Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TKO Group Holdings Inc (TKO, Financial) reported record results, expecting to reach the upper end of their full-year guidance for both revenue and adjusted EBITDA.
- The company announced a $2 billion share repurchase program and a $75 million quarterly cash dividend program, demonstrating a commitment to returning capital to shareholders.
- TKO's acquisition of Professional Bull Riders, On Location, and IMG is expected to strengthen its global position in sports rights and hospitality, aligning with its pure-play sports strategy.
- UFC and WWE live events continue to show strong demand, with UFC 306 setting records for highest grossing live event and merchandise sales.
- WWE's international expansion is evident, with 18 shows held outside the US in Q3, up from 11 in the same period last year, and setting multiple market records for ticket sales.
Negative Points
- TKO Group Holdings Inc (TKO) recorded a $375 million charge related to the settlement of the UFC antitrust lawsuit, impacting financial results.
- UFC segment revenue decreased by 11% due to fewer events in the quarter compared to the prior year, affecting adjusted EBITDA and margins.
- The timing of WWE's short-term domestic rights deal with USA Network will have an unfavorable impact of approximately $50 million on Q4 revenue and adjusted EBITDA.
- Higher production costs for UFC 306, due to the unique nature of the venue, resulted in reduced adjusted EBITDA and margins for the quarter.
- Corporate expenses increased due to higher personnel costs and executive compensation following the formation of TKO, impacting overall profitability.
Q & A Highlights
Q: Can you elaborate on the potential of splitting UFC rights and the impressive WWE margins this quarter?
A: Mark Shapiro, President and COO, explained that maximizing value on renewals is the priority, and they are open to creative models to achieve this. Andrew Schleimer, CFO, attributed WWE's strong margins to cost-saving measures and growth in high-margin revenue streams like ad sales and sponsorships.
Q: Why continue with the pay-per-view model for UFC when WWE is opting for broader reach with platforms like Netflix?
A: Mark Shapiro emphasized that the pay-per-view model remains strong, particularly for UFC, and they are open to exploring various business models to maximize rights value. He highlighted UFC's strong demographics and appeal to potential partners.
Q: Can you expand on Dana White's comments about entering boxing and how it aligns with TKO's margin profile?
A: Mark Shapiro clarified that while Dana White is interested in boxing, any entry would likely be organic rather than through M&A. They see boxing as a growth opportunity but would pursue it with minimal financial risk.
Q: How is UFC Fight Pass being positioned in renewal negotiations, and what about title sponsorships?
A: Mark Shapiro stated that UFC Fight Pass will remain a proprietary asset with potential for more live events to drive subscriptions. Title sponsorships, like the one with Riyadh Season, will be pursued if they fit well with events.
Q: What is the impact of the Sphere event on UFC, and how does the NFL deal with On Location fit into TKO's strategy?
A: Mark Shapiro noted that the Sphere event was a unique spectacle and not to be repeated soon. Andrew Schleimer highlighted the NFL deal's importance for On Location, emphasizing its long-term benefits and potential for similar future deals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
