WWE First Quarter Conference Call Report 5.05.11

* WWE held a conference call this morning to discuss their 2011 first quarter results, Vince McMahon, WWE's Investor Contact Michael Weitz, and WWE CFO George Barrios were on the call.

* McMahon noted that it was a somewhat disappointing quarter, but also stated that WrestleMania fell in the first quarter last year.

* McMahon also noted that PPV fell flat in the quarter, but said that TV ratings and the return of Tough Enough showed the power that the brand still has.

* McMahon discussed the new WWE, stating that they wouldn't leave the current product model, but would be using their expertise in television production, live event production and licensing to create new revenue prospects for the company with other acquisitions and projects.

* George Barrios mentioned again that WrestleMania fell in the first quarter last year, and that the impact would be felt in the second quarter report. He said that increased costs in film and live event costs cut into increased revenue from licensing and toys. and also noted they had an impairment of several million dollars from WWE Films as well.

* Barrios stated that the Elimination Chamber buyrate was down, partly due to the fact that their TV partner in the UK broadcasting it as a live event for free, not a PPV event.

* Barrios went on to explain that their revenue from toys increased 86% from a year ago due to their partnering with Mattel. Videogame revenue was up over $2 million due to agreements with THQ, but that the WWE All Star videogame sales are not reflected in the quarter.

* They took on a loss of $1.5 million on The Chaperone, because they now take on all the costs of marketing and advertising themselves as part of their self-distribution of the film.

* They continue to look for US TV partners for WWE Superstars and WWE NXT while they continue them as internet series domestically.

* They were asked to comment on how MMA has impacted WWE's PPV business, potential alternatives for the Network. McMahon said that he didn't see MMA as a direct competition for them outside of the fact that they are also on PPV. He did state that if they are on the night before a WWE PPV, it does have an effect because all of the promotional material on the cable companies, and not because of MMA is taking money from fans choosing one over the other. He said MMA doesn't hurt them any more than boxing.

* McMahon said that they have received good reception to promoting a traditional network, but that he believes that their Network will likely be a hybrid into a traditional network and an alternative, much like Netflix's streaming on demand.

* George Barrios noted will have 27,000 hours of library material digitized by the middle of 2010 at a cost of $4 million and that they will be looking at a future investment of $4-$5 million into creating new programming.

* McMahon noted that they would have two new live event programs, and that it would happen in the not too distance future. He also said finding a home for them would not be a problem. McMahon also stated that Edge's unexpected retirement wouldn't effect their bottom line because they are doing so well with developing talents.

* When asked about the timing of acquiring new assets, given the economy still recovering and whether we are far enough along in that recovery to launch a Network, Barrios said that with the balance sheet and debt capacity that WWE currently has, the job their end will be making sure they are acquiring something that WWE can add value to. Barrios also said there is never a good time to do anything, but they have to take a chance and maximize the opportunities that exist.

* On current storylines, McMahon said that Rock's return has brought them greater awareness by having older names ix it up with the new WWE talent, naming Miz and Alberto Del Rio.

* McMahon was asked about ticket prices rising, and said that they like being the best value for everyone with the lowest ticket prices, especially as the costs of everything else goes up. He noted that higher end tickets may see a rise.

* Barrios said they aren't adding more promotional dollars to the PPV marketing to the events but they continue to get more value by doing promotions with their partners.

* The call then ended.