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spk01: $2 million of revenue for the post-closing period of September 12th through September 30th. As a reminder, the prior year quarter included $33 million of revenue related to Diamond Baseball Holdings, which we sold in September 2022. PBR also hosted 19 series events in the quarter, which drove a 26% increase in attendance over comparative events in 2022. Now turning to events, experiences, and rights. The segment recorded revenue of $367.1 million, down $27.1 million, or 7%. Segment adjusted EBITDA was $29.8 million, down $15.7 million, or 34.4%. The prior year quarter included $72 million of revenue from IMG Academy, which we sold this past June. The decrease in segment revenue was partially offset by increases in media production revenue in IMG's media business from new contracts, including Major League Soccer, as well as media production for certain biennial and quadrennial events, including the Ryder Cup and Rugby World Cup, which did not occur in 2022. Increased revenue related to on-locations premium hospitality at the Ryder Cup. Live event revenue, primarily driven by new events such as Bear Jackson New Orleans, and our acquisition of the Armory Show Art Fair in July of this year. Segment adjusted EBITDA for the quarter was primarily adversely affected by the sale of IMG Academy, On Location's ongoing IOC investment, which began in the third quarter of last year, and is inclusive of personnel, marketing, and technology costs, and decreases at Endeavor Streaming. Moving on to our representation segment, revenue was $385.6 million, down $2.7 million. Segment revenue was impacted by a $29 million decrease at the agency. primarily driven by the impact of the WGA and SAG-AXA strikes, partially offset by growth in the sports and music divisions. This decrease was further offset by content delivery within our non-scripted production business, as well as increases at 160 over 90 in IMG's licensing business. WME Sports closed record-breaking NFL and NBA player deals, and WME's music touring business had a strong quarter driven by continued demand for live music. More than 200 WME clients performed across festivals, including Coachella, Lollapalooza, Glastonbury, and the CMA Fest in Nashville. In the third quarter, segment adjusted EBITDA was 96.3 million, down 36.6 million, or 27.5%, primarily related to the adverse impact from both strikes. Related to the estimated impact of the strikes, We previously estimated the impact of the strikes would adversely affect our representation revenue by up to $25 million per month on average relative to our forecast at the time. In the quarter, our agency performed better than expected, primarily due to overall deals being suspended at a slower rate than anticipated, profit participations, and outperformance in areas previously mentioned such as sports and music. As a result, the strike impact adversely affected our agency revenues in the range of $40 to $50 million in the quarter. Looking to the fourth quarter, we expect the originally estimated impact of the strikes to continue based on the lagging effect of the WGA strikes, the ongoing SAG-AFTRA strike, as well as the time needed to meaningfully ramp production. Now turning to our sports data and technology segment. Revenue was $124.8 million, up $78.1 million, while adjusted EBITDA was $24 million, up $19.8 million. Growth in this segment revenue was attributed to the addition of OpenBet, which we acquired in September of 2022, as well as growth in betting data and streaming at IMG Arena across a widening portfolio. For Wimbledon, IMG Arena delivered data feeds to more than 250 sportsbooks covering 651 matches. IMG Arena also entered a multi-year partnership with Conference USA to become the league's official data rights collector for football and men and women's basketball. Moving on to our capital structure, we ended the quarter with $5.05 billion in debt and $1.34 billion in cash, resulting in $3.74 billion in net debt. Our net leverage was 3.22 times at quarter end. As a recognition of our deleveraging progress and close of the TKO transaction, S&P global ratings recently upgraded our parent issuer credit rating, inclusive of the USC credit group, to double B-minus from B+. In conclusion, given Endeavor's previously announced review of strategic alternatives, we are tabling discussions related to capital allocation and annual guidance at this time. With that, I'll hand it over to James.
spk06: Thanks, Jason. Operator, can we open it up for questions now?
spk02: Thank you. If you would like to ask a question, then please press star followed by one on your telephone keypads. To withdraw your question, please press star followed by two. Please also ensure that your phone is unmuted locally. As a reminder, that is star followed by one to ask a question. Our first question comes from Cutgun Morale from Epicor ISI. Cutgun, please go ahead.
spk07: Good morning, and thanks for taking the questions, too, if I could. One on the strike and one on the health of the consumer. So first on the strike, I know nothing is certain, but it does seem like we're getting closer to a resolution, hopefully by Thanksgiving, as opposed to the dispute extending into December or 2024. Jason, I know you talked a bit about the expectations for Q4, but Can you help us think about the shape of the eventual recovery to your representation business and maybe Hollywood overall once things are hopefully resolved? And it seems like, you know, there's a lot of pent-up demand for things to pick up day one, but I was wondering what kind of impediments there might be to getting the machine fully up and running and when we might get there. Is this a mid-2024 event, for example? And second, Ari... I know you called out the strength you're seeing across, it seems like effectively all of your events, but is there anything more you can share about the health of the consumer that you're seeing? It seems like you've been largely insulated so far, but we are seeing more and more cracks in this system in different industries. So we'd appreciate any added perspectives. Thank you.
spk06: So on the first question, I'll take it to Zazari. Thanks for the question. It takes, you'll probably see going into the first quarter of the ramp up of things that were shut down because of the strikes. So the things that were closed had 19 days, 30 days, whatever amount they'll pick up. Hopefully the strike ends in the next couple of days, they'll prep again and then go the beginning of the year. The rest of the new stuff, and I agree with you, there's tons of pent up demand, a lot of stuff on the runway. That will get going probably, you know, I'm saying, April-ish, May, because you remember you have to have two to three months of prep, and then you can start doing the productions both on the movie and television side. So that's kind of the timeline to all of that. I think Mark will hit the consumer.
spk05: Yes. Hey, Cutcon. How are you? Too bad. Ari and I thought we were going to wake up this morning and this strike would be over. I'm sure Dad's also thinking the same thing on his call. Let's hope by the time we get to Disney, that's the case. for everybody's sake. On the general health of the consumer, look, you kind of answered it. You know, I don't want to hex anything here. But the bottom line is we seem to be somewhat insulated, and our peers so far are reporting that they're somewhat insulated, right? I mean, you know, Disney's going to go later today, but up until now, you know, they're kind of forecasting $10 billion in profits this year. for their theme parks. Everybody's talking about ticket prices being so high. In the summer, crowds were supposedly lower. Meanwhile, they're up 5x from a decade ago. Live Nation, of course, the other day just had their strongest quarter ever. They're on pace for record revenue in 23. They're reporting record attendance. And then you kind of move over to our surf, if you will, and we've got record attendance and ticket for caps at multiple events ranging pretty broadly from WWE to UFC to PBR, all the way to Freeze, which is our art fair that you know we hold in London, we hold in Korea, and just been a good story for us. So we're not really seeing any slowdown. And then probably preempting another question, when you look at the Olympics in the State of On location, and keep in mind what we sell there are mainly travel packages. The consumer that wants to go to Paris to go to multiple games, they need help with hotel, they want experiences, and often airfare is a part of that. And we have sold through one-third of our goal already, and the stacking of our marketing doesn't even take place until Q1, Q2, as you can see from NBC and TV. and their Sunday Night Football package, they just started to hit the Olympics hard. And every time they hit it, that bodes well for us. So, so far, insulated, health of consumers seems strong, and we're, believe me, we're keeping an eye out for it.
spk07: Great. Thanks, Robert. Thank you both.
spk02: Thank you. Our next question comes from David Karnavosky from J.P. Morgan. David, please go ahead.
spk03: Thank you. Maybe following up on the prior question, as we reach the endgame on the actor strike, maybe you provide an updated view on the demand environment for scripted, kind of once we get past that initial pent-up period. And then just sticking on the rep side, I think there's been a fair amount of investor debate about the sustainability of concert touring, whether it can grow off 2023 levels. I think you mentioned 200 of your artists. on the road in Q3, so would appreciate kind of your view on sustainability, how that might look in the 24. Thanks.
spk06: I don't see the pent-up demand ending anytime soon. You're going to be ramping. I mean, the hardest thing we're going to have to do is scheduling of people, mainly on the actor side, because there's going to be so much product happening. So I don't think anything's going to, even after the first wave, slow down. In that regard, this constant drumbeat of, is content at a peak? I don't believe that's the case. You're going to see this, I think, through 25. They've already pushed a bunch of stuff into 25. Warner Brothers, they've talked about it. Disney, they've talked about it. So I don't see it slowing down for a while.
spk05: Yeah, just on the music side, it's ironic. We're sitting here in Nashville at our country music office where we lead the industry in terms of music representation with a stellar leadership team here. And we're reviewing really our record bookings to date and forecasting next summer to be equally as strong. So artists want to tour. Crowds want to see them. And we're seeing record attendance and record ticket per caps. Frankly, a lot of endorsement and sponsorship deals that are following that. So very consistent with what Live Nation's reporting. That bodes well for us. Don't see it slowing down. The festivals that we are a part of, that we have an ownership position or we book ourselves, equally brisk.
spk06: Thanks. Operator, next question, please.
spk02: Thank you. Our next question comes from Steve Lazasek from Goldman Sachs. Steve, please go ahead.
spk08: Hey guys, good morning. Maybe first on the sports strategy at Endeavor, even with the USC now over at TKO, you still have some fairly sizable sports assets at Endeavor. PBR, the Miami and Madrid Tennis Open, I think being some of your biggest. You also have the bid out there for the PGA. So I was curious just if you could update us on the sports strategy at Endeavor and the extent to which you think there's opportunity to scale that platform and how that strategy might differ from how TKO might approach inorganic growth in the industry going forward. And then maybe just a quick one for Jason. Could you unpack what drove the year-over-year change in net income for us in the quarter? Thank you.
spk06: On the sports strategy, when you think about the Miami Open or Madrid, if you've ever been to the Madrid Open, it's kind of, I mean, one of the biggest attractions, they sell these packages for the food festival that happens outside. In addition, we're adding a music festival. So those are not, yes, they're sports, but they're really events, cultural events surrounding. Same thing with Miami. So when you think about those sports, as you define the sports, those are actually really events. A sport is the UFC, a sport is WWE. Yes, PBR is there. But that's also an event, a country kind of event that travels. So that's how we think about it. And as it relates to the PGA, remember, we had fees going back to, I don't know if you read all the details of the structure of our offer. And when we realized that, one, prices were getting ridiculous and they weren't going to recognize our fees, we didn't want to actually participate.
spk05: yeah just steven i want to elaborate on that because i know there's been a lot of discussion on this a lot written about it and just the fact that you mentioned it i think i'm glad ari responded to that uh just to make sure we level set with everybody because we want to be consistent in our our dialogue here you know we're not even on the tko side we are very focused on the integration there and we're working closely with the endeavor flywheel to make sure we maximize revenue synergies. We're not even thinking about M&A. The PGA, to Ari's point, we have a long, elaborate, comprehensive history with the PGA Tour. Obviously, fans and what they do, we represent a lot of golfers, but we represent them and have represented them on media rights at times, certainly internationally as well, on events. We own some sanctions, some sponsorship. We have 160 over 90 clients that are official partners of the tour like DP world we do their sports betting we have analytics so we have a multiple multiple disciplines if you will on commercial services so the opportunity was there that hey would we be interested in making a minority investment being part of a consortium and by the way that consortium was probably TBD down the line and all we said was absolutely we'd be interested in making a 10 minority investment as long as many of these commercial services deals those contracts could get extended for 25 million dollars per year it was an aggressive ask maybe it was unrealistic uh we we figured it would get shot down it ultimately did and then we were out of it so it wasn't like we weren't talking out of two sides of our mouths we're not we're not looking to buy the pga tour but certainly if we can have a little slice while we're getting our commercial services extended at a nice premium, we would do that. That just wasn't to be. So I think that context is very important here. Jason, you can talk about the net income.
spk00: Yes, Steve. On the net income line, I would point to primarily two items, one being transaction costs associated with the TKO transaction in the neighborhood of $70-ish million plus, and also restructuring costs. associated with that transaction in the neighborhood of $70 million plus. So those were big impacts on net income for the quarter, obviously both one time in nature and non-recurrent.
spk06: Great. Thanks, Stephen. Operator, next question, please. Great. Thank you for all that.
spk02: Thank you. Our next question comes from Stephen Glagola from TD Cowan. Stephen, please go ahead.
spk04: Hi. Thanks for the question. Ari, as you recently took Endeavor public two and a half years ago, how do you view Silverlake's consideration of a take private proposal relative to other potential strategic alternatives you're exploring? And also, do you think a go private would hinder any platform synergies that you see currently existing within the assets you own?
spk06: Since my lawyers are around and you know the answer that I'm going to have, I'm not commenting on anything as it relates to the go private or the review or anything that you've but I appreciate the question.
spk04: Okay. Do you mind if I ask a question or more then? I apologize for that. Uh, yeah. Um, um, for the core, for the core representation business, you've said that, you know, this business has historically grown revenue and EBITDA, you know, the double digit CAGR over the last decade. And how do you think the end of the packaging deals and fees and the new terms and the writers and actors contracts following these strikes are going to impact that growth, that core growth over the next five to ten years? Thanks.
spk06: Well, here's what I would say to you. We have a very big diversified business, as you can see by our results. So whether it be sports, whether it be music, whether it be digital, whether it be books, whether it be lectures, So we feel very good about now the well-roundedness of the whole organization. So even though there's no packages, we also have old packages. And as you can see on Netflix, everybody's selling their properties, their old properties, like they sold ballers, they sold suits. Suits is one of the biggest shows. Those are big fees that come back in packages on the old packages. So we really feel good about the portfolio that we've put together. Thank you. Operator, next question, please.
spk02: Thank you. Our next final question comes from David Joyce from Seaport Research Partners. Please go ahead, David.
spk09: Thank you. On the sports data and technology business, could you talk about some of the growth drivers from here? How much do you rely on any further regulation domestically or internationally? And kind of what's the purview of where you could still be adding to your data rights there?
spk05: Thanks, David. Bringing us home with SD&T, I love it. All right, so what I would say on this front, what we would say is, you know, remember, we have two parts of our business. One part is open bet, which is B2B, it's infrastructure, it's tech, it's white label for the myriad of sports betting operators around there. And increasingly, more and more these days, to your point, because regulation is lifting, You can see Brazil on the horizon. Finland, huge opportunity. Yesterday just had a great meeting with the operator in the Dominican Republic. So this is a very noisy area which plays to our benefit because they're not going to go out there, many of these players, and spend all the capital required on infrastructure, on tech, and on labor, when they can just white label it in a much more efficient manner, both cost and speed, with open vet. So we feel very bullish about that business. It's a good quarter for us in this area. And the prospects for 2024, with more and more regulation getting lifted, play to our advantage. The area we have to be careful on is the IMG arena side. And that is, to your point, sports data rights. I think heretofore we've been very disciplined to this point. We don't play in tier one kind of Trojan horse money loser properties. I'm not going to single anybody out specifically or any company specifically, but often it is a rice-fee-fest to try to get the sports data from some of these major leagues. And frankly, the margins are just too tight. There's too much risk. We can't make money on that. So we play in the Tier 2 properties, the Tier 3 properties, and often package it with our media division at IMG where we can get all kinds of efficiencies and synergies to make these profitable and strong margins. That's where we're going to continue to stay. So we are very content being the number three player in that marketplace behind Genius and Sports Radar, which, of course, has been at it longer than anybody else and probably is the leader and certainly the biggest.
spk09: I'd appreciate it.
spk06: You got it. Thanks, David. I just want to thank everyone. In conclusion here, operator, you can close the call. Thank you.
spk02: This concludes today's call. Thank you for joining everyone. You may now disconnect your lines.
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