More Details On WWE Network Subscriber Count, Full Announcement, Watch Extreme Rules For Free

As noted earlier, Vince McMahon announced that the Network has surpassed 1.3 million subscribers today on the post-WrestleMania 31 conference call. It was also announced that WWE will be doing another free month promotion in April, so new subscribers will be able to watch Extreme Rules at no cost. WWE sent us the following today:

WWE® Network Surpasses 1.3 Million Subscribers

Full Year Business Outlook Reaffirmed While Q1 2015 Currently Projected to Exceed Guidance

WWE® (WWE) today announced that WWE Network surpassed 1.3 million subscribers following WrestleMania® 31, making it the most viewed WrestleMania in history. WrestleMania was broadcast around the world last night on WWE Network as well as on pay-per-view from a sold-out Levi's® Stadium in Santa Clara, CA. The results represent a 97% increase from April 7, 2014 the day after WrestleMania last year and a 31% increase since January 27, 2015, when the network surpassed the 1 million subscriber milestone. Recent growth was driven by the success of our February free promotion and the iconic attraction of the Company's WrestleMania event.

"We believe that exceeding 1.3 million subscribers reflects the successful execution of our strategy and puts us on the path to transformative growth through WWE Network," said WWE Chairman & CEO Vince McMahon. "We remain focused on driving subscriber value by delivering the most compelling user experience and new content, evidenced by our new original series and partnerships with Seth Green, Jeff Tremaine and Jerry Springer."

"We are pleased with our short-term results and, for the first quarter, we currently project to exceed our most recent public guidance associated with an estimated average of approximately 918,000 paid subscribers," said George Barrios, WWE Chief Strategy & Financial Officer. "We are also confident in the long-term potential and understand subscriber growth could take many different paths. For example, Network subscribers might show consistent sequential quarterly gains or the quarterly adoption curve could exhibit seasonality with year-over-year growth. Regardless, over the long-term, we believe WWE Network has the potential to drive significant economic returns."

Based on data to date, WWE Network attracted an average of approximately 918,000 paid subscribers over the first quarter 2015, representing a 27% increase from the fourth quarter 2014 average.1 The network's February free promotion contributed to that growth, attracting approximately 201,000 trial subscribers, of which 154,000, or 77%, converted to paying subscribers in March. WWE Network reached an average of 982,000 total subscribers during the first quarter 2015, including both free trial and paid subscribers. To date, WWE Network has attracted nearly 1.8 million unique subscribers.

WWE Network: Growth Strategy

To grow WWE Network, the Company is executing a five-part strategy, including creating new content, implementing high impact customer acquisition and retention programs, introducing new features, expanding distribution platforms, and entering new geographies. Over the coming year, the Company is focused on expanding the network's line-up of compelling original content as a critical element of this strategy.

Programming: In addition to the premium monthly live pay-per-view events, WWE Network unveiled new programming for the remainder of 2015, which includes eight brand new original series and partnerships with director Jeff Tremaine, Seth Green's Stoopid Buddy Stoodios and legendary talk show host Jerry Springer. In addition, in the new show, Diva Search, WWE will span the globe in search of the most beautiful, athletic and charismatic women in the world to find the next stunning WWE Diva. WWE Network will also produce compelling specials and short form content, while continuing to add 1,000 hours to its robust video-on-demand library, which currently has more than 3,000 hours of content. (For more details of WWE Network's programming line-up see the Company's March 30, 2015 press release).

Promotions: Based on the successful execution of the network's free trial offerings, all new subscribers who register for the network in April will receive the network free in that month, including Extreme Rules live on Sunday, April 26.

Features/Distribution: Other important elements of the Company's network strategy include improving the user experience and content discovery across devices, while continuing to expand distribution platforms.

Geographies: The Company is developing plans for geographic expansion to India, China, Germany, Japan, Italy, Thailand and Malaysia.

Paths to Potential Subscriber Growth

The Company believes its strategy will facilitate long-term subscriber growth of WWE Network. There are, however, different paths that culminate in the realization of WWE Network's subscriber potential. For example, achieving consistent subscriber growth over sequential quarters could result in a path that approximates an upward sloping straight line. (See Exhibit 1)

Alternatively, it is possible that WWE Network subscriber growth could follow the more seasonal pattern of the Company's historic pay-per-view business. The latter path could yield an upward sloping trajectory over time, but could result in sequential quarterly declines while still delivering year-over-year growth. Any potential seasonal variations that might occur could be reduced over time as the Company continues to bring compelling new content to the network throughout the year. (See Exhibit 2)

The Company believes WWE Network will continue to make progress toward its subscriber potential, and management is agnostic to the pattern of growth.

Business Outlook

The level of WWE Network subscribers is a critical determinant of the Company's projected future financial performance.

In 2015, the Company expects year-over-year adjusted OIBDA growth in every quarter, with growth driven by the performance of WWE Network as well as the escalation of television rights fees, and continued innovation across all of the Company's businesses. For the first quarter 2015, the Company currently projects its adjusted OIBDA will exceed the high end of its most recent public guidance associated with the quarter's actual average of 918,000 paid subscribers.2 The most recent public guidance implied a range of adjusted OIBDA of approximately $3 million to $8 million associated with that average.

The table below outlines ranges of potential Company performance for the full year 2015 at different subscriber levels. The Company is maintaining its 2015 Business Outlook at various subscriber levels as released on February 12, 2015. The 2015 Adjusted OIBDA table (below) is consistent with the previously provided business outlook. (The Company's previous business outlook as well as reconciliations of Operating Income to Adjusted OIBDA can be found in the Company's Q4 2014 Earnings Release February 12, 2015).

1 Average paid subscribers are calculated based on the arithmetic daily mean over the relevant period, and may differ substantially from paid subscribers at the end of any period due to the timing of paid subscriber additions. Trial subscribers acquired during a promotional period are not counted as paying subscribers until they convert after the end of the free period.

2 These projections are preliminary and are subject to change based on the completion of the Company's quarter-end financial reporting process.

Total Company - Adjusted OIBDA (in millions)

Average Paid Subscribers (3,4)

2015E
500 ($10) - $10
1,000 $45 - $65
1,500 $100 - $120
2,000 $155 - $175
2,500 $210 - $230

(3) Average paid subscribers shown in thousands. The average number of paid subscribers over the 12-months of 2014 was approximately 567,000. This 12-month average is below the average for the 2014 period in which WWE Network was operative (WWE Network was launched on February 24, 2014).

(4) The average paid subscribers the Company will achieve over the full year 2015 is unknown. The range of average subscribers over the full year 2015 has been provided for illustrative purposes rather than as guidance, and has not been updated or changed since it was initially presented (July 31, 2014)

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