TKO Group Holdings Inc Q3 2024 Earnings Call Transcript

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

Question: Benjamin Swinburne - Morgan Stanley - Analyst : Great. Maybe I'd like to start with Mark on sort of the UFC, which is right around the corner with the domestic rights. I think you've made some comments recently about potentially splitting up the rights, taking back pay-per-views. I think as a public company, you certainly benefit from sort of the predictability of licensing out those pay-per-view fights to ESPN. But I'm wondering how you think about that relative to the potential upside of distributing those yourself. And then I'd love to hear, Andrew, the WWE margins this quarter were particularly impressive. I think your expenses were down like 20%, even though revenues were up 13%. You mentioned merger synergies. Anything else you'd flag as even live events, I think the event count was up, I think, at least internationally. So surprised how strong a margin you had in Q3. I'd love any more details you might share.

Question: Brandon Ross - LightShed Partners - Analyst : Maybe just to start with a follow-up on Ben's UFC renewal question. I've been thinking a lot about how different the approach to distributing your top content is between WWE and UFC right now. For WWE, the PLE, you're going with the broadest possible reach on Netflix and Peacock. There's no discrete transaction to watch your content.

Question: Brandon Ross - LightShed Partners - Analyst : Okay. And then Dana White recently talked about getting into boxing and said that it would be with guns blazing. Can you expand on that? Just wondering how this could be done in a way that's in sync with your current margin profile. And will this happen organically by perhaps letting UFC fighters box under your banner? Or is this one of those instances where we could see some M&A at play?

Question: David Karnovsky - JPMorgan - Analyst : Maybe just following up on the UFC renewal. Mark, interested to know how you're positioning UFC Fight Pass potentially as part of negotiations? Last time, that was kept separate. Is that the intention this time around? Or is there kind of an opportunity to roll the service or content into a partner platform and receive better economics? And then just staying with UFC, wanted to know your thinking about title sponsorship as potential inventory. Was this kind of a unique one-off?

Question: Stephen Laszczyk - Goldman Sachs - Analyst : Mark, in the past, you've spoken about the impact the Sphere event has had on the UFC brand. I'm curious now for Sphere, how you're thinking about the evolution of some of these marquee UFC events that you put on, maybe the opportunity to elevate more select pay-per-view fights perhaps potentially through a Sphere-like event in the future or perhaps even through stadium-like events that you host in the WWE side, similar to WrestleMania. Second, On Location already called out the NFL deal through 2036, I think. I was curious if you could just talk a little bit more about the financial profile of that deal, the extent to which you might be operating leverage if you outperform on selling NFL premium hospitality, and if you think a deal like the NFL one could be a good template for similar deals going forward with sports leaks. Thank you.

Question: Robert Fishman - MoffettNathanson LLC - Analyst : Two questions for you guys. Mark, with the Netflix deal fast approaching, can you share more about your excitement to drive additional growth in WWE sponsorship dollars maybe in the US and internationally? And then Andrew, if I can follow up on the cost from earlier. Any way you can break out WWE and UFC cost synergies to date and how you think about the trajectory of each cost bucket thinking about 2025 and beyond?

Question: Peter Supino - Wolfe Research - Analyst : A question on cash flow. Your portfolio of businesses is obviously a good cash generator. We think and have made the case that it's a great cash generator. And some of the numerical comments you've published on free cash flow conversion in the 40% range this year and maybe normalizing around 60% if my memory serves seem really beatable to us. So I'm just wondering if you could comment on that bullish challenge for free cash flow? And then separately, if you just comment on the environment for hiring and retaining talent. It's just amazing a year ago, we were being asked to model the impact on talent costs of the equity capital raised by one of your competitors. And that doesn't come up anymore. So if you could update us there would be great.

Question: Ryan Gravett - UBS Equities - Analyst : I think we lost Ryan during Andrew for his commentary. Assessments for the interest of time we can move on. But if I ask you on an absolute number. And then one final question. I'm sorry, say it one more time. Why don't we go to go the next question? Sounds good.

Question: Richard Greenfield - LightShed Partners - Analyst : Mark, I know this is a TKO call, but I actually had an Endeavor question. Endeavor, as part of the transactions, a couple of weeks ago announced that they're looking to sell 3: Madrid Open, Miami Open and Open Bet. I was actually in a couple of conversations earlier this weekend, we have heard that Ari Emanuel is actually looking at buying these assets. Is that with his own money personally or could that involve any TKO money? And I asked that question because I think there's a lot of investors in TKO who are wondering whether you have any interest in buying or investing in any other nonsports leagues as part of TKO?

Question: Richard Greenfield - LightShed Partners - Analyst :