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spk11: Good afternoon and thank you for attending today's Endeavor third quarter 2022 earnings call. My name is Jason and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, James Marsh.
spk15: Good afternoon and welcome to Endeavor's third quarter 2022 earnings call. A short while ago, we issued a press release, which you can view on our investor relations website, investor.endeavorco.com. Recording this call will also be available via that site for at least 30 days. Today, you will hear from Endeavor's CEO, Ari Emanuel, and CFO, Jason Lublin, before we open for questions. The purpose of this call is to provide you with the information regarding our third quarter 2022 performance, in addition to our financial outlook for the balance of the year. I do want to remind everyone that the information discussed will include forward-looking statements and or projections that involve risks, uncertainties, and assumptions, as well as described in the risk factor section of our filings with the Securities and Exchange Commission, including our 10Qs and 10K. If these risks or uncertainties ever materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements and projections. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. This measure should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issue today, as well as in the non-GAAP financial information posted on our IR website. With that, I'll turn it over to Ari.
spk03: Thanks, James. Our business performed well in the quarter despite an increasingly turbulent macro environment. We've built in position endeavor relative to a broad set of secular industry trends that continue to demonstrate resilience and enable us to deliver on our long-term growth strategy. Today I want to hit on two of these trends, the competition for premium sports and entertainment content and the demand for live events and experiences. I'll then turn it over to Jason who will share more segment level color as well as considerations for the remainder of the year. First, as it relates to premium sports and entertainment content, The company's strength lies in its decision we made nearly a decade ago to become a premium content supplier to the diversified and expanding list of tech and media companies who have pivoted to D2C. Alphabet, Amazon, Apple, and Microsoft are in a race to add offerings across multiple categories to attract customers to their ecosystems and convince them to stay. These mega bundles are often packaged in price as all-in-one subscriptions that deliver strong value. And these leading tech companies go head-to-head with major streaming and media players, including Disney, Netflix, NBC Universal, Warner Brothers Discovery, and Paramount, for the best video, podcast, gaming, and social content. Every single one of them requires a steady flow of premium entertainment and sports content, and we are the leader in these categories. It's undeniable that premium sports and entertainment content have become the most powerful and efficient means to acquire customers and keep them engaged. Pick Amazon and Thursday Night Football. Viewership on Prime has exceeded most common expectations, especially when you consider the strength of schedule, making it both appointment viewing and a powerful promotional tool for the platform. The NFL and Amazon are also partnering extensively on a first-ever Black Friday game, creating more opportunities to drive consumer product sales. Bottom line, Amazon and their competitors understand the network effect generated from premium content, and our flywheel is uniquely positioned to deliver it and benefit from it. Meanwhile, as linear players battle to keep viewers, they've increasingly turned to live sports. You are seeing this play out in new deals for the NFL, Major League Soccer, Formula One, college football across linear as well as SVOD and AVOD services. Additionally, sports betting is quickly becoming the ultimate live sports viewing compliment and yet another way to keep consumers engaged. During the third quarter, we closed our acquisition of sports betting tech leader, OpenBet, helping round out our tech offering in this space. Once again, we've positioned ourselves on the supply side of this industry, working directly with rights holders and sportsbooks to deliver everything from official data, streaming feeds, to betting odds and mobile apps. Beyond sports, the demand for premium talent-led content shows no sign of slowing. In fact, opportunities for talent are expanding into new formats as both big tech and the incumbents fight to link top creators to their platforms. We're closing more long-term deals for our clients with studios, as we did recently with HBO for the Game of Thrones executive producer and showrunner, Ryan Condal. We've also moved more television personality into podcasts, evident in the launch of Stephen A. Smith's new podcast, No Mercy. And we're seeing streamers learn more of our clients from the big screen to the small screen. whether it's Keanu Reeves landing his first television deal with Hulu or Tyler Perry's new deal with Amazon. We're also beginning to understand the impact of ad-supported streaming with new tiers being introduced from companies like Disney and Netflix and the launch of new free ad-supported streaming services. We expect this shift towards an ad model to lead to greater streaming adoption, further supporting the need for more premium content inventory. This is all to our continued benefit, especially when factoring in the incumbent broadcast and cable networks ongoing content needs. The second broad theme I want to hit is a continued consumer demand for experiences and live entertainment. The UFC has achieved 26 consecutive sellouts since restarting events during COVID-19. UFC 276 set a new record for single-event VIP experience revenue via our on-location business. And our first-ever event in France set a VIP revenue record for a non-pay-per-view event. In the third quarter, we serviced three times as many UFC VIP guests as in the prior year. Looking at the rest of our portfolio, our UK-based big Feastival music and culinary event sold the greatest number of tickets in its history. Meanwhile, the NFL International Games produced strong demand for on-location packages, and Super Bowl 57 sales are pacing incredibly well. In fact, interest in Super Bowl 58, slated for Las Vegas in 2024, is already outpacing last year's Super Bowl, and that's an event that's 16 months away. As for new launches, We recently debuted Freeze Soul, the fifth installment of our Freeze Art Fairs, with more than 100 galleries and 70,000 attendees over the four days, making our strongest inaugural Freeze event ever. As it relates to music and comedy tours, we continue to see strong demand, booking shows for our talent well into 2024. Comedy, in particular, is surging. Kevin Hart and Bill Burr sold out the only two arena shows at the Just for Laughs Festival. And Bill Burr at Fenway Park became the highest grossing comedy show of all time. So whether it's across premium sports and entertainment content landscape or in all forms of live events and experiences, our business continues to perform well despite the macro headwinds. And while we cannot yet predict those headwinds' full impact, we remain confident in our position and the strategy we laid out to capitalize on the most resilient secular trends long term. I'll now turn it over to Jason to walk you through our financials and update you on where we're headed as we look to close out the year.
spk07: Thanks Ari and good afternoon everyone. I'll start by walking you through our financial results for the third quarter. I'll also provide you some call around what we're seeing in each of our operating segments. As a reminder, all comparisons will be to the COVID-impacted third quarter of 2021. For the quarter ended September 30, 2022, we generated $1.221 billion in consolidated revenue, down $170 million or 12%. The prior year included $334 million of revenue from the restricted endeavor content business, which we sold in January of this year. Excluding revenues related to this business, consolidated revenues would have been up 15%. Net loss of the quarter was $12.5 million as compared to net income of $63.6 million a year ago. This quarter's results included $85 million of losses from affiliates, predominantly from our minority investment in Learfield, compared to $18 million of losses last year. Income before equity losses of affiliates was $72 million in the current quarter compared to $81.5 million last year. Adjusted EBITDA for the quarter was $303.1 million, up $19.8 million, or 7%. The prior year included $26.5 million of adjusted EBITDA from the restricted endeavor content business. Free cash flow was $153.2 million in the quarter, representing 50.5% conversion of adjusted EBITDA to free cash flow, defined as cash flow from operating activities less capex. Our own sports property segment generated revenue of $402.3 million in the third quarter, up $113.8 million, or 39%, while the segment suggested EBITDA was $195.7 million, up $61 million, or 45%. Growth in this segment was driven by an increase in media rights fees, sponsorships, licensing, commercial pay-per-view, and event-related revenue at UFC. In addition... UFC had one more pay-per-view event in this quarter versus the same quarter last year, as well as more events with live audiences. Segment results were also driven by the new team series format at PBR and the inclusion of Diamond Baseball Holdings. At UFC, with the return of live audiences at our fight night events, we set the highest grossing sporting event records at host arenas in San Diego, Dallas, Salt Lake City, London, and Paris. The Paris event was the first in France's history, after having worked with the local government there for 12 years to lift their broadcast ban on the sport. The event had the largest gate in merchandise records in the arena's history. Overall, UFC has had 26 consecutive sellouts since restarting full capacity events. In connection with the launch of Fight Pass in Brazil, we announced a new partnership with Band, one of the largest TV broadcasters in Brazil. for free-to-air distribution of select events and original content. UFC Fight Pass Brazil remains slated to debut on January 1, 2023. Now turning to events, experiences, and rights. The segment recorded revenue of $440.6 million in the quarter, down $5.7 million, or roughly 1%, and adjusted EBITDA of $49.7 million, down $35.3 million, or nearly 42%. Segment revenue was impacted by certain biennial and quadrennial events like the Ryder Cup, UEFA Euro Championships, and CONCACAF World Cup qualifying games, which all occurred in 2021 but not in 2022. Revenue was also impacted by the timing of certain events that occurred in the second quarter of 2022 compared to the third quarter of last year. These factors were somewhat offset by growth in our academy business, the introduction of our free solo event, and events returning in 2022 that were canceled in 2021, including the Erlingus Classic college football game, as well as a number of music events. We also saw record attendance at the Big Feastival in London, the Mubato Silicon Valley Classic Tennis Tournament, and our on-location business saw continued demand across properties such as Wimbledon, the U.S. Open Tennis Tournament, the NFL, and WWE's biggest events. Adjusted EBITDA was impacted by the timing of events, insurance recoveries recognized in the prior year, as well as increased cost of personnel, including the Olympics business with On Location, and the addition of Barrett-Jackson, which we acquired in the quarter. Additionally, our acquisition of OpenBet closed at the end of the quarter, As we previously announced, OpenBet and IMG Arena will form a fourth reportable segment called Sports Data and Technology beginning January 2023. Finally, representation. Our representation segment revenue was $388.3 million, a decrease of $276.4 million, or nearly 42%. Third quarter 2021 included $334 million of revenue from the Restricted Endeavor Content business. Excluding that, segment revenues would have been up $57.3 million, or 17%. Segment adjusted EBITDA was $132.9 million, down $8.9 million, or nearly 6%. The prior year included $26.5 million of adjusted EBITDA from the restricted endeavor content business. Excluding that, adjusted EBITDA would have increased $17.6 million, or 15%. Performance in this segment was driven by continued strength in our core talent agency business and the continued recovery of live entertainment, predominantly music, as well as our 16790 marketing business, where we saw increased spending from our corporate clients. Moving to the capital structure. We ended the quarter with $5.5 billion in debt and $970.8 million in cash. In the quarter, we made a voluntary pay down of $250 million of debt, At quarter end, our aggregate fixed rate debt is now approximately 43% of our outstanding total debt. We intend to pay down an additional $250 million of debt before the end of the year. Together, we expect a combined pay down to reduce our annual cash interest costs by approximately $30 million. We also expect our net leverage to be approximately 3.85 times by year end. We continue to anticipate free cash flow conversion of approximately 40% for the full year 2022. We also anticipate achieving roughly 50% free cash flow conversion for the full year 2023. With the strength of our free cash flow profile, we see more opportunities to continue to delever. Moving on to our updated 2022 outlook. We're tightening our revenue guidance range to be between $5.235 billion and $5.325 billion, which is $5.28 billion at the midpoint. representing year-over-year revenue growth of 21%, excluding the restricted endeavor content business. In addition, we are raising our adjusted EBITDA guidance range from $1.145 billion and $1.175 billion, which is $1.16 billion at the midpoint, up $10 million from the midpoint of our prior range, representing expected year-over-year adjusted EBITDA growth of 32%. Our updated guidance incorporates the following considerations. our high degree of visibility into revenues for the balance of the year, the continued adverse impact of FX, the delayed timing of content deliveries within our non-scripted business, the earlier than anticipated sale of the Miss Universe organization, and our ongoing cost discipline. Even in the face of an uncertain macro environment, we remain confident in our ability to execute on our strategy and the resilience of our business against challenges ahead. With that, I'll turn it back over to James.
spk02: Great. Thank you. Jason, we'll now take questions, please.
spk11: If you would like to ask a question, please press star followed by one in your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, it's star one.
spk12: Our first question is from John Hodulik with UBS.
spk11: Your line is now open.
spk14: Great. Thanks, guys. So obviously a lot going on in the traditional media space right now with the weakening ad market and sort of stronger cord cutting. Do you guys think this changes the calculus companies are making when it comes to sports rights? I mean, is there any sense that especially traditional companies are sort of becoming more reticent to spend on sports at this point? Does it accelerate the shift of sports from traditional platforms to digital platforms? That's number one. And then maybe for Jason, just the margins in the representation business were really strong this quarter. I mean, is this 34% sort of a good level as we start to look out into 23? Thanks.
spk03: So I'll take the front end of that question. So premium content continues to be in huge demand, whether it be sports rights or movie or television or podcast. The tech players like Amazon and Alphabet and Apple are in a race to add offerings across multiple categories to attract customers into their ecosystems and convince them to stay. As an owner of premium sports like the UFC, as well as a guy that represents premium leagues and federations, More interest in bidders in live sports is a win-win for us. And more opportunity strike broadcast deals for our talent. Apple, as we know, kind of moved in on MLS and MLB. Amazon now has exclusive Thursday night football, and they added the Friday night games for Black Friday. Netflix bid on F1. is rolling out their AVOD service. They are going to add sports. They're going to follow what we believe was Amazon's process, going after international rights for sports, testing it there, testing their system there, and then moving that to the domestic front. They're going to go day and date and live. I think it was just announced with Chris Rock. YouTube announced 15 MLB regular season games. And also ESPN and ESPN said they're securing international games during this year's NFL. It just shows the value of sports. There's going to be a couple sports coming up, the NBA, ours and some others. There's going to be multiple players in competition, whether that be from Paramount Plus, Comcast, Apple, Amazon, ESPN, and Time Warner Discovery. So I think the value of sports rights, as we have seen, even with the Formula One deal going to $75 million, is only going up. So I do not think it's going down, even in this environment.
spk07: As far as the EBITDA margins go, part of this 34% was the mix shift in the quarter between WME, our 160 over 90 business, and licensing. But, you know, we should be 30 plus margin for this segment on a go-forward basis.
spk02: Thanks, guys. Next question, please.
spk11: Our next question comes from Stephen Laskincy with Goldman Sachs. Your line is now open.
spk08: Hey, great. Thanks, guys. On OpenBet, maybe for Ari or Mark, now that the deal is closed, could you maybe talk a little bit more about the game plan for integrating OpenBet and IMG Arena over the next few quarters? What are the next steps? Are there any revenue or cost synergies that you think you can act quickly against that we should keep in mind as we think about modeling the new segment in 23? And then for Jason on FX, we saw some reprieve today, but FX continues to be a headwind. Could you remind us what your specific FX exposure is and how much of a headwind it was or has been on revenue in EBITDA this year and maybe how that relates to some of the guidance revisions that we saw come through. Thank you.
spk03: Just to remind you, we're in the B2B side of the betting business. We're not competing like the other players in the space for players and consumers. We're on the supply side to all of them. We have multiple touch points in the company across sports and sports betting ecosystems. IMG Arena distributes data and content on behalf of rights holders to sportsbooks. OpenBet offers sportsbooks a betting platform and a content offering ranging from player wallet, account management, trading, and odds certainty, and creation, excuse me. As a result, there's, I think in this space, there's nice secular tailwinds in the betting space both internationally and domestically as it rolls out to more states. On the synergies, I would just say both IMG and OpenBet are profitable businesses right now. It's going to be a new segment for us going into 23. And the combination, we expect to achieve meaningful revenue synergies when IMG has, Arena has the data and the content and open bet has player odds and et cetera. So on the revenue side and the cost side, we feel very positive about the business and it's a profitable business for us.
spk07: On the FX side, roughly 85% of our revenue is denominated in USD. So we do have some top line revenue exposure, mostly in our E&R segment. Roughly, let's call it, you know, $750 million-ish of exposure, but we expect the impact this year to be, on a full-year basis, roughly $120 million or 2% revenue. For us, though, the revenue exposure is offset as the cost of those contracts and servicing them are also in that currency, so it has a limited impact on our bottom line, as evidenced by us continuing to raise and forecast up our EBITDA guidance.
spk15: Great. Thank you.
spk11: Our next question comes from Ben Swinern with Morgan Stanley. Your line is now open.
spk04: Hey, everybody. It's Ben. Good afternoon. Ari, I had a question for you around capital allocation, and then I had a question for Jason on sort of sports rights and how those roll through the business. You guys have built this company, as I know you know, through lots of opportunistic and successful M&A, but we are certainly in a new rate environment. Cost of capital is higher. You're a public company. Can you just talk about your sort of philosophy as you look out over the next year plus around continuing to be opportunistic to make sure you don't miss big opportunities, but also recognizing sort of what's happened to the cost of capital and sort of where investors are focused from a leverage point of view? And then, Jason, IMG and WME Sports rep a lot of these big conferences. I noticed you guys were on the Big 12 deal, which I think got a 70% AAV increase. We typically don't think about that business that much, but can you just remind us how you guys get paid for businesses, for deals like that as it flows in over the course of those deals and sort of what segment that shows up? Because obviously that's a decent part of the IMG business as well. Thank you.
spk03: Well, as you saw, you know, Jason talked about we're going to pay down another $250. So on the allocation side, as we've said to you, we're going to be sub-four. We're now sub-four. Going into next year, we have a conversion rate of 50%, which I think Jason talked about, which we also indicated that we are going to get to. We're always opportunistic as it relates to M&A. We have a different formula for everybody. We kind of create moats around our businesses and see kind of where the opportunity is. Yes, cost of capital is more expensive. However, you know, we're long-term players. We evaluate everything about where we think it's best for the shareholder value. And we continue to be very kind of inquisitive, but with the understanding of where interest rates are going. So right now... We're looking at the marketplace, haven't seen anything that we want. We closed a bunch of deals that we wanted to do. And that's where we stand right now.
spk07: Ben, I would just add on the capital allocation. As Ari said, we're going to be 3.85 times a year, roughly at year end. We paid down $250 a day. I'm going to pay another $250 this quarter. And based on our pre-cash flow expectation next year, we'll be generating a lot of cash with the company. And we're going to look at all things to how to maximize shareholder value. return with our capital, whether that's continued debt repayment, stock buyback, dividends, as well as M&A. So we're constantly looking at the best way to maximize shareholder value with our capital over the long term. As far as your second question on media rights, typically what would happen is we would charge a commission percentage on the media rights deal. It can take a variety of different forms. Sometimes it might just be on the total value of the deal. Sometimes it might just be on the increased value of the deal or you know, there could also be hurdles that you add additional, you earn additional commissions based on, you know, certain thresholds. So it's traditionally just a commission rep agreement on those deals.
spk02: Great. Thanks, Ben. Thanks, guys. Jason, any questions, please?
spk11: Our next question comes from Jessica Ehrlich with Bank of America. Your line is now open.
spk01: Thank you. I have at least two questions. On ESPN, on UFC, ESPN Plus reported some weakness in pay-per-view revenue from USC, and I think they alluded to the number of matches. Could you just talk about what's going on, you know, under the surface and, you know, what you're seeing in terms of engagement? And then can you give us some color on, like, what happened with the equity loss and affiliate line? You said it was Learfield, well, the attention was Learfield IMG College, but... Why did the loss widen? And then guidance, why did you bring the revenue guidance? Why did you tighten it and bring it down a little bit?
spk15: Thanks. I'll take the first one and then Jason will jump in on the last two.
spk03: Thanks, Jessica. So, listen, Disney slash ESPN, they're great partners to us. A handful of our events from them was broadcast on ABC, kind of a huge amplifier for us. The ratings continue to be very strong. We look at that business specifically, Amigosys, on an annual basis, not on a quarter-to-quarter basis. So, marquee events shift from quarter-to-quarter year-over-year. As actually was mentioned on the Disney call, there was a robust performance on ESPN+, largely attributed to the UFC content. The third quarter of last year featured a matchup that resulted in an oversized pay-per-view. Like every sport, we'll have matchups that drive increased demand based on various factors like rankings and hype. The good thing is we're fortunate with the UFC, one of the most exciting fast-paced sports. It's reflected in continued record-breaking achievements and and sellouts, 26 over the last fights that we've had. And our big one is coming up Saturday, another sellout. And in the quarter, I think record-breaking sellouts, six out of the last eight in this quarter. So it's just kind of a matchup happened that was bigger in that quarter.
spk07: On the losses from affiliates, the vast majority of that is a charge from Learfield. Learfield took an impairment charge and that flows through our earnings, so that's where that's coming from. And then on the revenue guidance, a few things that we've incorporated in our guidance over the balance of the year that brought the revenue down slightly. One was the continued impact that FX is having on the business. Two, we have some non-scripted content deliveries that have moved, that have pushed from Q4 to Q1. And lastly, we sold the Miss Universe organization earlier than we had expected. So originally that, we expected revenue from that in the fourth quarter.
spk06: Thank you. Next question please, Jason.
spk11: Our next question comes from Cutgun Maral with RBC Capital Markets. Your line is now open.
spk10: Great. Thanks for taking the questions. You know, I know you spent some time on this in the opening remarks, but can you talk a bit more on what you're seeing across the health of the consumer with your events and experiences? we on the outside are just all trying to reconcile what's going on between these strong results that you and most of your peers have reported compared to what I think a lot of us are viewing as being an increasingly challenging macro backdrop. And so I know it's kind of a tough one to really answer, but, you know, how do you think about what's going on and how does that inform your near-term outlook? You know, that would be helpful. And just second, sorry, Jason, to follow up on the FX question, can you characterize or size the FX hit as being about $120 million? And I think last quarter you had sized it as close to $60 million. So I'm just trying to better understand, was the FX impact to the financials an incremental $60 million in the back half relative to what you were expecting? Because if so, it kind of seems like your top line guidance tweak wasn't that punitive. And in fact, you've X to FX sounds like everything has been in line to maybe slightly better, but I just want to get a better sense there.
spk03: So on the consumer side, I'll take the first part of the question, and Jason will take the second part on the FX issue. So limited impact on the business to date. We saw solid performances across the broad platform. On the own sports side, as I said in the last answer, UFC sold out all events in the quarter, 26 consecutive sellouts since we came back from COVID, five more ticketed events versus last year. UFC 276 set a new record for single event VIP experiences on location. We sold four, four on location VIP experiences going into Madison Crack for $40,000 and there were some at $24,000. 281 is the highest premium experience sold out. And I talked about that there was six out of the eight events in the third quarter broke records. On the events and experience side, for our location, strong performance at Wimbledon, U.S. Open, MLB All-Star Game, WWE, a biggest event. And when I looked at... interest in the Super Bowl 58 is outpacing Super Bowl 56 and we're 16 months away. On the IMG Academy side, I'm just giving you a flavor because how we look at it in a broad way, we had a record at the boarding school and a record at our summer camps. And so from our perspective, that's going well. I would also, if you just look, as you talked about some people in the same space, Live Nation reported, I think it was 44 million fans in 11,000 events. I mean, they're up double digits. Disney saw strong demand at the parks. And I would just say, I think the way we're looking at it, and we constantly monitor this, spending habits have shifted. but our company has a presence at every point on the purchase chain, whether it be premium experiences to concerts, to supply of content for the streamers. And I would just say during COVID, people were buying stuff, and post-COVID, they're more focused on experiences and were the beneficiary on that side of the equation. And with that, I'll turn it over to Jason for FX.
spk07: The $60 million when we gave you last time was for the balance of the year, and that number, as rates continue to move, has grown. The $120 million I gave was from the original budget for the balance of the year. For the original budget with the full-year impact of FX is $120 million.
spk02: Thank you so much. Next question, Alfred.
spk11: Our next question is from Brian Craft with Deutsche Bank. Your line is now open.
spk09: Hi, good afternoon. Ari, I know that you've expressed a great deal of confidence in the growth outlook for the representation segment, but I wanted to ask you in light of some of the larger media companies talking about more spending discipline and slowing down the growth in their content budgets, from your perspective, how are they changing what they're doing to kind of optimize the returns on content investment? I know they're still growing their budgets, but where are they getting more disciplined Where are they pulling back on spending? Any color on that that you could share would be super helpful.
spk03: Thank you. I think it's in their best interest to say that they're having some austerity. That being said, from where I sit, we believe our buyers are staying at their content spend levels. Netflix said they're going to be at 17%, potentially increasing revenues based on sub-growth Paramount went from $2 billion to $6 billion. We know Roku is in there right now. I think Disney said they're at $30 going to $33 depending on some sports rights. And, you know, on the podcast side, we've made, I mean, very high-end deals right now across all the different players. So, you know, the funny thing is, Endeavor, EDR, is a proxy for content growth and a barometer for overall content, not only in movies and television. And it's going up across the board. We are not feeling any decrease in the spend. I'll just give you this. In the quarter, the total number of scripted and non-scripted shows sold have increased when you compare it to the third quarter of 2021. And, you know, global subscriptions have increased when you look at all the different players. And the only way to keep people engaged in their platforms is through movies, television, and if it's, you know, the streamers, you know, podcasts or sports rights. And now they're moving to AVOD where then they're going to have to add more content and Netflix is going to have to go into sports. or live, so we feel very good about what they're doing, and I understand what they have to say, but we're seeing no decrease in our representation segment. Actually, as I stated before on these calls, we've increased double digits if you take 2020 out, and we don't see that decreasing at any point.
spk09: I just want to follow up that. Sorry, just one quick follow-up. You mentioned the AVOD launches. Do those AVOD launches trigger new layers of payment to you and your clients because of the way the deals are structured?
spk03: We're not there yet. Do I suspect that at every turn of a new content platform? there might be negotiations for different economic revenue models. Yes, I don't have what those formulas are right now, but some of them only have the rights for SVOD, so that they're not going to have to come back to us if they want to have an AVOD layer for different economics for our clients. But we're not there yet. Once that happens, we'll report it.
spk02: Thank you. Next question, Jason.
spk11: Our next question is from Doug Mitchelson with Credit Suisse. Your line is now open.
spk00: Thanks so much. A couple of quick ones. Ari, I was just curious on podcast renewals, some of the podcast platforms talk about dramatic improvements for margins in their businesses and increases in profitability as they grow ad revenue. Do you think the talent is going to maintain share of revenue in the podcast business, or do some of these platforms deserve a greater share of revenue and they were just overspending to start up the business? And the second one, I was just curious on location, just how much more runway there is to add events. Have you already captured the vast majority of the major events like the Olympics and Super Bowls, or is there a lot more events that you can sort of plug into that business? Thanks.
spk03: So on the podcasting side, over the last two quarters, And I can't finalize the number for this quarter, but they're making significant overall deals across all those three players. And there's a revenue mix with regard to advertising, et cetera. Will they change those deals? I'm not really sure. Not really my issue. Some of them have, they're complicated like in the SVOD and the AVODs. They're complicated deals on who gets the revenue mix on advertising, et cetera, and how you're structuring those deals. So it's all over the place. To give you one broad answer doesn't work. And on the on location side, we added the WWE. We've now added, we're adding Barrett Jackson. We have the Super Bowl. We have the Olympics. There's a lot more out there. In the space, I think we are a unique company as it relates to that and our offering. And, I mean, you can just see what we've done at the UFC and the revenue increase that we've had there over the years has been pretty substantial. So when people are realizing that high-end experiences, the consumer definitely wants it.
spk02: All right. Thank you. Robert, we have the next question, please.
spk11: Our next question is from David Karnowski with J.P. Morgan. Your line is now open.
spk13: Hi, thank you. I know it's a small asset, but you did sell Miss Universe recently. So as you look at your businesses, are there other places where you would want to pair your portfolio or is this more of a one-off? And then, Jason, can you just walk through the factors driving the higher expected free cash flow conversion in 2023? Thank you.
spk02: Why don't you take both of those, Jason?
spk07: Sure. Look, on the pre-cash flow, some of the factors are, obviously, we've paid down debt. We're going to continue to pay down debt. That should generate roughly $30 million of incremental cash flow, and really also working on our networking capital and our change in networking capital and getting that more stabilized. We've had some ramp-up of the network capital, giving pre-Olympics spend and some other things. That's primarily how we're expecting to get additional pre-cash flow.
spk02: And then some questions about optimizing the portfolio with the sales.
spk07: Yeah, look, we're always looking across the portfolio. If we have an asset that doesn't necessarily fit in the portfolio anymore and we can get a good return on it, we're always evaluating those opportunities. Thanks, Danny.
spk12: Next question, please.
spk11: There are no more questions at this time, so I'll pass the call back over to the management team for closing remarks.
spk02: Great. Thanks, everyone, for joining us today. Look forward to seeing you next quarter.
spk11: That concludes the conference call. Thank you for your participation. You may now disconnect your lines.
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