The WWE released a statement along with their Q4 ’17 and FY17 earnings report announcing that CFO George Barrios and CMO Michelle Wilson were being promoted to Co-Presidents, a reward for “their contributions to four years of record revenues and the successful transformation to a multiplatform business model.” In part 1 of a wide-ranging 2-part interview, JohnWallStreet asked Mr. Barrios about the WWE’s evolution as a business, its position as a pioneer in the OTT space and what drives the company’s popularity across so many international markets.
JWS: The WWE business model has changed several times under Vince McMahon’s ownership. For readers that aren’t familiar with the company’s history, can you provide some background on how the business has evolved to where it is today?
George: The company has reimagined itself multiple times over the last 30-40 years. It went from selling tickets in the northeast, to taking advantage of that great technological innovation that was fiber (or cable) to the home and creating media, to then allowing the media to create a product business so that you could engage with the product on a video game or with apparel or an action figure, to playing those technologies to go global and then the latest re-imagination is this social, digital and direct to consumer transformation.
JWS: You’ve been credited with leading the company’s latest transition to a multi-platform model. Can you discuss your initial vision and how you’ve seen it come to fruition?
George: In 2008-2009 we laid out where we wanted to go, where we thought the world was going and went about it step by step. It was about getting deeper locally, creating new content and data technology. The big “leave-behind” was our PPV business. We said we’re going to take our most premium content and go direct to consumer. It was a lot of thinking about where the world was going, not just where it was; and then just committing to it in a big way. It wasn’t that long ago, maybe 2-3 years ago that people criticized us, made fun of us or ignored us; today we’re at a place where people are saying, “how did you do it, we’d love to do it too.”
JWS: The WWE has a global following (India, Pakistan, Mexico, U.K. China etc.). What is it about the company that enables it to resonate with audiences across the world?
George: There are two things that come together that are both universal and timeless. The first part is the story telling. If you look across cultures and across time, the stories remain the same. Whether it’s Katniss Everdeen in Hunger Games or Luke Skywalker in Star Wars, it’s the hero’s journey. John Cena is going through the hero’s journey, Roman Reigns will go through the hero’s journey. The second thing that is universal is the ring. Whether it is the ancient Greeks or a village in India, everyone in the world, since the beginning of time, knows what happens in the ring. They may not know every nuance, but they get 80-90% of it. I love the NFL, but it’s a complex game that most people don’t understand.
Howie Long-Short: WWE reported record revenue ($801 million, +10% YOY) for full-year 2017, with adjusted OIBDA (operating income before depreciation and amortization) also setting a company record ($101.9 million, +40%). For Q4 ’17, the company increased revenue 9% YOY to $211.6 million; while increasing paid subscribers to the WWE Network from 1.41 million to 1.48 million. Shares are up 67% since October 25th, 2017 (and 17.75% in 2018). The primary catalyst is the optimism surrounding the company’s next series of television contracts. The current deal with NBCUniversal (for RAW/SmackDown) pays the company $200 million/year. It’s expected the next deal will double in value. Broadcast deals in India and the U.K. will also be expiring at the end of Q4 ’19.
Fan Marino: WrestleMania 34, entitled “Showcase of the Immortals” is Sunday Night in New Orleans. Brock Lesnar and Roman Reigns will headline the event, competing for the Universal Championship. Brock won’t be the only former (his return may be pending) UFC star on the card though, as Ronda Rousey makes her biggest WWE appearance to date in a mixed tag-team match with Kurt Angle, Triple H and Stephanie McMahon. WrestleMania 34 will stream live around the world on WWE Network this Sunday, April 8 at 7pm ET.
Editor Note: In Part 2 of the interview (to be released on Friday) we ask George why the WWE is more attractive than ever from a marketing standpoint (corporate sponsorships +29% YoY in ’17), about the financial impact WrestleMania has on the host city and to explain the mathematics behind the company’s subscription business model.
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