01
Indiantelevision.com
MUMBAI: Sports entertainment company WWE is planning to launch a television network through traditional cable, satellite and telco distribution.
WWE will also explore monetising content through alternative digital "over-the-top" distribution.
In order to maximise the value of content, WWE also plans to utilise more effectively licensing content to established television networks. These three options are not mutually exclusive.
Regarding a potential network, WWE said it is evaluating multiple approaches. It believes that a premium subscription model is the best approach in the U.S. to capitalise on fans? commitment to brands and their desire for more WWE content.
Based on market research, the company estimates that a fully distributed domestic pay network could ultimately attract between 2 - 4 million subscribers at a ?steady state.? These subscriber estimates derive from a projected base of approximately 47 million WWE digital TV households in the US (including lapsed fans), and the proportion of which have an affinity for WWE content, although there is no guarantee that this affinity will translate into actual subscribers.
These take-rates are based on a value proposition for the network that reflects inclusion of pay-per-view events, except WrestleMania, as well as compelling original content. Under the preferred subscription model, while its pay-per-view events would still be offered on an ? la carte basis as currently available, the research indicates that a WWE network offering would drive significant consumer interest (including households that currently do not purchase pay-per-view events).
At a proposed price per month between $12.99 and $14.99, this would represent incremental revenue to WWE of between $125 million and $250 million and incremental EBITDA between $50 million and $150 million. Actual results are contingent on several factors, including the necessity of entering into distribution agreements, and such results could vary materially from the expected range based on the rate of subscriber adoption and churn rates, as well as changes in pricing, promotion levels and distribution terms.
"Until a base of approximately 1 million subscribers is achieved, we estimate the network would represent a net investment for WWE. Ultimately, the company believes that a network and other distribution and monetisation options would represent a sizable economic opportunity in the US and internationally," WWE said.
Leveraging its global brand strength is a key pillar of WWE?s long-term strategy. Audience measures such as social media followers and the ratings of television programs demonstrate its brand strength, WWE states. It claims that last year, the average number of viewers of its Raw and SmackDown programmes exceeded the average number of primetime viewers for all cable networks and historically.
Q4 financial results
Meanwhile, for the fourth quarter ended 31 December, WWE reported revenue of $115.1 million as compared to $112.9 million in the prior -year quarter. Operating income was $2.6 million compared to a loss of $13.1 million. Net income was $0.6 million as compared to a loss of $8.6 million in the prior -year quarter.
Revenue from the Asia Pacific region fell to $7 million compared $9.4 million in the same quarter in the previous fiscal.
Business Outlook for 2013: In order to make significant earnings growth a possibility, it is critical that WWE invests in key areas, including talent development, content creation and marketing. WWE expects 2013 EBITDA performance will approximate the 2012 results, plus or minus 10 per cent. In addition, it anticipates that net income will be impacted by incremental expenses from the return to a more normalized tax rate and increased depreciation expense of approximately $2 million to $3 million that derives from its investment in assets to support the long-term growth objectives, including the launch of a potential network.
If a network is launched within the year, WWE expects a further reduction in EBITDA and net income in 2013 as the initial ramp in subscribers and revenue is not likely to be sufficient to offset the incremental, direct expenses associated with a network launch, such as marketing, program amortisation and transmission costs.
