World Wrestling Entertainment Inc

LSE:0M1G

Earnings Call Transcript 2022-Q2

[Operator]

Hello, and welcome to WWE Second Quarter Earnings Call. We have just a few announcements before we begin. [Operator Instructions] I will now turn the call over to Seth Zaslow, SVP and Head of Investor Relations. Please go ahead, Seth.

[Seth Zaslow, Senior Vice President & Head-Investor Relations]

Thank you, and good morning, everyone. Welcome to WWE's second quarter 2022 earnings conference call. Leading today's discussion are Stephanie McMahon, WWE's Chairwoman and Co-CEO, Nick Khan, WWE's Co-CEO; Paul Levesque, WWE's Head of Creative and Talent; and Frank Riddick, WWE's Chief Financial and Administrative Officer. Their remarks will be followed by a Q&A session.

We issued our earnings release earlier this morning and have posted the release, our earnings presentation and other supporting materials on our website. Today's discussion will include forward-looking statements. These statements reflect our current views are based on various assumptions and are subject to risks and uncertainties disclosed in our SEC filings. Actual results may differ materially, and undue reliance should not be placed on them.

Additionally, the matters we will be discussing today may include non-GAAP financial measures. Reconciliations of non-GAAP to GAAP information are provided in our earnings release and presentation, which are available on our website.

Finally, as a reminder, today's conference call is being recorded, and a replay will be available on our website.

I would now like to turn the call over to Stephanie.

[Stephanie McMahon, Chairwoman & Co-Chief Executive Officer]

Good morning, everyone. Thank you for joining us today. Before I discuss highlights from the quarter, I wanted to address some of our recent management changes. After more than 40 years of running WWE, my father, Vince McMahon has retired. As a true founder and entrepreneur my father and my mother for that matter, poured their heart and soul into building this business and taking WWE from a regional wrestling promotion in the 1980s to the global media enterprise we are today. He built the foundation that WWE stands on and prepared us for the future. WWE and its Board of Directors have had succession plans in place and it is both a privilege and an honor to be leading WWE with my partner Nick Khan as co-CEOs and with Paul Triple H Levesque, also my husband leading our talent and creative.

Nick, Paul and I first met around 2015 about a talent that Nick was representing. Our relationship grew with the three of us having the opportunity to work together during our last media rights negotiations. Nick was still an agent at the time, but it became quite clear, how well the three of us work together and what a tremendous asset Nick would be to our executive team.

A few years and Triple H's 50th birthday party later, it's hard to imagine where we are now. We independently fell in love with WWE as kids and now have the opportunity to live our dream as professionals. Paul is joining us today fresh from last night's broadcast of Monday Night Raw in D.C. You'll be hearing from him in a few moments.

Working alongside, Frank Riddick, our CFO and our strong leadership team, our goals are to maximize shareholder value by continuing to grow WWE across all lines of business. The team's success in doing just that as demonstrated by our strong year-to-date performance has given us the confidence to raise our full year 2022 guidance, which Frank will provide more detail on shortly.

This quarter saw record results for a Q2. We generated revenue of $328 million and adjusted OIBDA of $92 million, increases of 24% and 34% respectively over the prior year. In fact, each business line saw increases over the previous year quarter, highlighting the strength of each one of our segments. Since our last call, we staged four premium live events. Each one has continued the trend of viewership growth since licensing WWE Network to Peacock here in the US and represents the highest viewership in their respective history.

The following four comparisons are all year-over-year. For Backlash in May, we saw a 49% viewership increase. Hell in a Cell in June, we saw a 45% viewership increase. Money in the Bank in early July had a 17% viewership increase, and SummerSlam at the end of July, we saw a 20% increase in viewership.

Our flagship linear programs Raw and SmackDown continue to perform well driving in and out of those premium live events. We saw this trend clearly on the August 1st episode of Monday Night Raw on USA Network coming two days after SummerSlam. That show drew more than 2.2 million viewers, making it our most viewed episode since March 2020.

For the quarter, Raw ranks behind only around one and two of the NBA Playoffs in the key 18 to 49 demo among all Monday night cable programs, and SmackDown on Fox ranked number one in 18 to 49 among all Friday night broadcast programs in the quarter.

Our viewership success is not limited to our in-ring content. Last month, our second season of Biography: WWE Legends premiered on A&E along with two new shows WWE Rivals and WWE Smack Talk. The Sunday block of primetime programming delivered a 77% increase over the prior year's time slot. This marks the latest step in a growing partnership with A&E Networks that will see us deliver more than 130 hours of programming over the next several years.

On our social platforms just last month, our YouTube channel crossed a 90 million subscriber threshold. We also surpassed 70 billion lifetime views, becoming just the seventh channel on YouTube to achieve those numbers. On TikTok, WWE remains the number one most followed sports league with over 18 million followers more than the NFL, MLB, NBA, and UFC. Whether on broadcast or streaming, cable or social, WWE programming is achieving market leading viewership. Our diversified distribution approach is capturing fans at multiple touch points. Nick will speak about how we plan to capitalize on that strong viewership performance as we head into our next round of domestic rights renewal.

Before I turn the call over, I want to reiterate how humbled and committed I am to WWE in my new role. I've literally spent my entire life in and around this company and I have a deep appreciation and respect for our brand, employees, fans and superstars that makes WWE, a unique media property unlike anything else in sports or entertainment.

With that, I'll turn the call over to my partner and co-CEO, Nick Khan.

[Nick Khan, Co-Chief Executive Officer]

Thanks very much Stephanie. Against the backdrop of our viewership success that Steph discussed, we are also seeing growth in consumer products and live events, focusing substantial increases year-over-year for the quarter. We expect to see strong performance in both in the back half of the year as well. In the consumer products unit, we recently relaunched WWE Shop with our partner, Fanatics. WWE merchandise is now available across Fanatics and FansEdge sites.

Look for an expanded assortment of products in the near future across all points of distribution as we grow WWE Shop offering the leverage and expertise and scale of Fanatics. We've also had a strong start to the year with our trading card partner, Panini. In the first half of the year alone, we've exceeded 2021's -- I'm sorry 2022's full year performance expectations.

There is still growth ahead as we are planning additional product drops in the back half of the year. As we've done work to strengthen our existing lines of business, we continue to identify new revenue opportunities. Last fall, we announced a partnership with Fox's Blockchain Creative Labs. Our first NFT collaboration dropped ahead of our premium live event Hell in a Cell in June. All of those NFTs sold out in under 24 hours. Our last drop for SummerSlam with Blockchain saw all NFTs sell out in less than 16 hours.

The past quarter was also a first in our partnership with a premium live events business on location. Our first activation was at Hell in a Cell in Chicago. It was a great start, which continued to grow with our SummerSlam on location offerings from just over two weeks ago, which exceeded all sales from the prior events.

At SummerSlam, we also rolled out another new revenue stream with the ticketed live event experience of Undertaker's 1 deadMAN SHOW, featuring of course, The Undertaker in an intimate setting, sharing never before heard stories from his Hall of Fame career. This event sold out.

We announced a second Undertaker 1 deadMAN SHOW for Friday September 2, in Cardiff Wales. That event sold out in three hours. Look for more of this from us. The quarter also saw healthy performance around ticketed live events. Following WrestleMania 38, we saw sold-out shows for our premium live events Backlash in Providence, Hell in a Cell in Chicago, Money in the Bank in Las Vegas.

At SummerSlam, we hosted almost 50,000 fans at Nissan Stadium in Nashville. Paul Levesque will speak more about that event shortly. Our next premium live event is a major international ship Clash at the Castle in less than three weeks on Saturday, September 3, at Principality Stadium in Cardiff Wales. This is our first UK stadium show in over 30 years. Over 45,000 tickets have been sold for that event.

Also to note, this November 5 we returned to Riyadh for our Crown Jewel premium live event. That will be our second event in the region this year. We're pleased to be back in the territory with our regular cadence of shows. We are capitalizing on these well-attended events by customizing our in-venue merchandise offerings. After record-setting venue merch sales at this past WrestleMania, we continued that trend by capturing a 95% increase year-over-year on Money in the Bank sales. In-venue sales have been a revitalized business for us, as we pivoted to location, event and storyline-specific merchandise in-venue.

Turning to media rights. We have been detailing on these calls for the past two years how hungry the marketplace is for live premium content. Today, we remain as confident as ever as we prepare for the US rights renewal for Raw and SmackDown. Additionally, as everyone knows since those most recent rights deals the marketplace has become even more crowded with buyers. Interest from deep-pocketed tech companies has never been higher.

On Netflix, we've been saying on these calls for many months that we believe Netflix would look to enter the live space. We got confirmation of that this past quarter when Netflix made a bid for the rights to Formula One. We believe Netflix's appetite for live will only increase after the introduction of their ad tier. As we all know, the strongest CPMs are those sold against live programming.

With Alphabet, the parent company of Google, we are seeing bids for premium sports products both here in the US and internationally. The company recently put forward a bid for the US NFL Sunday ticket package, and pursued the Indian Premier League broadcast rights in that region.

With Apple, we saw their entrants into the sports space that made a really strong statement in their first year. Following the Major League Baseball deal this quarter Apple acquired the MLS rights in a 10-year $2.5 billion deal and MLS is still set to see more revenue from games they will sublicense along with Spanish language TV rights.

NFL Sunday Ticket will be announced shortly. We all expect that to go to a streaming company. Formula One what I briefly mentioned went from $5 million a year to over $85 million a year a 16x multiple. We know UEFA is out in the US marketplace right now, and we expect the league will more than double its fee from its previous deal. The Big Ten rights will blow past $1 billion in AAV, and we'll have three or more buyers.

As you know – as we know, there is no type of programming more valuable to sponsors than live. As the streaming landscape matures and sports become a core offering on these services we believe our products' three-pronged ability to draw on viewers ,retain viewers year-round and amass large audiences that sponsors live week to week puts WWE in a small group of premium properties for any media company.

And with that, I'd like to turn the call over to Paul Levesque.

[Paul Levesque, Head of Creative & Talent]

Thank you, Nick. I've had the good fortune to work in this business for over more than 30 years. Whether on screen at the office in the writers' room at the Performance Center and many of those at the same time, whatever the opportunity was available I always took it. Always wanted to learn, the behind the scenes the why we did what we did, so I could apply those learnings and become the best talent, I could possibly be.

In my new role, leading Creative and Talent, it comes with a great responsibility but I am incredibly confident that we have the right team in place to succeed. Core to that mission is orchestrating storylines and creative that appeals to our existing fans and helps us grow the WWE Universe along the way. It's early days, but we believe that you've seen some initial signs of this positive momentum.

At SummerSlam last month, Brock Lesnar drove a front loader out during his entrance. And at one point in the match he picked up the ring with the tractor and raised its 15 feet in the air which sent his opponent Roman Reigns tumbling to the floor. And as I've mentioned, I've been in this business for a long time. I've seen a lot, but I've never seen anything like -- took place that night at SummerSlam and our fans responded.

You saw it on the faces of the 48,000 fans at Nissan Stadium. You read their reactions on social media when SummerSlam was trending number one worldwide on Twitter. That moment alone surpassed 20 million views across all social platforms within 48 hours alone.

We want to continue to create these moments and memories that will last a lifetime and we will get there by writing compelling storylines for the most intriguing characters and then on top of that developing new talent.

Talent is an area where this company has a renewed focus. Last December, we launched our NIL program that sought to identify the next generation of superstars from collegiate athletics. In the nine months since its launch, we've signed over 30 D1 athletes. This list includes all-Americans, national champions and even Olympic Gold Medalist.

Our NIL program has been recognized as an industry leader. This past June, WWE's Next In Line was named Best NIL program at the Inaugural NIL Summit and in July took home the same recognition of the Hashtag Sports Awards. Outside of NIL, we've taken steps to make our talent development pathway more robust in an effort to attract a younger and more diverse group of athletes at scale.

At WrestleMania 38 in Dallas, we held our first ever all-collegiate athlete tryout. We had over 50 individuals whittled down from hundreds try out over a three-day period. We executed our second such tryout in Nashville leading up to SummerSlam, which by the way saw a cameo and viral moment from NBA Champion Dwight Howard. If you haven't seen it I highly recommend.

Through the first half of this year, we've signed nearly 50 new developmental talent at an average age of 23. The quality and depth of our talent pipeline is as strong as it has ever been. We continue to find new innovative ways to recruit and develop talent across the globe, which is core to our growth and reflective of our expanding fan base.

And that fan base turned out for us last week at SoFi Stadium in L.A. as we held our kickoff event for WrestleMania that will be held at that same stadium on April 1 and 2 next year. When we opened up ticket sales for the event, we saw the most successful first day sales in WrestleMania history. Over 90,000 tickets were sold within the first 24 hours more than any event in WWE history and a 42% increase over first day sales for WrestleMania 38 at AT&T Stadium in Dallas.

We are at roughly 80% for an event that is still eight months away and we have yet to announce a single match taking place on either night. In 40 years we have never sold that many tickets to WrestleMania that quickly. And with those record numbers we are tracking towards sellouts with passionate fans at SoFi Stadium for both nights. It is an amazing time for us and I look forward to the next steps.

And with that, I will turn the call over to Frank.

[Frank Riddick, Chief Financial & Administrative Officer]

Thank you, Paul. There are several key topics which we'd like to review today. These include discussion of our financial performance, the progress of key initiatives and our business outlook.

As Stephanie and Nick highlighted we had a strong quarter. Our results were in line with the preliminary numbers we announced a few weeks ago. In the second quarter, we generated revenue of $328 million and adjusted OIBDA of $92 million which exceeded the high end of our guidance.

Revenue increased 24% year-over-year primarily due to the return of a full schedule of live events including the staging of a record WrestleMania as well as an increase in consumer products and media rights. Adjusted OIBDA increased 34%, primarily due to the growth in revenue, partially offset by higher event-related costs including the production of our premium live events most notably WrestleMania. As a result of our performance through the first half of the year we raised our guidance for the full year. I'll touch on the outlook for the third quarter and full year in more detail later in my remarks.

During the second quarter, we had strong performance across each of our business segments. On Page 4 of our presentation, we detail our business performance in the quarter, which shows revenue, operating income and adjusted OIBDA contribution by segment as compared to the prior year quarter.

Looking at our Media segment on Page 5 adjusted OIBDA increased 5% on 4% revenue growth. Core content rights fees increased primarily due to the contractual escalation of domestic right fees from our -- from the distribution of our flagship shows Raw and SmackDown and international core content right fees also increased primarily as a result of our recently-announced MENA deal. Network revenue increased primarily due to higher domestic network revenue related to the Peacock agreement.

During the second quarter, we revised the premium live events calendar to include an additional event in the fourth quarter of this year. This change resulted in the deferral of approximately $6 million of revenue from the second quarter until later this year. The growth in revenue was partially offset by higher operating expenses. The increase in expenses was primarily related to the creation of our content including the staging of WrestleMania. Television production costs for our weekly in-ring content also declined. As a reminder, we produced this content in the WWE ThunderDome at Tropicana Field and the Yuengling Center in the prior year period, which was more expensive than the regulatory touring schedule.

Now let's turn to our Live Events business as shown on Page 6 of our presentation. Adjusted OIBDA from our live events improved $13 million, based on the $32 million increase in revenue with the return to live event touring. During the second quarter, we continued to experience strong demand for our Live Events. We held 59 total events with 55 in North America and four in international markets. Average attendance in North America was approximately 6,800. And return to full capacity attendance for WrestleMania contributed to both the increase in revenue as well as the average attendance.

In our Consumer Products segment Page 7 of our presentation, adjusted OIBDA increased 96% or $8 million or 96% or $22 million revenue growth. The results were primarily attributable to continued strong performance from our franchise video game WWE 2K22 as well as increased sales of trading cards and other collectibles. Venue merchandise revenue also increased as did e-commerce sales. The increase in e-commerce sales was primarily driven by the sale of existing merchandise inventory to Fanatics in connection with the launch of the new digital platform.

As we previously disclosed, a special committee consisting of the independent members of the Board of Directors has been conducting an investigation into alleged misconduct by Vince McMahon who has resigned and another executive who has left the company. The investigation is substantially complete and based on certain findings during the investigation the company has revised its previously-issued financial statements. The revised financial statements reflect unrecorded expenses for payments made personally by Vince McMahon totaling $19.6 million from 2006 to 2022. These payments had no cash impact on our business, but were recorded since they were paid by a principal shareholder and were deemed to have provided a benefit to the company.

Our second quarter results included a $1.7 million expense associated with certain costs the company has incurred related to the investigation. Going forward, we expect to incur additional costs related to the investigation. Vince McMahon has agreed to pay the $1.7 million of expenses incurred to date and additional reasonable expenses of the investigation not covered by insurance.

Now let's turn to WWE's capital structure as shown on Slide 8 of the presentation. In the second quarter, we generated $10 million in free cash flow as compared to $13 million in the prior year period. The decrease was due to higher capital expenditures related to the company's new headquarter facility. In the second quarter, we incurred $47 million of capital expenditures $40 million of which were related to the new headquarters. Excluding the new HQ CapEx, free cash flow would have been $50 million in the quarter or a conversion rate of 55% of adjusted OIBDA.

The company also received $11 million in the second quarter and $13 million through the first six months of the year and tenant improvement allowances for the headquarter facility. While these amounts reduced our overall cash outlay for the project, they are not included in our free cash flow calculation.

During the quarter, we returned $19 million of capital to shareholders, consisting of $10 million in share repurchases and $9 million in dividends paid. Our share repurchase activity in the quarter was limited reflecting regulatory and legal requirements related to the investigation as well as market conditions.

To date, we repurchased approximately 5.3 million shares for a cost of $289 million and have $211 million available under our $500 million repurchase program authorization. As of June 30, WWE held approximately $444 million in cash and short-term investments. Debt totaled $235 million including $214 million associated with the carrying value of our convertible notes. We have no amounts outstanding under our $200 million revolving line of credit.

Our current and projected liquidity remains strong and we continue to evaluate our capital structure and financing strategy for opportunities to lower our cost of capital and increase shareholder value.

Looking ahead, we've raised our outlook for the full year adjusted OIBDA. We are now targeting a range of $370 million to $385 million which represents an increase of 14% to 19% from 2021. This compares to the original range that was provided in February of $360 million to $375 million.

Our results through the first six months of the year have been ahead of our projections coming into the year, in particular, improved licensing sales including video games as well as lower business and production expenses contributed to our outperformance. The initiatives that could have implications for WWE's performance for the remainder of 2022, include the continuing execution of our live event touring schedule including our stadium strategy for WWE's premium live events, additional monetization of new original series, the licensing of Raw second window rights, additional licensing of WWE Network in international markets and sponsorship sales.

We are closely monitoring the trends in our business as our outlook is subject to certain macroeconomic risks over the remainder of the year, in particular, potential impacts on consumer spending. As we discussed on our last earnings call, we've seen some pressure on expenses, primarily related to labor, deliver cost of merchandise and diesel fuel.

To date, we've been able to manage these costs and largely offset the impact with other cost savings and efficiencies. At this point, it's unclear what impact slowdown in the economy and changes in consumer spending may have on our non-contractual areas of business, such as live events and merchandise revenue going forward. As appropriate, we'll make adjustments to our business to address any potential impact on our operations.

As for the third quarter of 2022, we're targeting adjusted OIBDA in the range of $70 million to $80 million. This estimate reflects strong year-over-year revenue growth from the contractual escalation of domestic media rights fees for the company's flagship programs and premium events as well as the benefit of ticket sales from Clash at the Castle, our premium live event in Cardiff Wales and increased monetization of content. We also anticipate that third quarter results will reflect an increase in operating expenses.

In conclusion, WWE generated strong second quarter results that reflected robust demand for our events and increased consumption of our programming content across the platforms. We believe our long-term outlook is supported by the rising value of live sports content, increased spend by streaming platforms on live and sports content to acquire and retain customers, increasing brand spend with media companies that deliver reach and fan engagement, an increasing premium for celebrities and compelling content fueling new IP monetization opportunities and the growth of media and entertainment in international markets.

Looking ahead, we believe that WWE remains well positioned to take advantage of significant growth opportunities. These include increasing the production and monetization of content, leveraging our celebrity talent and world-class production capability to fuel new content and product offerings and capitalizing on our global – expanding global audience to support growth across all of our business lines. We look forward to updating you on the progress of these initiatives in the coming quarters.

That concludes our remarks, and I will now turn it back to Seth.

[Seth Zaslow, Senior Vice President & Head-Investor Relations]

Thank you, Frank. Operator, we're ready for Q&A. Please open the line.

[Operator]

Thank you. [Operator Instructions] Our first question is from Eric Handler from MKM Partners. Please go ahead.

[Eric Handler, MKM Partners]

Good morning and thank you for the questions. Two questions for you. First, with regards to the second window rights to Raw, I'm wondering, since you have negotiations coming up next year for Raw and SmackDown, are you better off waiting on the day two rights and make that a part of the next Raw and SmackDown TV contract? And I've follow up after you answer that.

[Nick Khan, Co-Chief Executive Officer]

Thanks, Eric. It's Nick. I'll answer that if that's okay with you. Yes, it's something that we talk about all the time. It's a delicate balance of monetizing the content short-term versus making sure it's monetized long-term, so it's absolutely something that's top of mind and one that we're discussing and we'll figure out.

[Eric Handler, MKM Partners]

Great. And then secondly, I known it's interesting that your year-over-year advertising and sponsorship revenue was down in the second quarter even though WrestleMania was a bigger event this year just coming out of the pandemic. Wondering if you could sort of give an update on what's going on with sponsorships and what you're seeing with volume of contracts and the size of those contracts?

[Stephanie McMahon, Chairwoman & Co-Chief Executive Officer]

We've seen an increase. Hi, this is Steph. Thank you for the question. We have seen an increase in the number of partners that we have brought on. The partners that we do have are continuing to do business with us for a greater return and we do project growth throughout the year though, not a ton of growth. This is a slow-going process a little bit and we are committed and believe in the $100 million number that we've thrown out before. But for this year, all of our guidance is baked in. We are tracking towards our guidance and sales and sponsorship is holding steady. We had a bit of a hold, given the current situation, but a lot of positive momentum behind that we are now picking up once again. And we did see SummerSlam increase year-over-year about 40% of revenue growth in sponsorship. So, again, positive momentum there and still more to come on sales and sponsorship.

[Eric Handler, MKM Partners]

Thank you, very much.

[Operator]

Our next question comes from David Karnovsky from JPMorgan. Please go ahead.

[David Karnovsky, JPMorgan]

Thank you. Maybe one for Nick or Stephanie. The Mayor of Dallas recently stated that WrestleMania had an over $200 million positive impact on the city. And I guess just given the economic benefit that you're creating, do you see opportunity to extract more value from your major events through either a competitive bidding process or getting municipalities to at least kind of help defray some of your costs of staging these?

[Nick Khan, Co-Chief Executive Officer]

Absolutely, not just for WrestleMania or a number of our premium live events. That is the case in Carta, where we did receive a subsidy. So in addition to the strong ticket sales there, there will be a subsidy. On top of that, we're looking to replicate that for our major events moving forward.

[David Karnovsky, JPMorgan]

And then Nick just a follow-up on your media rights comments. We've seen some mixing [ph] organizations recently or at least reportedly turn down more money from streamers in order to kind of maintain distribution and promotional resources that you maybe get with traditional media companies. And we recognize that doesn't mean that the step-ups in those businesses are small, but I wanted to see how you think about kind of balancing reaching value for Raw and SmackDown as you go into the next negotiation?

[Nick Khan, Co-Chief Executive Officer]

It's always important to us that the access to the content is easy. So if you look at our current US situation, we have a broadcast deal with Fox, basic cable deal with Raw, streaming deal with our premium live events with Peacock. We like that balance because it allowed us to test it out. Well certainly, Peacock was still new and streaming was getting to become the norm rather than the exception. So it's something we look at often. We thought Formula One was smart for whatever that's worth in sticking with their incumbent and passing on a little bit more money to take a test for a streaming-only option. We'll see. It all comes down to the dollars and value to the shareholders. So depending on what the marketplace says, we'll take it all into consideration.

[David Karnovsky, JPMorgan]

Thank you.

[Operator]

We will take our next question from Brandon Ross from LightShed Partners. Please go ahead.

[Brandon Ross, LightShed Partners]

Hi. Thanks for taking the questions. I have one for Paul and one for Steph. First, for Paul. As Head of Creative, what opportunities do you see to refresh and improve the product? And what changes should fans and investors look for as your product evolves over the coming months?

[Paul Levesque, Head of Creative & Talent]

Thanks for the question Brandon. I think the opportunity in front of us is massive. And as a great man once told me first day on the job, thinking. And that's what we're doing here is first day on the job thinking for me. I've been doing this for a long time from a behind the scenes of creative, since really almost at the very beginning of my career here with WWE, but I'm approaching it from a first day.

What is working, what isn't working from the overall picture, all the way down to the smallest of details and really trying to create from there. It all comes down to the same thing -- that it's come down to since the beginning is creating iconic characters, putting them in amazing storylines and fantastical storylines and whatever works for those characters the best, and then running with it and watching how fans react to that along the way.

So, I think the opportunity is massive. I think it's an opportunity for us to not only engage with the stories that we have across our for our fans but to create new stories as well and create the platform and the opportunity for them to become bigger than anything we've seen prior to it.

[Brandon Ross, LightShed Partners]

Thank you. And then Steph, you ended your prepared remarks saying you're committed to WWE. But you had just begun a leave of absence and were forced back into the company when you came back as Co-CEO. Can you tell investors whether being Co-CEO is what you want for the long-term? And how important is it to you personally to continue your family's legacy?

[Stephanie McMahon, Chairwoman & Co-Chief Executive Officer]

Thank you. I have worked in WWE since I've been about eight years old, modeling merchandise for our event catalog, in any variety of capacities. And my parents couldn't afford a nanny when we were bringing up the business, so on weekends, I was sitting with our receptionist at headquarters.

I've worked my entire life for this business. I love this business. I took a leave of absence realizing that I needed a little bit of time with my family given the grueling schedule and nature. I got about three weeks which is more than a lot of other folks get and I was not forced into returning as the CEO and Chairman in the interim position, I offered. That was an opportunity for me to come back and be a part of this company that I love and have the opportunity to lead this company.

It is -- this business is something I believe into my core, I believe in the impact that we make on people's lives. Not only growing the business, which I believe we have so many different opportunities to do has been laid out by all of us here speaking today. But because of the impact that we make.

I mean we truly bring people together for generations from all over the world with all different backgrounds. We give them relief. We give them entertainment. We give them an opportunity to come together. That is very rare and unusual and special. And whatever we can do to continue to deliver on that promise is what we want to do.

Now that being said I understand your remarks and I think I'm reading between the lines, subtly -- but that being said Vince McMahon my father is still very much the controlling shareholder. He is -- still has his eyes on what is the best for our business in terms of maximizing return to our shareholders of which he is the biggest shareholder. Nick, Paul, Frank, and I remained focused on delivering the maximum results for our shareholders, so we will properly evaluate any opportunity that comes our way with that lens in mind.

[Brandon Ross, LightShed Partners]

Thank you. Your next career could be as an analyst. Good job reading between the lines.

[Stephanie McMahon, Chairwoman & Co-Chief Executive Officer]

[indiscernible]

[Brandon Ross, LightShed Partners]

Thanks guys.

[Operator]

Your next question will come from Steven Cahall from Wells Fargo. Please go ahead.

[Steven Cahall, Wells Fargo]

Thanks. Nick, thanks for the commentary about content rights and streaming. I think there's no doubt as you say that the streaming market continues to get more crowded with buyers. And I think a lot of those bidders like Netflix and Apple and Amazon, they're probably going to be looking at streaming only. I doubt you disagree with that, but they're not looking to take on linear rights. I think you've still got the second day rights on Peacock for Raw and SmackDown.

So I'm just wondering how you're thinking about kind of transitioning those rights into something that's more of a streaming package and a linear package? And as the way you kind of look at the world that if you do that you'll be able to maximize that streaming value but it may come with a little bit of devaluation of linear since it may not be live and exclusive anymore as it's on, but that the net-net comes out ahead? So, just wondering if I'm thinking about that correctly?

And then secondly, with the event in Cardiff, should we think about that Frank, as being as profitable as what you've traditionally done in Saudi Arabia? And do you have an appetite for doing even more than three international events a year going forward? Thank you.

[Nick Khan, Co-Chief Executive Officer]

Thanks, Steve. On the right side for us number one most important in the US are our incumbent partners, Fox and obviously NBCU -- NBCU, encompassing Peacock. So we always go to them. We always talk to them first about anything going on. Obviously Fox is big bet to be aside is that broadcast is here to stay. If you look at the ratings across the board on network live continues to deliver. It also delivers on streaming.

As we all know, even that MLS deal, we thought months ago internally that the lacrosse deal that Disney did with I think it's called PLL, that deal would sort of preclude MLS's re-upping with Disney, because the content tonnage had been replaced at a far lesser price point. So Apple saw that opportunity as well. They paid I believe it was 3x or so to get those rights with again some of the content being sublicensed to linear.

So we don't see it as a binary thing. We see it as a thing where you can do both unless someone of course comes in and says we want those rights exclusively and we want them just on the streaming platform. As you finally saw Amazon do with the NFL obviously, getting it a season early from Fox. So, we're bullish on it. We think there's a lot to unpack and we think that we're in the middle of unpacking it.

[Frank Riddick, Chief Financial & Administrative Officer]

So, Steve on your second question with respect to the profitability of the premium live events, specifically Cardiff, excluding media rights that we assigned to those events, we're expecting Cardiff to be very profitable on a relative basis. Not quite as profitable as WrestleMania but very profitable because of the subsidy that we're receiving. And it's also -- we're planning that it will be a sold-out event and so, we have started tracking all these premium live events and looking at their contribution on their own to the bottom line. And you can say that we've dramatically improved the profitability of those premium live events, because of the stadium approach but also because when you merchandise, as Nick mentioned in his comments, has become a lot more -- we've done a lot more effective job. So, for example, at SummerSlam, year-over-year venue merchandise was up 20%. On a per cap basis, it was up over 40%. And so, by going to those very targeted premium live events with better ticketing, larger audiences, larger ticket sales and enhancing the venue merchandise, has become a lot more profitable and that's a very specific strategy that we're following.

[Steven Cahall, Wells Fargo]

Great. Thank you.

[Frank Riddick, Chief Financial & Administrative Officer]

Thank you.

[Operator]

We take our next question from Alan Gould from Loop Capital Markets. Please go ahead.

[Alan Gould, Loop Capital Markets]

Yes. Thanks for taking the question. Most have been asked, but two. Frank, can you tell us where we stand in terms of the headquarter capital expenditures? How much is left this year? How much will be done next year? And secondly, can you give us some idea of how many international events we should see this year?

[Frank Riddick, Chief Financial & Administrative Officer]

So on the headquarters, the total numbers for the spending haven't changed. We're looking at total cost I think as we've said publicly between $270 million and $300 million. Now there's some offsets to that in terms of tenant improvement allowance tax credits, proceeds from sales, so the net cost will be lower than that. I would say year-to-date we're about -- for year-to-date, we're about $60 million of that or so. By the end of the year, we should be probably 75% to 80% through with the remainder coming in the first quarter.

On live events, international live events, yes, we're looking at more expanding the touring of international live events and premium live events. There's been discussion about adding another premium live event. We haven't made a decision on that internationally, but continue to see opportunities to do that. Or even our weekly shows that have gone over to Europe this year have been sold out we've been very successful in Germany and France, so we're seeing continued opportunity there. So I would expect that you'll see it expand.

[Alan Gould, Loop Capital Markets]

Thank you.

[Operator]

We will take our next question from David Joyce from Barclays. Please go ahead.

[David Joyce, Barclays]

Thank you. If you could please drill down a little further on the global net TV viewerships? Obviously in the US on broadcast and cable it's been stable. In cord-cutting environments that would imply some pricing power you'll have in renewals. But globally, are there some markets that you could point to with improving viewership trends? And also while you alluded to some new licensing opportunities, what incremental market should we think about that could be additive to your global media rights? Thanks.

[Nick Khan, Co-Chief Executive Officer]

Hey, this is Nick David. Thanks for that. A couple of things. Ratings in the UK very, very strong. It's one of the reasons that we're doing the Cardiff show, so we could have a local UK premium live event, stadium event for our fans there, which we also will think will increase viewership coming into it and going out of it.

In India, we remain the second most popular sport, granted a distant second, after cricket, but the second most popular sport in the country. In Australia, we continue to register in a meaningful way. And I would suggest we have a long-standing deal with Sony in India in the other two territories WWE Network still agnostic. Look for some developments there. Those are two of the many that we're focused on.

[David Joyce, Barclays]

All right. Thank you.

[Nick Khan, Co-Chief Executive Officer]

Thank you.

[Seth Zaslow, Senior Vice President & Head-Investor Relations]

Operator, we'll take one last question please.

[Operator]

We will take our final question from Vasily Karasyov from Cannonball Research. Please go ahead.

[Vasily Karasyov, Cannonball Research]

Thank you. Good morning. I had a couple of big-picture questions. First of all, can you tell us in your experience how does your business respond to a recession? We had 2020, but that was not particularly typical. So what, kind of, lines, revenue lines and cost lines will you be watching to see if you're getting impacted?

And the second question is what is the team's philosophy in terms of cost increases that would coincide or not coincide with the rights fees increases? Do you have a philosophy of expanding margins in the media segment, or do you think that you should share those increases with the talent and increase production balance further? Thank you.

[Frank Riddick, Chief Financial & Administrative Officer]

So with respect to the recession impact probably the most analogous recession we looked at in terms of the impact on the business would be the 2008 time frame. I just caution you that in analyzing that time frame and the impact on the business the mix of our business was very different back then. At that point in time only about 30% of our business was contractual and 70% was more of a transactional business related to live events and merchandise. And as our profit expanded through the media deals and the network our mix of business has shifted the other way around. We're now 70% contractual and 30% transactional.

So it may not be totally analogous. But to answer the question directly, yes. There's some -- there have been historically when you look at previous recessions an impact with a lag of six to 12 months because of the downturn in consumer spending in a recessionary environment where we saw some downturns on the order of magnitude of 30% or so on the revenue lines.

And now I think the impact -- if we have in this recession, if we are truly in a recession so far, we haven't seen any impact. We might get an impact with the lag as we discussed if the recession continues. But I think the overall impact even though those line items might be affected would be lower, because of the mix of our business. So -- but the lines that are affected typically are ticket revenue from Live Events, merchandise revenue, shop revenue anything that has more of a transactional nature, including game sales and things like that.

With respect to margins on expansion of domestic media rights whether it be for streaming PLEs or for the TV shows no. We try to manage so that we can grow margins over time. Obviously, the incremental margin on expansion of rights fees is large for us and we track that. Of course, we have to manage talent expense against that and maintain the quality of the show and the breadth of talent to keep the rights fees going up. But we would expect that margins and we try to plan our expense base so that as our domestic rights fees go up, our margins expand in the media section.

[Vasily Karasyov, Cannonball Research]

Thank you.

[Seth Zaslow, Senior Vice President & Head-Investor Relations]

Well, thank you everyone for joining us today. We appreciate your interest in WWE. And operator, you can now conclude the call.

[Operator]

Thank you. That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.