TKO Group Holdings Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brandon Ross - LightShed Partners - Analyst : Yeah, you guys can't hear me at all?

Question: Brandon Ross - LightShed Partners - Analyst : Okay -- there sorry about --

Question: Brandon Ross - LightShed Partners - Analyst : I was there. First, I'll take the blame on the technical difficulties. How about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 12:00PM, TKO.N - Q2 2024 TKO Group Holdings Inc Earnings Call

Question: Brandon Ross - LightShed Partners - Analyst : Sorry -- you, too. A couple of things. One is, in the prepared -- Ari really highlighted how much bigger of a profit center live events has become, especially at WWE. And you've attacked it in a lot of different ways, including venue size, pricing. Just wanted to get a sense of where you are in that optimization journey at this point? How do you go about optimizing ticket prices? How much room is there on the PLEs, are we going to see this move to stadiums and multi-night? Any color you could give us to kind of model out into the future would be helpful.

Question: Brandon Ross - LightShed Partners - Analyst : Got it. And then the NBA deal finally wrapping up, if it actually is wrapping up. I guess, UFC is really moving into focus. And was just trying to think about the intrinsic value of the pay-per-view asset that you have. In the past, you've been extremely helpful with viewership growth for the PLEs on WWE. I was wondering if you could just talk to us about how UFC viewership of the pay-per-views and pricing has evolved since the last deal and especially what you're seeing in recent trends?

Question: Brandon Ross - LightShed Partners - Analyst : Excellent. Thank you.

Question: Ben Swinburne - Morgan Stanley - Analyst : Good morning. Can you hear me?

Question: Ben Swinburne - Morgan Stanley - Analyst : Hello. Okay. So to make sure I didn't having Brandon's problems over here. Good morning, guys.

Question: Ben Swinburne - Morgan Stanley - Analyst : Two questions. On WWE, another huge year-over-year growth in live events revenues and yet expenses were down, I think, Andrew, you said production costs were down. I just -- maybe you could unpack what's happening there with this mid-50s margin at WWE because obviously, that's really impressive. And then I guess I would have thought the free cash flow conversion guidance might have come up just on the guidance raise, but also I thought -- I figured you'd take the settlement out of the free cash flow, maybe it's just too uncertain at this point. So I wonder maybe you could just comment on free cash flow as well. Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 12:00PM, TKO.N - Q2 2024 TKO Group Holdings Inc Earnings Call

Question: Ben Swinburne - Morgan Stanley - Analyst : Makes sense. Thanks, guys.

Question: David Karnovsky - JPMorgan - Analyst : Thank you. Mark, on the site fees, I'm interested how you view the best way to optimize this over the long term. Is this kind of a pure volume game where you look to get paid on as many events as possible? Or is this more about kind of increasing the value of the events as in highlighting that to host cities and venues as a way to kind of drive competitive pricing?

Question: David Karnovsky - JPMorgan - Analyst : And then on the WWE sponsorship, look like you added Wingstop as a sponsor for PLE events, which is in addition to Prime. Just wanted to see if you could dig into your strategy in terms of limiting those in-ring sponsors for now to the biggest events you have and how you see that building out over time?

Question: David Karnovsky - JPMorgan - Analyst : Thanks.

Question: David Karnovsky - JPMorgan - Analyst : Understood, thank you.

Question: Ryan Gravett - UBS - Analyst : Great, thanks. Maybe just circling back on the UFC rights, but on the international side. Can you give us an update on how international rights renewals are performing? And if you're willing to share what kind of step ups you're seeing? And just more broadly how you would characterize the demand environment for sports rights relative to what we're seeing in the US?

Question: Ryan Gravett - UBS - Analyst : Got it. Thanks, Mark. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 12:00PM, TKO.N - Q2 2024 TKO Group Holdings Inc Earnings Call

Question: Stephen Laszczyk - Goldman Sachs - Analyst : Thanks for the questions. First, maybe for Mark on live events. You guys see a pretty large swath of the income distribution across your two properties. I'd just be curious if you could impact some of the consumer trends you're maybe seeing at the moment? And then any thoughts on where there still might be opportunity across the properties to take some more price over the next year on the live events side? And then Andrew, you called out the Sphere in September. Just curious if you could add any context around some of the revenue or costs we should expect to see come in, in the quarter? Thank you.

Question: Stephen Laszczyk - Goldman Sachs - Analyst : That's great. Thank you, both.

Question: Peter Supino - Wolfe Research - Analyst : Thank you. Good morning. I wondered if you could help us think as bigly as we can about your longer-term growth opportunity outside of the United States, especially in terms of event count and productivity program to exploit that over time. And I'd also love to hear from you about the international distribution you'll get from Netflix and how that compares to your prior international distribution since that's such an important driver of demand. Thank you.

Question: Peter Supino - Wolfe Research - Analyst : Thank you.

Question: Eric Handler - Roth MKM Partners - Analyst : Yes, good morning. Thanks for the question. At this point, a lot has already been asked. But I guess with the WWE PLE deal that expires one quarter after the UFC deal, how are you thinking about -- do you run that at a similar time frame as the UFC deal? Do you want to get the UFC deal situated before you think about that PLE deal. So any color you can give there would be great.

Question: Jason Bazinet - Citi - Analyst : Thanks. You guys have obviously done a good job on the revenue and cost side with these two properties together. Do you mind just rolling the clock back and reminding us, when you created TKO, why you didn't take all of the sports assets inside Endeavor, including PBR and make it part of TKO? And is PBR is something that could become part of the TKO family going forward? Thanks.

Question: Jason Bazinet - Citi - Analyst : But there's nothing about the PBR asset that doesn't feel like it's not orthogonal to whatever you're building on the sports side. There's nothing that's uniquely different about that sport versus other sports.

Question: Jason Bazinet - Citi - Analyst : Understood. Okay. Thank you, everyone.