|By Raj Giri||February 28, 2013 | Comments|
To maximize the value of our content, we plan to utilize three approaches: licensing our content to established television networks, potentially launching a WWE network through traditional cable, satellite and telco distribution, and monetizing our content through alternative digital "over-the-top" distribution. These options are not mutually exclusive. We plan to utilize combinations of these approaches in our domestic and international markets.
Regarding a potential WWE network, we are evaluating multiple approaches. We believe that a premium subscription model is the best approach in the U.S. to capitalize on our fans' commitment to our brands and their desire for more WWE content. Based on our market research, we estimate that a fully distributed domestic pay network could ultimately attract between 2 million and 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 our pay-per-view events, except WrestleMania, as well as compelling original content. Under our preferred subscription model, while our pay-per-view events would still be offered on an á 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, we believe a network and other distribution and monetization options would represent a sizable economic opportunity in the U.S. and internationally.
Business Outlook for 2013
In order to make significant earnings growth a possibility, it is critical that we invest in key areas, including talent development, content creation and marketing. We expect our 2013 EBITDA performance will approximate our 2012 results, plus or minus ten percent. In addition, we anticipate that net income will be impacted by incremental expenses from the return to a more normalized tax rate (30%-35% as compared to 26% in 2012) and increased depreciation expense of approximately $2 million to $3 million that derives from our investment in assets to support our long-term growth objectives, including the launch of a potential network. If a network is launched within the year, we expect 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 amortization and transmission costs.
Got a news tip or correction? Send it to us by clicking here.
Seth Rollins Mimics Roman Reigns (Video), Chris Jericho Has Major Praise For Shinsuke Nakamura
ROH Star's Contract Expires, Jeff Jarrett On Tonight's GFW Show, Damien Sandow Note, Kevin Nash
Why Paul Heyman Wants Joey Styles In WWE 2K17, NXT Announcer On Her Debut, WWE Shop 4th Of July Sale
The Brian Kendrick Talks WWE CWC (Video), Cesaro's WWE Network "Pick", WCW Nitro - WWE Network
Jerry Lawler Domestic Assault Case Update, Charges Dismissed
WWE Live Event Results From Tokyo (7/1): AJ Styles Defeats John Cena, Asuka And Shinsuke Nakamura
Backstage News On WWE's Recent Talks With Cody Rhodes, El Torito Talks WWE Run And Departure
Jake Roberts Rips WWE Hall Of Famer, Rock And Kevin Hart Impersonate Each Other, SmackDown Top 10
Top WWE Superstar Returning For The WWE Draft, Backstage Update On Randy Orton's WWE Status
Roman Reigns Was Ordered To Apologize In Front Of The Locker Room, How Much Suspension Will Cost Him
Randy Orton Return Update, Paul Heyman On If Brock Lesnar Needs To Avenge Goldberg Loss, The Shield
Brock Lesnar's Great Response To Stephanie McMahon, If Loss Hurts WWE Drawing Power, Another Fight
Steve Austin Says Current WWE Product Lacks Realism, Suggests Seth Rollins Curb Stomp Angle
Batista On Arguing With Vince McMahon During Last WWE Run, Triple H And Stephanie Disrespecting Him
Absent WWE Star Returning To The Ring, Historic WCW Nitro Added To WWE Network, Lilian Garcia
Hornswoggle On Why CM Punk Stopped Talking To Him, The Rock Thinking He Was A Make-A-Wish Kid