World Wrestling Entertainment (WWE) Vincent McMahon on Q2 2015 Results - Earnings Call Transcript
World Wrestling Entertainment, Inc. (NYSE:WWE) Q2 2015 Earnings Conference Call July 30, 2015 11:00 AM ET
Executives
Michael Weitz - Senior Vice President, Investor Relations & Financial Planning
Vincent K McMahon - Chairman and CEO
George Barrios - Chief Strategy and Financial Officer
Analysts
Brandon Ross - BTIG
Eric Katz - Wells Fargo
Daniel Moore - CJS Securities Inc.
Laura Martin - Needham & Co. LLC
Mike Hickey - The Benchmark Co. LLC
Operator
Hello, and welcome to the webcast entitled WWE Second Quarter Earnings. We have just a few announcements before we begin. [Operator Instructions]. I will now turn the call over to Michael Weitz, SVP, Financial Planning and Investor Relations. Please go ahead, Michael.
Michael Weitz
Thank you, and good morning everyone. Welcome to WWE's second quarter 2015 earnings conference call. Leading today's discussion are Vince McMahon, our Chairman and CEO; and George Barrios, our Chief Strategy and Financial Officer. We issued our earnings release earlier this morning and have posted the release, our earnings presentation, and other supporting materials on our website, ir.corporate.wwe.com.
Today's discussion will include forward-looking statements. These forward-looking statements reflect our current views, are based on various assumptions, and are subject to risks and uncertainties disclosed in our SEC filings. Actual results may differ materially and undue reliance should not be placed on them.
Additionally the matters we will be discussing today may include non-GAAP financial measures. Reconciliation of non-GAAP to GAAP information is set forth in our earnings release and presentation, which are available on our website.
As a reminder, WrestleMania occurred in the first quarter of 2015 versus the second quarter of 2014. In order to facilitate an analysis of our results on a comparable year-over-year basis we are prepared pro forma statements which identifies the impact of WrestleMania’s ticket sales, merchandise sales, pay-per-view revenue and production cost on our second quarter results last year. This timing impact is shown in our earnings release and our presentation.
Finally, as a reminder today’s conference is been recorded, and a replay will be available on our website later today. At this time, it's my privilege to turn the call over to Vince.
Vincent K McMahon
Thanks. You guys can see that we delivered strong earnings growth. It reflects our strategy to realize our greater value of our content which we always attempt to do. We had strong revenue growth of 16% through six months of 2015, significant international growth of about 38%. Our Network Segment revenue reached a record of $131 million over the past year exceeding, and this is important, exceeding the range of our annual pay-per-view revenue throughout our history. Naturally there’s some higher cost charge against that, that George will get into that in a few minutes.
Our network had 1.2 million subs at the end of quarter, represents a 75% increase from Q2 of 2014, definitely on the right path. The network paid viewed than 75 -- had more than 75 original hours of content, so and with a lot more of that to come, and again always at a price as they say. We have a lot of other new content coming to the network including I’m sure most of you are familiar with one of the more popular shows, [indiscernible] HBOs shows [indiscernible], we’re trying to come out with a better name.
We’re also going to do some studio show stuff which we haven’t done before which we think that’s going to move the needle as well. The new episodes of WWE 24, and many things that happened successfully, Stone Cold Podcast things of that nature and many things we’ve also mentioned in the past which is coming to fruition is Camp WWE, which is our version of South Park, of course that’s on a VOD basis only. It’s really, really funny especially the Mr. McMahon portion of it.
Aside from that Tough Enough, which is the USA series and Total Divas, both reality shows, both when combined those shows together, including replays, and add that to RAW and Smack Down we are at 14 million uniques that are watching WWE every week and that’s just here in the U.S. and really is significant. We’ve also significant -- we have surpassed the 500,000 social media followers across our global platform and I can’t help but the promoter in me has to say instead of 500,000 its half a billion, which sounds much better.
And we are also apart [ph] by the way of [some of these things that] Facebook is doing in terms of enhanced supported video test, which our shared revenue content would create, so we think we’re going to do really well with that and I think Facebook is going to do very well with that as well. And speaking of Facebook we served 440 million video views and that is an overview of where we are now, George.
George Barrios
Thanks Vince. There are several key topics which I’d like to review today, these include management discussion of our financial performance, the progress of key strategic initiatives and our business outlook.
Over the past few years we’ve communicated an overarching objective to distribute our content across new platforms and realize much greater value from that content. As we entered 2015, we foresaw a significant earnings throughout driven by the expansion of WWE network, escalation of TV rights fees and continued innovation across all of our businesses. In the second quarter, our business accomplishments and financial performance reflected the successful execution of this strategy.
For the second quarter, our financial results surpassed our expectations based on strong business performance. Specifically, we achieved OIBDA of $13.2 million with an average of 1,216,000 WWE network paid subscribers. This strong performance was primarily driven by higher than expected video game and pay-per-view revenues as well as the timing of certain expenses including the roll [ph] of network marketing and programming cost.
The quarter was highlighted by the performance of our Network Segment which now generates more revenue on an annual basis than our previous pay-per-view business. To expand on that statement, the network segment generated revenue of $131 million on a trailing 12 months basis through June 30th. This far exceeds the annual revenue from our pay-per-view business which ranged from $70 million to $95 million over the 10 year period through 2013.
The growth of WWE Network demonstrates our ability to transform our legacy pay-per-view business into a global subscription business with high growth potential. At quarter end, WWE network had more than 1.2 million total subscribers, which represented an increase of 75% from the second quarter 2014. Subscriber growth was driven by the appeal of our original programming, including WrestleMania, our international expansion and the success of our free trial promotions.
During the quarter we premiered more than 75 hours of original content on WWE Network, increased the network’s comprehensive video on demand library to more than 3,300 hours and continue to grow its global distribution. The network was made available in Italy and Malaysia earlier this month. At quarter end, WWE Network had approximately 217,000 paid international subscribers. Through June 30th the network had attracted more than 2 million unique subscribers worldwide with 61% of these subscriptions active as of that date.
Importantly, the networks live and original content continued to drive viewer engagement among more than 75 hours of content that premiered during the quarter original series WWE Too Hot for TV, Swerved and Stone Cold podcast were among the network’s top programs. Additionally, Deep in the East a live event special produced in Japan on July 4th became the network’s most watched program of all time excluding our pay-per-views. Viewer data shows that more than 90% of subscribers continued to access WWE network at least once per month while our consumer research indicates that 91% of subscribers are satisfied with the experience.
During the quarter total subscribers declined by approximately 8% or 100,000 subscribers from the first quarter of this year. The sequential quarter declined followed the March 29 performance of WrestleMania and was somewhat indicative of the event-oriented consumer behavior shaped by our legacy pay-per-view business over the past 30 years. We continue to be focused on the continued development of original programming, impactful marketing campaign and the development of the user experience which we believe could reduce such event related seasonality over time. We view the creation of new content and the implementation of high impact customer acquisition and retention programs as critical elements of our broader strategy to grow WWE network.
For the remainder of 2015 we expect to add approximately 180 hours of original content to the networks featured programming. Exciting original content come through the network includes the reality series, following the Stars of NXT as they strive to make WWE’s main roster, a new series Table for Three giving viewers a seat at the table with our superstars and divas; a studio show highlighting current events in the world of WWE and beyond and new episodes of WWE 24, the WWE Lift and Stone Cold Podcast as well as teasers for Camp WWE and animated South Park style series premiering in 2016.
Additionally, we plan to expand the network’s robust video-on-demand library adding beamed programming collections focusing on captivating periods in WWE history. In terms of subscriber acquisition, the free month trial continues to be an important offering as it incentivized fans to engage with the network for the first time. We believe one month is the minimum amount of time required for a consumer to fully understand the scope of the breadth of the networks content. Based on the successful execution of the network’s previously trailed promotions, we initiated a new rolling one month program in July, which marks the fourth consecutive month and the fifth month this year that we have implemented some form of free trial offering.
To drive viewer engagement we enhanced the network’s watch list functionality providing the ability to add new programs to subscribers watch list directly from email notifications. We plan to continue using this capability in our subscriber communications. We also continue to leverage our sizable social media and digital app such as video sampling on Facebook, YouTube and wwe.com to target and acquire new subscribers. To facilitate network subscriptions, we plan to introduce a three month subscription cards at retail in October enabling a no credit card required payment option.
Improving the user experience and content discovery across devices is also an important element of our network plan. Over the coming months we’ll continue to improve the user experience by enhancing the network’s search functionality, adding the ability to organize content and screen [ph] collections and allowing non-subscribers the ability to explore the breadth and depth of programs that are available on the service with the subscription. Overall, we believe our strategy for attracting and retaining subscribers will facilitate the expansion of WWE network and provide a global platform for driving growth. Consistent with other subscription based businesses and our own past practice, we do not intend to provide an update on current subscriber level on this call. Our next planned update will be on our third quarter earnings call.
To review our performance in the quarter, let's turn to page five of our presentation, which lists the revenue and OIBDA contribution by business as compared to the prior year quarter. As shown, revenue declined 4% to approximately $150 million and OIBDA increased nearly $28 million from the prior year quarter. As a reminder the occurrence of WrestleMania in April 2014 as compared to March 2015 favorably impacted second quarter results by a year. On a pro forma basis excluding the impact of WrestleMania revenue increased 24% this quarter and OIBDA increased $37 million from the prior year quarter.
On a year-to-date basis revenues increased 16% to $326 million and OIBDA has increased $56 million. This growth is one we would describe as very solid. For the quarter as reported OIBDA increased nearly $28 million, driven by the increased monetization of content and strong sales of our video game. Networks segment OIBDA increased $24.5 million driven by the growth in network subscription revenue as well as operating efficiencies including lower customer service cost.
WWE Network generated $36.6 million in subscription revenue based on an average of approximately 1,216,000 paid subscribers which increased 31% from the first quarter of this year. Pay per view buys contributed $3.5 million in revenue with 264,000 buys as three events were produced during the quarter. WrestleMania did not have a significant impact on segment OIBDA growth as the timing of the event last year resulted in a lower pay per view revenue and an offsetting reduction in production cost in current year quarter.
Profits from the licensing of television content increased $9.5 million or 19% in revenue. The growth in revenue and profits was primarily due to the renegotiation of key domestic and international distribution agreements, the largest of which became effective in the fourth quarter 2014 and the first quarter of 2015. Revenue growth was partially offset by the timing of Total Divas which was not aired in the current quarter, whereas the prior year quarter reflected the production and monetization of the program’s second season.
Licensing profit increased $4.9 million primarily due to higher video game sales and effective loyalty rates. Estimated unit sales of our franchise game, WWE 2K15 increased by more than 40% in North America and Europe. Additionally, increase in licensing revenue and profit benefited from higher sales of downloadable content associated with our game WWE SuperCard. Live events profits declined $8.8 million based on the impact of WrestleMania ticket sales in the prior year quarter. On a pro forma basis, excluding the impact of WrestleMania live event profits increased $1.6 million or a 31% with an increase in revenue that’s derived primarily from the staging of 12 additional events in North America.
Corporate and other expenses were essentially unchanged from the prior year quarter and performance in other areas did not have a material impact in aggregate on our results. Net income increased $19.6 million, reflecting the increase in our OIBDA results and page 15 of the presentation contains our balance sheet. As of June 30, 2015 the company held approximately $110 million in cash and short-term investment and currently estimates debt capacity under the company's revolving credit facility to be approximately $151 million.
Page 16 shows our free cash flow. Through the first six months of the year we generated $60.8 million of free cash flow, representing approximately $28 million increase from the prior year quarter. The growth was driven primarily by the company's improved operating performance. Looking back over the quarter we continued to pursue innovative new ways to grow our business. We began to develop compelling new programming for the network, including approximately 180 hours of original content that will debut over the remainder of 2015. We premiered a reality series Tough Enough on U.S. Network and together with Total Divas our reality franchises have expanded our weekly television audience by nearly five million unique viewers. And WWE became one of the brands that will participate in an ad supported video test on Facebook to share revenue with other content creators. Notably during the second quarter we served more than 440 million video views on Facebook.
As we continue to innovate our brand metrics remains strong. Now as we look ahead we’re working to leverage this entrepreneurial spirit and our brand strength to drive sustained earnings growth. For the remainder of 2015 we’ll continue to expect year-over-year adjusted OIBDA growth for most of our businesses with the most significant increases driven by the performance of WWE Network, escalation of TV rights fees as well as our continued innovation. As stated previously the level of network subscribers is critical determinant of financial performance. For the third quarter of 2015 we expect ending paid network subscribers of approximately 1.2 million, representing an increase of about 3% to 5% from the end of the second quarter of 2015 and an approximate increase of 64% from the end of the third quarter of 2014.
Additionally we expect the company’s adjusted OIBDA will range from $13 million to $17 million, representing a year-over-year increase of $10 million to $14 million. This range of financial performance is provided on an adjusted basis, excluding non-recurring items which would be unknown at this time.
Although we anticipate earnings growth on a year-over-year basis in the fourth quarter we do not expect the same level of OIBDA growth, as we anticipate in the third quarter. Our full year 2015 business outlook at various subscriber levels can be found in our fourth quarter 2014 earnings materials. As I concluded last quarter we believe we're executing well, and innovating faster than ever. That concludes this portion of our call. And I'll now turn it back to Michael.
Michael Weitz
Thank you, George. Sandra we’re ready. Please open the lines for questions.
Question-and-Answer Session
Operator
[Operator Instructions] And we’ll go first to Brandon Ross of BTIG.
Brandon Ross
Thanks for taking the questions. I have a couple of questions. First you said you’re going to add a 180 hours of original programming on the networks in the remainder of the year. In your last 10-Q I think you said you expected $15 million to $25 million of cash spend on television. Is that number still accurate or does that still have [ph] to reflect the 180 hours?
George Barrios
Yeah it’s still accurate and there’s a couple of things. There’s the capitalization of cost that would show up in our TV licensing segments for shows like Divas and Tough Enough and then there is capitalization of cost that we’d show up in the Network Segment up for the network. But those numbers are materially unchanged.
Brandon Ross
Great. Thank you and second question is, this month you launched in Italy and Malaysia but there’s obviously there’s still some large markets out there, including Japan, China and India and places where NetFlix is going to launch in the next year. Can you give us an update on where you stand with these markets and whether it makes sense to have a mobile only offering to attack India and maybe even in the United States? Thanks.
George Barrios
Yeah, so as you mentioned there’s a few countries we haven’t launched and we continue to work on plans, Brandon to bring the network to market there. But I want to stay out of the specifics. What I will say is there are about nine countries after we launched in August last year internationally and we have now talked about four of them over the preceding eight months. So we’ll continue to work on doing that here over the next 12 months or so.
As far as the mobile offerings generally the packaging and different levels of service are things that we continue to look out but right now we like the simplicity of the new offering we have. But we’ll continue to look at potential options.
Brandon Ross
Great, thank you.
Operator
And we’ll go next to Eric Katz of Wells Fargo.
Eric Katz
Thank you good morning. Can you tell us the monthly sub trends throughout the quarter or maybe a way to think about both the churn post WrestleMania and also whether the Q2 sub counts technically look better than 1.2 million, since you wouldn’t actually count the free subs in that number?
George Barrios
We are not going to get into month-to-month trends. What I would say, I mean you see it kind of generally reflected in the quarter’s churn, it was one of the higher levels of churn that we had post WrestleMania and as I mentioned in the prepared remarks it kind of coincides with that event-driven legacy pay-per-view business model. But we want to stay away from trends. And I really didn’t understand the second part of the question, Eric.
Eric Katz
So when you have a 330 day trial obviously the paid subs wouldn’t be counted there. So I'm wondering if maybe there is sort of a timings shift where you offer an April free months, those subs wouldn’t be counted until they convert over. So some of the bankers in the free trials might actually get pushed out to July?
George Barrios
Yeah, because there’s always going to be with the rolling free month, I mean once we’re on -- when we’re doing it every month you are pushing the benefit continually one month out. So the sequential impact is nil but because you are always pushing it out.
Eric Katz
Okay and then the second question is, I know you’ve provided in the past some of the free sub numbers and conversion on the prior months. Do you have anything around that data for Q2?
George Barrios
No, and we don't think it's all that relevant frankly. And so it's something we don't think we're going to report on. We've originally did when it was new. But at this point we like the way it’s working and we're going to continue to using it.
Eric Katz
Okay, and then just the last question. Do you have any data points on the network’s awareness amongst fans? I'm guessing most passionate fans know about the network and what it offers. But have you done any surveys or anything of that nature, I'd be curious to know your findings.
George Barrios
Yeah, we do survey awareness, intent to purchase among those are aware and those that aren't. I would say that the awareness as described there is a real kind of complete understanding of the network is still relatively low even among our more passionate fans and certainly among casual, so which we see as a great opportunity for us.
Eric Katz
Thank you.
Operator
And we'll go next to Daniel Moore of CJS Securities.
Daniel Moore
Good morning, thanks for taking the questions.
Vincent K McMahon
Hi Dan.
Daniel Moore
What are the decision to give a projection for ending paid subs for Q3 previously, I believe you've given forward-looking guidance for subscribers. So why the change, what gives you the confidence in $1.2 million and do you expect to provide sort of one quarter forward guidance going forward?
George Barrios
Yeah, I mean I think to your point what we've done, and we just did in the previous quarter was give a range and it was pretty broad. So at this point it is fairly tight. We're becoming more and more comfortable in understanding kind of the cadence of acquisition and retention. What I will say, I think we'll still in such early days and if you look at other subscription businesses, they'll have a certain cadence and then it will shift. So I think I would tell our investors there’s always that, that at some point that cadence shifts. But at this point we feel fairly comfortable even one month into the quarter to start giving some guidance. But I’ll reinforce is still really, really early days.
Daniel Moore
Absolutely, very helpful. Q4 your comments obviously tempering growth expectations a little, at least on a year-over-year basis. Are there some key moving parts either in terms of costs or revenue on Q4 relative to Q3 that you anticipate?
George Barrios
Well, there are some, they're both lapping of certain elements. So for example last year we've recognize the minimum guarantee in our home entertainment segment that wouldn't be relevant this year. We begin to lap the largest of our TV agreements. But the show Vince mentioned our version of Hard Knocks is a reality series, reality series tend to be a little bit more expensive on a per hour basis. We didn't have it on the network in Q3. So there is a few different things.
Daniel Moore
Got it. And then just to take a shot at this. Looking out at '16 and beyond, what type of annual growth should be thinking about or anticipate in terms of content cost or just fixed cost more generally associated with the network?
George Barrios
Yeah, at this point Dan, we'll go into our planning cycle like most people in the fall. So we're not going to talk about 2016.
Daniel Moore
Okay, and as I think you implied in the press release no changes to your longer term projected OIBDA ranges based on a range of steady state subscribers?
George Barrios
Not -- I mean that business outlook is specifically for 2015. So yeah we're still comfortable with those ranges.
Daniel Moore
Okay, thank you again.
Operator
[Operator Instructions]. And we'll go next to Laura Martin of Needham.
Laura Martin
Hey guys. One for Vince and one for George. So Vince I'd be interested in your insight. I know you're doing the Facebook experiment and I know you're one of the largest YouTube channels. Could you talk about similar economic splits according to Facebook. So how do you think about YouTube versus Facebook? And then George for you, one of the things I understand that the revenues is now higher than pay-per-view but one of the things I think we'd hope is that at a 1 million or 1.1 million sublevel you would breakeven with the profit contribution of the old PAY-PER-VIEW in the last year-over-year. And so the 1.2 million subs are we making as much money as we would be making if we had stayed in the pay-per-view sort of world. Thanks guys.
George Barrios
Yeah, so I'll grab both of them, Laura. On the breakeven what we had said is at a steady state level we got somewhere between 1.3 and 1.4 subscriber, average subscribers, would be similar to pay-per-view business. I'd also said before that in 2015 we will spend about $120 million because that's what we spent roughly in 2014 in the segment. So the answer is yes that 1.3-1.4 we would be in the $30 million to $40 million above with the range.
I think moving forward and again this is a 2016 and beyond, is how we think about the future growth potentials and where we want to invest in the network and so on. So it's something that we're still thinking about and we'll share once kind of our thoughts coalesce. But we can definitely run the network segment at 1.3 to 1.4 and generate $40 million of OIBDA right now, or in that range.
On the Facebook, look we're almost at 7 million subscribers on our YouTube channel, 6.9 something. And we've done about 5.5 billion video views on a trailing 12 months basis. So if you're going to do video direct-to-consumer around the world, you're going to talk to us because we're one of the leaders in that space. So obviously we're talking to Facebook. They're doing a beta. There is some other brands in there. And we're excited. I mean Vince mentioned 440 million video views in the second quarter. That number was immaterial, if you went back three quarters ago. So it's really interesting. We know how to kill it delivering video. So we're excited about the opportunity.
Vincent K McMahon
It's high-class problem.
Laura Martin
Very well. So far we haven't gone here. So let's talk about programming, Vince and see if we can get you in the conversation. So you're going from, looks like you've got 75 hours now you're going to have to do 180. As we think forward a year or two, do you have an ultimate goal for how many hours of original programming you'd like to see on the network, what are you targeting in your mind.
Vincent K McMahon
Correct. We're just looking in all sources of programming. And again we're looking into what does our audience really want. We're also looking at growing, not necessarily -- keying on our nails in terms of that demo. I think you can have a self-fulfilling prophecy if you do that. And you have to develop programming for all the segments of your audience. When you look at the segment of our total television audience, they are pretty much four quadrants . We're not supplying programming for all those four quadrants at the moment. And I think once you start doing that you start broadening beyond the basis of what we do. I think you are going attract a broader base which is always very, very good in terms of kids and things of that nature even for the older people.
I mean I think there is so many -- when you look at demographics on television generally they have not necessarily a match to we're doing on the network. And we just need to develop programming for all of those quadrants.
Laura Martin
Okay, thanks.
Vincent K McMahon
Sure.
Operator
And we'll go next to Mike Hickey of the Benchmark Company.
Mike Hickey
Hey guys. Congrats on a great quarter, another one in fourth gear. Thanks for taking the questions. George, I know [indiscernible] but obviously do you see that sort of direction that's going to be more material that since [indiscernible]. Do you think maybe at a high level as you think about your 15 OIBDA growth potential and you said it was less than your average stock expectations for '15. Would it be reasonable, I believe to assume for slightly better or similar OIBDA expectation over a similar hypothetical subscriber range in '15.
George Barrios
Yes, Mike. Kind of like I mentioned to Dan we're really aren't going to talk about planning for -- or guidance on 2016. We're really focused right now '15. We'll go through our planning process here in the fall and communicate as we usually do in our Q4 earnings call, which typically takes place in February of the following year. So that's the plan right now.
Mike Hickey
All right fair enough. I figured I’d give it a shot. The -- and then on your upcoming Summer Slam event, it looks on the surface the match is very good. But maybe I'm the only one want to see the Undertaker and Lesner match. Curious when I guess when you look within the network and your social media release which is expensive, if you have an idea at this point how initial indication for demand are tracking. And then I'm also curious with your success with Beast in the East do you anticipate more promotion like this in the future. And I have some more follow-ups.
George Barrios
So Mike if I heard you right, I just want to -- because you're coming in a little foggy on our end. Number one, you said how do we build on Summer Slam and do we think it will be a real big attraction for the network. And number two, do we potentially plan to do more things like Beast in the East. Were those the two points?
Mike Hickey
Yes, you got it.
George Barrios
Yes, I mean we are thrilled, look we’re all fans obviously, so we are thrilled with Summer Slam. It’s starting to feel like WrestleMania in August. So we’re really, really excited and we’ll see what the results are but we don’t have visibility to that. It’s not like we could see from a cadence standpoint the impact. So we won’t know until the event.
Vincent K McMahon
As far as Summer Slam is concerned we feel that so strong we went from our traditional three hours to four hours this year. It’s just so much great content we have to do that.
George Barrios
And Beast in the East, huge success on the network. People love it. We mentioned it before. NXT has developed its own brand in following, is doing, the program does incredibly well on the network, when we have the live special, it trends globally on Twitter and it’s primarily available on the network. We’re going to continue to do more and innovate in that program because it’s just been a home run.
Mike Hickey
Absolutely. That sort of dovetails my next question. Curious if you could share with us how you plan to continue to develop your NXT franchising, it seems to be a huge hit here and a big contributor perhaps to your network subscriber engagement?
George Barrios
Look I mean you’ve seen the development here over the last couple of years under the leadership of Paul Levesque, not only is it an incredible training ground for our super stars and divas but there are so many compelling characters and stories within that process that only makes sense to share it with our fans. And I think it’s a little bit of a different feel. It’s feels a little different than RAW and SmackDown and so it has its own unique fan base. So we just think it’s great. It’s another way to super serve our audience and we’re going to continue to develop it.
Mike Hickey
All right guys. Thanks. Best of luck.
George Barrios
Thanks Mike.
Operator
[Operator Instructions]. And we’ll go next to Daniel Moore of CJS Securities.
Daniel Moore
Thank you again. Obviously there’s been a lot of noise if you will in the media about severing ties with this long-term legendary marketing talents. Anything you’d to comment on and then more generally to the point what’s your view of pipeline of talent, where it stands today and the investments that you’re making to continue to improve that?
Vincent K McMahon
We feel very strong with where we are now, as we just mentioned about the development of all the NXT stars coming up. When you look at what Paul has done over the last several years and you look at the number of individuals who have come from NXT are now in main events it’s an investment in the future and quite frankly it’s doing extremely well now. Long-term wise we feel really good as well. I mean there was a recent situation with Hulk Hogan who’s no longer with the organization and that doesn’t have any material effect. So again we were keen on individuals who can actually compete in the ring and derive benefit from that. So that’s where our emphasis really is.
Daniel Moore
Appreciate it again. Thank you.
Operator
And there are no further questions from the phone lines at this time.
Michael Weitz
Thank you everyone. We appreciate your listening to the call today. If you have any questions don’t hesitate to contact us. Thank you.
Operator
And this does conclude today’s conference. Thank you for your participation. You may now disconnect.