Q1 2004 World Wrestling Entertainment Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning and welcome to the quarterly financial earnings teleconference call. My name is Sarah and I'll be the conference coordinator. If at any time you do require my assistance, please press the star and 0 and I'll return to assist you. At this time I'd like to turn the call over to Mr. Phil Livingston CFO of World Wrestling Entertainment. Go ahead, please.

PHILIP LIVINGSTON, CFO, WORLD WRESTLING ENTERTAINMENT: Thank you operator and welcome to everyone here for the WWE Q1 earnings call. I'm Phil Livingston, I'm the Chief Financial Officer of WWE and I'm pleased to have with me, as usual, Linda McMahon, the CEO of the WWE. She's in Phoenix as we speak this morning. I'm sitting in Stamford, but Linda has been out at SummerSlam and last night in Tucson at RAW, so she's joining us from Phoenix.

I point out to everyone if you haven't accessed it yet, our press release and the PDF file of the presentation that we're going to go through this morning is on our Web site corporate.WWE.com And I encourage you if you already haven't done that go to that site, pull down the presentation PDF. We are going to walk through it and refer to page numbers and you'll need to move along with us as we go.

On page one of that presentation is our standard Safe Harbor statement that I just draw your attention to. We try to be as informative and as open as possible, and give you our view of what is going on in the business.

I know you need to understand that and we give you estimates and use our judgment to understand the trends, but there are risks in business as you all know and things change so that we caution you to be conscious of that as we do our best to tell you what's happening in the business.

On Page 2 you see the outline and the format for our call today. Linda McMahon, our CEO is going to go through the operational highlights, important trends that are going on in our business. I'll take you through the financial results of the quarter and give you a view of our revised outlook for the balance of 2004, fiscal 2004 that we're now in.

So, with that, I'll turn it over to you, Linda. Welcome and why don't you go ahead with our operational highlights.

LINDA MCMAHON, CEO, WORLD WRESTLING ENTERTAINMENT: Thank you, Phil and good morning, everyone.

It is hot in Phoenix. For any of you who may not be located here I think for SummerSlam not only did we have a hot event in the arena, but it was 116 degrees outside. But we had a sold out event with very, very enthusiastic fans cheering throughout the early evening and night and they even stood outside in the parking lot in that heat for about 3 or 4 hours in the afternoon. So it's good to see that kind of enthusiasm for our product.

And it was an event that was sold out well in advance. So we are looking at those kinds of trends and hoping for more of those as we continue to build our story lines and have our introduction of new characters. Excuse me one second.

I think the good news to report today is we've had a good solid quarter. I am very pleased and feel not just only encouraged but very enthusiastic now about the way that the two separation of the brands which SmackDown! and RAW is sticking, really growing.

I think I said on the last conference call that the first kind of real test was the fact that we would have our first RAW only Pay-Per-View which was Bad Blood and that was, I believe, in June and then Vengeance was in July and that was SmackDown!.

Now, Vengeance -- just one of those rare anomalies -- occurred two days after the close of our fiscal quarter so for this particular quarter we are only reporting two Pay-Per-View events where we normally have three.

But the good news about both Bad Blood and Vengeance, Bad Blood exceeded last year's number which was the jointly produced Pay-Per-View with both brands and Vengeance is going to be right at the number from last year. It might not get quite where it was last year, but again, one brand only.

So we know what we are doing is working, it is having the effect that we wanted it to have and so we're glad to see that sticky factor if you will now with both of those brands.

So good news on that front and we are seeing that on an international basis as well that our audiences around the world are really getting it with the brand separation.

So we are very encouraged now that we took the right path continuing to build that, so that was a good success and we will now be anxiously awaiting to see what SummerSlam did in the Pay-Per-View numbers which we just had this past Sunday.

You know, following right along with our growth and development, where I have talked about where I think still the frontier for us is is our international developing business and we continue to have a thriving international live event business, and I'm on Page 3 of what you are looking at this morning. And if you want to follow along with that I think that Phil referenced it's Internet, our presentation this morning. So I'm on Page 3.

Our live event market is really strong. We've had we've had the eastern tour in Thailand and Japan in mid-July, we were again back in Australia July 31st. Coming up in October we're going to be in the UK, Germany and Finland.

Now, I think the one area of the world that we are still not strong in our television market really is Latin and South America. Though we're continuing to work hard to develop those markets we're not really prepared to tour there yet.

And that will come later than, I think the strength that we are seeing in the European tours, clearly in the Asian tours and then in Australia. We're very, very much encouraged with the growth in that developing business and as always the live event tours and television penetration are driving the ancillary markets and the ancillary businesses.

For instance, we've now signed new deals in Germany and Italy in licensing deals. Australia has doubled the number of licensees that we have there and one of the things that we are doing in …