WWE CFO Talks About The “Success” Of 3-Hour RAWs, WWE Network, WWE Studios & More

WWE Chief Financial Officer George Barrios made a presentation at the recent UBS 40th Annual Global Media and Communications Conference and spoke at length about why WWE is continuing with 3-hour RAWs each week, WWE’s movie division, WWE’s relationship with NBC Universal and more. Here are some highlights from the presentation, transcribed by SeekingAlpha.com:

The Success Of Adding A Third Hour To RAW: Also really important is that that content id delivering for our network partners. So the third hour of Raw is up 35% versus what it replaced for USA. So they are very happy with that. ION’s main event is up about 15% from the show it replaced. So they are also very happy with that. Our morning show on Saturday mornings with the CW on their Vortex platform is up 50% over the show it replaced. So that’s really, we consider ourselves to be really good partners and like to put ourselves in the shoes of our partners. We know what is important to them and we get really focused operationally in delivering for them and I think in all three cases we have very happy partners for those shows and economically it puts us back to where to were in 2009, 2010 in terms of number of domestic hours that we monetize.

WWE Network: We just believe there is too much there potentially not to keep pushing at it. The drag on earnings is painful. It’s painful to investors. It’s painful to us but we just believe payoff could be too large so we are going to continue to push on that

Wherever the video is being monetized, we see that the real opportunity. We see growth there. Very high operating margins because we create our content once and then monetize it in a variety of those different platforms and also we have the ability to mine a significant library

There will be powerful, compelling exclusive original content that will be the core because otherwise people aren’t going to either watch it in the numbers you want or pay for it if you go that model,” he said. “But we can wrap around some very fresh, compelling content that’s created from our 100,000 hour library. So for example, one of the shows that’s in production right now and it’s tested really, really well in our focus group is the Monday Night Wars. It will be an episodic series, number of episodes be determined but somewhere between 10 to 15 episodes that looks at the year 2000 and 2001 battle between Ted Turner and Vince McMahon when they were on competing networks fighting for audience.

WWE Studios: The film business has morphed in strategy and execution over the last few years. WWE launched its film business in late ’05. Early ’06 and essentially we produced six film, invested roughly $100 million dollars gross, up $75 million net of tax credits. We produced these films generally in localities where there is 20% to 30% and in tax credits but gross of about $100 million, and right now the projected return on and ultimate basis and now these are fairly long-lived films. So we feel pretty good about the productions. It is essentially just above breakeven in cash-on-cash return. That model was characterized by partnership. Each of those movies were co-produced, co-financed, for the most part and co-distributed with different partners, Fox and Lionsgate, to name a couple. We thought we could do better by going it alone and we invested roughly $50 million in producing, financing and very importantly, distributing. So having all of the distribution execution on us on eight films. There was a series of impairments that we are taken in 2011 on those films and today we think the expected cash-on-cash return which with those impairments, the P&L impact has been felt pretty significantly but on a cash-on-cash basis roughly a 30% loss. So by any measure it was a strategy that was poorly executed. We have gone back essentially wiped that entire operationally the internal operations, wiped that clean, brought somebody else in to run our film business. A gentleman named Michael Luisi, long career at Miramax. It’s really the first time we have had anyone running the film business with significant commercial experience. We had creative folks in those roles before. But Mike brings a significant level of commercial experience and he has been retooling the model.

Maximizing Sales To Their Most Loyal Customers” About maximizing sales to their most loyal customers: There is also some structural changes in the home entertainment business. WWE as these change is taking place has actually weathered it pretty well if you looked at over the last four or five years. We certainly have felt some pain in that business, but if you looked at the industry as a whole, we have actually outperformed it. One of the reasons is because our fan base is very collector centric and they like collectibles. They like the physical product which is one of the reasons our home entertainment business, we believe, has weathered that change a little bit better but we all know where it is going. Optical disk drive are going by the wayside over time and we need to manage that transition. Higher margins because of the lower distribution costs but the price point becomes the issue and that’s something that we will have to, like a lot of our collagen content business, we will have to manage through.

WWE’s Future on USA & CW: We also, over the next few years have some significant commercial agreements. We have delivered significant value to our partners. So we feel very good that those agreements are coming up. Our agreement with the USA on Raw, our agreement with Smackdown on SciFi, our agreement with BSkyB in the U.K., our agreement Taj TV in India and our agreement with Mattel. In all five of those cases, we believe we have performed in exemplary fashion. So we feel good that those agreements are going to come up in the next few years. We look forward to seeing economic growth in that.

  • 7 year old boy

    Seriously wtf?

  • Deante320

    Yeah going from the 3.5, 3.6 to 2.55 and counting down is real success. Vince remember when you said you want results or you want resignations? Well start with this idiot you call CFO.

    • Pwnez

      The Shield has nothing to do with the ratings dropping.

      • Deante320

        The sheld has nothing to do with the fact that CFO is an idiot for saying the three hours is a success when the ratings says otherwise. Hell the sheld needs to spike powerbomb HIM through a table.

        • GodsLoyalSon

          He’s talking about the first hour, het your head out of your ass

          • Deante320

            How about the rest of the show, arsehole? the first hour doesn’t a matter a damn thing if the rest gone to hell.

            To be clear, I’m referring to the CFO, not the shield comment.

          • Backstreet Bungalow

            Sounds like your grammar gone to hell

          • Deante320

            Okay, there, fixed it, happy now, Damien Sandow?

          • GodsLoyalSon

            Again, he’s refering to the 8’o clock hour not the entire show. Still working on getting that head removed?

          • Deante320

            Again and I will say this slowly:



            Is that clear enough for you because if it didn’t then I feel sorry for you.

            BTW: the CFO was talking about the third hour not the first, ignoramus. You might wanna read that article again and read every sentence.

          • GodsLoyalSon

            Again, I will say it slowly since you obviously lack reading skills

            HE’S……TALKING…..ABOUT……THE……FIRST…….HOUR…..NOT…..THE…..ENTIRE…….SHOW. IF……HE……SPOKE……ABOUT…..THE……ENTIRE…….SHOW……THEN……..HE……WOULD…….HAVE……TALKED……ABOUT……EVERY…..HOUR. You obviously just proofreaded the paragraph and took the title at face value.

            Here is what he said since you obviously don’t have a clue as too what he’s talking about “So the third hour of Raw is up 35% versus what it replaced for USA. So they are very happy with that.”

            What hour was replaced recently on USA? The 8’o clock that broadcasted NCIS. He’s saying that there is now an increased viewership rating on that hour since they have taken over. That’s whats he’s talking about. How do I know that’s what he’s refering too? BECAUSE…….THE……..SHOW………USED…….TO……START ……AT ……..9. THE…….THIRD…….HOUR……..IS……..THER……NEWLY……ADDED………HOUR,……..NOT……..THE……..PREEXISTING…………..ONE………DUMBARSE. He only mentioned one hour because that’s the one that HAS THE SUCCESS HE MENTIONED DUE TO USA REPORTS. Okay? Is that clear enough for you? If you are trying to sound smart then your doing an extremely terrible job at it. And by the way, the three hour raws have been a success because tell me how many superstars we see every week on raw vs the two hour concept? How many good matches have been broadcasted vs the two hour shows?

          • Deante320

            True btw this is the best debate I’ve had in my life. It does display their roster but unfortunately they only displayed not that many and some are still lost in the move. We comment on the ratings because this happened before to another company which pretty led to their downfall. Don’t get it twisted, I want WWE to continue at three hours but to many people three hours, plus main event (best show in wrestling tv at this point), smackdown(my favorite show) and satuaday morning slam(surprisingly good) people are in WWE overload mode plus those Hollywood writers isn’t helping either.
            I understand what the guy saying but ratings is what’s keeping the show televised(other than sponsors and merchandise sells) and the reason we go to the 2.55 factor is because that’s a bad omen for WWE who been making 3.5 to 3.9s and then plummeted. So to our eyes the move isn’t good YET(and I emphasize the word YET). I’m sure WWE like always will find a way to get back to where they’re been before the move to 3-hours but there are things to be fixed. I’m sure you agree on that part too. BTW I’m responding to this because my computer messed up and I’m using my iPod.

          • GodsLoyalSon

            Really? Thank you. Some are lost because they haven’t hit the spot that would launch them to fame or it is due to them not having the it factor. Me personally, I want to see The Uso’s become a major part of the show because they have a presense about them that screams ‘main eventer’. I’m actually fine that they have that many shows because each one is different. I don’t feel overloaded when I’m watching them because I don’t feel like their shows that I have to watch but shows I get to watch. Besides, have you noticed how each show wets a different palet? Main event are for people that love high card claiber matches, Smackdown is for the pure wrestling fan, and Saturday Morning Slam is for families

            WCW did not fail because they went to three hours, they failed because they acheived the highest level they could and didn’t know how to maintain it. They failed because they bombed at booking who held the title and were having the belt get tossed around like hot potatoes. So much so that an actor got the belt simply for shock value. Yes I do agree with you on that one though, WWE will survive and they will make it back to where they were

  • IMNova

    Are they a retard?

  • pwnez

    Success? Is that what we’re calling it? Interesting.

    • GodsLoyalSon

      He’s talking about the first hour.

      • http://www.facebook.com/jacob.rael.9 Jacob Rael

        Doesnt matter if the first hour is good if the other 2 bomb

        • GodsLoyalSon

          Oh my goodness will you people listen for once? He’s talking about the success of their new moves in recent months with the networks telling them that it was a success in increased viewership with the 8 hour spot being taken over by raw. That’s the success he’s refering too, not saying the entire show has been a success. Allot of you all need to learn how to read past something at face value and how to read a paragraph instead of proofreading.

          • Deante320

            The dude just downplayed the failure of the third hour. If you even seen the ratings for raw from the 3rd hour (which was the subject BTW) viewership declined at the 3rd hour and because of that, raw’s viewership (ratings) suffers. If you were preferring to the 1000 episode then that’s means nothing because it was a special event.
            How good was the 3rd hours on raws after that? I’ll help you: IT TANKED! So the guy is downplaying the failure and made as if the move is a good idea when it hasn’t.

          • Two Cents

            No, the CFO is actually referring to the new third hour, which is 8 to 9, not the actual third hour of the show.

            Yes, he did downplay it as if the move was good all around, which it’s not.

            Yet and still, it’s only about profits here when it comes to WWE. Once the well dries up, Vince will probably choose to go back to two hours, but as long as USA pays the money, there will be no change to it.

          • GodsLoyalSon

            The paragraph is titled “The Success of adding a third hour to Raw”
            The third hour is the added one, the 8’o clock period not the 10’o clock period. You are obviously getting those two mixed up because that’s the one he’s talking about since he mentions that USA reported that there is an increased viewership on that hour since Raw took it from NCIS. They already had the 10 hour spot so officially the third hour is the 8 hour spot. That’s the third hour he’s refering too. Now your just sounding stupid, when did I make reference to Raw 1000? Also I’m well aware of the thrid hour your refering too but your wrong in what you preceive the man is saying. Read that paragraph and begin to see where you error terribly.

          • Deante320

            Okay true you’re right but that not a good thing. Both the CFO and USA downplayed it as if it good move when I stated it’s not. viewership has Increased, but will it help WWE in the long run? No. Hell, TNA or nxt even could take that hour and that will have a “increase” by a grand margin because USA probably don’t have a good show to fill that hour. Two cents has a point that it’s comes down to Money but when the whole show tanks because of the extra time, first hours okay but soon or later they’ll have to reconsider that move.

            So yes you’re right, I’ll admit but so am I when I said he’s an idiot for thinking it’s smart because that hour that replaced that show (NCIS) is not gonna help the entire raw as I implied in my first comment. If this a one hour show or a two show then I would say success but it’s 3 hours and people tune away before it ends so how is the first hour (8 ‘o clock) is helping WWE or USA?

          • GodsLoyalSon

            They didn’t downplay anything man, they are just talking about a new move that they recently and how it was a success for both parties involved. That’s all the man was saying. Don’t overanalyze something without interupting the facts properly. The third hour was a good move for them because now they are showcasing their roster better and now have time to get new stars over.

            We can’t say that it hasn’t worked because it hasn’t been around for a year yet. You are correct when you say that either show could have taken that spot because NCIS isn’t that good of a show to begin with. I disagree with that guys comments because there are other factors at play with people likely going to bed at the third hour and finishing the show the next day on Telly-Tv.com or Youtube, some people DVR the show then switch to CBS, some people stream the show, and a few other things at play. I can only watch Raw online after it airs because I don’t have cable but if I did then I would watch it all the way through.
            Its helping WWE because their sponsors get to have their products seen in between commercials and it helps USA because they get to display their programming. What helped Burn Notice become popular was because it aired after Raw and people got currious about the show to watch it. That’s where the success lies. Thats the success they are talking about

          • http://www.facebook.com/vincent.letterio Vinny Letterio

            Again I am going to have to stop you here, USA is the #1 ranked cable television channel, they have the programming. But see, WWE is PART of their programming, has been for a while. You think the two sides are not communicating when they have a 9 figure partnership, that would be a stretch. And most people have DVR and record it anyways, no commercials makes it less than 2 hours. Why are you complaining that the company is hurting itself when it is profiting you, the consumer, cause that is pretty rare. You should give up on arguing points, I do not think it is your thing.

          • Deante320

            Actually the argument is already over. I understand what he meant and vise versa. But not to make a beef or anything, but we do have a right to complain as fans and consumers because we like the WWE and us fans/consumers don’t want a good thing to go away albeit they’re a part of the #1 cable company yeah. The reason I and most others complain is because we care about the WWE. So i’m not gonna nod “yes this is good” because it benefits me as a consumer if WWE has a problem which could cause people to stop watching altogether, is that not our right as consumers and as fans to voice that problem?

  • Two Cents

    At the end of the day, it’s all about that money, money…yeah, yeah.

  • svr

    I knew this was gonna be stupid. seriously ? success ? ok… to boost ratings , get mark henry back in the ring , and give christian a huge ass push. do the right things vince..

    • Backstreet Bungalow

      Come on now Christain wil always be mid card filler in the giant jelly donut that is WWE. Vince don’t give a damn if you can wrestle WWE = 10% SKILL 90% HOLLYWOOD

      • svr

        in the end ,im sure all the wwe fans agree that wwe will no longer be the same. only interesting around Royal rumbles.. and Wrestlemania. That is if theres watchable feuds…

  • bob12346

    Your missing the point in what he is saying about the ratings..yes a 2.5 is very very low for raw..but for that 8oclock spot that 2.5 is better for usa tben the .6 they would get from ncis/law and order svu reruns..

  • http://www.facebook.com/jacob.rael.9 Jacob Rael

    Raw needs to go back to two hours before their ratings get even lower 3 hours suck if they cant make it compelling