World Wrestling Entertainment, Inc. (WWE) CEO Vince McMahon on Q1 2022 Results - Earnings Call Transcript - Seeking Alpha

World Wrestling Entertainment, Inc. (NYSE:WWE) Q1 2022 Results Conference Call May 5, 2022 5:00 PM ET
Company Participants
Seth Zaslow – SVP and Head, IR
Vince McMahon – Chairman and CEO
Nick Khan – President and Chief Revenue Officer
Stephanie McMahon – Chief Brand Officer
Frank Riddick – Chief Financial and Administrative Officer
Conference Call Participants
Mark Kelley – LightShed Partners
Curry Baker – Guggenheim Securities
Eric Handler – MKM Partners
David Joyce – Barclays
Vasily Karasyov – Cannonball Research
Steven Cahall – Wells Fargo
Operator
Hello, and welcome to WWE’s First Quarter Earnings Call. This call is being recorded.
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
Thank you, and good afternoon, everyone. Welcome to WWE’s first quarter 2022 earnings conference call.
Leading today’s discussion are Vince McMahon, WWE’s Chairman and CEO; Nick Khan, WWE’s President and Chief Revenue Officer; Stephanie McMahon, WWE’s Chief Brand Officer; 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 about an hour ago 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.
With that, I would now like to turn the call over to Vince.
Vince McMahon
Good afternoon, everyone. Thanks for joining us today.
As you know, we have a following a record performance in 2021, the momentum seems to be carrying on very well into 2022. We had a really good strong start delivering record financial results, which obviously reflects the strong performance across pretty much all lines of businesses. We had a couple of notable achievements, we staged what we would know as a stupendous WrestleMania, in addition to other successful premium live events, including Elimination Chamber, Royal Rumble and Day 1. We also announced an expanded partnership with A&E to produce the original programming, and we completed a modest media rights agreement in the media region. Nick and Steph will provide further perspective on our operations. And Frank is going to give us a financial performance in more detail. I think we’re pleased with how the business is currently performing and positioned. And we believe that our creativity will enable us to continue to drive growth and value to our shareholders. Nick?
Nick Khan
Thanks very much, Vince, and thank you, everyone, for joining us on today’s call.
We’re pleased with the results for the quarter, and we’re confident the Company’s momentum is strong coming out of WrestleMania 38.
To start, we want to share with you some information on WrestleMania’s performance across various lines of business. In terms of viewership, this WrestleMania was the most viewed event in our Company’s history, both domestically and globally. On this, it affirmed the strategic bet we made over a year ago that partnering with a widely distributed streaming service would drive new eyeballs to WWE. This success comes as the increasingly cluttered streaming marketplace see subscriber numbers begin to slow, and in some instances, even fall and viewership stagnate, not for WWE. To put it into context, in 2021, WrestleMania’s first year on Peacock, we saw a 15% increase in viewership from 2020, which was the last WrestleMania to air in the U.S. on WWE Network. This momentum continued into 2022, where this past month at WrestleMania 38, we saw a 61% increase from 2021. We also doubled WWE viewership in total on Peacock over the past WrestleMania weekend compared to the year prior. That’s massive year-over-year growth.
As you can see, we did not hit a ceiling after our first year on Peacock. During WrestleMania weekend, nearly one-third of all Peacock accounts viewed WWE content. In fact, WrestleMania 38 was the second most watched live event in the history of Peacock, behind only this year’s Super Bowl. What this tells us is that we are reaching new fans on the service and growing WWE’s audience with the growth of Peacock, alongside the existing robust partnerships and viewership on USA with Raw and Fox with SmackDown.
As we all heard in Comcast’s earnings report last week, Peacock increased its paid subs by 40% in Q1 alone. As Peacock continues to grow its user base and in turn, those users continue to sample WWE content, we are confident these viewership numbers will only continue to grow. Our viewership records were not limited to the United States, a staggering 56 million viewers watched WrestleMania in India through Sony Sports Network. The number showcases our incredible reach in the region. In total, we saw a 54% global viewership increase over 2021. That increase is a credit to the content and to the recent distribution deals we’ve done globally that get WWE Network on more widely distributed services in international markets.
WrestleMania 38 was also the most attended and highest grossing live event in WWE history, drawing an over 156,000 fans from all 50 states and from 53 different countries. With next year’s WrestleMania taking place over two nights at SoFi Stadium in Los Angeles, our goal is to top the strong 2022 numbers.
Heading into this year’s WrestleMania, we wanted to expand offerings to our fans and provide more opportunities for them to interact with our product and our superstars. For the first time, we expanded WWE superstore access to 5 days and invested in building out enhanced activations and live event programming at access. This included an interactive exhibit on the 30-year history of The Undertaker and announced booth where fans could call their own WWE match and over a dozen panels with superstars. The investment helped to drive the highest WrestleMania merchandise sales in WWE history. Look for us to build on these on-site opportunities in the future.
Steph will speak shortly on the record-setting performance on the sponsorship front for WrestleMania. We saw success across the board. Beyond WrestleMania, during the quarter, we continued to identify new revenue streams and build on past success. Nowhere was that more evident than in our international business.
In March, we finalized and signed a deal with the NBC Group to make it the home of WWE in the Middle East, North Africa region. NBC Group is a market leader in the region, and we follow what we believe to be a successful model here in the U.S. of partnering with an entity that showcases our product on free-to-air and on its SVOD service. We expect to see substantial growth in the MENA region as well, which should increase our already robust live event business in that region. Speaking of which, that NBC deal came on the heels of our February premium live event Elimination Chamber, a sold-out show from the Superdome in Jeddah. In terms of viewership, this show saw a 41% increase domestically and 42% increase internationally over our last show in the region, which continues the viewership growth that we’ve all been seeing for our premium live events, look for more news to come on plans for another Saudi event to take place later this calendar year.
Looking ahead, we announced last month that we will be staging a September premium live event in Cardiff, Wales at Principality Stadium. It’s the first major WWE stadium event to be held in the UK in 30 years. We are seeing that there is clearly pent-up demand and excitement locally with over 85,000 preregistrations for tickets, significantly surpassing our own internal projections. These tickets go on sale on May 20th, and we believe they’ll go quickly. According to Booking.com, 95% of all hotel rooms in Cardiff are now booked for our Cardiff date.
Turning back to domestic business during the quarter. We continue to cultivate new revenue streams for the Company and drive more value from existing lines of business. In February, we announced On Location as our first ever third-party hospitality provider for our premium live events. On Location is the premier live event hospitality business working with the NFL, the NCAA and the Olympics. They will design individual experiences around all of our domestic premium live events starting with Hell in a Cell in Chicago on Sunday, June 5th. These unique experiences are new offerings for our company. Look for more of these activations at our biggest events for the rest of the year and beyond.
In March, we announced a partnership with Fanatics. As part of the relationship, Fanatics will develop and manage all online WWE merchandise sales. Coming off the record-setting WrestleMania merchandise weekend, we believe that there will be further growth to all of our merchandise with the Fanatics partnership, which we’ll launch this summer.
Finally, we continue to focus on developing original programming, seeing its value as a revenue driver, marketing tool and pathway to deepen relationships with additional media partners. Following up on the success of last year’s A&E shows, Biography: WWE Legends and Most Wanted Treasures. We extended the deal with A&E for 35 new episodes of Biography and 24 new episodes of Most Wanted Treasures. In addition, we are introducing a new show, WWE Rivals which will tell the stories behind the biggest classes in WWE history, both in and out of the ring of which A&E has ordered over 20 episodes. We will also produce post shows for certain biography episodes, which will showcase WWE Superstars and friends of WWE reacting to the episode that just aired on A&E.
In all, there will be more than 130 new hours of programming in the second phase with A&E. We continue to build out our original programming slate and we’ll have more to share soon.
As we focus on moving the day-to-day business forward, we continue to monitor the live events landscape as we begin to position ourselves for the next right cycle. Developments over the past quarter tell us that when we enter into the next round of negotiations, there will be more buyers looking for live programming than at any previous point. New entrants are coming to the table and incumbent players are ramping up their investment.
Let’s talk Netflix. The recent Netflix business shifts that everyone on this call are fully aware of signaled to us a number of things. First, Netflix is willing to make adjustments and reverse positions when it identifies an issue. A few years ago, Netflix put out on social that it was okay with password sharing amongst users. Obviously, that has changed. As recently as 2021, Netflix’s most senior executives said there would not be an ad product on Netflix, a quote from the Netflix earnings call just a year ago, “Our fundamental product is on-demand and advertising-free. Sports tends to be live and packed with advertising. So, there’s not a lot of synergies in that way.” As we had mentioned on our last earnings call, it’s just a matter of time before Netflix goes with live. Nothing commands a higher CPM than live and nothing offers the leverage to command broader buys.
Let’s talk Apple TV+. Its prolonged entry into the sports space came together in actuality this past quarter. The company began exploring sports rights back in June of 2020. Since that time, they’ve come to the table for a number of rights deals negotiation. There was an aggressive pursuit of the NHL last year. They have now landed their first package with an exclusive collection of regular season MLB games that are streaming on Friday nights. We are all hearing about the possible movement of NFL Sunday ticket at a record price. Let’s all see where that lands with Apple now being a real player in the live space.
Let’s talk Amazon. They first tested live in the UK with Tennis. Amazon then went bold with getting the exclusive NFL Thursday night game package in the U.S. and by accelerating the start date of that deal by a year to this September’s NFL season. They take big dollars for marquee talent and production to make sure that their first big massive rights deal has the best chance to resonate. Amazon also announced a smaller M&A deal last week, which we found interesting as well.
All of these moves towards more live programming on streaming is yet another sign that all of these traditional and newer tech companies will be pursuing more live with both sports and entertainment. Disney+ made moves on this front during the quarter and doing its first live telecast announcing the Oscar nominations on streaming exclusively and by announcing that Dancing with the Stars, a live program, will go exclusively to streaming this fall. Hulu, already in the live space with ESPN+ simulcast of NHL streamed its first live special this month with a Red Bull event. And Amazon too experimented with live programming beyond sports with its airing of the American Country Music Awards 1.5-month ago.
As all of these outlets ramp up their investment in live, whether sports or entertainment, WWE is uniquely suited as the sports entertainment property to fulfill multiple programming needs. We’re seeing the success with Peacock, and we’re confident a robust rights marketplace will be attracted to that success as well.
With that, I hand the call over to Stephanie.
Stephanie McMahon
Thank you. In addition to the record viewership and sales for WrestleMania that Nick and Vince spoke to, we would be remiss not to reiterate that WrestleMania beat the Super Bowl in terms of our reach across digital and social media with 2.2 billion impressions, 1.1 billion video views, 87 million engagements and 13.1 million hours of video watch time. WrestleMania also reached a new record for sponsorship revenue at more than $10 million, which is a 50% increase year-over-year and a 47% increase over our previous record from 2020. For the first time in WrestleMania history, we had two presenting partners in Snickers and 2K, which incorporated a fun social campaign around who the presenting partner really was that was highlighted in that week.
Additionally, WWE increased sales and sponsorship revenue 34% year-over-year in the first quarter. Throughout this time period, we brought on 9 new partners, including Toyota, Mike’s Hard Lemonade, DoorDash, Rihanna’s Fenty Beauty and Rocket Mortgage. More and more brands are looking for meaningful integrations, not what is referred to as logo slabs. And WWE is the perfect vehicle to seamlessly incorporate partners into our content across platforms.
Toyota, in partnership with Fox utilized our augmented reality technology to bring the Tundra to life inside the arena on SmackDown. We also created customized commercials with our in-house production studio, starring WWE Superstars, Rick Boogs and Shinsuke Nakamura as they took their Tundra offroading to surf, hike, mountain bike and kayak. DoorDash became our first ever legacy partner for WrestleMania, matching donations to 5 local nonprofit businesses in Dallas. And Fenty Beauty is utilizing Bianca Belair’s social reach to launch a new lipstick line across YouTube and Instagram.
Innovation and interactivity are critical to the success of any media property. We were extremely pleased with the relaunch of our premium video game console franchise, WWE 2K. After taking a little more than a year off to improve the game engine, we worked hand in glove with our partners that take to interactive, listen to our customers and fans and earned back their trust by delivering a game that exceeded their expectations. WWE 2K22 was a commercial and critical success with the highest Metacritic scores on both Xbox and PlayStation platforms in franchise history with over 5.6 million hours viewed on Twitch to date.
We continue to see strength in the performance of our mobile games with 2K and Scopely, SuperCard and Champions. And recently signed a new deal in the role-playing game space that will be announced soon. We also continue to evaluate the metaverse, both walled garden environments that already exist as well as decentralized properties, look to hear more in the coming months.
Gaming is a priority for WWE to reach our next-gen audience with over 80% of WWE’s audience self-identifying as gamers. And nearly 60% of the gaming audience in general being 34 years or younger. We aren’t only targeting the next generation of WWE fans. We are also targeting the next generation of WWE Superstars. In partnership with the Cowboys at their headquarters and state-of-the-art training facility, The Star, we recently held the first-ever all-college tryout with over 50 student athletes from 40 universities. We hired 15 of those athletes, 8 men and 7 women with the average age of 23. This is in addition to the NIL program we launched in December, which we highlighted on our last earnings call, featuring Olympic Gold Medalist and two-time NCAA champion, Gable Steveson, who made two appearances at WrestleMania. We will be announcing our second NIL class soon.
Pop culture also continues to help us reach a much wider audience. Logan Paul’s appearance at WrestleMania garnered over 143 million impressions, 119 million video views and 15 million engagements. The Undertaker drove the Pace Car for the Daytona 500. Ronda Rousey promoted WrestleMania on Ellen, and Roman Reigns was invited back to the Tonight Show starring Jimmy Fallon. Sasha Banks and Xavier Woods were nominated for Nickelodeon Kids’ Choice Awards. And this past weekend, four NFL franchises invited WWE Superstars to announce Draft pick for their teams with the Miz, Titus O’Neil, Baron Corbin and Gable Steveson participating in Friday’s national telecast, across ESPN and NFL network.
We feel confident about our ability to continue to strengthen WWE’s brand and grow our audience, which should result in incremental revenue opportunities across all of our lines of business and increase long-term value for our shareholders.
And now, I’ll turn the call over to our CFO, Frank Riddick.
Frank Riddick
Thank you, Stephanie.
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 Vince highlighted, 2022 is off to a strong start. In the first quarter, we generated record quarterly revenue of $333 million and record quarterly adjusted OIBDA of $112 million, which exceeded the high end of our guidance. Adjusted OIBDA increased 33%, primarily due to higher revenue and profit from the return to a full schedule of live events, including a large-scale international event. Growth in revenue and profit was partially offset by the absence of onetime upfront revenue recognition related to WWE’s licensing agreement with Peacock.
Our performance in the first quarter places us firmly on track to meet our full year outlook. I’ll touch on the outlook for the second quarter and full year in more detail later on in my remarks.
During the first 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 20% on 15% revenue growth. The most notable item driving the results was the contribution of our large-scale international event Elimination Chamber. Network revenue decreased due to the onetime upfront revenue recognition in the prior year period related to the delivery of certain WWE Network intellectual property rights to Peacock. Excluding the impact of this onetime item, network revenue increased due to higher domestic network revenue related to the transition to the Peacock service.
Core content rights fees increased modestly as the contractual escalation of rights fees from the distribution of our flagship shows, Raw and SmackDown was partially offset by the timing of events in the quarter. Specifically, we had one fewer episode of SmackDown in Q1 2022 as compared to Q1 2021. The growth in revenue was partially offset by higher operating expenses. The increase in expenses was primarily related to our large-scale international event.
Television production costs for our weekly, in-ring content, Raw and SmackDown, decreased. As a reminder, we produced this content in the WWE ThunderDome at Tropicana Field in the prior year period, which was more expensive than a regular 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 $7.1 million based on a $22.6 million increase in revenue with the return to live even touring. During the first quarter, we continued to experience strong demand for our live events. We held 52 events in North America with average attendance up nicely from the fourth quarter.
In our consumer products segment, page 7 of our presentation, adjusted OIBDA increased 78% or $5.2 million with the growth primarily attributable to our franchise video game, WWE 2K22, which, as Stephanie discussed, was released in March and has had record performance for the franchise. Venue merchandise revenue increased while sales of our merchandise on our e-commerce site, WWE Shop declined, in part due to a tough comparison to elevated COVID-related sales in the prior year quarter.
Now, let’s turn to WWE’s capital structure, as shown on slide 8 of the presentation. In the first quarter, we converted 66% of our adjusted OIBDA to free cash flow. We generated $74 million in free cash flow as compared to $54 million in the prior year period. The increase was due to higher operating performance as well as favorable working capital, most notably the timing of collections associated with license fees partially offset by an increase in management incentive compensation payments and capital expenditures. In the first quarter, we incurred $21 million of capital expenditures, $13 million of which related to our new headquarter facility. Excluding the new HQ CapEx, free cash flow would have been $87 million in the quarter or a conversion rate of 78%. During the quarter, we returned $39 million of capital to shareholders, including $30 million in share repurchases and $9 million in dividends paid. To date, we’ve repurchased approximately 5.2 million shares for $279 million and have $221 million available under our $500 million repurchase program authorization.
As of March 31, 2022, WWE held approximately $448 million in cash and short-term investments. Debt totaled $235 million, including $213 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’re currently evaluating our capital structure and financing strategy.
Looking ahead, we’re not changing our outlook for the full year adjusted OIBDA at this time. We continue to target a range of $360 million to $375 million, which is up 10% to 15% from 2021. As we discussed on our last earnings call, this range reflects our projection for record revenue, with growth driven by full year impact of ticketed live events, the staging of additional large-scale international events, escalation of right fees for the Company’s flagship programs and monetization of new original series. Additionally, our outlook reflects our assumption of a significant increase in our operating expense base, in particular, an increase in production, content related and other expenses. Key initiatives that could have meaningful implications for WWE’s performance for the remainder of 2022 include the continuing execution of our live events touring schedule, including our stadium strategy for our premium live events, the licensing of Raw second window rights, additional licensing of WWE Network in international markets, further increases in sponsorship sales and the ongoing monetization of new original series.
The outlook is also subject to certain macroeconomic risks over the remainder of the year, in particular, potential impacts on consumer spending. We’ve seen some pressure on expenses, primarily related to labor, delivered 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 they may have on other areas of our business, such as live event attendance and merchandise spending going forward. We’ll continue to monitor consumer behavior very closely and as appropriate make adjustments to our business to address any potential impact on our operations.
As for the second quarter of 2022, we’re targeting adjusted OIBDA in the range of $80 million to $90 million, which represents an increase of approximately 17% to 32% from the prior year quarter. The estimate reflects strong revenue growth from the impact of WWE’s returns and live event touring and the contractual escalation of domestic media rights fees for the Company’s flagship programs and premium events. We also anticipate that second quarter results will reflect an increase in operating expenses.
In conclusion, WWE generated strong first quarter results that reflected robust demand for our events and increased consumption of programming across platforms. We believe our long-term outlook is supported by the rising value of live sports content, increasing spend by streaming platforms on live and sports content to retain and acquire customers, increasing brand spend with media companies to deliver reach and fan engagement, and increasing premium for celebrities and hit 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 expanding global audience to support growth across all business lines. We look forward to updating you on the progress of these initiatives in coming quarters.
That concludes our remarks, and I’ll now turn it back to Seth.
Seth Zaslow
Thank you, Frank. Operator, we’re ready for Q&A. Please open the line.
Question-and-Answer Session
Operator
[Operator Instructions] And we will go first to Brandon Ross of LightShed Partners.
Mark Kelley
Thanks, guys. This is actually Mark Kelley on for Brandon. Thanks for taking the questions. Just a couple for us. You have the convert coming due next year, it’s about 8 million or so shares dilutive. How are you thinking about resolving that? And then, the business has always been underlevered and what do you think the right amount of leverage is for the business? And then, one quickly on renewals. It seems like the Peacock partnership has been extremely successful with viewership up dramatically. And just given that success, does it make sense to bundle that renewal for beyond ’24 with the Raw and SmackDown rights? Thank you.
Frank Riddick
So, on the first question on the convert, we’re currently analyzing our capital structure strategy and how we’ll deal with the convert, and we’ll have more to say about that in the late second or third quarter. We do — as we’ve said before, we do believe that given our cash flow and liquidity, we can accommodate a slight increase in leverage, but we’re not at this point giving any indications as to what we’re going to do.
Nick Khan
In terms of the bundle, Mark, the bundle can be a very powerful tool. Obviously, we have a strong relationship with Fox. So, we’ll talk to both incumbents first, see what makes the most sense and ultimately move forward from there.
Operator
And we’ll go next to Curry Baker with Guggenheim Securities.
Curry Baker
Nick, I have a couple on India for you. WWE clearly saw some strong engagement there during WrestleMania. Can you provide any additional color on ratings or engagement to help us think about your momentum in India more broadly? And then, maybe walk us through how you view the media ecosystem there and your outlook for the next renewal? And lastly, are there any opportunities there, like a stadium event to maybe realize more meaningful economic sooner? Thanks.
Nick Khan
Thank you. So, I think the first part of the 8-part question — I’m kidding, Curry. The first part of that on India and other indicators there. So, about a year or so ago, we did an exclusive to India only event, which were our up-and-coming Indian superstars versus our American superstars. So, for that event, which we produced out of Orlando, we did 25 million viewers. So, a significant amount. Again, even in India, the Indian superstars are not big names yet. So, we saw a massive viewership turnout for that. Obviously, the WrestleMania numbers are terrific as our other premium live events have done quite well there as well. It’s a hugely important market to us.
The third part of your question, we’re always taking a look globally as we sort of found Cardiff outside of the two Middle East, North Africa shows that we do annually. We found Cardiff. We thought it was the right spot at the right time, stadium show which we’re all optimistic on, and we mentioned those preregistration numbers. So,, we’re taking a look around the globe to see where else that will work for us.
Refresh my recollection on the second part of your question.
Curry Baker
Yes. The second part was just on the media ecosystem there and maybe kind of any initial outlook you have for the renewal. I know it’s a couple of years away. But yes, just that.
Nick Khan
Everyone, as you know, is waiting on the credit rights. So June 12th and 11th in India and for the companies who are putting in bids for those are obviously going to be big, big days. Obviously, a lot of American-based companies bidding on those rights. I would say the entire focus of that ecosystem is on that. Once we come out of that, we’ll see where other properties land there.
Operator
And we’ll go to our next question from Eric Handler with MKM Partners.
Eric Handler
Two questions. Let’s start with Nick. I’m assuming partners around the world are seeing the benefit that Peacock is seeing from the viewership from WrestleMania another premium live event. Is that bringing more people to the table to do more licensed deals internationally? And if so, is that also seeing a positive benefit in the dollar value of these licensing contracts?
Nick Khan
So, I think in the first part of this, I had nothing to do with when Vince, Stephanie and company launched WWE Network in 2014. I felt they were way ahead of the game in getting into the SVOD business at the time, if I’m remembering correctly, it was Netflix, Hulu, WWE. In my humble opinion, I think we were ahead of the game again in the Peacock licensing deal for WWE Network domestically, almost so where are the U.S. companies who were in constant contact with, their international strategies, most of them are just sort of starting to materialize now. So, even if you look at the SkyShowtime partnership, which is for 22 European countries, it made sense for them to get in, in that together since they weren’t established on their own in those territories. We think all of that is leading to a robust international rights marketplace for us, and we’re in deep talks in many of those territories.
Eric Handler
Excellent. And then, question on the core content rights fees was down about $11.5 million from the fourth quarter. I think you guys said that there was one fewer SmackDown episode, which I assume that had a little bit of impact, but that seems like a pretty steep sequential drop. Is there something else in the core content rights fees that went away, or wasn’t there, and will that happen again in 2Q?
Frank Riddick
Yes. As we said, it’s primarily the number of events and moving the revenue from quarter-to-quarter, but there was also some changes, small changes, other changes in smaller international markets there in that number as well.
Nick Khan
And Eric, just a point of clarification. I think it was a premium live event, not a SmackDown episode, if I have that right — SmackDown, got it. Okay. But on the premium live events, for example, when we decided to go with Day 1 on January 1, that eliminated the December premium live event for us. Obviously, our fiscal year is the calendar year. So, things like that always get taken into consideration as well.
Operator
And we’ll go to our next question from David Joyce with Barclays.
David Joyce
A couple more on the international front. Just wondering where you are on ramping up the international events towards the more of a normalcy level? Obviously, you’ve already mentioned Cardiff, but just on the normal level of events, just wonder where we are on that reopening. And also on the performance center front, are there any more that you’re opening up to develop more talent, or are you pretty much set with that infrastructure at this point? So, you’re just working on the development at this point? Thanks.
Nick Khan
David, I’ll take the first one of those, and then I’ll hand it over to Frank on the performance centers. On the international live events, we just came out of a European tour which ended last week. So, in Paris, France, for example, over — I think it was 11,000 in attendance, a big show there for them, for us, European tour where we saw success across the board in each of the cities that we visited. So, we’re back up and running. In terms of televised international events, Cardiff will be outside of the Saudi show, which we already had. Cardiff will be the first one. And then again, we’re anticipating another Saudi show this calendar year. So, look for more of the televised bigger shows next year, but our touring is back internationally and the results are strong.
Frank Riddick
On the performance centers, as we’ve ramped up — as Steph was pointing out, as we’ve ramped up our recruiting effort, particularly with younger college athletes and NIO program, we’re looking at expanding and improving some of our performance center. We don’t have a decision on what we’re going to do yet, but we are looking at it.
Operator
And we’ll move next to Vasily Karasyov of Cannonball Research.
Vasily Karasyov
Frank, you were talking earlier about evaluating the optimal capital structure and capital allocation. So, in that regard, I wanted to ask you about your philosophy with regards to share buybacks. So, you’re already buying back stock pretty much regularly. Can you tell us how you make the decision? How much stock to buy in a particular quarter? Should we take it as your judgment on where the stock is going in the near future? And how may that change after the convert is resolved? And will you commit to a certain buyback every quarter, or will you remain opportunistic? And if so, what criteria will you use? Thank you.
Frank Riddick
So, the way we manage the stock buyback program is we look at — we have an opportunistic program where we look at a discount to where we think the intrinsic value of the stock is and where we’re trading and we buy back stock according to the level of discount to the intrinsic value. And we’ll intend to remain opportunistic in the way that we run the program. So, on the convert, we’ll deal with the convert probably sometime in the third quarter and come up with a plan on how to do it. But if — future stock buybacks will depend on our cash flow and our liquidity and other uses of capital.
Operator
And we’ll go next to Steven Cahall of Wells Fargo.
Steven Cahall
Thanks. Maybe first, just curious if you could speak a bit more about ratings. You had a really successful WrestleMania. So just wondering, the KPI deck shows ratings still kind of trending flat to down. I know you had a different mix of episodes, but has there been a rebound in ratings since WrestleMania?
Nick Khan
Yes. I think, if you look at this entire past quarter, Steve, ratings were up on raw, ratings were up on SmackDown. In fact, two, three weeks ago on a Friday night, SmackDown obviously on FOX Network, we beat the NBA playoff game, which was on ABC network head-to-head in both the overall ratings and the demo. So, we’re confident that the ratings have been strong. A lot of linear ratings, as you know, are down significantly, where — especially in the original scripted programming side. I’m not sure how much more, you’re going to see in terms of high-end scripted content on network television. We’ll see. But very, very strong outside of the Olympics. We’re pleased with them.
Steven Cahall
Great. And then, I was wondering if you have any information on how CPMs have been trending around your linear network content. And it’s an interesting time as we head into the upfront. I think there’s a lot more kind of talk out there about growth in AVOD and streaming and how that may impact just linear CPMs overall. So, I’m curious if you know from your network partners, how your CPMs have been trending and how you kind of feel about how those CPMs might get priced as we get into this upfront. Thanks.
Nick Khan
Clearly, you’ve been talking to our network partners as we can see, which you should be doing. We’re good with where they’re going. Obviously, any increase is a good thing for us, a good thing for them. Keep in mind, these relationships, the Peacock relationship, especially on the sales side is new. Fox relationship, we’re a couple of years into. So, it takes time to get these things up and running the way that they need to be. We think our sub numbers, we deliver. We think our advertising numbers, we deliver. We think ratings wise, we deliver. So, we feel good about it.
Operator
And with no other questions in queue, I would now like to turn the call back to Seth Zaslow for any additional or closing comments.
Seth Zaslow
Great. Thank you. We’d just like to thank everyone. We appreciate your interest in WWE and joining us on today’s call. If you have any follow-up questions, please feel free to reach out to me. Jenny, you can now conclude the call.
Operator
Thank you. That does conclude this call. Thank you for your participation. You may now disconnect.

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