Vince McMahon and his team are probably disappointed that the WWE Network only added 31,000 new subscribers over the past three months, but they were ready for the news to hit the street.
Shortly before the opening bell on Wall Street, the company started to spread the word about the dropping of any commitment for subscribers - moving to a NetFlix like $9.99 per month price point without any requirement that you remain a subscriber for six months, as has been the model since the launch.
Here's the message sent to subscribers:
Great News! WWE Network is now $9.99 per month with no commitment. That's right. You'll continue to get every LIVE pay-per-view, access to our massive on-demand library and more for the same $9.99 per month you currently pay, but without a 6-month commitment!
There is no action is required on your part. On your billing date in December, your WWE Network subscription will automatically convert to a no commitment account and will continue uninterrupted for $9.99 per month, plus applicable taxes.
Thank you for being a WWE Network subscriber.
The Network subscriber number was one part of a picture that resulted in a net loss of $5.9 million for the third quarter, or $.08 per share (for comparison, Q3 of 2013 saw a net income of $2.4 million, $.03 per share). Ahead of more detailed comments on their mid-day conference call, company executives are getting the word out about how this is to be expected considering their aggressive change of business model.
Chairman and Chief Executive Officer Vince McMahon:
During the quarter, we delivered stronger financial performance than anticipated and surpassed our guidance while making significant progress on the execution of our WWE Network strategy. To capitalize on the substantial opportunity created by WWE Network, it's time to remove all the barriers to those that want WWE. We are excited to introduce a new simplified price plan at $9.99 per month, and like Netflix with no commitment/cancel anytime. This reflects our belief in the broad appeal of WWE Network content. Additionally, we continue to develop the international platform for WWE Network and plan to make the network available in the U.K. on an OTT basis in November. WWE Network continues to be the single greatest opportunity to transform WWE's business model and we remain optimistic about our potential to drive long-term growth.
Chief Strategy and Financial Officer George Barrios spoke more specifically to the Network, and the company's overall media strategy:
As we expanded WWE Network to 731,000 subscribers, our Adjusted OIBDAof $5.1 million surpassed our guidance, which indicated an Adjusted OIBDA loss ranging from $10 million to $15 million with an average of 723,000 subscribers. Given our performance in the quarter, we have improved our 2014 Adjusted OIBDA outlook ranges by approximately $15 million to $20 million. Key metrics continued to show strength. Raw and SmackDown TV ratings increased 2% and 3%, respectively. WWE's social media presence has increased 71% to over 420 million followers. In addition, revenue from the Company's seven new key television agreements is expected to increase from approximately $130 million in 2014 to approximately $235 million in 2018, providing over $100 million of revenue growth subject to counterparty risks.
Thus far, the company's stock is fairly flat - trading at near the $13.03 per share price at which it opened after an initial dip to a low of $12.31 after the numbers hit.