that we want to continue to invest in the growth strategy, which is about content, it's about technology, and it's about expanding our global presence.
And one example I mentioned on the CapEx guide being on the high end of our historical range, that facility we purchased back in the third quarter we'll begin retrofitting the facility out to serve our production need, so that's an example of us having ---+ or why we did the convert to support that.
And then finally, in addition to general corporate and investing in our strategy, in the media sectors, you know <UNK>, is fairly consolidated, which means that when we're talking to potential partners about potential commercial relationships, we are usually dealing with organizations that are much larger than we are.
And what we've found ---+ and we've formed a perspective ---+ is that having the balance sheet with significant cash on it is good for us.
I think it shows we have the wherewithal to take advantage of a variety of options and how we execute it to the future, so we think it's beneficial for that purpose as well.
So those are the three reasons we did it.
As you know, <UNK>, because I know you pay attention to a lot of what we're doing, we've made a lot of investments over the last few years, so we think there is flexibility in the cost structure.
The tough thing for us is always going to be we're so bullish about the future, is we want to make sure we are investing for the long term.
We've always said we prefer a lumpy 15% CAGR than a straight-line 10% CAGR, so we're willing to take hits in the short term if we think over the long term we can deliver a bigger result.
And by the same token, we wouldn't have made a public commitment if we weren't willing to do everything in our powers to deliver on that.
We will continue to balance those two things.
We don't break the subscriber levels down by market, but what we have said, if you think about WWE Network's international presence, it's an English-only network.
It's priced in the US dollars.
It doesn't have things like download [digital] functionality right now, which you need in markets that have low broadband penetration.
So we always talk about the international rollout as a soft launch, if you will.
And then over time, we will figure out where we want to invest in the product to localize it more, and we're doing more and more localization.
Starting last year, we were offering next day of our pay per views in multiple language as an example.
<UNK> mentioned the UK tournament.
That's another example.
So you'll see us do more and more, but we don't give out specific countries.
As you know, there's a lot of discussion about corporate tax rates going on right now.
We are a full taxpayer, so our assumption is that if any of the plans as they currently have been detailed were to be executed, we'd be a beneficiary because we're at the top end of the tax rate.
But I don't want to start talking about specific assumptions because we need to let the federal government sort that out.
I'll let <UNK> handle that aspect of revenue, but as far as the UK tournament, it does allow us to capitalize on specific as well as a much larger pool of talent.
And again, it's somewhat localizing.
Obviously, for the UK in May, as I mentioned, developed more into a European-type show, which again, allows us to more localize yet in Germany, Italy, et cetera.
So we can do a lot more live events.
We can do a lot more in terms of growth as far as specific talent to these specific countries, so there is just so much opportunity out there on a global basis.
We haven't tapped into it really very much at all, and this is our first venture into tapping to that specifically, notwithstanding the fact that Paul has done extraordinary job of attracting talent from all over the world in an effort, obviously, to go back into the specific countries which they represent and continue to build a localized audience there as well.
Our expansion internationally as far as talent is concerned is mammoth.
<UNK>, on the ad revenue question, we're not believers in the premise you laid out.
We think the monetization of this passionate fan base that we're super-serving with a subscription service, that the best path to monetization is to keep increasing the number of subscribers.
For us, when you look at the way we monetize content, we have the subscription service, we license our content to partners, and really, our ad model is more on the AVOD platforms, on YouTube, on our own O&O, maybe someday other players like Facebook and Snapchat and so on where we have incredible engagement as they build out their ad tech.
So that's the way we think about advertising.
We have a light advertising load on the network right now, but I wouldn't expect that to grow.
Our expectation is we'll keep the model we've had now for over year and a half of a 30-day free for new subscribers.
It's for new subscribers only.
And as we mentioned before in the discussion about promotions, we will continue to experiment.
So the answer is yes, we will try some things around WrestleMania.
Obviously, we think if you come in for our premier event, you will get a real good feel for the value of the network.
So we will do some things.
Let me just say there's no one talent that makes this big wheel keep on turning.
And there is a mixture of combinations in the storylines and of the resolution of those storylines at WrestleMania or Royal Rumble or SummerSlam or any of our other events.
You will see some vacillation from one pay-per-view to the next, and it's just the nature of the business.
As far as momentum is concerned, I think we have more momentum this year than we did last year.
And as you mentioned, fewer individuals are injured, so that always gives us a larger talent pool and more players to deal with and more storyline.
So there seems like there's more momentum coming into this year's WrestleMania.
As far as the brand extension is concerned, it's working extremely well.
It's working exactly like we thought it would.
If you like the product Raw, you are more likely to watch the product on SmackDown.
There is some crossover, which is what we wanted.
At the same time, we are building ---+ new viewers come in.
We're introducing new viewers in SmackDown, and that just in an of itself is what we're trying to do as well, and are doing.
And more viewers come to SmackDown, then more viewers are likely to watch Raw as well, so it's a big wheel keeps on turning.
That's our strategy.
And also it's like you have fresh talent coming from one brand to the next, so in essence, if you haven't seen a Roman Reigns on SmackDown, then what he does if and when he does come to SmackDown, then that's really a big thing.
So it freshens up talent.
It gives us much longer range in terms of the use of those talents and the IP that goes with them, so that's obviously that in addition to more live events.
And more room for more talent to be able to rise to the top.
If you have only one show and one ---+ or two shows with the same talent, it's difficult to create new stars because the tendency is to just keep the new larger talent on top all the time.
So it allows other stars to be able to climb the ladder of success.
So there is so many reasons why that ---+ and multiple touring.
Again, if it was just one show, both Raw and SmackDown, you are limited to your international touring for argument's sake.
And we can have the SmackDown tour in December and a Raw tour three weeks later or the next month.
So it allows us a lot more flexibility as far as the brand growth is concerned.
And of course, the other aspect of that is that SmackDown is now a live television show.
Television ratings on SmackDown have been extraordinarily good, much better than previous years.
Raw rating continues to decline somewhat, much like the NFL ratings.
<UNK>, we've been doing that now for about a year.
So early in 2016, we started making available within a few hours after the end of the broadcast multiple language versions of the pay-per-view.
Fans in Germany, if they want, they can enjoy it in German.
Fans in Spain or in the US who prefer in Spanish can do that as well, and they can do that live in Spanish.
So yes, we've been doing that.
We've got some surprises in store here coming up.
But we think over time, you'll just see more localization of all different forms.
There's obviously other destinations, but if you looked at the increase ---+
Yes, the increase is primarily around space.
Obviously, we've grown the headcount quite significantly over the last four years, and it's a way for us to consolidate a lot of our creative folks, so we are excited about the buildup.
But yes, that's a big driver of the year-over-year increase
Thank you, everyone.
We appreciate you listening to the call today.
If you have any questions, do not hesitate to contact us.
Thank you.
