Versant Media Group Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $5.18b | Revenue (TTM) = $6.60b
Market Cap = $5.18b | Estimated Revenue = $6.57b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $6.65b | Revenue (TTM) = $6.60b
Enterprise Value = $6.65b | Forward Revenue = $6.57b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Versant Media Group Stock Analysis
Analyst Opinions
14 Analysts have issued a Versant Media Group forecast:
Analyst Opinions
14 Analysts have issued a Versant Media Group forecast:
Versant Media Group Events
Past Events
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SEP
8
Goldman Sachs Communacopia + Technology Conference 2026
10 days ago
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AUG
6
Q2 2026 Earnings Call
about one month ago
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JUN
2
2026 Evercore Global TMT Conference
4 months ago
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MAY
20
J.P. Morgan 54th Annual Global Technology
4 months ago
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MAY
14
Q1 2026 Earnings Call
4 months ago
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MAR
10
Deutsche Bank 34th Annual Media
6 months ago
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MAR
5
Morgan Stanley Technology
7 months ago
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MAR
3
Q4 2025 Earnings Call
7 months ago
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StocksGuide Free
Versant Media Group — Goldman Sachs Communacopia + Technology Conference 2026
1. Question Answer
Wonderful. Well, good afternoon, everybody. My name is Mike Ng. I cover media cable telco here at Goldman Sachs. And I have the privilege of introducing Anand Kini, who is the Chief Financial Officer and Chief Operating Officer at Versant Media. We have 35 minutes for today's presentation. And first and foremost, I want to thank you so much for being here today, Anand.
Thanks, Mike. Thanks for having me.
Pleasure is mine. Well, let's talk about big strategic priorities for Versant. The company completed its separation from Comcast earlier this year in January. It's a pure-play media company with cash-generative linear networks such as USA Network, CNBC, MS NOW as well as very fast-growing digital platforms. To kick things off, would you talk a little bit about the operational performance of the business and how you would characterize the first few quarters as a stand-alone public company?
Sure. So we're very pleased as to, kind of, the momentum we have in the business. So a few different fronts. We start -- let's start with the financials. So strong EBITDA. We've grown EBITDA for the first half of the year, very strong margins, generating very healthy free cash flow. So all of the financial metrics that we look at and measure our performance have come in very strong. But I'm very pleased it's not just the financials, which are one snapshot in time, but also more structurally kind of for now and going forward. And what I mean by that is you look at like the audience metrics. So our portfolio reaches 120 million pay-TV people, people who watch us primarily through pay-TV. And we're seeing ratings growth really across the portfolio. And kind of every single network in a portfolio-wide double-digit ratings. And it's both in, again, the pay-TV business as well as platforms. Our platforms businesses, which are hallmarked by GolfNow and Fandango, 9% kind of underlying revenue growth for both Q1 and Q2. So that part of the business is doing quite well in addition. And then kind of wrapping it all up, it's -- we're really executing on our growth priorities. So investing in the platforms business, driving audience and doing all that while kind of executing as well our capital allocation, which, again, for us is about really threefold. We're doing all of them, returning capital to shareholders, investing in growth and maintaining a healthy balance sheet. So I'm very pleased on our ability to execute all of that just in the first 6 months.
Wonderful. I mean there's a lot in there that I wanted to dive into, but let's start with the linear networks side of the house and just talk about some of that ratings momentum that you mentioned at the onset. So MS NOW, exiting the second quarter, I think MS NOW delivered its seventh consecutive month of audience growth with viewership up 14% year-over-year in the second quarter. What do you see as the key drivers behind that momentum and MS NOW's ability to capture a meaningful share of the cable news audience? How are you thinking about sustaining that trajectory through the midterms?
Yes. Well, first, I'm very happy to report it was 7 months as of our Q2 earnings call. We've continued -- it's actually now we just got August results, it's 9 months where we've seen that kind of year-on-year growth. So the momentum -- and it's actually growing even faster the last several months compared to the metric in Q2. So really pleased. In terms of what's driving it, I think a couple of things. One, our team has done a very good job of editorial. We made a bunch of editorial changes in Q2. People like Pete Alexander, who you may know from NBC News Now, is on MS NOW. And every new show we launched in the summer, if you look at the ratings compared to the prior year time slot, it's up. So that editorial has really worked well. And we're also -- we recognize who our audience is with MS. I mean we are kind of people who have the kind of affinity towards the Democrats or who we are, and we're always going to -- that's our true -- our core audience, and we're going to be true to that audience. But we've also broadened the tent some. And we think there's a way to do it where you can appeal maybe to some independents, some other constituencies who want to try something new and kind of demonstrate how we do that, like we had Ted Cruz on air in the last couple of weeks, and he was on with Ali Velshi. I don't think somebody like Ted Cruz would have thought MS NOW would have been a platform where he would have felt comfortable coming on a few years back. So it's kind of creating that environment, which, again, we want to have as big of a tent as possible while, again, staying true to our core audience, and we've successfully done that. And so I think that's going to be what's going to drive us as we get to the midterm. So there's obviously tremendous interest in the elections right now, and we are the place to be. And then once we get past the midterms, all eyes are going to really look towards the primaries in '28. So I think we're really set up here for not only the forward.
And could you talk a little bit about how investors should think about the kind of translation from ratings momentum into advertising revenue? For cable news networks, how much of that ad inventory is sold upfront versus available to monetize in scatter to benefit from strong ratings? Or is this something that is more of a tailwind for the subsequent year?
Yes. So I think overall, in terms of the upfront versus scatter -- and there can be small changes by network, but it's generally a good rule of thumb. It's about 75% is sold in the upfront and the balance is sold in scatter. And that's going to be broadly true with like a network like MS NOW as well. I think the key point is the incremental ratings we're delivering, we're able to monetize them. And so in that 25% that is not sold in upfront, that can continue and there's opportunities for us to drive both in terms of fundamental demand to place more and more advertising in it -- in that network. And that's what you've seen. So we've been able to monetize those rating points that we're delivering, both on MS NOW and frankly, across the portfolio.
Great. Since you're talking about MS NOW, ahead of the midterms, I believe Versant is launching a dedicated MS NOW direct-to-consumer product built around community, exclusive content, digital engagement. Could you elaborate a little bit on the MS NOW DTC go-to-market strategy? How are you structuring that product such that it doesn't cannibalize some of the linear distribution touch points?
Yes, it's timely because it actually launches tomorrow. So you'll get a good view of it then. So one of our approaches on DTC, frankly, whether it's MS NOW or CNBC, which will launch later, we are -- we don't think the consumer just wants exactly what's on pay-TV and to now just put it on digital. We don't think that's really -- if you've cut the cord, you've kind of made a decision probably not just on price, but you kind of want a different experience. And that's our approach. So for MS Now, the DTC product has 2 things that we've heard from our customers they really want. For the MS NOW current audience, we have one of the highest engagement levels in the industry. The average MS NOW viewer watches 9 hours a week. It's #2 in the industry. So they want more and more and more. So they want abilities to interact with our talent. So you'll see, if you go tomorrow to the D2C, there'll be ways to have virtual sessions like a virtual lunch, say, with Rachel Maddow. They want the ability to connect with one another. So you're going to see platforms and forums where the MS NOW viewer who may find often like other platforms like social media, a little toxic for their interest that there will be a place for them to have a moderated conversation with each other on topics of interest. And they want kind of a bespoke editorial approach. That's a little bit more both for them and also very importantly for the other constituency that we're appealing to is all of the non-pay-TV viewers. And particularly as you look at this base of audience, there's a lot of younger folks who don't subscribe to pay-TV, who have the political persuasion that they like MS NOW, but they kind of want a less highly produced, more authentic, Think of it almost like an Instagram Reels, that kind of feel -- that feels very different than what you get on television. So that's what we're producing as well. So it's going to be a fundamentally different offering that you have on pay-TV. So that cannibalization risk isn't there and really gives more to the current audience and hopefully attract some new viewers who don't get pay-TV today.
Great. I'm looking forward to checking that out tomorrow. While we're on the topic of a direct-to-consumer, CNBC acquired StockStory, an AI-driven financial insights engine as part of the broader push into DTC or DTC platform for retail investors. Could you talk a little bit about CNBC Pro, what the longer-term vision for CNBC is?
Sure. So the D2C for CNBC is really going to target the retail investor. And what we've learned and really we've looked at our customer, we've asked our customers, the CNBC audience. And the one thing we've heard repeatedly is folks love CNBC, they want us to offer something that helps them manage their money, give them the tools to kind of understand what's happening in the market for them to evaluate their own portfolios, make -- give them insights and recommendations on where else they can achieve their financial objectives by making investments. And the one thing is there's other services out there, but none that has the trust factor that we do. And not also one that has the utility and the breadth and the talent that we can bring. It's not just -- it's the CNBC brand as well as the individual talent that people are kind of spending time with each day. So we're going to be bringing that service, again, to really target it to the retail investor needs with the brand they trust. With StockStory, StockStory is going to be a big component of that where StockStory enables us, some of those tools will be AI-enabled, AI-enabled with human curation. So when it comes to understanding what maybe a company in your portfolio has just reported in real time, taking that news to say, well, how does this impact my investment decisions or maybe coming up with recommendations on what you may want to look at to invest your dollars. StockStory will be a part of that equation that will be kind of core to the offering.
Great. On carriage renewals, Versant recently secured multiyear distribution renewals with 2 major pay-TV partners. I think one was in the U.S., one was in Canada. What's your strategy on preserving your economics, growing your economics as you go into these carriage renewals and what does the success of these negotiations and agreements tell you about Versant's ability to operate separate from Comcast?
Yes. So I think to answer your second part of your question, it validates what we thought as we went into the spin. And we had a pretty good leading indicator because right before the spin, we had done a deal while part of NBCUniversal with YouTube TV, where we got a renewal that we're very pleased with. YouTube knew we were spinning. So they handled it internally as if we were basically 2 separate companies, and we're able to secure good terms on that. And now we've done, as you just said, 2 renewals where -- again, we're very pleased with the outcomes. I think it shows that when you have a portfolio that has the audience metrics we were talking about, whether it's MS NOW or CNBC or Golf USA or the entertainment portfolio, you have the audience heavy engagement and a very heavy mix of live news and sports. It's what distributors, marketers and audiences care the most about. We're 60% live news and sports. So I would say like we didn't do anything so different in these negotiations now that we were spun because we could execute based off of the strength of that portfolio. And we did and the results, I think, speak for themselves, and I think are -- give us even more and more confidence as we head to future renewals.
Great. On the topic of skinny bundles, could you talk a little bit about what you're observing in the industry as it relates to skinny bundles, sports-specific bundles, news specific bundles? And how is Versant positioned as these skinny bundles just become a more regular part of the day-to-day?
You're definitely -- you're seeing -- I think that the change in the industry has been on packaging. If you look over the last 3 to 5 years, where I think 5 years ago, the debates were mostly on the per sub fee, and there was an assumption that whatever that fee was probably going to get applied to every one of the distributor subs. We're now -- there's still that negotiation, but then equally important is the negotiation on what packages you're going to be in. And again, I'll go back to what we just talked about, where if you look at the most broadly distributed packages, the one hallmark is the news and sports oriented. And our portfolio plays really well to that. So we're in. So I mentioned the YouTube deal. They have a news and sports kind of bundle, and we're in that. And you'll see we have -- if you look at our 4 biggest networks, our MS from a financial profile perspective and frankly, audience too, MS NOW, CNBC, USA and Golf Channel, all of them are in this news and sports kind of -- they have that -- they have news and sports networks. And so we found it to be that our portfolio plays very well to make sure we're getting broad distribution. Only thing I'll add to it is that like we recognize that we're advantaged here. And so that gives us a good kind of negotiating position. And we also are focused on while within pay-TV for our network, we did talk about the D2C to think about how do you make sure you still have good reach and audience extension outside of that. And that's the D2C services for the entertainment networks, it's AVOD, it's content licensing to make sure others, and we've had success there. So again, we're very active kind of in both areas of it to make sure these brands that we have that we're very proud of kind of get the broadest kind of audience reach possible.
Great. I wanted to ask about Versant's kind of ad representation capabilities. I think right now, NBCU continues to represent Versant's linear ad inventory for the time being for, I believe, it's a 2-year transition period. What internal sales capabilities are you developing in-house? How much do you really have to do there?
Yes. Sure. So you're right. Today, NBC, we do have this rep deal. It deals with our television -- mostly just our TV inventory. There's a little bit of digital, but it's mostly TV. So what that means is that for much of our digital portfolio, we have the in-house capabilities. So things like the programmatic infrastructure, we've developed that. We do have a sales team. It's not scaled to kind of handle television inventory since we don't need to do that today. But -- and the ad ops and ad trafficking systems, where we have components of them where we're developing them. I say it all in that we have time. As you said, it's a 2-year deal from the time of spin. At the end of those 2 years, there's really 3 options. There may be a renewal. Both sides have to agree. We think this has been a very productive relationship for both us and NBCU. So that's definitely a possibility. We could take it internal or we could -- there's interest from others there even when we -- before we did the spin, others had come to us about repping our inventory. So all options are possible, are on the table. And if we did elect at some point, whether it's 2 years from now or some or whether it's at the end of the 2 years or sometime in the future, if we elected to take it in-house on the systems perspective, while there's work to do, we're not starting at ground zero because we have those -- a lot of -- many of those capabilities already built.
Great. Very clear. Just on the midterm political outlook, obviously, the vast majority of direct political dollars tends to be local in nature. But as we head into the midterms, can you talk about how political affects the Versant network portfolio, ad revenues? How does this ultimately flow through to MS NOW, CNBC digital? Is it in the form of more engagement and ratings? Or is it CPMs? Just would love your thoughts on that.
Yes. So there's -- it's a great question. There's a little distinction here for us in our cable network brethren and local stations. So local stations, as you know, I'm going back to my days on NBC, they get a lot of bespoke political ad dollars from specific campaigns given it's kind of geographically targeted. And that can be at the very local level of the kind of mayoral rates up the gubernatorial and presidential. And obviously, purple states tend to attract the most money. For us, we get some political monies in. There could be some packs, for example, that are relevant nationwide. Sometimes you'll even see -- and you'll get some presidential election money like in the midterm, where it's more state by state or congressional district by district. Maybe you get a little bit on like a very big state, and they don't mind the fact that it's shown to a lot of folks who can't vote in your relevant state, but you don't get that much of it. Again, there's always a little bit of nuance because you have the virtual MVPDs and they can target more specifically. There's some of it coming in through there. But again, not to the same extent as the local stations. The uplift we see is more what you mentioned as one of the other venues, which is just ratings lift. We definitely see that. There's a ton of interest in the midterms. And as we mentioned, 9 consecutive months of growth. A chunk of that is, we think, for editorial decisions, but some of it is just the overall market where there's a lot of interest in it. So there's more inventory to sell, we sell that to everybody. So a little bit may go to specific political ads, but a lot of it is kind of nonpolitical players who are interested in reaching the audiences that we get. And that's -- and again, that's true both on TV, which we've talked about, but also true on digital platforms like msnow.com, look at that. And again, there, we can target as well to some extent. So we'll get some political, but we're less dependent on that specifically than maybe other folks in the political ad ecosystem.
Great. That's very clear. Maybe just zooming out and just asking about the overall advertising environment and the health of the overall market. How would you describe advertiser demand across news, sports, general entertainment? How is scatter pricing behaving? Is it a healthy market? Or do you see some pockets where there may be some concerns?
So right now, it has remained quite healthy. We're seeing strong demand really across the portfolio. I know it's always -- it's an area where there's clearly a lot of geopolitical kind of instability or uncertainty. And so I think we get asked this a lot about there's a little bit of an undercurrent as well, is there something -- could it change? I'm sure. I mean, it could. This is -- but it hasn't. And some of that uncertainty has been there now for a bit. And I do think part of what we're seeing across the board, and you're seeing a lot of strength on television is in the fragmented world that we live in with media fragmentation, those places that can aggregate audience have become more and more valuable. And I think even in a world where maybe there's uncertainty and people want to spend a little closer in, they're first allocating the money to these big audience platforms like television, and we've seen that consistently. And right now, we don't see any signs of that changing.
Great. Maybe we can pivot and talk about the platforms business. I believe the current revenue growth guidance is for high single digits on an underlying basis. But there's also been a lot happening underneath the hood of the overall platforms umbrella with the acquisition of Full Swing and the divestiture of SportsEngine. So maybe that's a good place to start. Talk a little bit about that acquisition and the divestiture and how you view the overall platforms business?
Sure. Let me start with the acquisition. So we bought Full Swing. We're super excited about it. And maybe I'll start with a little bit of, well, why we bought? Why did we buy? What was the rationale? And it's, I think, a pretty -- for us, it's a very emblematic of how we approach M&A. We're very disciplined in how we look at inorganic opportunities. Our [ prism ] is the -- we really -- really they should be in 1 of the 4 markets that we're in. And again, that's personal finance business news, CNBC, political news and opinion, golf and then a broader one, genre, entertainment and sports. This clearly was right in obviously golf. And the reason each of those is important is in those markets, we have big brands. We attract very sizable audiences who engage with us and who trust us. And so there's a lot of value we can bring to assets there, and these are markets we know. So if you look at Full Swing, particularly, as we were getting to see the opportunity, for those of you who are not familiar, it's a golf simulator and golf consumer technology company. So it is really tapped into kind of the -- in large part, the indoor golf market. So as we looked at this, a, the fundamentals of the market are great. There's 36 million, I believe, kind of what are called off-course golfers. So folks who golf, but they golf, it could be at a Topgolf, a Full Swing, a Back Nine -- sorry, a Back Nine, those kind of establishments. Five Iron is what I meant to say is another one. And so growing market, that 36 million is like, I think it's like up 60% since 2019. There's more off-course golfers than on course. So market fundamentals are great, and it's a growing business. And then you plug it into our assets, the golf channel, GolfNow, we have the #1 media platform. We reach more golfers than really anybody else to drive awareness and adoption of the service. On GolfNow, we already have great relationships with tons of golf courses. A lot of those off-course golf operators, they use GolfNow software to kind of book reservations or be able to secure time at their facilities. So we know them. So we're able to, again, through both sides, drive the commercial channel and residential channel to drive a ton of value from a go-to-market perspective. And for Full Swing, they have tons of customers that are both commercial customers as well as residential. So we uniquely were able to drive tons of synergy value to this business, and that then translated to a very attractive kind of financial profile in terms of the returns we would generate. So that's for us, as we were kind of thinking about like from an M&A lens or from a platforms business, starting there, how we thought about, okay, like this is really a great fit and what it enables us to do, enabled us to drive a lot of value. And then I think you would also ask like how do we think overall about platforms. We're very bullish. The core underlying Fandango and GolfNow businesses, putting Full Swing aside, are doing great. As we talked about high single-digit growth, we've delivered 9% in Q2, 9% in Q1. We are very bullish on that business. There's still a ton of room to grow. We're still at like only less than 10% of total tee-times booked on GolfNow, so a lot of room to grow share. And similar story in Fandango. And so -- and then finally, on SportsEngine, the other question you asked with this on kind of the disposition. I think for us, we want to be great stewards of capital. As we looked at SportsEngine in our portfolio, it is a time either you're going to be a buyer or seller, it's a consolidating market. All of the things I just mentioned on Full Swing, how it kind of fits in with the asset portfolio, we couldn't convince ourselves. It was the same with SportsEngine and the rest of the portfolio and the synergies we could drive to it. And so we got the value maximizing approach there in this time was to sell. And so that's what we did.
Great. And that's a great transition to the next question, which is just about Versant's goal to generate 50% of its revenue from non-pay TV sources over time. Maybe talk a little bit about why that's a critical goal and an important goal to have just as you think about the kind of long-term EBITDA and free cash flow trajectory of the company? And what are some of the milestones that you're looking out for over the next 12, 24, 36 months to make sure you're on track to achieve that goal?
Yes. So we put that kind of objective, and we've talked about it because, a, we think it is a good representation of the opportunity we have. A, we're not -- we are aware of the secular changes facing pay-TV. We think we're really well positioned within the market, but those changes are happening. And I think it would be kind of -- we're honest with ourselves on that. And I think for us, though, we recognize that there was this opportunity like we just talked about with GolfNow. We built this business and the brand strength and the audience strength we have to kind of expand and kind of expand vertically and to provide consumers more and more utility on various other platforms. And in those 4 markets of those brands, we think 50% is a goal that is achievable. And again, it's not a number just kind of pulled out of the air, like we saw it and we saw it in golf. So we look at that metric in each of those 4 verticals I mentioned. And today, in golf, actually over half of the golf revenue now has nothing to do with the golf channel. It's actually GolfNow, and I'm not even talking about Full Swing. It's over half before Full Swing. It's even now going to be greater with Full Swing. So I think we've demonstrated that you can do it. The playbook will be maybe -- will not be the exact same in each market. But I think since we demonstrated that we could do it and with the strength of the brand, we thought that was an achievable goal, and that evolution, we think, also makes the business even stronger because as you harness the core assets in the brand, it's a pretty efficient way to kind of drive margins and to drive audience scale and to kind of take a business that has on a trajectory for long-term growth. So that's the reason that we have and why we think it's the right objective.
In terms of our progress, and we mentioned in like 3 to 5 years being at 33%, we're making steady progress against it. I think what we're looking for in the next, you mentioned 12, 18, 24 months is we have a lot of initiatives in play that kind of are towards this objective, whether it's the CNBC D2C launch we've talked about, MS NOW D2C, Fandango AVOD, integration of Full Swing, the launch of like Fandango One, which is what we used to be called INDY Cinema, is a software service for exhibitors. Every one of those, a lot of organic, some inorganic to kind of show them start to scale. And we're seeing good results. It's early, like the early results on Fandango AVOD are good. The MS NOW D2C launches tomorrow, but it's to continue to kind of launch them and to see audience scale and then monetization will follow audience scale.
And these all feel like relatively, I'll call them, low-hanging fruit because of the kind of capital allocation fight that you had to do within broader Comcast, right?
Yes. I mean one of the things we're focused on, too, is each of these, we can execute capital very efficiently from a capital perspective because they are the product of the scale we have, like the organic ones harness our internal capabilities, like we already have infrastructure. We have video infrastructure. We have the technology. We have obviously the talent and the brands to use. So we're able to do them so that you're not going deep in the hole with kind of a bet on the come, but rather pretty efficient, modest investment for we think sizable opportunity.
If I could just jump back to platforms for a moment. As you talked about, the outlook is for underlying high single-digit revenue growth for platforms. But with the portfolio changes, I guess, on a reported basis, are you on track to do better than the high single digits just because my suspicion would be Full Swing will be accretive relative to...
Yes. I mean -- so we're going to disclose and report such that we can show the -- a, so we can show the underlying because we just want to be transparent on that. And like Full Swing is growing rapidly. There's a whole bunch of puts and takes here because there was a few months where we didn't have SportsEngine nor Full Swing. We have neither. And then there's going to be months that we'll only have Full Swing towards the back end and it was early months with SportsEngine. So I think the numbers are going to kind of -- because they're apples and oranges, like, yes, like in the back end of the year where you're including Full Swing, it's going to -- like nominally, it will -- could look really, really strong, but we didn't think that was really representative of the kind of underlying performance. So we're very focused on the underlying, and in that visibility, like I think you'll see how each component is working.
Great. That's perfect. Last quarter, the second quarter, you raised full year revenue guidance and EBITDA and reiterated free cash flow dynamics. Just wondering like how you're pacing against those full year goals and anything that you would highlight that may be happening intra-quarter?
Yes. So first, on the full year, we're -- like we feel really good about the business. We wouldn't have raised guidance, obviously, if we didn't. And the fundamental thing on the guidance has nothing to do with the ins and the outs of Full Swing or SportsEngine. It's the foundational like the momentum we have, all the ratings I mentioned before, and that's translating to great advertising. We got the distribution renewals like on the terms we expected. So that was great news, again, not a surprise. So it's based off of the fundamentals. In terms of the quarters, and we mentioned this for those of you who had a chance to listen to our call on Q2, there is going to be a quarterly trajectory, which we've always known when we issued guidance, we -- this was embedded in there that the back end of the year has some different sports timing in Q3 and 4, and especially in Q4, there's a different volume, specifically of like NASCAR events year-on-year that affect our financials that are going to be represented in our results. In fact, we were pretty explicit that we're not expecting -- Q1 and Q2, we grew EBITDA. We're not expecting to grow EBITDA in the back end of the year. That's all embedded in the guidance that we gave. If you take it, if you abstract from the sports timing, which is kind of endemic to our industry, the fundamentals of the business are great. We feel very good about kind of how things are going. That's going to continue going forward. Like we're bullish. We have very good visibility, our distribution deals. Now with the renewals we've done like 2/3 of them are not until '28 and beyond. We also have like very good visibility in the sports rights. A lot of our sports rights go past 2030. We have a few renewals sooner. But like I said, many are past that. We don't have any kind of big renewals now or 2027. So that's helpful as we kind of look at the future of the business.
Great. On capital allocation, Versant generates substantial free cash flow. You're supporting a quarterly dividend. You have a buyback authorization. Maybe just talk a little bit about what are the priorities for Versant from a capital allocation perspective right now? Do you have appetite for more M&A or more divestitures?
So our capital allocation, we're consistent on this. It's 3 things. And for us, a big deal is they're ands, not ors, and we're very proud that we can do this. A is to return capital to shareholders. We've returned $305 million through the first half of the year between dividends and share buybacks. That doesn't include the $100 million ASR that we announced executing in Q3. Second is to invest in growth in smart ways, disciplined fashion. We have -- we talked about the organic initiatives we have, a few like a Full Swing where we know it's -- there's a high bar for both organic and inorganic, but for those that pass that bar. And third is to maintain a healthy balance sheet. We have a North Star on leverage. We've talked about at 1.25x. And if we may be a little above or a little behind temporarily, but that's our goal to get there in quick order. And again, we think all 3 of those work together, so you can do and you don't have to pick between one or the other. And that's how we're going to continue to run. And when you talk about M&A, if it passes all the thresholds and fits within those parameters, again, sure, but that bar is high.
Very clear. Just to wrap it up here, one final question. As you look out over the next 12 to 24 months, maybe you can just tie it all together and talk a little bit about strategic priorities, things you're most excited about.
Yes. I mean, as we talk, we're very excited where the business is and the future. So for us, like next 12 to 18 months is really about executing our growth strategy we've talked about. And I'm -- a, I'm very excited about the core television business. We talked about the audience trends, monetization. It's all going really well. And then if I look at the growth, we launched Fandango AVOD just a few weeks ago, that's out of the gate strong. We're launching the MS D2C tomorrow. We're very bullish and optimistic on it. We're going to launch a CNBC D2C. We haven't given the exact time frame, but it won't be that far into the future. And then we're seeing success on the early M&A and integrating them. I mean, Full Swing just closed, but I talked about Fandango One, INDY Cinema and some of these other deals, Free TV Networks. They're all -- like we're pleased where -- how these growth initiatives have come together to evolve our business to continue to expand our audience and reach. And you put that all together, we feel good to continue to execute that same capital allocation approach we just discussed. And so I think that's kind of the full strategy we've been pursuing, and we're really looking forward to continue to execute against that.
Great. Well, Anand, thank you so much for participating in our conference. It's been a privilege to have you on stage here today.
Thank you, Mike.
Versant Media Group — Q2 2026 Earnings Call
1. Management Discussion
Greetings. Welcome to Versant Media's Second Quarter 2026 Operating and Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I'll now turn the conference over to Wylie Collins, Executive Vice President of Treasury and Investor Relations. Thank you. You may begin.
Thank you, and good morning, everyone. Welcome to Versant Media's Second Quarter 2026 Operating and Financial Results Conference Call. Joining us today are Mark Lazarus, Chief Executive Officer; and Anand Kini, Chief Financial Officer and Chief Operating Officer. Also with us are Jordan Fasbender, General Counsel; and Natalie Candela, Vice President of Investor Relations.
Before we begin, I'd like to remind you that certain statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to Versant Media's filings with the SEC and today's earnings release.
All forward-looking statements are made as of today, August 6, 2026, and we undertake no obligation to update them. In addition, we may refer to certain non-GAAP financial measures. Information and reconciliations to the most directly comparable GAAP measures are included in today's earnings release and in the materials posted in the Investor Relations section of our website. During today's call, all comparisons to the prior year are against stand-alone adjusted figures, which represent our estimated 2025 results as if Versant were already a separate independent company.
And with that, I'll turn the call over to Mark.
Thank you, Wylie, and good morning, everybody. Our second quarter results reinforced the strength of our portfolio and the strategy that we're executing: to win with premium live content, extend the reach of our iconic brands and accelerate growth across our platforms. Across news, sports and entertainment, our brands continue to grow audiences and engagement while delivering value for viewers, advertisers and our distribution partners.
Our TV portfolio now reaches more than 120 million viewers each month with double-digit audience increases in aggregate across our networks. We also recently completed multiyear renewals with 2 large pay TV distribution partners, one in the U.S. and one in Canada, further highlighting the value of our portfolio. That strength gives us confidence to invest where we see the greatest opportunities, growing our digital platforms, advancing our direct-to-consumer offerings and deepening our audience relationships. Together, these investments extend our audience reach and build upon the foundation of our iconic, highly cash-generative brands.
Our performance this quarter demonstrated our strong execution of this strategy across the portfolio. Let's walk through a few of the highlights. CNBC reinforced its position as the leading global business news brand. During market hours, the network ranked among the top 10 cable networks for the fourth consecutive month and delivered its highest-rated quarter in more than 5 years. Coverage of the SpaceX IPO drove CNBC's highest-rated day during that same period. CNBC continues to generate the most affluent and educated weekday daytime audience in all of television, a distinction it has maintained for 27 consecutive quarters. The network also featured exclusive interviews with business leaders and policymakers, including Jeff Bezos, whose appearance generated more than 100 million video views across all platforms.
MS NOW also built on its momentum, delivering its seventh consecutive month of audience growth in TV and expanding its reach on digital platforms. In June, viewers watched an average of 9 hours each week, the second-highest level of engagement across all of television. And MS NOW saw a 14% increase in viewership in the second quarter versus last year. That momentum extended well beyond television. Year-to-date, the network generated nearly 3 billion combined YouTube and TikTok views and in June ranked as the #1 news organization on YouTube. Podcast engagement was also healthy with more than 11 million audio downloads during the month. In July, we celebrated MS NOW's 30th anniversary, an important milestone for one of the country's leading news brands. MS NOW continues to accelerate.
Golf Channel also had an outstanding quarter. PGA TOUR coverage delivered the network's most-watched second quarter since 2020, with comprehensive coverage across all of golf, including the Masters, PGA Championship, U.S. Open and PGA TOUR and its signature events. In sports and entertainment, USA remained a top 5 entertainment network among key demographics, extending a track record of leadership spanning more than 3 decades. Live sports continue to drive large, highly engaged audiences. In the WNBA's first season on USA, the network aired the 3 most-watched games across cable and streaming, while League One Volleyball increased viewership over its inaugural season, and the WWE continued to deliver large audiences.
We're investing in sports where we believe we can create long-term value. Last month, we announced a 5-year agreement with the Bundesliga, one of Europe's most renowned soccer leagues, known for passionate fans, iconic clubs and athletes and global appeal. Beginning this season, we will broadcast more than 300 live matches annually with at least 30 premium matches airing on USA Network and all remaining matches streaming for free on Fandango. This agreement builds on our year-round sports offerings, expands our reach with soccer fans and creates more opportunities to engage audiences across platforms. In addition to Bundesliga, the start of our NASCAR Cup Series coverage on USA Network begins this Sunday, and the return of the Premier League later this month provide a strong lineup of live sports as we enter the second half of the year.
In entertainment, we're driving viewership with a balanced portfolio of original programming and proven franchises. Our strategy is to build brands that engage audiences across multiple platforms for years to come, and that strategy is delivering results. Everything on the Menu saw double-digit ratings growth in its second season, and we're excited to build on that momentum with our next generation of originals, including Anna Pigeon and The Golden Life, set to premiere this month and fall, respectively.
Platforms continue to be an important part of our long-term strategy, and both Fandango and GolfNow delivered strong results. We are evolving Fandango from a leading movie ticketing business into a comprehensive entertainment platform. A few weeks ago, we launched our new AVOD service, bringing ticketing, home entertainment and free streaming together under the Fandango name. AVOD is one of the fastest-growing areas in media, and we enjoy clear advantages from the well-known Fandango brand, broad connected TV distribution, rich first-party data and unique and exclusive content, most recently with the addition of the upcoming live Bundesliga matches.
The Fandango platform we're creating is anchored by a differentiated core business as demonstrated by healthy ticketing volume growth. In any given month, 50 million consumers visit either Fandango or Rotten Tomatoes to decide what to watch. Together, these platforms enjoy loyal customer relationships and support our long-term growth strategy.
GolfNow realized broad-based growth, including domestic rounds booked, global course relationships, payments volume and GolfPass subscribers. We are further strengthening our leadership in golf and platforms with the acquisition of Full Swing. Full Swing is a leading sports technology company serving one of the fastest-growing segments in the golf industry through immersive off-course golf experiences. The acquisition expands our portfolio with an interactive offering, spanning immersive simulation, launch monitors, virtual greens, integrated software and performance data. As a trusted partner to many of the game's top players, Full Swing is growing rapidly, is profitable and generates healthy recurring revenue.
We believe Versant's leadership in golf uniquely positions us to accelerate adoption of Full Swing's technology across both consumer and commercial markets. We believe there is meaningful upside in this market. Today, there are 38 million off-course U.S. golfers, exceeding the number who play on traditional courses. And since 2019, the number of off-course golfers grew more than 60%, and simulator golfers grew by more than 150%. More importantly, Full Swing will expand our golf ecosystem by broadening our relationship with the golf community. Together with Golf Channel, GolfNow and GolfPass, we are uniquely positioned to connect premium content, commerce, technology and participation, creating more ways to engage golfers throughout their journey.
There are also additional opportunities beyond golf, including baseball, where Full Swing's technology is already used by both college and professional teams. We are also advancing our direct-to-consumer strategies around MS NOW, which will launch its direct-to-consumer experience ahead of the midterm elections, giving audiences new ways to engage with its hosts, programming and community while deepening engagement, strengthening the brand's relationships with viewers and fans. And at CNBC, we're developing a next-generation digital platform that will combine CNBC's trusted journalism, exclusive access to leading voices in business and AI-powered investing tools to become a premier destination for investors.
Taking a step back, our accomplishments this quarter reinforced what we've believed since becoming an independent company just over 7 months ago. We continue to deliver premium content that expands our audiences, drove compelling results across pay TV and platforms, renewed distribution agreements with valued partners and advanced the strategic initiative that will further strengthen our leadership in golf. Looking ahead, we'll continue to invest where we see competitive advantages and clear return, extending the reach of our brands while creating long-term value through scalable platforms. Today's announcement of an additional $100 million accelerated share repurchase program alongside our quarterly dividend reflects our commitment to returning capital to shareholders, the enduring strength of our business and the confidence in the opportunities ahead.
With that, let me turn it over to Anand.
Thanks, Mark, and good morning, everyone. Our second quarter results reflect another quarter of disciplined execution of our strategy and progress toward our financial objectives. We delivered EBITDA growth, strong margins and meaningful free cash flow while continuing to invest in the business to drive growth. Based on the strength of our first half performance and our expectations for the balance of the year, we are raising our full year outlook for revenue from $6.15 billion to $6.4 billion to $6.2 billion to $6.45 billion and for adjusted EBITDA from $1.85 billion to $2 billion to $1.9 billion to $2.05 billion. On free cash flow, we are maintaining our prior expectation of $1 billion to $1.2 billion to account for natural quarterly fluctuations in working capital timing.
Turning to our results. Total revenue for the quarter was $1.64 billion, a decline of 4% compared to the prior year. Excluding the impact of the SportsEngine divestiture, revenue declined 3%. Our performance reflects the resilience of our brands, strong audience engagement and continued momentum in platforms, mitigating the secular changes in pay TV. Turning now to the components of revenue. Linear distribution revenue was $954 million, down 6% year-over-year, reflecting subscriber declines that were partially offset by contractual rate increases. These trends were consistent with the prior year's performance. Advertising revenue was $423 million, reflecting a slight 0.6% decline year-over-year compared with a 13% decline in the prior year period. The improvement was driven by strong demand across our news and sports portfolio, favorable network ratings and additional revenue from our acquisition of Free TV Networks.
Platforms was the fastest-growing part of Versant, with revenue increasing to $225 million in the quarter and continues to play an important role in evolving our revenue base. Excluding the impact of the SportsEngine divestiture, revenue increased 9%, driven by momentum at both Fandango and GolfNow. Fandango generated solid growth in tickets sold, video-on-demand transactions and sales of our new cinema operating platform, while GolfNow delivered increases in U.S. bookings, payments processed and GolfPass subscriptions. We're encouraged by the performance and continued progress in scaling platforms.
Content licensing and other revenue was $43 million, which was flat year-over-year, following the sharp uptick in the first quarter. As we've discussed previously, this category can fluctuate from quarter-to-quarter based on the timing of licensing agreements. We view content licensing as a growth area over time as there's continued demand for our own programming and library. Adjusted EBITDA for the quarter was $624 million, an increase of 3%, and reflects the breadth and depth of our audience, continued platforms growth and disciplined expense management. Our margins remain above 30%.
Turning to expenses. We are focused on managing costs while investing behind our strategic priorities. Programming and production costs were $522 million, down 9% from prior year, as we continue to deliver premium content in a cost-efficient manner. Programming costs fluctuate throughout the year, largely based on the timing of sports events. As we shared on the first quarter call, we expect sports rights costs to meaningfully increase in the second half, further impacted by an increase in NASCAR races this year, our first season with the WNBA and golf events. Each of these reflects the strength of our sports portfolio and breadth of audience. In light of this, we expect second half programming costs to increase year-over-year and in turn, adjusted EBITDA for Q3 and Q4 is unlikely to demonstrate growth versus the prior year.
Other cost of revenue were $128 million, $1 million higher than in the prior year quarter. Increased costs due to higher transactional volumes related to our digital platforms and from our acquisition of INDY Cinema, now rebranded Fandango1, were largely offset by decreased costs from our divestiture of SportsEngine. Total cost of revenue, representing the sum of programming and production costs and other cost of revenue were $650 million, down 7% from the prior year. Selling, general and administrative expenses were $369 million, a decrease of 8% compared to the prior year. Looking ahead, we expect modest increases in SG&A as we support our growth initiatives, including the development of the upcoming MS NOW and CNBC direct-to-consumer offerings. We're focused on identifying efficiencies across our organization that will benefit 2026 and beyond, such as by optimizing our infrastructure and deploying technology to streamline workflows and improve productivity.
Finally, with regard to cash generation, liquidity and capital allocation. Free cash flow totaled $350 million during the quarter. As we've noted before, the timing of working capital and tax payments can create quarterly variability in free cash flow, and we anticipate higher CapEx in the second half of the year, largely associated with construction at our New York office facility. As with adjusted EBITDA, we continue to anticipate that second half free cash flow will be lower than the first half. Despite these timing distinctions, our business model delivers strong cash conversion on an annual run rate basis. We ended the quarter with approximately $1.5 billion of cash, which, together with our strong free cash flow generation, supports our capital allocation priorities of investing in the business, returning capital to shareholders and maintaining a strong balance sheet.
Demonstrating our commitment to returning capital to shareholders, we repurchased $100 million of stock in the second quarter under the previously announced accelerated share repurchase transaction. Through today, we have returned $305 million to shareholders this year, through $200 million of share repurchases and $105 million in dividends. This morning, we also announced our intention to commence an additional $100 million ASR during the third quarter. At the same time, we're deploying capital into long-term growth areas with investments in the MS NOW and CNBC D2C offerings, the Fandango AVOD and on disciplined M&A such as the recent acquisition of Full Swing.
We believe Full Swing, with its clear alignment and synergy with our leading golf brands, will generate attractive financial returns and value for shareholders. In the second quarter, we executed and advanced our strategic priorities with financial discipline, positioning us well for the balance of the year and beyond.
And with that, I'll turn it back to the operator for Q&A.
[Operator Instructions] And our first question comes from the line of Peter Supino with Wolfe Research.
2. Question Answer
I wondered if you could discuss your affiliate renewals and what, if anything, about those negotiations was different than the tone of negotiations under Comcast. And then also, if you could answer a second question, it would be about the direct-to-consumer expansions of MS NOW and CNBC. I wonder what data or perspective you might have on the latent demand for those brands outside of the pay TV subscriber base of today?
Thanks, Peter. So I'll touch on the affiliate side. I mean, we had -- we did some deals while we were still part of NBCU in 2025, and then we have a few deals up this year. There was really no change in how we approached it or how the distributors approach it. We had very similar conversations. It was really about the value of our brands, the strength of our brands and what it does for them to keep their subscribers happy. And the fact that we have a lot of live news and sports, we have some strong entertainment content and that we are able to deliver audiences to our distribution partners made those conversations quite similar to anything we've experienced in the past.
So really, I mean, I'll call it business as usual. It was different because we were a different company, but very similar conversations. And I think we had outcomes that both we and the distributors feel very good about that we have long-term partnerships. As it relates to the D2C, these, MS NOW and CNBC, are very strong brands with highly engaged audiences. We are going to -- we are creating direct-to-consumer products, not streaming products, because they are -- it is a much broader than just streaming what we do on television. It is about serving those engaged audiences with content that is not just replicative of what we do on television.
So the strength of MS's highly engaged audience, already watching 9 hours a week, of our network, but also the size and scale of the audience that may or may not be watching us each and every day, who's interested in the point of view that MS has, I think we'll be able to have a strong marketplace as we enter it. CNBC already has direct-to-consumer businesses. We know that there's a demand. We're simply reimagining them and making them stronger and creating a destination for retail investors with a toolkit.
Yes. And just to add on, Peter. There's a couple of kind of indicators, too, to just reinforce what Mark said. So we mentioned before that MS has one of the biggest YouTube and TikTok presences. So like outside of pay TV, we're already amassing big audiences. We have a big live events business that CNBC has had for some time and MS NOW has as well. And then also, we have 2 publishing businesses, the kind of the website and the apps for both MS NOW and CNBC that amassing big audiences as well. So it's kind of everything Mark said. It's also -- it's not like both the CNBC subscription services and all those other things I just mentioned demonstrates there's a lot of appeal for those brands and for those businesses outside of the pay TV.
Our next question comes from the line of Michael Ng with Goldman Sachs.
I have 2 questions as well. Just the first on SportsEngine and Full Swing. Very encouraging to see the upgrade in revenue and EBITDA, despite the disposition of SportsEngine, which I think is about a $90 million headwind to full year revenue. But my question is, how much of the guidance increase was related to Full Swing contributions kind of net of the SportsEngine disposition versus improvements in the underlying business?
And then secondly, I was just wondering if you could talk about the ASR and what that means for your appetite for additional M&A, if there's any relation there?
Sure. Thanks, Mike. So on both questions, first, let me start with the guide, our guidance and your point on Full Swing. Just to be very clear, our update in guidance is not because of the acquisition of Full Swing. As you know, we're getting a partial period here given we just closed the acquisition, and we looked at and we established taking our kind of outlook up was based on the entirety of the portfolio. As you know, there's a lot of like ins and outs, as you just mentioned. The SportsEngine divestiture, that comes out. Full Swing comes in. But no, it was not because of that. It was just much more reflecting the confidence we have in the business. Going forward, not only the second half of the year, but going forward after that, all the results we just talked about the momentum we have in the first half, and we see that continuing.
On the second question on the ASR and M&A, I think we've been -- we view our capital allocation policy, and I think we've demonstrated that, and we're going to continue to demonstrate it, is that these are ands, meaning we're going to invest to grow the business, we're going to return capital to shareholders, and we're going to maintain a healthy balance sheet. And we think -- and I think this quarter where we were -- we executed the Full Swing transaction, and we're kind of again returning capital to shareholders both in terms of the dividend and share buybacks, demonstrates that, and our balance sheet remains very healthy. So that principle is what we're going to continue to run this business on kind of now and going forward.
The next question is from the line of Rich Greenfield with LightShed Partners.
So I bought a new Sony TV the other day. And when I was setting it up, I had like, I don't know, 10 or 15 apps that were preinstalled that had asked me whether I wanted to add to my new TV setup with Google TV. And Fandango, interestingly, was 1 of those 15, along with other very -- much more high-profile apps, which certainly surprised me. And you've been -- you've rolled out this Rotten Tomatoes app and you announced a Fandango kind of AVOD sort of take on what Tubi has done. Now we've got Pluto replicating Tubi with on-demand.
It seems like there's like some larger strategy that you're kind of noodling on around the movie entertainment business and how you monetize it. Similar to sort of the golf vertical that you've gone really deep in or the finance vertical that you're going deeper and deeper into. I guess I just -- could you sort of lay out like what you're thinking vision-wise? Or are there assets that you need to acquire to build this out? Is it all internal? Just give us sort of a peek into what you're thinking about because I feel like there's something there.
Sure. Thanks. I hope you clicked yes and installed that.
I did, Mark. I did click yes. I did, I did. I promise.
Okay. Thank you. So listen, we start with Fandango as a very strong brand, right? And it's been widely known mostly as a movie ticket buying service. We started with a strong brand, and as you just experienced and articulated, a large installed base in the connected TV world. It pre-exists. That's a strong base to start up. Where we aspire to move this, and we touched on it in our remarks, is to really create a comprehensive entertainment platform where consumers under 1 brand can find out where movies are, buy tickets to theaters, rent or buy films or TV series, watch for free at home with differentiated and exclusive content. And with Rotten Tomatoes, it's really a great discovery platform.
We have 50 million people coming through the Fandango, Rotten Tomatoes door in any given month. And the ability for us to have expose them and transact with them on all 3 of those levels, free AVOD, buy or rent TV and movies or purchase movie tickets, we think it's unique that we have all 3 of those wrapped into one. The strength of our ability to work with all studios as an independent company, we think, is also unique as others dabble in a variety of those areas.
What differentiates you from Pluto or Tubi? I mean there's a lot of players. I mean, Disney yesterday said they're launching an AVOD service. Paramount said they're thinking of it, for Paramount Plus. Like what makes Fandango unique from a product standpoint?
I think some of the main -- some of it will end up being content for each of us. And I think our deal with the Bundesliga, where 270 Bundesliga matches will be exclusive to Fandango stream, it gives us a unique selling proposition. But more broadly than just content, I mean, we have some deals and windows for movies and TV series. So content will be one, but everyone will have an angle on that.
I think our ability -- because of the transactional business around movie tickets and buying and renting films and TV series, our ability to target content and target advertising will be distinct. And again, that, I think, attached to our large installed base and our independence away from all studios and our ability to work with all studios, it gives us a clear advantage.
The next question is from the line of David Karnovsky with JPMorgan.
Your linear distribution growth firmed a bit relative to last quarter. Is this seasonality, but trends on pay TV or something specific to your deals? And second question, can you discuss the better trends in advertising? What networks have driven this? Is it mainly about ratings? There was also mentioned the recent acquisition, which we assume is Free TV Networks. Can you maybe frame the contribution and how that's performing to date?
So I'll take the first one on the linear distribution. We were able to -- we have long-term deals with all of -- most of the operators or all the operators. We just finished 2 more. We are not blind to the normal headwinds that everyone in the industry is facing, but we are able to strike deals that allow us to mitigate some of those headwinds, and then the rest of that mitigation will come by our capital allocation and investing in our businesses, both organically and with strategic and disciplined M&A. So again, not blind to what's going on in the distribution world, but we are able to -- our strategy is to be able to mitigate that, and we believe we're making significant headway.
Great. And on the advertising question, a couple of things. The strength was pretty broad-based. Now we have talked a lot about the power, one of our kind of hallmarks is we have a very sports and news and live event focused kind of programming. It's about 60% of our audience. That's the kind of programming that's resonating very well. Mark went through the rating success we've had kind of across the board, a lot of it in those areas. And with that engagement, it has a lot of demand for marketers. So I think that's a big driver. So it's pretty widespread in terms of there's not one specific network or asset that's driving our strength, and we're proud it's broad-based.
Second part is in terms of like an acquisition, adding to it and the business here is Free TV Networks. The underlying organic growth is what kind of drove the kind of the trend improvement. So sure, Free TV Networks is a business we really like, and it's contributing, but that's not the driver as to why you saw the significant improvement from the prior period.
Great. And maybe a follow-up on Bundesliga rights. It's a novel approach to use sports mostly for a FAST channel. Can you speak a bit to your strategy here?
For us, and it was a unique opportunity to work with them. We've had a lot of success over the years in our previous experience, but even continuing in as Versant with the Premier League and with sports to drive adoption of platforms. The Bundesliga was an opportunity that we sought to create at scale live sports content, a significant number of hours, 600 or 700 hours of live sports, and be able to both serve our pay TV customers with premium matches on USA and create a new marketplace for ourselves in free AVOD and bring in a new group of people who may not have experienced Fandango for the services and the content that sits there now, but trying to build circulation. And sports has been one of those things in the industry that has done that, and we decided that this was a smart investment in a sport that we know has a very loyal and engaged fan base.
Our next question is from the line of David Joyce with Seaport Research Partners.
Just a little bit more on the pending direct-to-consumer launches given that there's a lot of fluidity in bundling, packaging platforms, integrating other third-parties entities, what is your view on your strategy there? Would you be looking to -- you partner to help drive the subscriptions? How much do you want to lean into Peacock since they do need some more scale?
And then also on the advertising side, what are you doing to help with the NBC ad sales thing? And when would you want to be taking that back in-house?
So on the D2C, we're going to launch them independently, to start. We do have some of our deals with our MVPD and partners, allows for us to be bundled into what they're doing for customers. And we think that's an opportunity to quickly gain more subscribers and usage. So we are open and having active discussions across the industry on where bundles might make sense, where we think it's one of the advantages that we have as a new independent company, as we're not beholden to any specific company for distribution. We can work with any and everyone. And I think over time, you will see us doing just that.
I think next one was working on the CSA.
On the CSA, sorry, I lost. So on our deal with NBC has been going very well. And I think if you looked at the advertising trends of what we're seeing, it's hard to deny that. So we've had a very strong relationship there. It does have a term. It was a 2-year deal. At the appropriate time, both sides will determine whether it makes sense to continue on or whether we should make another arrangement plan or do it ourselves. But for right now, we're very much focused on partnering with them. They've been great sellers and stewards of our brands. We're going to support that. And together, we'll sit down with them, and each party will determine if it's in our best interest. But we're months, if not a year away, from that determination.
Our last and final question is from the line of Brent Penter with Raymond James.
First one for me. What's the biggest synergy opportunity you see in Full Swing? Clearly, it fits within a portfolio of golf businesses. But can you just help us understand in practical terms, what are the biggest benefits by being under the Versant roof?
Yes. I think, quite simply, first, golf participation is growing. Our golf ecosystem of Golf Channel, GolfNow and GolfPass, we can really accelerate the adoption. It comes in a couple of forms, right? First will be just market where we'll be able to market the product, both for commercial -- to commercial entities and to consumer users very simply through Golf Channel, GolfNow, GolfPass. Second big piece would be we have a massive GolfNow sales force who talk to golf courses and golfers every single day, and they will now have another product that they can sell into those establishments.
So those are things that Full Swing, as successful as it is and excited as we are, we can instantaneously add to their exposure and their sales team. And so we're very excited about that sort of opportunity. And oftentimes in M&A, people talk about synergy being about cost. For us, this is about revenue synergy.
Got it. And you all continue to execute on these M&A opportunities. Is there a limit on size you're willing to entertain for M&A? Mark, earlier you used the word "disciplined," and you all have been committed to leverage levels. But if something larger comes up, what's the willingness either through the balance sheet or through equity to take advantage of that?
So I think -- so on the question, Brent, it's -- we've been -- capital allocation, we talked about like our leverage 1.25x, that ratio being our North Star. So anything we do, if we were to be below or above it, you would expect it and we expect ourselves to kind of get back to that in relatively quick order. So I think, again, that question about -- we would never say we're going to exclude considering something, it would have to go through our disciplined process, make sure it adds value to shareholders, that we're going to be a great buyer. Some of the synergies, for example, that Mark talked about in Full Swing, we look at that about the unique value we add on any potential deal we do.
And then in terms of kind of capital structure and capital allocation, again, it's going to have to align with those 3 principles about growing our business, evolving our business model, enabling us to maintain a healthy balance sheet and most importantly, driving value to shareholders and enabling us to return capital to shareholders as well.
And I think, hopefully, we've proven that, and we have capacity because of the way we've managed to date.
Ladies and gentlemen, thank you for participating. This does conclude today's teleconference. You may now disconnect your lines at this time, and have a wonderful day.
Versant Media Group — 2026 Evercore Global TMT Conference
1. Question Answer
Good morning, everybody. My name is Kutgun Maral. I'm the Media, Cable and Telecom Analyst at Evercore ISI, and it's our pleasure to welcome today Anand Kini with Versant Media Group to our conference. Anand, thanks for being here.
Yes, thank you for including me.
Yes, absolutely. So maybe to kick it off, Versant is now roughly 5 months into its life as an independent public company following the separation from Comcast. For me, having spent some time with the management team and at the Investor Day, one thing that stood out was that Versant seems to have a real sense of energy and urgency, an entrepreneurial or start-up feel inside a scaled cash-generative media company. That's not necessarily the culture that I've observed with some of your peers. So maybe to start, how would you describe the internal mindset after the separation? And how is that showing up in the way that the company is making decisions, allocating capital and pursuing growth?
Sure. So I think you got the characterization exactly right. There's a scrappiness that we have, very kind of an entrepreneurial spirit. I think a lot of it was as a spin, we were attracting people, and we had people with that mindset that joined us. As a team, we're aware of, obviously, the secular changes happening in the industry, but we're also very much appreciative of the assets we have, the audience reach the opportunity we have. And I think this organization individually and collectively, we knew to kind of take advantage of the opportunity. We wanted to do things differently than they were -- the way they were done before. And that meant, again, having a different mentality. And it then shows up in terms of things you mentioned like speed and decision-making. And again, to maybe take that from abstract to kind of more concrete, we're still very data-driven, very analytical.
But if you look at, for example, the number of growth initiatives that we have out right now, whether it's a couple of D2C products with MS NOW and CNBC or we've done some kind of bolt-on M&A like INDY Cinema, which we now call Fandango1 and a whole host of others. We've only been in existence for 6 months, and I'm proud of the fact that we've been able to, with discipline, execute these and kind of recognize there's a great opportunity to grow the business. And so I think it's kind of emblematic of who we are and that kind of spirit of, let's drive shareholder value in an efficient, disciplined way, but with an emphasis on speed and urgency.
Perfect. And next investor understanding, I think investors broadly speaking understand the high-level objective of diversifying the company beyond the traditional pay TV ecosystem. Everything I'm about to say is very interconnected. But from your seat as the CFO and COO, what's the internal scoreboard that you use to judge whether that transition is working? Is it mix of revenue outside of pay TV, the growth of platforms, EBITDA and free cash flow the penetration within specific business like GolfNow, Fandango, CNBC, MS NOW or anything else?
Sure. So it's pretty multifaceted. I'll start with we're very proud of our Pay TV business. Like I mentioned before, we're aware of the secular changes happening. But in terms of like a scorecard, again, this is a very good business for us. It's going to be a very good business for a long, long time. So we spend a lot of time making sure are we delivering great premium content that audiences love. That is still a foremost job. And so we're obviously looking at ratings and audience engagement and monetization. Then in addition, as we talked, a big plank of ours is to evolve the business. Pay TV is going to be important, but we also want to take these brands and these verticals and expand into platforms and other ways for consumers to experience them. And so there, again, we'll look at metrics such as how much of our business mix is coming from nonpay TV. How is our audience engagement outside of pay TV? And importantly, how is our monetization? Or are we actually monetizing these audiences?
And then kind of underpinning all of that across both look at a lot about the overall kind of financial performance in terms of EBITDA and free cash flow, we are a very cash-generative business. And as we evolve this, we're going to continue to be and then that then translates, of course, to kind of driving returns for shareholders over the long and short term. So we kind of look at every one of those components as we kind of manage this portfolio.
Perfect. Let's talk a little bit more about the platforms business. And platforms grew high single digits in the first quarter, led by GolfNow and Fandango. How would you rank order the drivers of that growth? And how much of it do you view as structural versus more dependent on things like the film slate, consumer activity or timing?
Yes. So I think the biggest driver kind of in the quarter as well as, I think long term,is just overall transaction volume. And that is the total number of golf rounds that are booked in GolfNow. The total number of courses that we're in, who are using our software or in Fandango, it would be kind of ticketing volume, home entertainment, kind of purchases at home. So this transaction volume is really about more and more people engaging with these platforms. And it's a great thing. It's exactly what we want to see because as you have more and more folks engaged, there's more ways that we can obviously share new services with them. We can monetize them more broadly. And that's been the fundamental driver.
Now in terms of kind of the -- as you mentioned, whether there's a cyclical component or it's kind of like, I almost call it more foundational. There's going to be certain elements, yes, where there's a cyclical component, but it's really focused perhaps mostly on Fandango, where there's the theatrical slate, which obviously is a theatrical slate. Some years are kind of bigger, broader and some years are not. And there's a little bit of like quarter-to-quarter volatility and sometimes a little year-to-year. But I think the key, though, is that, a, in golf we're really -- it's a different story, where golf is -- doesn't really have that. We've developed this multifaceted business model where there's key times, there's software, there's subscription services. And in that, it's kind of more of a player in the overall golf ecosystem.
There's not one thing that's really driving it in isolation. And in Fandango as well, well, yes, there is an element which has this impact on the slate. We're broadening that too. We've extended into software for cinema operators. We're launching an AVOD service. So again, those are not dependent on the slate. So I think the key here is it's foundational kind of what's driving it. And while there may be a little bit of quarter-to-quarter volatility because of some of the cyclicality over time, the long-term growth is foundational in nature. And I think even over time, you'll see even that cyclical nature start to diminish where the dependency say on Fandango and the slate becomes less because we're developing these other revenue streams.
That makes sense. And let's unpack golf a little bit more because that seems to me as one of the clear proof points of the broader vertical strategy. So maybe you could talk a little bit about what needs to happen for golf now to materially increase penetration from here?
Sure. So I think there's really 2 big things on golf now. First, just to put the context, market leader -- we're very proud of our golf performance, but we still represent less than 10% of all tee times booked. So one is like that is a metric that we think there's a ton of room to grow, and that's probably like in many ways, like the most important one. And who we compete with is we don't really compete with other digital competitors. We're competing with the telephone. So we have an advantaged way for consumers to book their tee times. And so this is all about driving that higher. And then that's also related to the second component, which is how many golf courses are we in?
We're in about 25% of golf courses. So again, there's an opportunity for that number to be a lot higher. And importantly, that's 25% of kind of golf courses -- traditional golf courses you play, we kind of call on grass. There's a lot of now kind of off grass. So this would be kind of the simulator experiences that are really popping up in a lot of environments where, again, our service is very relevant. So again, it's kind of getting our service into those areas, into those venues to a greater and greater extent. So I think those 2 work hand-in-hand as we are in more and more kind of venues, you'll see us get more and more rounds. And then within each venue, we can increase the share. And we're going to do that fundamentally by investing in some sales efforts.
This is an area pre-spin. We -- again, as part of a bigger company with other priorities, we didn't really have as much of some of the resources, which we're now investing in because it's very much about working with the golf operators, working with the courses to get into them and also to have a greater share of their tee time, which is really beneficial for us and beneficial for the course operator.
Yes. Perfect. And maybe switching gears a little bit to Fandango. It seems like there's a lot going on over there because you have ticketing, home entertainment, Fandango1 software, Rotten Tomatoes and as you alluded to, the upcoming AVOD service. What's the long-term financial model that you're trying to build around that brand? And how much of that opportunity can become recurring software or ad-supported versus purely transactional?
Sure. So the overall framework for Fandango is where we really want to take it and we are taking it from a business that was movie ticketing and that was the origins of Fandango. And then maybe 5, 6 years ago, as part of Comcast, we added on home entertainment where you could kind of buy and rent movies and television series at home. And our strategy is to make it a broader kind of general entertainment platform. And that means the AVOD service that I mentioned before in terms of enabling customers to have now watch things at no cost for ads. And then in addition, as again, as part of its entertainment platform, we have a business-to-business component with Fandango, we call now Fandango1, which was in the cinema previously.
And that's an opportunity for us to service exhibitors and really service them and have a -- we have a cloud software solution that helps them run their business. And you'll see even more opportunities with Fandango, again, now looking at it from a consumer lens to watch everything they want. And again, if you think about it with Fandango, one of the reasons we're so excited about this evolution is we're the only company that can offer a consumer.
Do you want to watch a first-run film in the theater? We got you. You can buy tickets to us. Do you want to watch something at home that may have just been in the theater just a few weeks ago, you can do that and well -- and it could be a TV series or a film for a fee without ads? Or do you want to watch something at home with a few ads that may be a different type of title may have been released a little longer ago.
And we're giving consumers full choice and they can access content however they want. Nobody else can do that. And we think, again, in terms of creating this broader entertainment platform for consumers on various different types of content with a tremendous brand that they love and along with Rotten Tomatoes, which gives you perspective on what do other people think about what you're watching and gives you -- helps you discover great content. It's a very unique value proposition that we're very excited about.
Is there anything more you could share about the AVOD platform and just how you're thinking about its competitive positioning with some pretty meaningful operators out?
Sure. So we have a lot of respect for some of the competitors. They've done very well. We think that also, a validates the opportunity. This is one thing broadly structurally. AVOD is growing. There is clearly some wallet fatigue that's with consumers between the various SVOD services and pay TV. So this notion of watching content, good content for free with some ads, consumers have accepted. So it's a growing market. In terms of our positioning with it, we think we have some notable advantages. First, we're ubiquitously already distributed on connected TVs, and that's a big deal because that's obviously how consumers want to access it. B, we have a brand that consumers know and love. I already mentioned Rotten Tomatoes kind of from a discovery perspective, another brand, they know and love and trust.
We also then have relationships with studios to kind of secure programming that's not our own. And then again, we're starting with a great base of programming that we're going to harness on the platform, great library content and kind of new content that we develop, that gives us a window to establish it and again, give consumers a window to access it. So if you look at that, and I already mentioned kind of the use case in a way from a consumer where we're going to have the AVOD as part of a broader ecosystem that really nobody else has. So you kind of put all that together. And I will say, finally, we're not going to just be a me-too service. We're going to have representing genres that we are particularly strong at. And so we're going to have a point of view and kind of a curated approach that will be a little different than other or, frankly, very different than others.
So I think you put all of that together, it's a very unique value proposition that we would argue really nobody else kind of has in a market that's growing. And also finally, I'll just wrap up by saying this is foundationally done by a lot of our own research with our own customers. We have a ton of Fandango customers. We've asked and they've told us they want this service. So we know there's kind of rock solid consumer demand that we're not kind of guessing on that it's proven.
Yes. And personally, I think almost all my theatrical decision-making is tied to Rotten Tomatoes.
Great. I love to hear. I'm glad you're a customer.
Yes. Maybe switching over to the CNBC side. I want to ask about StockStory. And maybe you could talk a little bit about how it helps to expand the direct-to-consumer opportunity beyond what CNBC could build organically? And what financial lever matters most to you in terms of higher paid conversion, higher ARPU, better retention, deeper engagement? Or is this really about reaching a broader retail investor audience?
Sure. So StockStory was fundamentally about not changing what CNBC and particularly the CNBC D2C is going to be, but accelerating the development of it. So just if you're not familiar what StockStory is, it's a service that leverages AI to kind of develop investor tools, some stock recommendations, really be able to provide the wealth of financial information in a way that's easy for consumers to access it at their fingertips. And those capabilities as we're building the D2C service for CNBC are obviously kind of front and center of what we want to do. And again, this accelerated the development of it. And importantly, it's not only about the feature sets that StockStory has today. We've been -- we have a team now on board that is very familiar with using AI and using technology to kind of create these consumer experiences.
And so as you can imagine, AI is evolving so rapidly. We are going to continue to develop more and more ways for consumers to subscribe to our service to be able to get tremendous amounts of information in ways that they can digest and very importantly, also personalized for them, which I think is a big feature -- big benefit of AI. Now as you were asking, I guess the other part of this was, well, how do we look at what's most important as we build the D2C. And kind of one answer is well, all of the things you mentioned are obviously important, whether it's audience or engagement or monetization.
I think in the early days, we're very focused though on audience conversion and engagement because I think once we kind of have folks and we know there's, again, a big population that really loves our brand and wants this service, our ability to bring them in for them to use the platform significantly, that's then going to lead to audience scale and then financial scale.
So that's probably -- those are the metrics. And part of that is bringing them in and then retaining them. And again, the service like StockStory is a big part of it because it both gives them an ability to kind of access a ton of information in ways they want, and it keeps the daily habit of them using the service that kind of reinforces that. So if I was to pick 3 in the early days, number of kind of converting audience to bringing them on board, how much they're watching and then how well we're doing retaining them.
Perfect. And maybe just sticking with direct-to-consumer and maybe roping in MS NOW, you said previously that investments here are not substantial. And maybe from a CFO standpoint, where are the major spend buckets between products, technology, content, marketing or anything else that you'd call out? And what milestones would cause you to maybe step up or moderate those investments? And kind of as part of this direct-to-consumer conversation, how do you make sure that the product is additive to the ecosystem rather than cannibalistic to the linear networks that you have?
Sure. So I'll kind of take them in pieces. So first is kind of the economics. So the -- we're starting off where we have a lot of the infrastructure in place. So that's just like from a technology perspective. We have a like video services existing, with CNBC has CNBC, Pro and Plus. We have some big digital publishing businesses in MS NOW and CNBC. And we have Fandango, which we just talked about, which has a big video infrastructure. So we're harnessing what we already have. So the -- and then we also obviously have a lot of our own programming and talent that we will harness for these that kind of our cost that we've already incurred.
There's not really that much incremental cost. So where we will spend and that's one of the reasons why the total investment is not huge where we will spend and where we spend some is, a, on kind of product and design. We want to create an interface and a way for consumers to interact, which is bespoke to the needs of this product and then also on marketing and kind of acquiring customers. So -- but a lot of where I think you typically see a ton of the money spent, we already have those capabilities kind of in-house. So that's what makes it inherently a very kind of efficient model. And what was the second part of that?
Second part was about how do you make sure that it's additive to the ecosystem as opposed to cannibalistic to the linear network?
Sure. So I think the key here is that we're not replicating the linear bundle and just moving it online. It's not what we want to do. It's not, frankly, what we think consumers want. These are going to be bespoke experiences that are attracting customers with a value proposition that's different than again, that's true to the brand. So let's take CNBC just to start there. It is a service targeted to the retail investor. Will it have some of our programming that CNBC has? Sure, it'll have some, but it's not just going to be that. It's going to be tools and kind of recommendations and unique editorial that's going to help investors make smarter and smarter decisions with the brand they trust, with talent that they know.
So -- and we talked about StockStory, that's some AI capability. So as you can imagine, that inherently because it's a different experience complementary to what they can in this case, see on CNBC, our television network, but it's not the same. And with that, it almost internally is not going to be cannibalistic. And it's very similar to MS too, with MS NOW, it fundamentally is a service that's going to be built around community. It's about community of currently loyal MS NOW viewers and even nonviewers who really love the brand. Again, a brand and talent that really resonate with people. And the thing we've heard from our customers is they want ways to interact with one another, and they also want ways to have experiences with the talent.
That could be like a virtual lunch where they get to ask a question. So as you can imagine, if I talk about that, that's -- those are not capabilities that you would get watching MS NOW on TV. So it's a unique experience. And we've seen this already. If you think about other ways of products we've built like on MS NOW, we have podcasts on MS NOW, like Rachel Maddow has a highly successful podcast, for example. That provides a different experience than what you're going to get watching Rachel on MS NOW in the network. So we've seen every time we develop these, we were able to kind of take our loyal viewers and give them more and capture new customers, and that's exactly what we're going to do with the DTC.
Yes. It'd be interesting to use AI and offer consumers ability to argue with [ Sorkin ]. I'm sure we'll get there eventually. Let's switch gears to the linear side, even though I know that you're trying to diversify and grow outside the linear ecosystem. But for investors, I think Pay TV headwinds remain a big concern. You've talked about before planning conservatively around those headwinds. And what does conservative mean in practice to your distribution revenue assumptions, programming commitments, SG&A structure and free cash flow planning?
Sure. So when we say conservative, we're not assuming that there is a like a Pay TV industry recovery. Like what we're assuming is the trends that we've seen and which have been pretty consistent over the last several years continue. We think that's a safe bet. I mean, there's -- you could make arguments that, that is -- that it could be better than that. We've seen some signs of some folks some distributors are seeing some more favorable and positive subscriber momentum. But we think the better way for us to run our business is to assume that it continues. It's possible that just in reality does. And frankly, we want to manage our cost base, assuming that it's kind of the continued trends are that they don't change. And what that means maybe more specifically is that like on distribution revenue -- linear distribution revenue, you'd have the subscriber kind of the cord cutting that we've been seeing, and then it would be partially offset by some rate changes on our wholesale deals with our pay TV partners.
But that's exactly what you've seen over the last several years in our financials. And then we're managing the cost base in response to that. So on programming costs, the key there is, yes, sports rights are more fixed, but everything else is pretty flexible, and we will modify programming costs in response to the overall revenue outlook. SG&A, again, also, we recognize the realities of the secular changes impacting pay TV. So we're very focused on efficiency. And we've set up the company on day 1 to be very shared services focused, not a lot of resources at each brand other than editorial. And then we're leveraging technology and automation to continue to drive as much efficiency out of the cost base as possible.
So that's how we're kind of running it and the focus as you put all of that together, is this is a very cash-generative business, and we're running it to continue to be very cash generating for a long time. And I think that shows up in our numbers, and we think that's the best way to drive long-term shareholder value.
Absolutely. Before we get to capital allocation and M&A, just 2 more on linear Pay TV. A meaningful portion of your subscriber base is covered by distribution agreements extending into 2028 and beyond, which is very encouraging. I guess, how should investors think about the renewal cadence between now and then, especially as skinny bundles and VMVPD packages continue to evolve?
Sure. So just to put the numbers out there, we have about 16% of our subscriber base is up in this year. And then we got roughly about a quarter up next year, and then the balance is '28 and beyond. So the fact that we have such a large percentage secured '28 and beyond, obviously, gives us a lot of confidence in the business. And one important point is many of those deals in '28 and beyond were secured after the spin was announced, so it kind of highlights that the counterparties knew we were spinning. And with that, our brands and our networks are powerful, and we were able to secure terms we're very pleased with. And it kind of leads into the second part of that, which is the skinny bundle. I think as you go forward in these negotiations, that will be -- we've seen it, like in the old days, primary,the negotiating points were, okay, I have this big, big bundle and we'll negotiate kind of terms around that, what kind of the rate side is, what the duration is.
Increasingly, it's more about these other packages. And I think in those other packages, you want to be heavy on news and sports. It's what audiences love. It's what distributors love, it's what advertisers love. And 60% of our total ratings are news and sports. And our biggest networks are in news and sports, MS NOW, CNBC, USA, Golf. So we're very well positioned for this environment. And you've seen it in reality, like those deals that we did, say, on YouTube and some of the different packaging contracts they have, our biggest networks are within them. So we're very confident about our portfolio and as we go into these negotiations in the quarters and years to come.
Perfect. And you mentioned advertising, so that's a good segue. Maybe you could talk a little bit about what you're seeing in the underlying ad market today across Versant's portfolio. And what gives you confidence that the company can grow its share of advertiser budgets over time?
So I think the ad market right now is solid. It is -- we're seeing strong demand kind of -- and if you look at it, again, strong demand in news and sports, and we've got great ratings there kind of across the portfolio as well, and we're monetizing those ratings like just to pick on one, like MS NOW ratings are way up. Year-over-year, we're very pleased by that, and we're able to monetize it. And as you look again, if you're an advertiser, you want to be on MS NOW. You want to be on CNBC. It is the place for business. You want golf, we're synonymous with golf and our sports, you can't get anywhere else. And then -- and again, premium entertainment as well, we've seen strength across the portfolio. So we feel very good about kind of where things are at on advertising.
I think for us, too, as we kind of go forward, it's not just about kind of television, it's also about digital, and we're creating new inventory in digital. I'd mentioned going forward, the AVOD, for example, will produce some inventory, we have free TV networks, which is not digital per se, but it's a different type of inventory that we have. The DTC services will have new digital inventory. So I think, again, we feel good on where the ad market is now. And then as you kind of look at the evolution of the business going forward, we think we're going to continue to be a must-buy for advertisers, both in the traditional network world and increasingly in the digital and platform world as well.
And you're presumably fairly well positioned into year-end with political. And then as I think about it now, and we look at some of the capital markets activity that seems to be coming in the tape in the coming months, a lot of retail heavy deals. So all that bodes well for ratings and monetization?
Yes, particularly, you're right. I mean in both like on the political side, that will really help MS NOW ratings. We'll get some political advertising. To be fair, political advertising, a lot is kind of local station driven, which we don't have. We'll get some on the network but a lot of it is just kind of gives us overall ratings kind of more ratings to sell, and we're seeing a lot of demand for that rating, and you're 100% right on CNBC. I mean the kind of the retail investor orientation, some of the IPOs will drive ratings. And if you just look also at CNBC, just to maybe to our own horn for a bit like some of the access we've had where we just interviewed People Administration, President Trump was on. We've interviewed obviously Jeff Bezos. We interviewed Warren Buffett just over the last several months.
And that access is kind of really showing up in terms of people are watching. Brands also love the ability to kind of say, this is the kind of content I want to be associated with. So it helps with ratings also kind of really drives advertiser demand.
Perfect. I want to hit on capital allocation and M&A because I think that's certainly an interesting and important part of the story. You initiated a dividend. You completed a $100 million buyback in Q1 and announced a $100 million ASR what should investors infer from this cadence? And how do you decide the pace of repurchases versus preserving flexibility for organic investments and M&A?
Sure. So I'm going to start with saying we've had a consistent and disciplined kind of capital allocation methodology or strategy. And that's been from the day we were formed even before it's what we will -- what we have and to what's -- I think always going to be. So 3 prongs to that. First, where we want a conservative and great balance sheet. And I say first just in order, but they're not in order. We're going to do all 3 of them, and we have been doing all 3 concurrently. Second, we're going to invest behind growth and really evolving the business model. And then third, we're going to return capital to shareholders. And that's exactly what we've done.
And I think one of the key parts of Versant is that those are not ors between those 3 statements, they're ands. And I think what you've seen, for example, in the share buyback in Q1 or the ASR or the dividend as well as the investments I talked -- we talked about earlier in terms of the organic growth and some of the bolt-on M&A they represent that, that's our ability to do that, and that's what we're going to do going forward as well. And then your question about kind of share buybacks our methodology is it's not mechanical when we look at share buybacks, we look at a whole host of factors.
We looked at the overall market environment. We looked at kind of -- we'll look at growth opportunities for us and kind of what's the best way to drive long-term value for shareholders. And kind of we consider all that when we make those decisions. But I think the biggest thing is those 3 principles I mentioned upfront, we're firmly committed to.
Perfect. Two on M&A. Maybe first, you talked about bolt-ons that strengthen the existing verticals and potentially more transformational moves that could diversify your revenue base. How do the return thresholds differ between those 2 types of deals? And what financial discipline should investors expect you to apply?
Sure. So I think I know, I mean we will be and we are very disciplined and really 2 factors in first, in any M&A. A, it has to be strategically aligned with kind of what we just talked about in terms of our strategies. Just to reiterate, we're focused on the 4 core markets we're in. And again, just to repeat them, personal finance business news, political news and opinion, golf and then genre entertainment and sports. We have big brands, really success and market leadership in them. So that prism is -- we think there's a lot more opportunity there. So we'll look for M&A in those areas. And again, within those areas, we want to extend our audience reach and evolve our business model. So that's prism one strategy-wise.
And then financially, can hit all those boxes, but it also has to generate very strong returns for us and with a high degree of confidence, needs to really be able to drive. We need to be confident in the synergies we're going to be realizing through cost and revenue. And it also needs to kind of fit within that capital allocation criteria that I mentioned, one of the planks is for us to maintain a conservative and very strong balance sheet. So that's going to be, frankly, the discipline, whether it's a small deal or a larger deal. So we don't really modulate that. And I think the M&A that we've done to date, which is not the really big ones that you referred to are smaller, but they all go through that exact same methodology.
And I think you'll see kind of basically every single box that I just articulated to check. And if it happened to be a bigger deal, we'd have the same kind of approach and the same discipline that would be applied.
Perfect. And the last one on M&A. I think the question I keep getting is around horizontal. And I think maybe pre-spin the expectations or the thought process from outside was a little bit different. And now it seems as though you guys have been very consistent and very clear that you're very focused on vertical M&A and kind of strengthening the verticals that the different brands that you have as opposed to cobbling up more cable networks and growing that way. Maybe talk a little bit about that approach and why is that the right approach and any interest in some of these linear assets?
So I'll start with -- we feel very confident about our strategy on kind of, as you said, verticals or looking at the 4 core markets we're in. We think, again, each of those markets is really large in terms of the total available market. We have great brands within them. We have established huge audiences and leadership. And we've demonstrated our success or our ability to be very successful with golf. So it's not just academic. There's a reality of what we've done. So I want to start with that, that we think there's a ton of value to be generated there. And again, with the proof point that we just talked about in golf.
Now I think as you then go to how do you compare that to horizontal M&A and our own feelings there. So one, I think sometimes some may overestimate in my opinion, maybe some of the synergy potential A lot of the synergies are talked about in terms of, well, big time cost savings. I know how we have run our portfolio when we were part of Comcast, we run it today. And we've been very disciplined and focused on costs for years and we'll continue to be that way. I would presume a lot of the other linear portfolios have similarly kind of managed their business that way.
Again, not being there, I can only speak from what I can observe or based on our own experience. So I'm not sure then as you look at that, there's maybe that much cost opportunity that is really remaining as you maybe try to combine portfolios. The other aspect, which may be just more unique to us is, we talked a lot earlier about distribution and how we're positioned or ad market as well. And however you want to look at it, sports and news kind of orientation, we think is really beneficial and it serves us well. And there's obviously a competitor -- one of our competitors whose results speak for themselves with a heavy sports and news focus. I think anything as you look at kind of M&A that dilutes from that is something that we have to be pretty careful about. Like we're not -- we don't really want to dilute from that.
We think that mix serves us well. And I think that's another kind of consideration that has to be in the mix as you think about horizontal M&A.
Makes perfect sense. And maybe just to slowly wrap up, if we look out 12 months from now, what are the 2 or 3 proof points that you want investors to point to and say that this vertical platform thesis has worked?
Sure. So maybe I'll just mention 3. So I think first, and we've talked a lot about the evolution of the business model. And I think we'll see that in terms of the percentage of our total revenues that come from outside of Pay TV. We've talked about that metric and it's 19% for 2025. And we put out there that we want that to be 33% over 3 to 5 years and long term 50-50. So over like a 12-month horizon, seeing continued progress on that. And kind of within the same category, I think that will show up in terms of platform revenue growth and kind of seeing continue. You mentioned earlier that we saw a very strong performance in Q1, and we're very bullish here and continued kind of strong performance in that area.
So those are kind of one category. Two, maybe related to that, but also now thinking more audience, really about customer engagement, both on Pay TV, but also outside of Pay TV. We've talked a lot about extending our reach and extending engagement. And so another thing, say, over 12 months is that we're successfully reaching people and people are engaging across all these platforms. They're listening to more podcasts. We've launched the DTC services, and they're engaging there. They're continuing to watch good amounts of television, and we're delivering great content there. So that's another -- to me, on the evolution to get again to see that audience reach extension and to see the multi-platform engagement.
And then the third component, as you kind of bring those first 2 things together in some ways is to kind of demonstrate that we have a very cash-generating kind of very resilient business model and to kind of show. And that means EBITDA, free cash flow and to show very strong results there. And that's exactly how we're running the business is to kind of do all 3 of those things. And I think that's how I'll be looking at it.
Perfect. Well, Anand, this was very insightful. I really appreciate it. Thank you so much.
Thank you very much.
Versant Media Group — J.P. Morgan 54th Annual Global Technology
1. Question Answer
Okay. We'll get started. Happy to have at the conference for the first time from Versant Media Group, Mark Lazarus, CEO. Mark, thanks for being here.
Thank you, David.
All right. Great. So you separated from Comcast and NBCUniversal in early January. Maybe you can walk us through your impressions as a stand-alone company to date. What's been the response from your operating partners? Any early learnings from interacting with the investor community?
So we spent a year separating out. And during that year, we were kind of doing 3 things simultaneously. We were doing the actual separation, which was complex and cumbersome. And I think maybe most of us didn't quite understand how complex and cumbersome, but we were able to manage that. And then we were operating the individual businesses and then trying to plan for growth for the future.
We've now got the separation behind us. We've been our own company now for almost 5 months. And I think the reaction is from our partners, whether they're distribution partner, advertising partners, sports leagues, anybody that we're in business with, has been an appreciation for the renewed focus that we're able to have on our business and on those partnerships.
We're now not part of a bigger company that has competing constituencies, and we're able to really focus on our individual business and invest in those businesses. And I think that's been appreciated by our partners.
In terms of dealing with the investor community, I think we feel gratified that our story is starting to resonate and that people are starting to understand that we have a focus on these 4 vertical businesses, that we have scale in those businesses. We have iconic strong brands with which to build off of, and we're gratified by the reaction we're getting.
Okay. Maybe we can go with that, right, the 4 verticals. We'll cover each of these a little bit more in depth, but at a high level, can you just speak to what those are and kind of how you frame the TAM around them?
Yes. So the 4 verticals are business news, personal finance, retail investing around CNBC. And we think of that TAM as -- there's 100 million people who are involved in the investing world. They want to be part of everything. They want to understand what's going on in the markets, and they're interested in what we do in terms of financial news.
So we feel that in that business, we have the ability to not only do what we do on television with CNBC, but to enhance what we've already started with CNBC Pro and CNBC Plus and reimagine a direct-to-consumer business focused on the retail investor, building out differentiated tools, building out a product set that will allow unique interaction between our consumers and the markets and their own portfolios, not being a broker-dealer, but providing the tools for them to make informed decisions.
With that, we bought a company called StockStory, which is an AI recommendation -- stock picking recommendation engine that we will incorporate into our toolkit. And I think we'll continue to look for opportunities like that.
The second vertical is news and political opinion around MS NOW. MS NOW is the #2 rated cable network regardless of genre. It is big. It has an incredible amount of engagement. The average engagement for our consumers is they watch 9 hours a week. That is also second largest engagement of any cable network. Fox News has a little bit more than us. We have 9 hours a week of individual engagement. The next closest is only about half of that.
So big audience, people interested in political news and opinion and an opportunity for us to reach a highly engaged audience. With that, we're going to invest in a D2C product. There had never been investment in digital video for MS NOW inside the old NBC News Group. NBC News made a decision to invest its digital resources into other things, NBC News NOW and other products. And really, there was no digital video footprint for MS NOW at all, which in today's environment is not a good thing.
So we're investing and we'll launch later this year in MS NOW direct-to-consumer business centered around the news and opinion that our audience is interested in, but not just replicating what we have on TV. It will be a much broader palette of content speaking to the audience, the pro-democracy audience as we call it.
The third one is golf, quick and simple. It's golf. 15 years ago, we had -- all of our revenue in our golf business was Golf Channel. Over time, we built out other businesses to the point where now half of our revenue in our golf business is tied to Pay TV, half is tied to other revenue streams, GolfNow, which is our tee time business. We booked 40 million tee times last year. It's a significantly scaled business with a large profitable -- a large profit and a very strong margin.
We have GolfPass, which is a direct-to-consumer business, where we're partners with Rory McIlroy. And then we have an underlying software services business that ties tee time businesses, not just ours, but also to golf courses and also helps them manage all of their business lines with whether it's yield management or just overall management of their food and beverage in general. So that's our golf business, and that's sort of a model home for everything that we want to do. We want all of our businesses to trend towards 50% Pay TV, 50% nonpay TV.
Overall, as a company, we're a little over 20% nonpay TV, but we have to -- the goal is to transition further towards that 50-50. And then the final is our -- final vertical is our sports and genre entertainment centered around USA Network, which is a combination of entertainment and sports. We have the Premier League. We have NASCAR. We have WNBA. We still have a deal with NBC to air the Olympics. We have League One Women's Volleyball, and then we have WWE Wrestling, which we'll call sports since it's live.
Sports entertainment.
Sports entertainment. So anyway, that's U.S.A. And then Fandango is a very strong direct-to-consumer business. We sold 70 million movie tickets last year. We also have a large home video business as part of that, buying and renting movies and TV series and underlying business we bought a few years back called Vudu from Walmart, which has helped us power that engine. And then we will -- we're going to invest and create an AVOD service, a free -- free with advertising video service under the Fandango brand, which we believe, again, will move us outside of more Pay TV because it will be an advertising-only business not tied to the bundle.
Those are the 4 verticals, heavy emphasis on live news and sports, heavy emphasis on live, whether it's sports, news or even with products like E!, where we do a lot of award shows and live from the red carpet. We have a heavy emphasis on live.
That was a great overview. Mark, in choosing a strategy of vertical integration, I think you could say you're effectively not pursuing horizontal growth in the cable network space. I assume some investors have asked you about potential cost or revenue synergies through M&A. Why is that not a path Versant is looking at actively?
Yes. I think -- the way I think about it is if everyone has been doing their jobs the way we've been doing our jobs at NBCU, I'm not sure how much cost out there's still left to do at most of these companies. Certainly, there's a management layer that you could take out and have synergies. But we've all been managing the decline of the linear business in a way that I would think is responsible. And my expectation is that everyone else has been doing that, too. So the reality of how much cost out there could actually be in synergy, I think, is less than many people have speculated.
Maybe just staying on linear for a second. So pressures of Pay TV are well known. I'm curious, first, how you see the industry in the next 2 to 3 years, the prospects for some stabilization in the sub trend. And then just second, what are the tools in your control to help offset some of those trends within distribution or ad sales?
Yes. So I think we're -- there seems to be -- there is some stabilization, and we're happy about that. What we can control is our product. And what we've been doing, and if you think -- you look at our portfolio, our product that's on linear is exclusive to the Pay TV ecosystem. None of our sports are streamed anywhere. It's all been held exclusively for the Pay TV operator, and we make that point with them in partnership with them.
Now one day may we start to think about doing something else. Yes, but we would do it in partnership with the Pay TV world. We're not looking to run around them. So that's our focus. And when I talk about the direct-to-consumer businesses around CNBC and MS, they will be much broader and much higher price. They won't be discounted to what the pay TV providers give to us as part of our deal with them.
On ad sales, you're currently operating under a 2-year partnership with NBCUniversal. Consistent with that, we saw your networks featured in their upfront presentation this month. What can you say about the relationship to date? How does that inform your long-term view?
So the relationship is very good. I mean that -- when I was at NBC, I oversaw the ad sales business. So we have a pretty heavy focus, first of all, on who the people are and how they operate and very confident that they are treating us as if we had never left the company in terms of they are our representative in the ad marketplace. And I think they did a very good job of integrating and working with our team and integrating us into their upfront presentation. Our content was featured prominently, and I felt very good about that.
In terms of the marketplace, we feel like, again, they are representing us. It's beneficial for both sides. They need the reach that we provide. And frankly, we're -- our CPMs are a little cheaper than some of the stuff that they have to sell, the kind of big shiny objects that they have. So we can help them bring in buys, so to speak. And so I think the combination works well. That being said, we have optionality. They have optionality towards the end of this year, we'll both make a decision whether we want to continue on as we are, continue on in a partial fashion or separate.
Let's pivot into your verticals. We'll start with MS NOW. So the political cycle is ramping up with the midterms, how are you kind of thinking about the viewership trajectory at the network this year and into '27 and then kind of capitalizing on that through ad demand?
Yes. So ratings have been up. Our ratings have been growing 20% against total day and prime time. So we feel very good. And one of the risks we had at MS was having to rebrand. And I am very pleased with the way that rebrand went. I think a combination of 3 things really helped us. One, I think we did a very good job of seeding with our audiences that we're going to have a new name, but we're not going to have a new approach.
I think we spent -- had a marketing budget that allowed us to also make sure people knew that we were just changing our name and had the same mission. And then we were fortunate that there was a heavy news cycle when we made that change and the news cycle played right into us changing the name and people were going to watch regardless. And so I don't think we lost a step in the rebrand. The focus for MS has been to get more people to watch. I mean, we have a center left point of view. Some might say it's more left than that. I think it's up to interpretation.
Our goal and what I said to Rebecca Kutler, who runs the business and to the teams that work there, whether it's behind the camera or in front of the camera is the only job is to get more people to watch. It's not to satisfy somebody's point of view, get more people to watch. And if you do that, no matter what their political persuasion, we're going to be able to monetize it. And so with these ratings that have been going up over the last 6 months, we've been able to monetize it, and it's been a very good trajectory for us there.
You noted earlier, plans to launch a DTC platform for Ms NOW around -- I think it was midyear, maybe you said at the Investor Day.
Yes, it will end up being a little bit towards the back end of the year, but yes...
Any updates on this? What do you think early success would look like for that platform?
Early success will obviously be a combination of subscribers and engagement if we can get people to sign up to want to watch us and then engage -- and then get them to stay with us -- stay on the platform for a period of time. The biggest opportunity we have is there are a lot of people who are interested in the MS point of view, who are younger than are watching us on television and are getting that type of news from a lot of other places right now. If we can start to make inroads there, then we'll have success.
And that's -- and that will be -- while our talent is one of our biggest assets, bringing in differentiated talent, younger talent who may have a similar point of view will help hopefully allow us to expand that audience.
Maybe staying on news with CNBC, you have a leading network brand in the financial space. How do you think about leveraging the core audience into a wider subscription product? And then what opportunity do you see to keep adding functionality to the Pro or all access tiers?
Yes. So first, let me take half a step back. With -- from 6 to 9 a.m. with Squawk Box and Morning Joe on MS, we reach the most influential people in business and politics every day, more people -- more influential people than any other media company in that 3-hour window every single day. It's a really important daypart for us, and it's a really important calling card for us because we can get pretty much any business leader and any politician between those 2 networks or administrative official between those 2 networks.
So we are part of setting the agenda of the day every single day. And I think that's a very important calling card for us. Back then to your question because I didn't answer your question on CNBC, again, we have people from both political parties. We have administrative officials. We have, from time to time, the President. We can help set the business agenda for the day and what the intersection of politics and business are. That's important.
We have kind of had a renewed focus on what the markets mean to you as an investor, not just the professional investor, but the retail investor. And that will be a big part of our push in the direct-to-consumer business. That's why StockStory was an important acquisition. That's why the toolkit that we're going to create, the charting and the types of products we'll create will allow us to hopefully give individual and retail investors a reason to use our digital business as their home base.
I want to shift to sports. So prior to the spin, you rebranded your offerings as USA Sports. Maybe just speak first to the institutional knowledge and production capacity that sits here. And then you touched on this a little bit earlier, but we've seen competitors in the space like Fox or CW, right, widen their distribution either through an owned or third-party streaming platform. You kind of touched on this a little bit, but how do you see the digital opportunity for your properties?
Yes. So on the knowledge base of sports, this is one I can speak. I've run -- personally have run 2 different sports divisions in my career. I ran Turner Sports and I ran NBC Sports for the last 15 years. So the knowledge of the sports industry we have. I've also -- we've hired a gentleman named Matt Hong, who's running -- who's the President of our Sports division. He, for a long time, was the Chief Operating Officer of Turner Sports, not during my era, but after my era. So again, someone with hands-on experience and the relationships across the industry.
And then we've hired a gentleman named Jeff Behnke as our executive producer. Again, at one point was the executive producer at Turner Sports back when I was there, someone who is known and trusted in the business. So our skill set and our knowledge base is there. There's no one in the sports industry worried about how we're going to handle their properties. I have full confidence in that.
When we separated, all of the rights that we have were assigned to us. So we actually have the direct relationships with the sports leagues and organizations. It's not through NBC. We actually separated the contracts. So we have our own direct relationships and work with them. I feel very comfortable. I like the asset base we have. I do think there's going to be more opportunity.
I think as the NFL comes to market and in all likelihood takes more money out of the marketplace for their product, some of the competitors in the sports space will have to make choices on what to keep and what to not keep of their current roster. And I think we'll be in a good position to add to our roster at an appropriate price. I mean we're not a scaled entity that's going to be able to buy the NFL or the NBA. Good news is neither of those are available short term anyway, but there will be a lot of other properties that are.
Since we've spun, we have extended our USGA golf contract. We've extended our PGA of America, really our Ryder Cup contract. We've bought League One Women's Volleyball. And we've expanded our WNBA offering, including having the WNBA Finals this year. So we have a good roster. At some point, streaming our content -- you mentioned Fox. Fox essentially took their content and just sell it as a -- they're not really -- they are streaming it, but they're selling it holistically, right? They're selling their networks on a streaming platform.
And then CW did a deal with ESPN. So at some point, might we do that or do something on our own? Yes. But as I said, we'll do it in conjunction with the MVPDs and without disrupting the strength of our relationship with them, which is by having exclusive contract -- exclusive content with them.
Maybe just following up on rights availability, your comments around the NFL. Do you see opportunities to kind of proactively go to some of your peers on sublicensing opportunities?
Yes. I think they -- many of them will be looking for some of that, especially in the college space when there's so much content.
Okay. Let's move to your Platform segment. GolfNow has seen solid growth in recent years, though global penetration remains low. Can you speak to the opportunity to expand first to more regions? And then within the core markets, what room do you have to add more courses or upsell on services?
So we have about 9,000 courses, 6,000 domestically, another couple of thousand internationally. We've just really started expanding in the U.K., France, Germany, Austria, South Africa and Australia. We bought a company in Belfast that's helped us do that expansion globally. This is another area where this was in need of investment. When you go all the way back to the beginning of the spin, these businesses kick off a couple of billion dollars of EBITDA. And all that money was being harvested and used to fund other NBCUniversal projects.
We -- and I was part of it, we made big decisions on where the best use of our capital was. And at that point, we were building out Peacock. We are building new theme parks. And now that capital all stays within our business. One of the things around GolfNow, we're going to do is just expanding the sales force. It's a feet on the street business in terms of getting golf courses or multicourse operators, and that's a real opportunity. So we're in the process of hiring a whole bunch of salespeople, many of them in the international markets to expand our opportunities there. And that's -- we grew in the first quarter in our platforms business to high single digits, 9%. And I think that, that should continue.
With Fandango, obviously, if you go to the movies, you're probably familiar with that brand and platform. You've announced plans to leverage the business into AVOD, I think along with some broadcast digital nets you've picked up. So why are you bullish on the AVOD offering? And how should investors view the upcoming service relative to some of the established offers they have today?
Yes. So first, just one other business we acquired as part of Fandango, this goes to the movie ticketing business. It's called INDY Cinema. We've rebranded it as Fandango1. And it is, again, a software services business that ties movie ticketing to theater chains and individual theaters. It's a real expansion opportunity for us and a new line of business for us in Fandango. And we're very bullish and the early results we've had this business for a quarter are very strong. So we will be able to expand how Fandango operates into another revenue stream.
In terms of the AVOD service, we own a lot of content. We have access to a lot of content because we buy content for our linear services for E!, Oxygen, USA, Sci-Fi. We -- and then we have strong relationships through Fandango and through our linear services with all the studios where we can do revenue share deals on acquiring movies and series that will allow us to have an offering.
So 2 reasons why I think we can -- why we like this business. One, we -- there is a market. What's growing right now in linear television or in video is free. People are getting subscription fatigue, And we have an ability through our offerings, both in Free TV Networks, another acquisition we made and through this pending AVOD service. We have a real opportunity to create an ad-only business.
Yes, there are already people embedded Tubi, Pluto in particular, and have had a lot of success, and they've grown very quickly. We think we can be another important offering. We think the brand of Fandango is strong. We think we have -- already have a very large installed base because of that Vudu product in our home video business. We already have a large installed base across all of the MVPDs and connected TV devices.
So we feel that we're not starting from scratch and trying to get it in front of people. We will -- we've never marketed Fandango really before, so we'll be able to do that. And we're very -- because of the data we have from movie ticketing and the home video business, we know what kind of stuff they're buying and going to see. And we know the genre of content that there's so we'll be able to serve them the content that they want to see. We'll be able to use that data and information and use that for ad serving as well. So we're bullish that we will have a product that can grow very quickly.
And I would assume rotten tomatoes...
Rotten tomatoes will play into that, too, yes.
And just circling back to your -- I'm curious on the INDY Cinema comment. I guess the most immediate addressable market is sort of that essentially almost half the theater operation, which is not associated with the kind of big 3. And then is there an international opportunity somewhere...
Big international opportunity. Yes, we're in the process of a discussion with the largest South American than Latin American theater chains now, which they own hundreds of theaters. So that's -- the international is a big opportunity for both of our platforms businesses.
You mentioned before Free TV Networks. I think you've talked about scaling this to meaningful ad revenue. And obviously, the over-the-air market is clearly growing. Can you talk us through how you get there? What audience scale or kind of measurement infrastructure needs to be in place to get traction with national marketers on the OTA inventory?
Yes. We need to -- I mean, we've got good distribution, but we're improving the distribution. We're buying or doing deals to get more VHF as opposed to UHF signals. We've got 4 networks now. Right now, it's small and it's all direct response advertising. Again, that's a good kind of low overhead business. We actually use a third-party seller who brings us the advertising. The business that we bought was founded by a group of people that had done this before and sold their business to Scripps.
And those businesses still exist. We basically run the same play. And we are confident that the audience -- the type of shows we have a Western channel, we have a True Crime channel, we have some African-American channels. Those are the audiences that are looking for free over the air and that have -- are watching the antenna-based networks. And we're seeing strong viewership growth, and that's evidenced by the ad sales growth that we're seeing in the Direct Response business.
I guess stepping back, you've stated a target for platforms revenue to be 1/3 over, I think, the next several years. Can you walk us through how you see the path to getting there? And maybe also discuss a bit M&A, how that plays a part in it. I think investors have asked about just kind of your philosophy around deals.
So on the M&A side, there's 2 buckets for us. There's the ones that enhance our verticals that exist today. And I think the INDY Cinema does that with the Fandango business. The Free TV Networks does that in our entertainment business and StockStory does that with CNBC. There are opportunities -- other opportunities in each of those verticals and in golf and in the political opportunities, whether it's events or newsletters or podcasts, there are opportunities to do M&A, responsible and M&A in those verticals.
And then I think there -- our goal will be something more transformational. It doesn't have to be big to be transformational, but something that continues to move -- help us move revenue outside of Pay TV and into -- outside of Pay TV and into other revenue streams.
I think the most important thing I would say to investors is we really have 3 goals. We want to return capital to shareholders. We want to invest in our businesses, and we want to have a strong balance sheet. And I think we have all 3 of that right now. I think we're uniquely situated in our space with a strong balance sheet to be able to be selective and on M&A. And we also have the ability with the strong balance sheet to be able to return capital to shareholders, which we've already done with our dividend and by buying stock back.
Maybe on that point, you repurchased $100 million in Q1. You announced $100 million ASR earnings. Anything else you can say just on your overall approach to buybacks?
No, but other than we will continue to utilize all 3 of those tools to transform our business and to make sure we are responsible stewards of the capital that investors trust us with.
Okay. I want to touch on margins and costs, especially in light of some of the Pay TV trends we were talking about earlier. How do you think about managing the expense base and in particular, programming?
Yes. So we were able to set up -- I'll get to programming in a minute. We were able to set up the company to be an efficient company, right? We didn't -- we started with a leaner group and a leaner strategy than what we had come from, just we were able -- had that luxury of getting started. We are also -- we had to lift and shift many of the systems and processes from NBCU just to get the spin done on time.
I think what we're doing now is looking through every single process and every single application that we have. And I think we will be able to continue to be efficient. We're obviously using what are the new technologies and tools and what can they allow us to do to be more efficient. I forgot what the first part of the question was.
It was just about managing the expense base in programming.
Programming. So we -- so we're very judicious with our programming. We've got -- one of the things we are able to do because news is really such a variable cost, we can toggle up and down as revenue -- if there's revenue issues with the amount of how we spend into news because it's really a variable cost. There's no rights fees. There's -- or anything.
In terms of sports, those are a big part of our costs, and we'll be judicious and responsible with what we buy and only buy things that give us -- I look at any acquisition through 3 filters. One is, what does it mean to our audience, what does it mean to distributors and what does it mean to advertisers. If it's good for all 3 of those, then obviously, that makes sense to go do. If it's good for 2 of those, you probably still want to go do that kind of programming deal. If it only fits one of those, it's probably not the right thing for us.
Got it. With that, we're about out of time. Mark, thanks so much for being here.
Thank you, David. Appreciate it. Thank you.
Thank you.
Versant Media Group — Q1 2026 Earnings Call
1. Management Discussion
Greetings. Welcome to Versant Media's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
At this time, I'll now turn the conference over to Wylie Collins, Executive Vice President of Investor Relations and Treasury. Thank you. You may begin.
Thank you, and good morning, everyone. Welcome to Versant Media's First Quarter 2026 Operating and Financial Results Conference Call. Joining us today are Mark Lazarus, Chief Executive Officer; and Anand Kini, Chief Financial Officer and Chief Operating Officer. Also with us are Jordan Fasbender, General Counsel; and Natalie Candela, Vice President of Investor Relations.
Before we begin, I'd like to remind you that certain statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to Versant Media's filings with the SEC and today's earnings release.
All forward-looking statements are made as of today, May 14, 2026, and we undertake no obligation to update them. In addition, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in today's earnings release and in the materials posted in the Investor Relations section of our website. During today's call, all comparisons to the prior year are against stand-alone adjusted figures, which represent our estimated 2025 results as if Versant, we're already a separate independent company.
With that, I'll turn the call over to Mark.
Thank you, Wylie, and good morning, everyone. We're off to a strong start to the year with continued progress and growth across key areas of the business, driven by disciplined execution and the strength of our portfolio.
As we report our first quarter as an independent company, I want to recognize the truly unique culture and organization that we are building. I am incredibly proud of how our teams are executing with focus, rigor and a shared commitment to performance. The teamwork is evident in the results and in the momentum we're building across the business. This momentum reflects our strategy at work, operating scale, market-leading brands anchored in live sports and news, winning with premium content, expanding audience reach and accelerating the growth of our digital platforms.
We hold a leadership position in each of our 4 large and growing markets: business news and personal finance, political news and opinion, golf and sports and genre entertainment. Across each, we continue to make meaningful progress against our objectives, deepening engagement and driving new monetization opportunities.
Let's talk about the results. At CNBC, we saw exceptional engagement during a period of heightened market volatility. The network delivered its highest rated quarter in 4 years, with double-digit year-over-year growth. reinforcing CNBC's role as the destination for business news when it matters most. That strength was on full display in Davos at the World Economic Forum, where CNBC was on the ground having and covering the most consequential conversations shaping today's global economic agenda with CEOs, policymakers and business leaders. Viewership among key demographics increased more than 50% during the week, resulting in our largest Davos audience in 5 years.
We also continue to expand and build on the strength of our programming with the launch of Morning Call, a new early morning program that begins our Business Day lineup by delivering premarket analysis, insights and global financial developments to set the agenda for the trading day. At MS NOW, the network achieved its most watched quarter since 2024 with double-digit growth in both total day and prime-time viewership among key demographics. MS NOW reached an average of over 30 million viewers weekly, and our viewers watched an average of 9 hours weekly. The second highest engagement across all cable networks regardless of genre and nearly double the next closest competitor. That scale extends to digital, where the MS NOW website and app delivered the strongest first quarter on record. MS NOW generated more views on YouTube than the 3 broadcast networks combined from their news divisions.
And we had over 1.6 billion views across YouTube and TikTok combined year-to-date. Growth also continued in digital publishing and podcasts with original podcast downloads up more than 60% year-over-year. MS NOW is the network audiences turned to during the most important moments in politics. With the 2026 midterm elections approaching, MS NOW will continue to deliver premium programming with differentiated analysis.
In Golf, Golf Channel continued to build on its leadership position as the #1 golf media outlet, driven by strong early season engagement. The PGA Tour is off to an exceptional start with the golf channel drawing its largest audience for the players championship in 2 decades. And that momentum continued more recently at the Masters, where Golf Channel reached 13.5 million unique viewers during the week, reinforcing its role as the primary destination, not only for live Golf, but for news, interviews and post-round analysis as well.
We are extending that leadership Beyond Pay TV through our Platforms business. GolfNow delivered broad growth across tee time bookings and payments. GolfPass, boosted by our partnership with Rory McIlroy in the first quarter reached the highest number of subscribers ever. In just a moment, I'll talk about the Platforms business. But as it relates to Golf, this is a clear example of how we are integrating content, commerce and consumer engagement within a single ecosystem.
Turning to sports and genre entertainment. In the first quarter, we delivered the largest Olympic audience in USA network history with the Milan Cortina Olympics, which aired across USA Network and CNBC, reaching approximately 3/4 of U.S. pay TV households and securing the #1 rank among sports and entertainment cable networks. In addition, we are building on our momentum in women's sports. Our first season of League One Volleyball in USA Network was a breakout success highlighted by the most watched match in league history.
We are also proud to have just kicked off our inaugural WNBA season this past Sunday with our opening game and the doubleheader just last night. Beyond live sports, we are driving value from our deep content library the licensing of keeping up with the Kardashians and other iconic entertainment titles to third-party platforms underscores the enduring demand for our own content and our ability to monetize it across the evolving distribution landscape. In addition, our entertainment brands continued to perform throughout the quarter. E! Live from the Red Carpet drove strong audience engagement around major events, including the Oscars, the Grammys and the Critics Choice Awards. The Critic's Choice Awards aired as a simulcast on E! and USA Network doubling viewership compared to the prior year.
And finally, in Platforms, we delivered high single-digit growth in the quarter, continuing to build a scalable revenue stream Beyond Pay TV while expanding the reach and distribution of our iconic brands. Our performance reflects disciplined execution and progress in scaling these businesses, which remains a foremost strategic priority. Platform's growth in the quarter was driven by GolfNow and Fandango with Fandango1, formerly INDY Cinema, expanding Fandango's value proposition for cinema operators. An important component of our platform strategy is to build on CNBC's position as the leading source for business news and expand our audience relationships through deeper and broader coverage.
As part of this strategy, we acquired StockStory, an AI-driven platform that enhances our ability to deliver real-time actionable investment intelligence and supports the next phase of CNBC's direct-to-consumer product development. We're building on this momentum with other new platform initiatives as well, including the previously announced MS NOW direct-to-consumer offering and Fandango AVOD service, both on track to launch later this year. These initiatives and strategies underscore that we are actively managing through Pay TV secular changes. We are focused not only on continuing to improve the content and reach of our leading brands but also aggressively expanding Beyond TV through direct-to-consumer initiatives.
Our strong balance sheet enables us to both return capital to shareholders and invest in these growth opportunities. That includes acquisitions such as INDY Cinema for Fandango, StockStory for CNBC and Free TV Networks, which expand our platform capabilities and accelerate our evolution. As I just mentioned, we remain committed to returning capital to shareholders through dividends and share repurchases, including this morning's announcements of an accelerated share repurchase transaction as we enter the second quarter.
With that, I'll turn it over to Anand and we'll walk through the financials.
Thanks, Mark, and good morning, everyone. I'll begin by reviewing our first quarter 2026 results then discuss key performance drivers and finally, touch upon our outlook for the remainder of the year.
As Mark mentioned, our first quarter performance reflects a strong start to the year with disciplined execution, driving robust profitability healthy margins, significant free cash flow generation and continued momentum in Platforms revenue. Total revenue for the quarter was approximately $1.69 billion, a 1% decrease from the prior year quarter. This performance reflects the expected continued pressure on Pay TV, impacting Linear distribution and Advertising revenues. This was partially offset by significant growth in Platforms, which, as we've mentioned, is a top strategic priority for Versant.
Linear distribution revenue was $1.01 billion, a decline of 7% year-over-year, driven by continued cord-cutting trends partially offset by contractual rate increases. This decline is consistent with the prior year trajectory. Advertising revenue was $368 million, down 5% year-over-year a significant improvement from last year's Q1 decline of 12%, reflecting the power of our portfolio, particularly in our news businesses, where we successfully monetized strong ratings and robust advertiser demand. Platforms revenue was $192 million, up 9%, with strong results at both GolfNow and Fandango.
Mark mentioned the breadth of GolfNow's growth and it's a similar story with Fandango, with robust performance in ticketing and home entertainment within the cinema now known as Fandango1, also fully integrated and contributing to our success. Content licensing and other revenue was $121 million, a significant increase compared to the $57 million in the prior year and was favorably impacted by the licensing of select titles in our content library including Keeping Up With the Kardashians, which we announced in January.
A reminder that the value of licensing transactions is generally recognized immediately when the content is delivered. As a result, Content licensing and other revenue can vary significantly quarter-to-quarter and year-over-year. In the first quarter, adjusted EBITDA was $704 million, reflecting our continued focus on operating efficiency and increasing 5% versus the prior year. Margins remained well above 30%. Programming and production costs were $519 million in the first quarter, down 5% year-over-year as we continue to deliver the premium content our audiences love efficiently. As a reminder, these costs have some degree of seasonality with higher costs in the second half of the year driven by sports rights timing.
Other cost of revenue increased 11% in the first quarter due to our continued investment in Platforms including costs associated with onboarding Fandango1. Total cost of revenue was $638 million, down 3% compared to last year. SG&A costs of $346 million represented a decrease of 9%. We remain focused on operating with a lean organization and modernizing our technology infrastructure, driving efficiency and productivity. We expect a modest go-forward increase in SG&A costs to support our growth initiatives, including the ongoing development of our D2C offerings.
Free cash flow totaled $558 million in the quarter, reflecting strong cash generation and timing-related items, including accounts receivable collections and payable processing, which we expect to normalize as the year progresses. Capital expenditures were relatively light in the first quarter and are expected, consistent with our prior commentary to increase modestly over the remainder of the year, largely driven by the build-out of our Manhattan facility and targeted investments in our Platforms and other growth businesses, demonstrating our commitment to return capital to shareholders. Our Board has declared a quarterly cash dividend of $0.375 per share.
And as Mark mentioned, in the first quarter, we repurchased $100 million of Class A shares under the $1 billion authorization approved last quarter. And this morning, we have announced a $100 million accelerated share repurchase agreement, which we expect to complete in the second quarter. Liquidity remains strong with a total cash balance of $1.2 billion at quarter end, supported by healthy free cash flow generation as well as timing-related items discussed earlier, which we expect to normalize in the second quarter.
Our capital allocation priorities remain consistent: investing to evolve our business model and generate growth, returning capital to shareholders and maintaining a strong balance sheet. We mentioned previously our decision to explore strategic alternatives for SportsEngine and sold most of the business on May 1. Our focus will always be to maximize long-term value through disciplined capital allocation, and this sale, along with the growth investments we've mentioned, underscores that commitment.
As we look ahead to the rest of the year, we continue to expect $6.15 billion to $6.4 billion in revenue, adjusted EBITDA of $1.85 billion to $2.0 billion and free cash flow of $1.0 billion to $1.2 billion. We expect quarterly fluctuations driven by content licensing working capital and higher programming costs in the second half, particularly in the fourth quarter. These dynamics are reflected in our full year outlook and consistent with 2025. As mentioned, content licensing revenue can vary across quarters, and we expect higher programming costs driven by sports rights timing relative to both Q1 and last year in the second half and particularly Q4. With respect to free cash flow for the remainder of 2026, we also expect continued variability due to working capital timing differences.
And with that, I will turn it over to the operator for Q&A.
[Operator Instructions] And our first question is from the line of Michael Ng with Goldman Sachs.
2. Question Answer
I have 2, one on advertising and one on skinny bundles.
First, on advertising, it was a little bit better than expected in the quarter. Can you just talk a little bit about how much of the performance was driven by growth initiatives gaining traction versus the strong new cycle across CNBC and MSNBC. Was there any halo effect on USA from the Winter Olympics? Just trying to understand the sustainability of the outperformance in ads?
And then on skinny bundles, could you talk a little bit about whether you're seeing a wider range of performance across your network portfolio? Said differently, are MSNBC and CNBC outperforming the rest of your networks, just given their inclusion in the news inclusive plans?
Thanks, Michael. Thanks for the question. It's Mark. So on advertising, we -- the marketplace has been strong. The portfolio of news and sports, along with a bunch of the live entertainment we had has been resilient. And the -- our partnership with NBCU representing us in the market has proven to be fruitful for both parties. And we believe that this is sustainable. There is not really was not a big halo from the Olympics. The Olympics were wonderful, and were great for us. But as a reminder, that they buy -- NBC buys the time from us. So we didn't benefit from growth in advertising from the Olympics. But the -- our portfolio of live content is what advertisers are seeking and I feel that, that will continue, and we have all good indicators going forward.
On the skinny bundle side, I think what I would say is that we're well positioned, and we are in all of the appropriate bundles, as you point out, we're in the sports and news and sports and news bundles with our content. And the portfolio is diverse and has networks that is prepared and built to work with the distribution marketplace in this new tiered bundled world.
Mike, just to add on to what Mark said. On the advertising side, the organic presence drove kind of the trajectory improvement. So yes, we have some new initiatives like Free TV Networks, but to be clear, that was not the reason that we saw that performance improvement. That was just based on the organic businesses and the health of them and all the factors that Mark just mentioned.
And then again, just to reiterate Mark's point on the skinny bundles. The way we look at this also from a business model and financial perspective, we look at it in total revenue. And we're -- as you saw the kind of the linear distribution revenue and our focus is on maximizing that across the portfolio. And that's how we manage the business, and it kind of shows up in our results and how we'll continue to do so.
The next question is from the line of Brent Penter with Raymond James.
First one for me. On MS NOW and Fandango, digital and AVOD strategies, I appreciate the color launching later this year. Are there any more details you all can give at this point on what the go-to-market or maybe pricing strategies will look like for each? And then can you help us size the investment this year to bring those both to market?
Thanks, Brent. We haven't settled on pricing yet. And really, that's only for half the equation. MS NOW will be a direct-to-consumer and be a subscriber-based service which will center around content that MS NOW, it's reporters, its contributors, it's anchors create, but not only that, there'll be a build-out in a sense of community and mindfulness and it will be a much broader service than what we provide today, bringing together voices that are both on our air and not necessarily on our air today. But that will be a subscriber-based service.
Fandango AVOD will be just that, be free with advertising. And it will be -- we will be able to serve content based on the data and information we have from our current Fandango users, both in buying movie tickets as well as buying home video services for buying and renting TV series and films, and we'll be able to serve advertising relevant advertising as people consume our content. But again, that's a free with advertising service.
And then just to answer your question on the investment. So the investment is not substantial. A, we get the benefit of leveraging our existing infrastructure, say, on the video, for example, we already have a well-established Fandango infrastructure to support video playback. And similarly, on MS NOW, we have existing streaming services that have video playback at CNBC. So there was some kind of bespoke user design investment, but we have a very strong base that we're starting with.
So a lot of the investment is actually just on marketing and driving awareness to the product for the consumer. But it's embedded in kind of the outlook we said. We mentioned that you'll see, for example, SG&A tick up modestly. And that's really to support those plans and a little bit on the CapEx side, we've mentioned that you'll see a little bit there, both for the New York facility build-out and to support them. But from a size perspective, it's not like substantial dollars.
Okay. That's helpful. And then on the accelerated buyback, what drove the decision to do that? And why now? And then still with $800 million of authorization pro forma for that. Is there any color that you can give on what will drive your decisions around the pacing of the remaining buyback?
Sure. A couple of things. So just to reiterate, the buyback A, both the ASR for Q2, and then we bought back $100 million in Q1. And then we also have the $0.375 dividend. I think all exemplify our capital allocation approach. Which just to remind everybody, kind of 3 prongs here and in there -- and that we're uniquely positioned. We think to do all of them. A, is maintain a strong balance sheet, which we think gives us a competitive advantage and a strategic advantage. B, is to invest in growth to evolve the business. And then c, is a return of capital to shareholders, and we take each one of them are equal priorities. And I think the results that you just see in our share buyback and dividend kind of exemplify that.
I think one other thing in terms of the ASR, it kind of just underscores our confidence in the business and our commitment to that capital allocation approach. And just one final thing, but we don't view these capital allocation decisions within this framework as static, but rather like we make those decisions in the context of the market environment and opportunities we see to add value. And that's going to be our approach going forward as well.
Okay. And then final question for me. Could you just size the benefit from Keeping Up With the Kardashians? And then what's the time frame on that licensing deal?
Sure. So just a couple of things. On the sizing, it was a driver, as you can see in the Content licensing and other growth. It is a driver of that. Again, I think it reiterates that we have a multifaceted business model where we Content licensing, we have ad sales, Linear distribution platforms. This is one of the levers that we have and I think it exemplify the value of the library. And yes, this quarter was Keeping Up With the Kardashians. We have a lot of other programming, great True Crime kind of library. We have a lot of other unscripted programming that we will sell in the future as well. just by notion or I should note that this is inherently, there's some variability in this revenue stream on Content licensing just based off of the timing of the sale.
We recognize all the revenue for the sale just based off of a gap this quarter that it's announced, and that will be the same with other sales that we do going forward. And it's a multiyear licensing deal that we did with the Kardashians.
Yes. I'll just add to that, that we do have a robust library titles that are part of the current structure of the library, but also as we continue to create new and original content that will also be things that we're able to put into the marketplace. And shows that we have -- are creating now. We have been -- we know have been attractive to third parties who have already reached out to us about licensing.
The next question is from the line of David Karnovsky with JPMorgan.
Maybe just following up on the prior question. Is there any way to help frame residual cost, I mean, either for Kardashians or just how to think about your library content generally to help us better understand flow through to EBITDA or cash flow when you do move some of this programming? And then on SportsEngine, maybe this detail will be in the queue, but I don't know if there's anything you can say on the terms of the sale or just revenue and EBITDA impact.
Sure. So on the residual cost, like, a, I should say, like really all of our content sales are profitable, like we generate heavy -- good margins from our Content licensing it is going to vary a little bit on deal by deal depending on the individual talent that's associated with the show. But I guess the best guide I can kind of give on that is it was a driver of kind of -- one of the drivers of the increase in content licensing and other revenue. and those incremental revenues are profitable. It's a good margin business for us.
And then I think your other question that you asked on -- can you just remind me of that was? SportsEngine. So on SportsEngine, it's like in terms of we did sell on May 1. It is -- we're very proud of the business. We think, like I mentioned, an attractive deal for our shareholders. It was a way to kind of maximize value of the asset. It's not going to be from a materiality perspective within our financials as you look at kind of revenue and EBITDA. It's not going to kind of change our trajectory of kind of our guidance and so forth. As you can see, we've kind of stuck with where we were.
And so it kind of gives you a sense of that. And then financially, again, we're pleased with the outcome, but we don't think it's going to really change how we run the business going forward.
Our next question is from the line of Rich Greenfield with LightShed Partners.
When I look at companies like Disney, and Fox even, they sort of talked about how their D2C strategy is sort of counteracting or lessening the declines they're seeing in the Linear business, in terms of how they talk about their overall trajectory of subscribers.
And so I'm wondering, I know you can't get into details on pricing and the exact strategy on the MS NOW launch. But I guess, how should we judge success? Like will success be lessening the declines on the Linear business? Like what are the sort of the ways you think about we're going to be able to understand the success and progress of that D2C strategy?
And then just I wanted to follow up on the cord shaving comments at the beginning of the Q&A. Disney warned about the impact of the YouTube TV skinny bundles on their nonsports assets. I guess when you look at both DIRECTV and YouTube TV, they've gotten more aggressive with sports bundles and sports and news bundles, anything you can say on are most people from what you can tell, taking sports and news? Are they gravitating towards sports, obviously. You have a unique view given the portfolio you have where are consumers gravitating to as these skinny bundles play out?
Sure, Rich. So I'll start with the second one first. And clearly, we are seeing -- there are a set of consumers who are looking for sports and news. We are proud that 4 of our 7 linear businesses fall into those areas and in those tiers and that we are participating in that. As it relates to the entertainment side, what we're seeing is a fair amount of stability. We still have a large and robust subscriber base. We're also being creative and flexible with how we're able to distribute.
And by way of example, I'll share that oxygen over the last few years, while it is a very, I'll call it, very fair priced to the MVPD. We also have some availability in free over-the-air as a multicast network. And we think that, that's a way to expand creatively and flexibly without -- and being additive to our distribution flow mechanisms. And we see a lot of opportunity. And as the MVPDs change, their tiers, we'll be creative and flexible and that's one of the things that we, as a stand-alone company, have the ability to do to work with all of the MVPD partners to make sure our content is available through them, but also in other forms and fashions without damaging or hurting those relationships.
On the MS NOW question or really the D2C question. Our goal is to continue to build scale and expand our audiences. Yes, we hope that comes with a large base of subscribers and where we'll gauge ourselves is how do we work, how do revenues look across all of our various forms of distributing content. One of the things that we want to do is make sure we grow revenue diversification within each of our verticals as we have been doing. And as we talked about, we have done a very good job over the years with Golf by adding StockStory, adding INDY Cinema, adding Free TV Networks. So MS NOW is the MS NOW version of growing revenue diversification into that very important vertical for us.
So it goes well beyond subscription in your mind, but you do think it should lessen subscription declines in success?
Yes, yes, very much so. I mean we want to build an audience, a circular way to move audience between various platforms for our content. And this is one of the key elements.
Our next question is from the line of Sean Diffley with Morgan Stanley.
I had 2 on capital allocation follow-up and then a sports rights question. So obviously, you can buy back your own stock, the ASR is helpful, but you're also able to do M&A. I was hoping you could walk us through how you assess the relative attractiveness of each and where your strategic focus is from an M&A standpoint and how you would describe the valuation backdrop for some assets out there?
And then second, on sports rights, obviously, some of your bigger competitors are very focused on the NFL. Do you see the potential for smaller rights to free up and which sports we should be focused on?
So we'll talk about the framework for M&A. Clearly, we're looking in a variety of areas and obviously can't be too specific here. But we're adding to our verticals as the 3 that I've already mentioned that we've done, and we're looking for accretive opportunities within each of those verticals.
More broadly, we are interested in being -- we're going to be very disciplined, but we're interested in things that help us diversify our revenue streams. And as we've talked about, a vertical strategy, not a horizontal strategy, across the linear landscape.
On the NFL question, and then I'll let Anand come back to the capital allocation side. On the NFL question, yes, the competitive set, they're working through whatever -- however they and the NFL are going to work through the next cycle of contracts. I do believe that, that will put pressure on those companies that retain or grow their NFL expense to make decisions on other content and that we will selectively look at contracts, if you can just be -- look at who the next groups of leagues that come up, whether it's baseball, hockey, soccer, or Premier League, there's a variety of content coming due.
I think what I would just express is that we are well positioned. If you think about -- since we've announced our spin, we have extended our USGA contract. We've extended our PGA of America Ryder Cup contract. We have expanded our WNBA relationship. We have done a deal and have now completed our first season of League One women's Volleyball. So I do think there will continue to be opportunity for us to build upon our sports portfolio being judicious with our capital.
And just to kind of go back to what Mark said on the capital allocation and M&A. So in terms of, again, like whether it's share repurchase, whether it's ASR or on the market and M&A. Again, we view it as it's -- these are both 2 prongs, and the third prong is maintaining a healthy balance sheet that we are going to execute concurrently. And that's what we've been doing. And we hold each one as very important. And I think, again, they all work together. So we think we're in an advantaged position to be able to do it all. And I think our results kind of show that.
And then on M&A, Mark mentioned the strategy focus. It's also we have a lot of focus on value. I think hopefully, our results in Q1 demonstrate that we have a resilient, strong business model. And we're going to do things, whether there's a lot of room to grow organically. Our Platform's revenue growth this quarter demonstrates that. That was really organic growth in GolfNow and Fandango. So we're going to look when there's opportunities that are inorganic. They have a very high threshold even as they fit within those markets and those strategies. And if it makes a lot of sense and it adds a lot of value, we'll pursue. But if it doesn't, we really like the hand that we have.
Our last and final question is from the line of David Joyce with Seaport Research Partners.
Anecdotally, it seems like you've been self-promoting Fandango and GolfNow and GolfPass more. What's the engagement and subscription growth been like year-over-year? And where do you see your share going in a few years?
And then secondly, some of your other peers have been starting to work on vertical video. Is this possibly going to be part of your strategy? And what would be involved in that?
So first, thank you for noticing. Yes, we have been utilizing our airtime given the portfolio we have. We've been utilizing our airtime to promote Fandango, GolfNow and Rotten Tomatoes some, you left that part out. Hopefully, you've seen those as well. I think what we've been doing there, I think the results that we just announced of growing at 9% is indicative of the power of our linear promotion, helping grow those businesses.
They're not really subscription businesses, they're transaction businesses, but our growth is evident that our transactions are growing. And I think, and part of that, for sure, is our ability to promote those services on our air, and we will continue to do that. It's one of the benefits we have of having this closed loop of multiple businesses.
In terms of vertical video, we are investigating it, where there's a couple of companies that we're working with. In fact, if you look, we just launched a new golf channel app, and it is all -- it is built for vertical video. We'll continue to do that in other areas and other genres as well.
This now concludes our question-and-answer session, and will also conclude today's conference.
Ladies and gentlemen, thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.
Versant Media Group — Deutsche Bank 34th Annual Media
1. Question Answer
Okay. Thanks, everyone, for joining us here. So I'm excited to announce Anand Kini, who's the Chief Operating Officer and Chief Financial Officer of Versant. Welcome, Anand.
Thank you. Thanks for having me.
So maybe just start off with some high-level questions. I think at your Investor Day, Versant was described as unleashed to grow further beyond the bundle. Maybe you could start by just recapping the core thesis for Versant as an independent company, how it differs from its prior role at Comcast? And where do you see Versant in, say, 3 to 5 years?
Sure. So we're a leading media company. And the way we look at ourselves is we've got kind of big brands in 4 large dynamic markets. Personal finance and business news, political news and opinion, golf and then genre entertainment and sports.
So we start within Pay TV, these brands are CNBC, MS NOW, USA Golf Channel, exceptionally strong, and these brands are in really live. So we have about 60% of our audience is live news and live sports. That's exactly what marketers want, what distributors want and what advertisers want. So we start with a very strong position in Pay TV, a very profitable business for us, and we have a really good runway with those businesses.
And then you combine the fact that those brands that also command very large audiences, things like MS NOW is kind of the perennial #2 rated network in all of cable, not just in news, and they're very similarly like golf has, the Golf Channel has more hours of golf on it than all other television networks combined. You take the audience strength and the brands, and that enables us to extend these businesses outside of Pay TV. And we're already kind of doing that. We have a platform business that includes GolfNow at Tee Times reservation business as well as Fandango movie ticketing business. That is about $850 million in revenue. We're supplementing that with new services like a D2C service for CNBC and MS NOW, AVOD for Fandango. And that's what we're going to be growing significantly.
And one metric we use is our percentage of our revenue comes from Pay TV and comes from non-Pay TV, that's a big metric that as we continue to grow these others. Today, we're like 81% Pay TV and 19% not. And we're going to kind of evolve that over time to like 33% over the next 3 to 5 years, non-Pay-TV and then 50-50.
So that's -- it's a little bit of our trajectory going forward and kind of how we're thinking of the business. And really it's about strongly profitable and then evolving the business model. In terms of then how we're kind of different than where we were before and I come from NBC Universal and Comcast, I think -- and we have a great deal of respect for the -- for our previous parent. I think a couple of things. We obviously have our own capital allocation. and our own capital.
So in the old -- in my old job at NBCU, our priorities might have been Peacock or it might have been the film studio or it might have been kind of theme parks. And these businesses were frankly not invested and that cash flow was harnessed for those. Now we're kind of have these businesses to pursue the strategy, I just talked about extending these brands into new audiences and evolving the business.
And then also, we're a smaller company, we're more nimble, more flexible, we're faster from an execution perspective, like we're more efficient, and that's -- that's not any merch on Comcast just given our size as a spin, we're able to do that and our trajectory, as I just mentioned, is kind of to evolve this business and kind of drive profitability and to kind of grow the business over time as we extend its reach. And while we're doing that, maintain a healthy balance sheet and deliver a lot of value to shareholders, both in terms of dividends, share buybacks and obviously, stock appreciation.
If you look at the 4 key verticals, business news, politics, news, golf athletics and entertainment. In your view, which of these verticals represent the most significant near-term value creation opportunity? And which one requires the most investment and transformation in order to realize that potential?
I know it's going to sound a little like cop out admittedly. But in these 4 verticals, we view them all as very attractive. So put a fine-tooth on it, like if I take CNBC, which probably in this audience, people are very familiar with. It is this brand that resonates very, very deeply, particularly for the retail investor. And so as we're thinking about a new digital and consumer service oriented to the retail investor, providing them information to make smart investment decisions. We've surveyed our consumers. They really want this offering. There's -- it's a fragmented market in terms of where they get this advice today, and it's not coming from a brand that they trust or has the information that only CNBC can provide.
Similarly, if you take MS NOW, as I mentioned, like the #2 by audience network in all of cable, and yet other than having a text-based kind of website and an app, we've never had a digital video service and ability for this business that people want more and more of. It's one of the -- not only audience, but it has one of the highest engagements, meaning the average viewer watches 9 hours a week, they want to interact more significantly with it. They want to have like opportunities to kind of virtually meet, say, some of the talent, Rachel Maddow, et cetera. We've never done that before. That's a big opportunity.
Similarly in golf, like we've already established a significant big successful business there digitally. But we've only scratched the surface. Like I said, we're synonymous with golf and the golf market is growing, and we can provide more and more Tee Times bookings more consumer technology services. And then similarly on Fandango on the entertainment side, we're very bullish on our AVOD service for Fandango we've announced. We already have a big business in ticketing and in home entertainment. This is a natural extension now for consumers who want to watch stuff for free with ads. And I should say on all of these, like the investment profile is kind of -- and it's moderate in that we have a lot of synergies. These are businesses that already have an existing -- and we have an existing audience, so the cost per customer acquisition is really efficient from that perspective because of our audience scale. We already have existing technology and video infrastructure that we can harness and we have these brands that resonate. So we're able to do it in a very cost-effective way to kind of evolve the business.
You had your first earnings call a week ago. I just want to give you the opportunity to share with investors what makes Versant different and what might be underappreciated in the stock.
So I think a couple of things. If I was to kind of list out what I think really makes a difference, let's have some of the things that come top of mind. There's a lot. But, a, I've mentioned before, the strength of our brands. B, is kind of live, the live news, live sports. Third is the size of our audience. Fourth is kind of our existing success already, and we're building on it in digital and then 5 is probably our -- the health and the strength of our financial model and our capital structure. And again, to go a little further on a few of them.
So on the brands, again, these -- our brands resonate. They're universally known. They instill kind of deep emotions in folks, even a brand like MS NOW, which some people love, some people don't like, but it's a brand that matters to people when it kind of stirs emotions. And I think those brands and you combine. And then with live kind of the second component I mentioned producing live events is hard. It is like -- and a lot of other companies have tried and they're not always good at it. We've developed a real expertise. You have to have the on-air talent, you have to have the production capabilities. And in sports, you obviously have to have the sports rights, and we have all of that.
And then you combine that then with the audience size that we already talked about, and we have -- we're big in terms of really almost -- really all of our networks. And that -- those things that enable us to build those platforms and I think and build a digital business. And while there's a lot of companies that want to do this in terms of transitioning from Pay TV and kind of taking these audiences and migrating them, I think you have to have those 3 things live brands that kind of can migrate as well as big audiences that you can harness to bring over and we uniquely have it. And we've already kind of demonstrated it, and this platform business already exists and it's kind of scaling very nicely.
And then the final aspect that I said that business financial strength kind of provides us the capital to be able to execute that while at the same time delivering value to our shareholders in the near term and the long term and maintaining a healthy balance sheet. So I think -- those are kind of all the components, I think, that make us very different.
Yes. That's helpful. Maybe we could talk about the 2026 outlook a bit. I think you're projecting a continued but moderating decline in revenue and EBITDA. Can you just help us understand what the key drivers of that are? And maybe if you could talk about when you expect the company to return to growth and what the key factors are for getting to that point?
Sure. So the revenue and EBITDA, the starting kind of revenue where 2026 guidance. We have a really good visibility. For example, if you look at our revenue in general, linear distribution, which is obviously our Pay TV subscriber fees. The vast majority of our deals are not up until past -- the majority are not up to '28 and beyond. So we have about 16% that are up in 2026 for renewal. So that's only a small percentage. Those are obviously important renewals, but the vast majority are not.
And our assumption here is that -- and you could definitely take a more bullish case than we've taken, and we'll see is that the pace of the secular challenges in terms of cord cutting, we're assuming kind of stay as they have been, kind of high single digits, offset them by contractual rate increases. There are some indications, obviously, that over the last quarter or so that things have gotten a little bit better. I know Charter gained video subs last quarter. We hadn't seen that in a while. To the extent that's better than what we think that would obviously be kind of a tailwind to us. But we factored kind of that in. The advertising market is healthy. We feel pretty good about that.
And then on the rest of revenue on platforms revenue, we're bullish. We've stated on the earnings call that we're expecting kind of high single-digit kind of revenue growth organically in platforms. And so you kind of put that all in and kind of leads to the revenue guidance that we gave. And then on EBITDA, we factored in the expenditures for those new initiatives I just mentioned, whether it's the D2C initiatives on CNBC, MS NOW, Fandango. And those are all kind of baked in then to a number that we think still reflects really strong profitability, significant cash flow generation of over $1 billion. So we're kind of both driving profitability and evolving the business at the same time.
As you then kind of look past that, our model after '26 is really drive profitability, evolve the business. That's going to lead to stabilization of the top line in the medium term. And then in the long term, really to drive growth both on the top and the bottom line and really create Versant as a platform for growth over time. And that's kind of the entire trajectory and how we're running the business.
Okay. Maybe we could talk just about the revenue mix. You've outlined this long-term goal to shift to basically revenue mix to parity. So half of it coming from outside of Pay TV, half of it coming from pay TV that number from non-Pay TV was 17%, '24, 19% in '25. What are the key milestones for narrowing that gap getting to 50% and also getting to that medium-term 33% goal?
I think a couple in terms of the things to look at how we manage the business, one will be I'd mentioned this platform's revenue, which is really consists of GolfNow, Fandango Sports engine and some of our CNBC D2C initiatives. That's the one where we're expecting high single-digit growth for '26. That's the -- that business we think has -- or that area has a lot of growth, not just in '26, but going forward. So continued strong growth there will be one big hallmark of it.
Another part of kind of this mix of non Pay TV will be on advertising. Our advertising today has a healthy amount of digital advertising that is not associated with Pay TV. Some of the initiatives like the AVOD on Fandango. We have this business free TV networks we acquired, which is an over-the-air business that has entertainment programming that will drive that area. So we're we expect that the advertising trajectory will improve, particularly as we kind of evolve it and to have more from non-pay TV sources driving that advertising.
And then in general, the other -- we are going to be regularly updating everybody on this mix percentage that you mentioned was 17% and 19% for '24 and '25. So we will keep investors informed of that trajectory. But like I think I said those 2 areas of looking at platforms revenue and advertising and the other one, too, will be we have an area that's not huge today, but it's several hundred million dollars of content licensing. And we own a bunch of our content, like we announced a few weeks ago, we sold the Kardashians franchise to Hulu. That was a very good deal for us. We own a lot of content in True Crime -- we have like a franchise called Snaps with 700 episodes. That has a lot of demand, both internationally as well as domestically. So that will be another area you could expect, while it's a little chunky just given the accounting of content licensing, where it won't be a linear increase necessarily every year, that will be also a source where something that kind of look at as we continue to kind of drive towards that 33% mix and then 50% over time.
On your earnings call, you talked about platform revenue growth in the high single-digit range for this year. Can you talk about what comprises the platform business and the drivers behind that growth? And do you expect acceleration in platform revenue growth in 2027 and beyond as these digital initiatives really gain momentum?
So what's in there is, again, that the biggest businesses there are GolfNow and Fandango, are the 2 biggest ones today. And so -- and both of those businesses from a share perspective, have a lot of room to grow. So let's say, GolfNow. It is the leading way online way to book Tee Times for those -- if you're a golfer, but still it's less than 10% share time.
And it doesn't really have a notable digital competitor. The biggest competitor is actually a telephone. And so it's a far better way to book Tee Times than any other way. And we've seen this in other businesses that open table for restaurants, for example, I mean, it's become the preferred way to make a restaurant reservation for the most part. For us, this is about adding more sales capabilities. This is an area where in the old -- when we were owned by NBC Universal, we didn't necessarily have the capital to deploy to get more feet on the street to sell it into more courses kind of grab more share there. And that will be a big driver as we continue to go forward on platforms growth.
Similarly, and this is true with Fandango, too, which is 10% of the tickets sold there's room to grow on that because, again, it's an advantaged way of going to the theater, you get a reserved seat. In addition, on both of them, there's a lot of adjacent markets right next to us of where we are today that we think are going to be very fruitful to drive more growth. For example, on GolfNow, for those of you who are golfers, there's a tremendous amount of consumer technology, whether it's simulator or range finders or so forth.. We have -- we talk to golfers better than not argue about any other company, given our golf channel and our GolfNow business.
So you'll see that continue to expand and extend and again, leveraging the low cost per customer acquisition and in Fandango, we did the same thing with buying Indy Cinema. We have an existing relationship with exhibitors that are -- we're providing their ticketing services. Now we're going to provide operating software opportunities for them as well.
And then the CNBC D2C will be a component of that, too, which we're very bullish about servicing the retail investors. So we expect that, that growth profile that I mentioned is going to be very strong for many years to come and that there's a lot of runway here.
Yes. You mentioned the direct-to-consumer investments, including the membership community for MS NOW and CNBC for retail investors. How do you view the profitability profile of these ventures? Are these going to be managed as sort of loss leaders early on to build a user funnel? Or do you expect them to be accretive to the P&L in the near term? And maybe if you could just help to frame how much incremental costs are associated with the launches of these services.
Sure. So the initial investment is relatively modest. So I think a lot of folks are used to kind of the media D2C services and it's a very significant investment early. And again, I come from NBC, so we were part of it with Peacock. This is very different. We're not going -- very purposely are not doing a Versant D2C service. Rather, we're doing D2C services bespoke to each brand. And I think the reason that's important is that you can then very much harness the synergies that you have with each brand.
So I mentioned, for example, on CNBC, the spending -- the cost per customer acquisition given we already have a television audience and a big brand that people have very positive disposition to, retail investors are already with us to kind of get them now to subscribe to this service. is significantly more efficient than if you're trying to do -- trying to approach this in a very different way.
So the investment and also technology wise, we have a lot of it already in-house. Like we have video infrastructure. We have a couple of CNBC B2C services how video playback. We have the Fandango infrastructure. We have a lot of commerce infrastructure at Golf Now.
So we're using what we have. And sure, there's some investment on like the user interface or some investment in marketing. But it is much more modest than really what I think a lot of folks would expect. It's embedded in our 2026 guidance. So I would not -- in general, that's the approach, relatively modest levels of investment. And then the payback in any of these services, the payback is not instantaneous. There is going to be some moderate initial investment and then the paybacks measured over years, but this is also not the model where you're expecting payback 5 years from now, it's pretty quick. So it's measured in -- we expect positive contribution to the P&L in the near term.
You mentioned the low share of the Fandango and GolfNow both have less than 10%. What's the target market share for each of these businesses? Where do you think you can get to? And what are the kind of the critical steps to realizing that share potential?
Yes. I mean we haven't publicly stated that we're trying to target x share or y. And even for us, we know there's a lot of room to grow, and we're going to pursue that growth. And really, it's a lot about, again, executing on sales initiatives, it's execution fundamentally. I mean, like on GolfNow, it's about just making sure the awareness of the offering continues to increase, make sure we're in more golf courses public golf courses, so people can avail themselves of the service.
And so we can debate what the ceiling of the opportunity is, but I think most people would agree that if it's 10% for these there's a lot of room on the upside for this to be significantly more. And again, we also think about kind of share not only in the specific verticals that they're in today, like Tee Time reservation or software or propane but it's -- these are brands that one services the golf for Fandango services kind of the entertainment consumer. We look at it almost in a broader sense about what's the kind of wallet share timeshare for that entire ecosystem. So that's one of the reasons that AVOD makes a lot of sense.
And you could imagine we're going to extend these brands into other kind of adjacent areas that we think will enable them to continue to be significantly larger than where they are today.
I wanted to ask you about the Free TV acquisition and the planned launch of Fandango, AVOD service. They signal a significant push into the ad-supported non-Pay TV space. How are you going to differentiate these AVOD offerings in a crowded market with incumbents like Tubi and Pluto and the Roku Channel, et cetera?
Sure. And look, we have a lot of respect for those competitors. They've done very well, Tubi in particular, and Fox has been very vocal about it. And as I said, I mean, I think it's an impressive what they've done. We view Fandango as having some of its own unique advantages in the space. And I'll start by saying this is a growing market on free. So it's pretty clear that there's some consumer subscription fatigue, both with SVOD as well as with TV. And so what you're seeing is from a market share standpoint, 3 offerings, fast, free platforms are continuing to grow. And it's both in terms of streaming as well as on over the air. One of the reasons we bought, as you said, the kind of free TV network. So we see significant kind of just a market tailwind across the board, and we think that's going to continue for a while.
In terms of Fandango and some of the advantages it has, well, one is it's a known brand that people have a very positive kind of disposition towards, it's kind of known for all things entertainment. The recognition of the brand for all the work we've done is amongst the highest of entertainment brands. Two, it has an existing distribution footprint. We're in just about every single connected TV platform. As you think about making sure that consumers are going to be able to access this free AVOD service, that's often a pretty big hurdle about how do you make sure you're in those platforms. We already are. And then three, we have consumer data because we're already there, and it's one of the biggest, most popular ways people are renting and buying movies and TV series today as well as getting tickets we kind of know things on a PIA compliant basis about what do you like to watch, what have you watched in the past. We have credit card information. That's relevant both on a recommendation perspective, so we can make sure we get the right programming in front of you. And also from an ad monetization angle because we can go with a more targeted ad load, which makes the viewing experience better, makes the marketing and the advertising more effective. A lot of our competitors, the viewership is on an unauthenticated basis so they don't have that benefit at all.
And then finally on Fandango, we have a lot of existing studio relationships because we're serving the studio through exhibitors. We're also serving the studios directly because we're selling their films and TV series for purchase. And so for us to be able to secure content for the AVOD based on the existing studio relationships where we have an advantage there as well. So I think we're walking in with some significant advantages in this space that we're very bullish on.
Yes, it sounds like -- maybe we can shift a little bit and talk about distribution. I think you noted that over half of your Pay TV subscribers are covered by agreements extending through '28 and beyond with only 16% up for renewal this year. Can you discuss the renewal cadence for the rest of your affiliate contracts, are there any significant renewals on the horizon over the next, say, 2 to 3 years? Do you foresee the renewal process? How do you see the renewal process going without the support of NBC Broadcast, which obviously you had for your previous renewal.
Sure. So to get the numbers out there, we've got 16%, as we mentioned this year and, call it, about 1/4 next year in '27 and then most of the balance in '28 and beyond. So we do have a few coming up this year itself. We feel very good about the renewal a couple of reasons why. So a, there was a bunch of renewals done at the very end of '25 at the end of last year. And they were -- on one hand, yes, they were done together with NBC. But the counterparties, and we were public on many of them, like, say, YouTube TV that was done at the end of the year.
And the counterparties obviously knew we were spinning. So in many ways, those deals were done almost on a basis where the spin was happening, they could use that information as part of the negotiation. And we were very satisfied where we came out. So to be very specific, like on YouTube, which they have introduced new packaging constructs. So on their news and sports package, our news and sports networks, very specifically Golf USA NBC, MS NOW, they're in that construct. And we got the rates that we're pleased with, too.
So we think we have kind of a case study that these deals went successfully, demonstrating the power of our portfolio. And at the end of the day, we have big audience networks that people really care about in, again, news and sports, which is what distributors want. So we think we're set up very well. And then other couple of aspects that also make us very bullish is, a, our content very uniquely has a heavy amount of exclusivity within the Pay TV ecosystem.
So if you look at a lot of the renewals industry-wide, I think one of the things that's complicated them for some of the other media companies is there some leakage where a lot of the programming that are being offered to the MVPDs is also being offered direct-to-consumer, often at price points that if you're a distributor, you view as kind of internally cannibalistic to what you're offering on a wholesale basis. We don't really do that. Our sports are really exclusive to the Pay TV platform. And that carries a lot of weight. So I think from a distributor value proposition perspective, we're reinforcing that value to them in ways that some of our peers are not. And also, we don't have -- like we're benefiting sure we don't have NBC with us and would anybody would love to have the power of football behind them, obviously. I'm not going to say that's not the case. But you also don't have the streaming issue. You don't have a distributor. You're not distributing a Peacock or another big streamer on a direct-to-consumer basis that has some of the same content. So there are some of those specifics of how this is structured, we think are very beneficial to us.
And you've got this 2-year partnership with NBC Universal for ad sales. What happens after that second year? Should we expect Versant to build out its own independent sales for us in infrastructure -- and how would you manage that transition? How do you think having your own sales independent from Comcast impact your financials?
So we're going to have a few different options. As you mentioned, it's a couple of year deal. So we have some time. I think -- and really 3 ways we could see this evolving. One is we may renew and that's both parties would have to agree to that, meaning NBC as well as Versant. Recall that we did this deal really for a couple of reasons initially.
One, there was just a speed. We're trying to get the spin done and to stand up our own sales force at that time would have been hard. But very importantly also, we think it was the right thing for both companies, even independent of speed. This has been a proven go-to-market kind of winning approach. NBC as when we were part of NBC, kind of very typically led the upfront in terms of volume was one of the leaders in pricing as well, has effectively sold and scatter and driven yield. And so proven ability to bundle this inventory and sell it. And again, in the benefit that we bring to NBC is that we're addressing unique audiences so they can go to agencies and kind of make sure that those agencies and the marketers are able to kind of deliver different types of audience reach.
And also the pricing is different. I mean clearly, NFL inventory is priced at one level. Our inventory is still premium priced, but not at the same level, and there's a little bit of dollar cost averaging to the agencies and the marketers about getting reach on a cost-effective basis that we uniquely can deliver. So we're -- so there's a real chance that we decide that mutually this is an advantageous relationship and we extend.
Path 2, and we had a lot of this even before we set up this arrangement with NBC. There's a lot of other parties that were interested in potentially selling for us. We decided not to pursue them this go around, but that will be there. Again, there's a bunch of folks that kind of see the value NBC has with -- having us and they would like to participate as well. So we think there will be a pretty active market of third-party sellers. And then three, we could do our own sales force. We're not starting at 0, meaning we do have our own salespeople today on digital.
So NBC sells most of our -- almost all of our TV inventory. Some of our digital inventory, a good chunk of our digital inventory, we actually have our own sales force that's selling it. and digital continues to grow, that will become a bigger part of the overall sales. And we could launch our own initiative, our own sales organization if we wanted to. So we feel like there's a lot of options here. We're going to pick the one that kind of value maximizes in the short and the long term, and we think we're really well positioned for that.
On the digital inventory that you're selling yourself, how much of that is programmatic versus manual?
We do it it's a blend in terms of we do both. I think you'll see our programmatic go up over time, like as I think as we're looking at, for example, at the AVOD offering that we're going to, you'll see more and more of it. So today, a bunch of it is direct -- but I think we're seeing that shift that we will lead into programmatic increasingly as we add more and more digital sources.
Another partnership you have with NBCU is for the Olympics, and I think that goes through the 28 games in L.A. Beyond the Olympics and that ad sales partnership, are there any other ongoing operational or technological arrangements with Comcast that are material to the company we should be thinking about?
Yes, not from a material. The biggest material interrelationship between the company is, in fact, ad sales one we just talked about. The Olympics, and just to be very clear on how the Olympics work. It is -- we love having the Olympics. There's -- it provides, obviously, healthy ratings for us. It's a good promotional platform. economically, NBC buys the time on our networks. And economically, it's not a -- like not having the Olympics will not kind of cause any economic impact on us directly. And we'll see what happens after '28.
Other than those, like we -- of course, we have some transition service agreements on technology that are not material financially that we will migrate off of relatively quickly. There's an existing transition service agreement on some sports production. And again, we'll migrate off of that relatively quickly, not a huge economic impact for us. And then there's a brand license on CNBC that is a -- that's a 5-year license between the 2 companies. And that's pretty much pretty much it. So there's not a lot of kind of dependency or connectivity in a negative sense, I should say, between the 2. And of course, we have our Comcast Cable carriage deal, which is done at arm's length and when that comes up for renewal, well, we're very optimistic that we'll renew that on favorable terms.
Maybe we can talk about costs, especially given some of the top line pressures despite more adoption of skinny and genre-based bundles, the cable networks face these secular pressures. How do you manage costs to offset the top line pressure? And what are the areas of the cost structure that have the most opportunity to actually save?
Yes. So about 70% our cost base is kind of addressable in the short term. The way to think of our costs are using round numbers, a little more than half of our costs are programming and of programming, about half of programming is sports right. So once you take that out, basically, that math will work about 70%-ish is not sports rights, which those are more fixed. Everything else, whether it's entertainment, news programming, SG&A, of course, those are all kind of pretty addressable and variable in the short term.
In terms of then our opportunity on costs. So we will flex costs appropriately. If revenue does not materialize the way we think we will pull those levers to kind of help mitigate the impact on the bottom line. The other thing in terms of where the opportunity is, because of the need to kind of execute the spin within a quick time frame, we had to replicate a lot of the NBCU infrastructure technology-wise. We set up the org to be efficient. So we're all shared services everywhere other than programming for the brands. Everything else is we don't have brand-specific resources.
That being said, technology-wise, in terms of enabling us to say, take advantage of automation, take advantage of some of the AI capabilities like in the back office, finance, HR and increasingly even the front office, so to speak, like in production. We need to have a more modern infrastructure, which we are actually developing right now. It's a big priority for '26 to enable us to unlock those savings, probably first starting in the back office an increasing up and down the value chain. -- that will -- that is going to be an area, frankly, we're going to do that whether it's not in response to any kind of revenue pressure. We're going to do that regardless because it's the right thing to do to maximize profitability. But I think there's a material opportunity there for incremental.
Let's talk about sports. So many of your competitors are obviously focused on NFL rights. What can Versant do to capitalize on the other sports rights that might come to the market over the next couple of years? Any particular sports that you've got your eye on at this point?
So we're very happy with our sports portfolio. For those of you who aren't familiar, it's like anchored by NASCAR, PGA Tour, USA, which is the U.S. Open. We just extended our deal with the PGA of America for the Ryder Cup and we have Premier League and WWE list goes on. And we've built a very -- position we're very proud of a women's sports that we think is a big growth opportunity with WNBA, which is new to us, we're one of the biggest kind of media partners of the WNBA as well as League One Volleyball, Women's Volleyball League, which is also -- the ratings have been quite strong, and then we have the PGA.
So we don't have to expand into more sports -- so it will be opportunistic based on where there's clear value, value in terms of distribution, value in terms of helping us evolve the business model in advertising I think the -- and Mark mentioned this on the earnings call we had, NFL looks like it's going to be kind of trying to renew their deals, we can argue on timing, but one would presume that's going to have a pretty significant rights reset for the existing media partners.
Presumably, that could result in some of the existing media partners, either taking a different view on -- and the -- for those of NBA, that's a long-term deal. Those rights are set. On other sports, they may -- whether a sublicensing opportunities or whether that is not maybe engaging in renewals. So again, we'll look at that. We think, again, we're very unlikely to be in the NFL and NBA business. We don't think that really makes sense for us.
But those other sports, there may be real opportunities for us. Those sports want linear distribution on kind of popular networks like we have like on the U.S.A., but it's going to have to make sense for us economically. We're not going to do it just to add to the sports portfolio.
Okay. As you navigate was a competitive market for sports rights, how do you plan to manage that cost inflation while at the same time you're investing in new content to drive growth?
Yes, we'll be very disciplined here. Like I think to the extent we are going to add sports, we'll find to offset elsewhere. Like again, part of, I think, the economic calculus where is going to have to make sense, will be okay, if we're going to do this because it's going to add, say, distribution value we're going to look at the overall programming lineup that we have and say, where are we spending elsewhere.
And I think we're going to make those trade-offs there. So we're not -- we wouldn't envision this to be adding to the cost structure with the kind of with the hope that we're going to have a business model to come. The business model is going to have to be established upfront and we'd make those tradeoffs.
Okay. Got it. Let's move to capital allocation. You've laid out a clear capital allocation framework -- maybe you could walk us through how you're prioritizing uses of cash, particularly trade-offs between M&A, organic investment and shareholder returns.
So -- we're in a, I think, a very privileged position that we're happy for. We have a very cash-generative business, and we have a very healthy balance -- and we're thankful that Comcast enable us to have this opening a healthy balance sheet. We're a 1x net leverage today. We set our targets 1.25. And then we've guided for '26 of over $1 billion of free cash flow.
I mentioned that because when it comes to kind of capital allocation, we have 3 priorities that we can execute concurrently. So rather than being an or, it's an -- and those 3 are we're going to maintain a healthy balance sheet. As I mentioned, that 1 to 5 net leverages are North Star. We're going to invest in growth organically and with a high bar inorganically and we're going to return capital to shareholders. We've announced the $1.50 annualized dividend. We've announced the Board authorization of a $1 billion share buyback. So we're going to do all 3 of them. I think a lot of our peers can't because of different financial constraints they may have. And we're in a position where we're not necessarily like we can do and we're able to execute all 3. And that's and we view them all an equal priority. So we're going to execute all 3 together.
Okay. And just on the M&A side, it seems like your strategy appears to be focused on smaller targeted deals like Indy Cinema, Free TV, things and free TV. Things that are highly aligned with the company's strategy. Is it fair to say that large-scale transformative M&A is off the table for the foreseeable future as you kind of focus on these other initiatives?
I wouldn't say anything is kind of off the table. I think part of our job kind of fiduciary wise is to look at everything and see what is going to accrete the most value for shareholders, and we will look at everything. Clearly, as I mentioned, part of our capital allocation kind of priorities are that healthy balance sheet. So the -- and getting back to that North Star of 1.25 leverage. And so that's going to be a consideration in terms of transaction size is our confidence in the ability to get back to those levels kind of quickly.
That being said, like we will -- I think if I was looking at M&A priorities, kind of the principles we have is -- we mostly are focused or largely, we expect to be focused on the 4 markets we're in that I mentioned before. We want to have things that evolve our business to that. I was talking about the evolving to a healthy -- a bigger mix from non-Pay TV over time, getting that 50% longer term. And then we really want to make sure these obviously transactions generate significant value with clear synergies that we can kind of bank on and the bolt-ons make a lot of sense. We've done them. Could there be something that's bigger and transformative? I mean I think it would depend on the circumstances and the bar will be very high to make sure that it hits every one of those criteria I just mentioned. All right.
Great. We'll wrap up there. Thanks so much.
Thank you. Appreciate it.
Versant Media Group — Morgan Stanley Technology
1. Question Answer
All right. We're going to kick us off here on day 4 of the Morgan Stanley TMT Conference in San Francisco. We're really excited to have Mark Lazarus, the CEO of Versant, which spun off from Comcast in early January.
Quick disclosure. For important disclosures, please see the Morgan Stanley research disclosure website. And if you have any questions, please feel free to reach out to your Morgan Stanley sales rep. I'm joined by Thomas Yeh from the Morgan Stanley Media and Entertainment research team.
Mark, thanks so much for being here.
Thank you for having us.
So you just reported earnings and reiterated your outlook for 2026. What have been your biggest learnings in the first few months of operating as a stand-alone company following the separation from Comcast?
We've learned a lot. We learned that our -- I think that we really realized that while we have big iconic, well-known brands, they were really hidden inside of Comcast, and that's been a lot of the premise for the entirety of the spin that we can unlock value with these very popular big brands. So taking CNBC, MS NOW, Golf Channel, E!, Oxygen, SYFY, Fandango, GolfNow and really exposing them. And then bucketing them into vertical businesses where we can expand beyond the pay television ecosystem, that we've been so successful and are so successful in, but we'll be able to invest into them. We'll be able to do that, and I think the biggest learning is how important our strong balance sheet is, right?
We have very low leverage. We're able to invest in the businesses and return money to shareholders. And I think learning that as we've gone has been really helpful. And then our -- the independence that we have, we've been able to do a few things in these first few months, we've closed two small acquisitions. We've announced three organic investments. And while that could happen over time in a big company, it would have taken more time. We're a little -- we're able to be more nimble and fast moving.
Excellent. That's a great place to start. So we wanted to -- we actually -- we have CNBC presence here at the conference, which is great...
We travel with our own crews.
We appreciate that. I start my day every morning with CNBC.
Thank you.
So we'd love for you to maybe walk through some of the four core verticals, what you think are maybe most important and most underappreciated as you look at the portfolio, and what you see as the most immediate areas of growth within the company?
So -- okay. So I'll start with CNBC and focusing a vertical around CNBC, the global leader in business news, a very influential network in terms of who comes on and who's watching, has focused on business news, personal finance and the retail investor. And our ability to do that through television and digital is one thing. But we're going to invest in a renewed and revitalized direct-to-consumer product, direct-to-consumer products that will allow us to build out tools sets using AI and for stock recommendations, charting tools, that will allow us to expand quickly in an area that we really weren't investing in before. So that's one important vertical.
The second one would be in political news and opinion around MS NOW. MS NOW did not have a digital video strategy, hard to believe in this day and age that a big brand, really the #2 or #3 depending on the year, rated linear television cable network did not have a digital video strategy. And that was by design from the NBC News Group decided to put their resources into other digital video products. So they did not create one around MS NOW. Puts us a little behind, but it also has a massive opportunity. It's the #2 engaged audience of all linear services, 9 hours a week, our audience watches. And over the last 10 years, the prime time audience for MS NOW has doubled, in a world where distribution has gone down, our audience has doubled.
So a very important and valuable audience that is highly engaged in that product, we'll be able to focus with a direct-to-consumer product around newsletters, around podcasting, around -- and then on the digital video side. The third, and I talk briefly is Golf. It's a fun vertical to have, and it's really a model home for what we've been -- what we want to do with the rest of the businesses. Golf 12, 15 years ago was Golf Channel was the entire business that we had in Golf. We then acquired a business called GolfNow, and it was a roll-up of tee time businesses. We now have a tee time business that is of significant scale. We booked 40 million tee times last year. We're in the early stages of our growth there. We only have -- we only booked roughly 10% of all the tee times, so there's a lot of organic growth.
We're early in our international expansion. We're now -- we bought a company in Belfast and now serve the U.K. with great penetration. We have Austria, France, Germany, South Africa and Australia that we're growing into. So GolfNow and then extensions to that is a software services business and enterprise software that helps with yield management and inventory management for golf courses and helps them run their businesses. And then a video subscription business where we're partners with Rory McIlroy for GolfPass.
When you roll that all up, it's now the same size as our linear Golf business, so roughly 50-50 in terms of how the revenues come in. And that's a model home. That's what we want to do in all four of these verticals. Go from where we're roughly -- we were in '24, we were 83% Pay TV. That's gone down in '25 to 81% on our way to 30%, 33% over the next 3 to 5 years and then eventually, hopefully, the whole portfolio lives in a 50-50 world.
And then the final one is our entertainment and sports vertical. On the sports side, we have very strong sports product. We have -- we're the biggest provider of Golf content, roughly 2,000 hours of live golf, 200 events. We have the -- premierly, we have roughly half the Premier League schedule exclusively on USA Network. We have the WNBA. We have NASCAR. We have had 2 weeks of incredible Olympics as part of our programming partnership with NBC. We'll have that again in 2028 for the L.A. games. We did a deal with women's volleyball league called League One. So -- and we're looking at other sports properties. So we're heavily invested in sports.
On the entertainment side, Fandango is, I think, an underappreciated part of our portfolio, mostly known as a movie ticketing service. We have -- we sell roughly 70 million movie tickets every year. It's also a top 5 home video business for streaming movies and TV series at home with Fandango at home. And we're going to move that business and all of that audience and circulation we have for movie tickets and home video into a free AVOD business. We have the content, both that we own and that we license from third parties for both our TV networks and for AVOD, and we'll be able to create a service for -- with just an advertising base. So again, moving and transitioning our business from heavy dependence on Pay TV to a more balanced dependence across other revenue streams.
That's an excellent overview and we want to get into a bunch of those pieces. I think one of the things you hit on was the importance of live programming in there, which I think is over 60% of your audience distribution across news and sports. Maybe you can talk about the resilience you've seen in viewership trends, how important live programming assets are for you and how you see that portfolio evolving over time?
So yes, four of our businesses are heavily reliant on live programming. So MS NOW, live; CNBC, live; Golf Channel, a lot of live; and USA Network with its sports portfolio a lot. There is also some live on E! with live from the red carpets and award shows and other things. So we do have a live portfolio.
When you look at ratings trends, Live has held up better on linear television than scripted or unscripted. I'm sure there's hits in scripted and unscripted and some do well. But on the whole, live ratings are holding up. Our sports ratings are either in the area of flat or growing. MS NOW is up double digits since we rebranded in November. Some of that is new cycle. Some of that we like to think is how we're programming it. And CNBC's ratings have been steady and continues to garner an important and valuable audience.
So Live is going to be the best in linear television, and it's part of our thesis around the vertical strategy as opposed to a horizontal strategy of just rolling up other businesses. We don't want to overly dilute that live element. It's important for advertisers, it's important for distributors, and it's important for audiences.
I wanted to dive a little bit deeper into the strategy that you mentioned about evolving the revenue mix over time. You mentioned the 33% target over a midterm time frame. How should we think about -- we all clearly know the headwinds in the linear ecosystem. How should we think about your clearest opportunities to really offset that and whether that's continuing mitigation of potentially some of those declines on the linear side versus the growth drivers that you're seeing on the...
We have to do both. I mean we need to mitigate the secular decline as best we can. Some of that will be by the mix of programming and maintaining audiences so we can continue to drive ad revenue. There are premiums on ad revenue for live content, and that will be helpful. Some of it will be through renewing distribution deals with some increases and I'll call the marketplace increases, not expecting outsized increases. So those will be forms of mitigation.
In terms of growth, which I think is more important, we need to mitigate what we can, but we need to grow. I mean it's not -- to get to the right mix, the wrong way isn't going be -- isn't going to make anyone get excited. So it's going to be about either organically or inorganically growing new revenue streams. So we've got the three initiatives I laid out, MS NOW, CNBC and the Fandango AVOD as growth vehicles organically. We've made two small acquisitions to date as we were spinning. Free TV Networks, which is a free-to-air, linear over-the-air form of fast channel, but it's built solely on advertising. And free-to-air television and free AVOD are two areas in our ecosystem that are growing. It's demonstrable that those are growing. So we're very bullish that we'll be able to grow revenue streams there. And then we bought a company called INDY Cinema, which like we have in the Golf business is a software -- enterprise software platform that ties very closely with our movie ticketing service, and we'll be able to implement it across all the relationships we have in the film and cinema industry. So again, a diversified revenue stream. We'll continue to look for bolt-on acquisitions that fit in our verticals. But really, we're focused on those organic growth plans for now.
Can you talk a little bit more just in terms of how you see the opportunity for the Free TV Networks acquisition. And as we head into the Fandango AVOD launch, how we should think about that given the fact that [ FAST ] is a very competitive space, which is growing. But clearly, a lot of alternatives and...
Yes. So on the Free TV, it's already an established brand. We bought a small company that was led by gentleman who had done this before and sold that business to Scripps earlier named Jonathan Katz. He relaunched another set a couple of years ago. It's four networks in specific genres around African-American audiences, Western audiences and True Crime places that we already, certainly with True Crime with Oxygen, we already have some expertise.
So we think those comes -- it's mostly direct response advertising now, but we believe that, that can grow to 9-figure ad revenue very quickly. And then there's expansion opportunities in terms of getting distribution there, which just grows the audience. So there's a big appetite for free. I mean the cost of media is hitting people hard and people are looking for free options and the same thing on the free AVOD and that serves a little different role with us. If you look at what others have done in terms of revenue, say, a Tubi or a Pluto, they've been able to get big audiences.
What we have that they don't have. First, we have a very strong brand in Fandango, it's well known. It's got high awareness, and it's a very popular brand. We haven't ever really marketed or advertised it as what it does in home video or certainly not in AVOD. We have a lot of information on our customers that those others don't because of what they -- because they're purchasing tickets and TV series and movies from us. So we have a lot of information on what they're buying and what they're doing. We'll be able to serve them content that fits their viewer profile and more importantly, we'll be able to work and target advertising to them, and we'll be able to use -- because it's digital advertising, we will be able to be more effective and be in sort of the newer forms of advertising, programmatic ad sales in other areas. So we're very bullish on growth for both of those.
Got it. And for INDY Group Cinema, can you just maybe talk a little bit about how that fits into the broader portfolio? I think there's obviously ebb and flow in terms of the sentiment about the health of the box office in terms of just the...
I think if people make good movies, people will go. But we also believe it's -- we can tie it in with our -- with who we work with now, the theater owners and cinema operators. But it also doesn't -- it gives us the opportunity to potentially think beyond theatrical films as a ticketing service, and it gives us a technology offering that could go into other parts of the ticketing world. We don't have current plans, but it gives us optionality to expand what we do in ticketing.
Got it.
So we want to go back to sports. You clearly articulated your leadership position in golf as a vertical. Maybe you could talk about, obviously, that's the most competitive space, the sports rights backdrop given how important it is and how live viewership is really driven by that. How important is your ownership of kind of the sports rights and programming and your ability to get those sports rights given you're obviously a bit smaller than some of the other competitors that you're going up against?
Yes. Well, that I've personally had a long career in sports. I ran in parts of my career, Turner Sports, ran NBC Sports. So I've been smaller. I've been bigger. I'm back to smaller. But we believe a couple of things. One, we have a very attractive portfolio now. We have a product that has big passionate fan bases. It's not the NBA, it's not the NFL, but they also don't cost with those costs. So NASCAR has a big following. Each and every week, it's typically a top 1 or 2 rated sport on the weekend. It's -- there's one race everyone who's interested in it watches it. There's been a lot of buzz around F1, and F1 has done really well and done nice growth. But every week, the NASCAR race is 2 or 3x bigger in terms of audience. It's a big popular sport. Premier League where we have half -- roughly half, a little less than half, the games exclusively is an important product. And we, over the last 12 years as part of NBCU really feel like we've helped build up the Premier League in this country. And now as part of this new company, we'll get the benefit of.
WWE is also an important big popular sport, call it a sport because it's live, but we -- and does really well for us. So we have a very strong portfolio, and we talked to Olympics and WNBA. But I think what's happening, what we're going to see over the next year or 2 is as the NFL comes back to market and extracts more rights fee from those who are either are in it now or stay in it or come to get in it. I believe it will cause some dislocation of properties from other places. And we would still over 60 million homes have broad reach with USA Network and will be in a position to potentially bring some other sports to our portfolio.
We have a strong sports division. My personal history in sports, we have a gentleman named Matt Hong, who's running our day-to-day sports vision was COO at Turner Sports for years and now as the President of our sports division. We have our own production company facilities. So we're ready to go, and we have the relationships. So as those opportunities develop, we're not chasing the NFL. We're not going to be in the NBA, but there'll be good live sports properties that will fit our profile.
I'm curious how you think the NFL kind of renegotiations play out. And as you alluded to, other players might have to kind of divest other things? How do you kind of see that playing out? And where Versant can fit in that?
Well, I think that the NFL is going to come to market shortly. I think they're in preliminary discussions. I'm not in any of those, so I don't know for sure. But I believe that all of the current players will want to stay in and will pay excisable increase to maintain their NFL relationships. And I think they're all going to have to make hard decisions as other properties come up, what they can stay in and what they can't, what they can afford and what they can't. And I think that will create opportunities for people like us.
It makes a lot of sense. So I want to turn to general entertainment, how does that fit into your broad strategy? I would say investors are obviously a bit less enthused about that vertical versus kind of news and sports where you guys play, but how should we think about the appropriate level of investment in scripted original content?
Yes. We're doing -- there's general entertainment. I'd like to call it based on what we have focused entertainment, right? We have -- U.S.A. is sort of broad-based, but we're kind of leaning on the sports arm there. And -- but we'll do a few scripted originals for USA Network, not a massive amount of few that will help us with ad sales and be good for our discussions with distributors. But candidly, we're not going to make enough that is going to change the profile of USA Network, but it's an important part of our -- to have as part of our portfolio.
And then when you look at something like Oxygen, that's why I say focused, it's heavily focused on True Crime. True Crime has proven to be a very durable genre. It works on linear television. It works in FAST channels. It works in streaming. We're going to put a lot -- do a lot of that in AVOD. We talked about True Crime as part of Free TV Networks. So I believe we will -- we can continue to focus on that. It's relatively efficient to make. I know you asked about scripted, but we're going to lean more into unscripted as an entertainment company.
We'll have a few scripted originals, but we -- which will mostly be USA and some coproductions for SYFY Network. But True Crime or Oxygen, and then E! really centered around pop culture also has a strong digital E! News digital business, has a strong traditional digital business, but we're starting to make video content with them. But again, that will be largely unscripted. We got a lot of press around the redo of the Real Housewives of New York, the original series -- the originals. I think we were trying to call it the Golden Girls because that would be stealing, but golden something, but we were going to make unscripted content for E! and then focus on live, pop culture, on the award shows, on our red carpet and on our digital business. So a long way of saying, scripted will be a piece, but a smaller piece, and we'll focus on the unscripted.
Makes sense. I'm curious, AI has obviously been a huge topic of this conference. I'm curious as I think about some of the things you just talked about, crime could be one area where you could leverage AI production. Do you think of that as something that could increase the velocity and output of content, make things a lot cheaper? Is that something that you guys would leverage?
Yes, 1,000%. We believe in that. We have to obviously just be respectful of unions, guilds, et cetera. And I think in that space, we think that's imminently doable. And I think it's -- it's exactly the types of opportunities that we look at. It's also exactly the kind of things we can do as an independent company where we can move quickly. Inside the bigger company, we had -- there was a lot of competing constituencies, and you had to balance all of that every single day as you are making these decisions. We have a much narrower path now, and so we can make informed decisions more quickly and do some things that we might not have done inside the bigger company.
Great. And we want to turn to CNBC a bit more, as you alluded to, you're kind of the leader in the space. Maybe talk about tapping into that really dedicated sticky fan base. And I also want you to hit on prediction markets. You had signed a deal with Kalshi. We had Tarek here at the conference. Maybe just talk about how you're integrating prediction markets into your programming.
Yes. So CNBC is, I assume, an incredibly valuable big global brand. And I went to Davos for the first time and saw it on full display. I mean it was -- every business leader, every political leader wants to come talk to CNBC. It's an influential voice. And I think of this go to our 6 to 9 a.m. window where Squawk Box lives and Morning Joe lives. And I think between those two shows, we reach more influential people every single morning than any other media company. And that's a really nice calling card for us. So CNBC, the number of live interviews with influential people and the people that we reach, I think, stands in as one of one. That's a really important part of who we are.
Every politician regardless of party wants to come on and send their message, most business leaders or many business leaders want to come on and send their message to, whether it's employees or investors or others. So a very powerful, powerful network and has always been, but I think we can help accelerate that inside this company, and it won't be a hidden gem anymore. It's just going to be a gem, that's one.
On the prediction markets, it's a little bit of the Wild West out there now. We did a deal with Kalshi and it's got several components to it. We like that they had gone through sort of the regulatory processes, and we're on the other side of that. The deal has multiple components where we -- they buy advertising from us, that's one that was sort of table stakes. But we're integrating their content into our shows and into our messaging. They're putting CNBC and access the CNBC information into their app, which is good for us as it gets us into other and new and younger audiences. They're providing us data and information for all of our content on air and digitally. And then finally, we hope that we will be able to get more people to use their platform. And as that happens, we get -- we have -- get a piece of revenue stream from that.
So multifaceted, very new, just getting started. The prediction markets around sports and other things. Some of it's got its ups and downs. We like the discipline that Kalshi has shown in terms of what they're getting into and what they're not.
I wanted to ask a little bit more about the linear business, which is still a large part of your revenues. I think you mentioned on the earnings call a degree of visibility into that revenue stream just given the timing and the renewal schedule in particular with some of your partners. Can you maybe just talk about maybe it's early days, but what you're seeing in terms of how your negotiating leverage might change with these distributors going forward now that you're no longer part of the broader Comcast?
Yes. So I think we have roughly 16% of our subs up this year towards the back end of the year. Yes, we were being negotiated as part of the bigger NBCU or not. So that comes without having football to drive, but it also comes with things that are benefits. Let's start with -- we like that we have 62% live news and sports, which has value to the linear television distributors. That's an important element.
CNBC, MS NOW are big, powerful engines. MS NOW, certainly, this year, as we come towards election cycles, we expect more and more growth as the year goes on and then the sports portfolio.
One of the things that has been part of big media companies, I'm sure everyone has read over time is the stress between distributors and media companies, not really about the price of the linear network, but what's the streaming service and the stress. Why should we pay you for all your linear networks, where we can just tell people to buy your streaming service and get most of the same content. None of our content, none of our content today is on any streaming service. So it's exclusive to the Pay TV ecosystem, and we think that has value.
180 Premier League games, 10 NASCAR races, 50 WNBA games, 52 weeks of WWE, that is all exclusive to Pay Television. And that with -- and not having our own streaming service, and we're not going to create a aggregated SVOD service, we think, gives us -- puts us in a very good position. We also have the history of just 2025, where we -- even though we were part of NBCU, it was obviously known that we were spinning and we were going to be our own company and have to bifurcate the contracts, and we were able to successfully complete a series of deals on terms that work for both parties.
Does the launch of MS NOW on a DTC platform change that dynamic, you think at all?
We don't think so because it's not going to be a replicate service. We're not just going to stream our network. It's going to have community access to our talent, other talent with differentiated shows. So it won't be just a replicate service. It will be a much different service with a lot of other things attached to it.
Got it. There's also greater focus, I think, on the directionality of the universe subscriber declines. I think some green shoots in recent quarters from some of the major distributors in terms of the stability that they're potentially seeing, but also increasingly maybe some concern on skinny bundle fragmentation. Can you maybe just talk a little bit about your networks and how they're positioned to?
Yes. So the green shoots are very exciting. I mean I think Charter, in particular, but we -- yes, we have modeled for sort of decline industry-wide decline. So if that moderates, that will be good for what we've planned for. And right now, there are some indications that we may see some moderation to that as you point out. So that's -- as it relates to the bundles, most of the skinny bundles are focused on news and sports. And we are in all of those bundles that have been built out as part of our -- with our networks because we are heavily news and sports. I do think, candidly, entertainment is those networks have some distribution risk over time. But the preponderance of our -- not only our content but the revenue attached to those services is much -- is higher than it is for our entertainment services. So we're -- we feel like we're in a very good position to be as part of the skinny bundles evolve especially around news and sports will be part of them.
So as a portfolio of networks, is there a -- an interest or, I guess, a focus on establishing minimum thresholds based on the tiering of sports and news relative to some of the entertainment networks that you...
Well, those -- there are minimum thresholds in the industry now that exists. And I won't talk about individual negotiations. But yes, we certainly would like to maintain certain levels of minimum thresholds and work. And most of the distributors are working with the programmers on that. It's not just us. I mean it's -- there's. It's an industry-wide thing. So -- but again, we've been able to be part of all that.
Got it. Quickly, you mentioned political. Can you maybe just talk about from an advertising perspective, how you think that shapes out as we head into the second half of 2026? And how you're positioned to potentially benefit from that?
Yes. Well, MS, obviously, and CNBC both could serve in that role. We don't get -- and a lot of political advertising is very local. We get some national political advertising, mostly around advocacy and props and other things that are up for vote. But what we do get is a halo around ratings. That is good for the entirety of our -- for the entirety of our advertising sales unit. So ratings around for MS, in particular, in the even years has typically a nice spike to it, and we're seeing that early on. We saw it around the state of the union. We saw it around certainly the election last November, and we saw it just Tuesday night, where MS was the fifth rated network of all -- in all of television regardless of distribution mechanism with a couple of primaries in Texas and a few other states. So we feel like we're on a very good trajectory there.
Great. In our last couple of minutes, I just wanted to ask more around the M&A and strategic considerations that you've highlighted during your Analyst Day and on your earnings call. There have been some small acquisitions already made. How are you thinking about M&A going forward in terms of the philosophy of what you might be looking for and -- just in terms of size and opportunity set?
We will be disciplined and opportunistic. We do, as I said, our balance sheet is really important to us. We want to maintain the strong balance sheet that we have. We come from a very disciplined background at Comcast. Anand Kini, who's here in the room with us is our COO and CFO. But we come from a very disciplined background and we're going to maintain that. So that's one. So we're not looking to...
Second is we will invest in these four verticals. And our criteria will be, does it help expand one of those four or more of those four verticals, that will be an important filter for us. And then finally, returning money to shareholders is important. And when we announced our dividend this week and the authorization for share buyback, I think we put our money where our mouth is on that.
Great. I think that's all the time we have. Thank you so much for being here.
Thank you all very much. Appreciate it.
Versant Media Group — Q4 2025 Earnings Call
1. Management Discussion
Greetings. Welcome to Versant Media's Full Year 2025 Operating and Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded.
At this time, I'll turn the conference over to Wylie Collins, Executive Vice President, Investor Relations and Treasury. Thank you. You may now begin.
Thank you, and good morning, everyone. Welcome to Versant Media's Fourth Quarter and Full Year 2025 Operating and Financial Results Conference Call. Joining us today are Mark Lazarus, Chief Executive Officer; and Anand Kini, Chief Financial Officer and Chief Operating Officer. Also with us are Jordan Fasbender, General Counsel; and Natalie Candela, VP of Investor Relations.
Before we begin, I'd like to remind you that certain statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to Versant Media's filings with the SEC and today's earnings release.
All forward-looking statements are made as of today, March 3, 2026, and we undertake no obligation to update them. During today's call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in today's earnings release and in the materials posted in the Investor Relations section of our website.
With that, I'll turn the call over to Mark.
Thank you, Wylie, and good morning. We are pleased to report Versant's 2025 operating and financial results as an independent, well-positioned media and entertainment company. 2025 was a pivotal year for Versant. We completed our transition to a stand-alone public company while advancing our clear and deliberate strategy, continuing to win with premium content, extending the reach of our iconic brands and accelerating the growth of our digital platforms.
We operate in 4 large and growing markets: business news and personal finance, political news and opinion, golf and athletics participation and sports and genre entertainment. In each, our brands hold leadership positions with clear opportunities to extend beyond pay TV.
Versant enters this next phase with meaningful scale, reaching an average of approximately 100 million people every month. Our live news, live sports and premium entertainment programming continue to attract large engaged audiences and generate robust advertiser demand. Approximately 60% of our audience comes from news and sports, which is most valued by audiences and advertisers.
In 2025, CNBC solidified its position as the #1 global business media brand, delivering exclusive breaking news and more than 6,000 hours of live on-air coverage. That leadership was on full display in Davos last month, where viewership surged across all 3 days of coverage as CNBC was at the center of the world's most consequential business conversations.
We built on that position of strength in 2025 with a multiyear partnership with Kalshi, integrating real-time prediction market data directly into CNBC's editorial coverage. This important commercial relationship introduces new revenue streams and connects us with a younger, highly engaged and data-driven investor audience.
We're extending that strategy even further. CNBC will launch a next-generation direct-to-consumer subscription service tailored to retail investors, a fully integrated platform combining CNBC editorial insights, investment recommendations, portfolio tracking, advanced charting, AI-powered analysis and powerful decision-making tools, all built on a brand and talent that investors trust.
We believe this service addresses a significant market need with a product only CNBC can deliver. On election night in 2025, MS NOW was the most watched network across all of cable, reinforcing the strength of the brand at the most consequential moments in politics. Since the rebrand to MS NOW in the fourth quarter, that momentum has not only held, it has accelerated with double-digit growth in total viewers since November. That momentum extends well beyond traditional television as well.
In 2025, MS NOW generated nearly 8 billion views across TikTok and YouTube, along with more than 140 million podcast downloads, demonstrating the depth and demand of a highly engaged audience. To build on that engagement, later this year, we will launch a new MS NOW direct-to-consumer platform centered on community, access and exclusive content, extending the breadth and depth of MS NOW's audience reach.
The Golf Channel is the #1 golf media outlet. And in 2025, we aired over 2,000 hours of live coverage across more than 200 events, accounting for 35% of all hours watched for golf. The inaugural Golf Channel games aired in December, and we also extended our USGA partnership through 2032 and our PGA of America partnership, including the Ryder Cup through 2033, securing long-term rights and reinforcing our leadership in golf for years to come.
Beyond pay TV, our tee-time platform, GolfNow, delivered a record year with 40 million tee-times booked over 9,000 courses globally, demonstrating Versant's scale in the broader golf ecosystem.
Across our broader sports portfolio, USA Sports added Pac-12 football and basketball and expanded our leadership in women's sports through long-term agreements with the WNBA and League One Volleyball. Last month, we also brought the Olympic Winter Games from Milan Cortina to audiences nationwide on USA Network and CNBC, and we'll provide more on that during our first quarter call.
In entertainment, USA delivered the #1 scripted cable original premiere of 2025 with The Rainmaker, and it has already been renewed for a second season, reinforcing our ability to launch and develop premium franchises. We also broadcast the Critics Choice Awards, which delivered their strongest ratings since 2022, a reminder of the enduring appeal of live unscripted entertainment.
At Fandango, we will launch new ad-supported streaming service later this year, enabling audiences to watch films and television series for free, leveraging Fandango's broad distribution footprint, scaled customer base and Versant's strong library of content. This is a natural extension for the Fandango platform, growing audience and deepening engagement while driving incremental monetization.
In addition, we completed the acquisition of INDY Cinema Group, expanding our offering for cinema operators with a cloud-based operating system now deployed across theaters worldwide. We also added Free TV Networks to our portfolio with national over-the-air distribution, expanding our presence in the fast-growing free ad-supported market and extending our footprint beyond traditional pay television. These acquisitions reinforce our strategy of building on our leadership in our core markets by expanding distribution, deepening engagement and developing new audience touch points through both existing and new platforms.
We view revenue mix as a critical indicator of our strategic transformation. In 2024, 17% of our revenue came from non-pay TV platforms. In 2025, that increased to 19%, and that was achieved without the benefit of the new initiatives launching this year. Our target is 33% over the next 3 to 5 years and over time to get closer to 50%, positioning Versant to a platform for growth over time.
We are committed to continue investing in the business and returning capital to shareholders. Our Board has declared the company's first dividend and has also approved a $1 billion share repurchase authorization. This program reflects our confidence in the business and our strong balance sheet, which provides us the flexibility to invest in growth while also delivering meaningful shareholder returns.
As we move forward, we have a clear strategy and the infrastructure, operating discipline and leadership required to win. We enter this next chapter from a position of strength, profitable, scaled and disciplined. None of this would be possible without our team. Across every part of our company, our people executed at a complex separation while continuing to deliver for audiences, partners and shareholders. I am incredibly proud of what we have built and even more confident in what we will accomplish next.
With that, let me turn it over to Anand.
Thanks, Mark, and good morning, everyone. As Mark noted, we are focused on disciplined execution and positioning the company for long-term value creation. I'll review our full year 2025 results, discuss key performance drivers and provide our outlook for 2026. Unless otherwise noted, all comments reflect stand-alone results, meaning a view of 2025 and 2024, as if we were already operating as an independent company, aligned with how we presented at Investor Day and how we will report going forward.
2025 performance is consistent with the forecast we shared in December with strong profitability, healthy margins and significant free cash flow generation. Total revenue was approximately $6.7 billion, down 5% year-over-year. The decline primarily reflects ongoing secular pressure in pay TV and advertising normalization following the prior year's presidential election cycle, partially offset by growth in our platform's businesses.
Stand-alone adjusted EBITDA, which excludes transaction and separation-related costs, was about $2.2 billion, down 9% year-over-year. Stand-alone adjusted EBITDA margins remained above 30%, consistent with the framework outlined at Investor Day. An estimated stand-alone free cash flow totaled a healthy $1.5 billion for the year.
Turning now to revenue details. Linear distribution revenue was $4.1 billion, down 5% year-over-year, driven by continued moderate cord cutting, partially offset by contractual rate increases. Importantly, more than half of our pay-TV subscribers are under agreements not subject to renewal until 2028 and beyond, providing meaningful revenue visibility.
Advertising revenue was approximately $1.6 billion, down 9% year-over-year, reflecting ratings declines and post-election normalization in use. Quarterly growth trends were affected by sports timing differences and certain assumptions related to the impact of the 2024 Paris Olympics on our stand-alone results.
Platforms revenue, primarily GolfNow and Fandango, increased 4% to approximately $826 million. GolfNow delivered another strong year with growth in bookings, payment volumes and subscriptions. Fandango performance reflected a softer-than-expected theatrical slate, particularly in the second half. We expect platforms to return to high single-digit revenue growth organically in 2026, supported by a stronger box office slate and continued growth at GolfNow. Additionally, we anticipate favorable contributions from our recent INDY Cinema acquisition.
Content licensing and other revenue was approximately $193 million, down 9% year-over-year, primarily due to timing of entertainment licensing agreements. On expenses, cost of revenues declined by about $130 million in 2025 driven by programming cost savings, including from a new long-term NASCAR agreement. SG&A, excluding transaction and separation-related costs, was slightly lower year-over-year and reflects the resources required to operate as a stand-alone public company.
Turning now to the fourth quarter. Results were broadly consistent with the full year trends. Revenue was $1.6 billion, down 7% year-over-year. Stand-alone adjusted EBITDA was $521 million, down 19%, impacted by production tax benefit in the prior year quarter. Full year results better reflect the underlying financial profile.
We began the year with approximately $850 million of cash and total liquidity of approximately $1.6 billion, including availability under our $750 million revolving credit facility. Gross debt totaled approximately $3 billion, resulting in net leverage of 1x trailing 12-month stand-alone adjusted EBITDA, providing substantial financial flexibility.
With respect to capital allocation, returning capital to shareholders remains a top priority for us, alongside disciplined investing to support long-term growth. As Mark noted, the Board has authorized a share repurchase program of up to $1 billion and has declared a $0.375 per share quarterly cash dividend, representing an expected annualized dividend of $1.50 per share.
Our 2026 outlook remains consistent with the framework provided at Investor Day. We expect revenue between $6.15 billion and $6.4 billion supported by midterm political advertising and new product initiatives. We expect adjusted EBITDA between $1.85 billion and $2 billion as we continue to invest in growth with some quarterly volatility caused by sports rights timing, particularly in second half.
Depreciation and amortization will remain elevated in 2026 largely due to amortization of intangibles related to the 2011 Comcast acquisition of NBCUniversal. This amortization will be substantially complete by year-end 2026. We anticipate our cash tax rate for 2026 to be approximately 26%, excluding the impact of intangibles on the balance sheet.
From a capital expenditure standpoint, we expect 2026 CapEx to be modestly above stand-alone 2025 levels. The increase primarily reflects the build-out of our new Manhattan headquarters and targeted investments in our platforms and other growth businesses. Over the medium term, we expect capital intensity to normalize following completion of these projects.
We continue to expect free cash flow between $1 billion and $1.2 billion in 2026. Free cash flow conversion will be modestly lowered in 2025, reflecting working capital timing, onetime cash tax benefits in 2025 and the incremental capital expenditures I just outlined.
On working capital, we anticipate quarterly variability, particularly in the fourth quarter. This is principally caused by separation-related timing effects, including NBCUniversal's prefunding of certain receivables at separation, which increased our opening cash balance with a corresponding Q1 working capital impact.
With that, I'll hand it back to the operator to open the line for Q&A.
[Operator Instructions] And the first question comes from the line of Michael Ng with Goldman Sachs.
2. Question Answer
Congratulations on your first quarter as a stand-alone public company. I just have 2 questions, if I could. First, platforms is obviously a critical part of getting to your revenue diversification goals. Can you talk a little bit about your confidence in achieving that 1/3 of revenue from non-pay TV over the next 3 to 5 years, key new product launches and features that you expect to be the most meaningful in the next couple of years here?
Yes, sure, Michael. Thanks. So we're really confident in our platforms business. As we mentioned earlier, though the results for 2025 were a little bit impacted by a slightly softer film slate for the industry. And Anand mentioned, we expect high single-digit revenue growth for 2026, which is consistent with the history that we have with these businesses. So we're very bullish on strong growth, both top and bottom line long off into the future.
When you think about those core businesses, GolfNow and Fandango are established leaders. They're really strong, you'd say, preeminent brands in their respective markets. And they still have a lot of room to grow organically and to grow penetration. GolfNow, for example, represents less than 10% of the total rounds booked and it's very early on in the international expansion trajectory that we've undertaken.
We can extend these businesses very easily into adjacent markets. We're launching a free AVOD service as part of Fandango, which will complement the movie ticketing and the home rental business. And we purchased INDY Cinema, which we mentioned, which enables us to offer the industry's best operating software to the same cinema operators who already use our partners in the ticketing business. So there's a lot of -- many more expansion opportunities for Fandango and GolfNow.
We'll also launch brand-new platforms associated with our brands. CNBC's D2C is targeted to the retail investor. MS NOW D2C will be offering community insights perspective relevant to that brand. These are big powerful brands. We've got big existing audiences, and we're in a great position for these to be adopted at scale around D2C places we have not really invested before.
Yes. The only thing I would just add is, I think as Mark mentioned, Michael, it's a good question. And for us, it's a combination, as you saw, of organic investment where we're making quite a bit as we just talked about the different brands. And then also M&A, our bar is high. I think INDY Cinema is a good example of an M&A opportunity that we found very compelling, very good use of capital, significant value creation, fits with our brands, fits with Fandango. It's kind of an opportunity to add incremental value right away because we already have a sales channel to those exhibitors who buy our Fandango ticketing products. So I think that between the organic investment and then selective inorganic just kind of reinforces how confident and how bullish we are about our platforms business.
Wonderful. And just as a follow-up, could you just provide an update on the SportsEngine strategic review process and the M&A point to support platforms? Just some clarity on kind of tuck-ins versus maybe something more midsized?
Sure. I'll start with SportsEngine. So as we discussed, we're evaluating kind of value-maximizing alternatives for that business. So just to be very clear, we see a lot of consolidation in youth sports market-wide. So we think it's the right time for this review, but we haven't made a decision yet. We -- just to be very clear, we like SportsEngine. It's been a very good business for us. It is a very good business. And so we're only going to pursue opportunities that genuinely maximize value for the long term.
Broadly on M&A, we will consider, obviously, all opportunities that add value. I think INDY Cinema is a very good example of a tuck-in, as you called it. And we think there very well may be more. I mean, for example, GolfNow, we built GolfNow over time. It was really a roll-up of a lot of independent operators. You can kind of consider that in some ways a tuck-in type as well. So definitely, we'll look at those.
Could there be something bigger? Sure. But I think the key point is our thresholds here are very high. As part of our capital allocation, M&A is one area, but the brand fit, the ability to drive value right away and the synergies are something that we obviously consider very carefully. And so it has to kind of satisfy all those thresholds and make sure it delivers premium returns, and we will continue to be very disciplined in pursuing that.
Our next questions are from the line of Brent Penter with Raymond James.
First one for me. Good to see the shareholder return plans in the buyback authorization. What's your philosophy going to be on buybacks? Do you plan on being pretty opportunistic? Or should we expect them to be pretty regular? And is there a 10b5-1 program in place already?
Yes. At this point, we're going to be opportunistic. We're going to be thinking through the total capital allocation program sort of holistically, and we'll handle it that way.
Okay. And then realize it's very early into your journey as a stand-alone company and majority of your renewals are beyond '26 and '27, but can you just update us on your confidence on the affiliate fee trajectory and what you might be hearing from distribution partners at this point?
Well, we were able to execute a bunch of deals last year when we were long announced as a stand-alone company, and we were able to do that on terms that work for us and work for the distribution partners. We have a few deals up later on in this year, and we anticipate being able to have very productive and similar discussions with them at that time. Our live portfolio of news and sports we think plays into what people are still looking to watch on linear television, and that's a big part of our asset play.
Okay. Got it. And then final question for me. The Warner Bros. Discovery process, obviously kind of moving into the next phase now. Watching from the sidelines, what have you all learned from this process in terms of the industry in terms of some of your competitors in terms of valuations? What does all this mean for Versant?
Well, we have our plan to go as an independent company. We have a strong set of assets. We're very focused on our vertical markets. And the wider view was it was interesting because the assets from Warner Bros. were interesting to a couple of people in a couple of different ways, and we look at that as being reinforcing of the value of our company.
I think the only other thing I'd add is I think maybe what we learned is as you kind of went through that process, the assets that had a tremendous amount of value often were around news and sports. And I think you've heard us say before that, that's about 60% of our audience is news and sports. So we think in many ways, that process validates, a, the quality of our brands and our portfolio and the strategy that we're pursuing to kind of continue to drive those businesses, which are supremely positioned within the pay TV ecosystem, and it also gives us the opportunity then to extend them outside of it. So we think, in many ways, kind of validated the approach that we have.
Our next question is from the line of Peter Supino with Wolfe Research.
A couple of questions about the way your brands go to market. First, I wondered if you could talk about the size of the audience that you're reaching in linear pay TV. We obviously can see ratings data on individual shows, but I wonder how many households are engaging with your news and sports content every month and with enough frequency to be important to your negotiations with pay TV distributors. And the background of that question is we just hear in our conversations with clients and enormous preoccupation with the possibility that you all might have -- I mean it might someday lose a distributor.
And then a second go-to-market question relates to your brand's DTC opportunity. Could you talk about your economics streaming CNBC and MS NOW direct-to-consumer and whether someday a partnership with a third-party streamer with a massive audience might be interesting.
So on the audience engagement, we have big brands that are well known and ubiquitously known to the marketplace. We reach around, as we stated earlier, 100 million people each and every month with our brands. If you look at some of them individually, MS NOW has doubled its audience in prime time in the last 10 years. We're reaching over 1 million people on average, 1.2 million people on average in prime time on MS NOW each and every day. So that's massive scale. And those people are watching with huge engagement, they're watching roughly 8 to 9 hours a week, which is the second highest engagement across the entire media TV landscape.
CNBC similarly has a large loyal following in the financial sector and with retail investors, and you'll see that as we talk about the D2C and eventually launch that in the future.
Across our sports, Premier League, WWE, NASCAR, WNBA, the Olympics was -- we were reaching 2 million, 3 million, 4 million people at a time with USA Network over the last few weeks. So we have scale, and we do it by both on individual networks and the accumulation of the total audience across our portfolio.
On the D2C programs on the economic profile, we feel very confident that we already have an infrastructure. So the build-out of these is not a massive capital -- not massively capital intensive. We're creating product suites that will appeal for CNBC to the retail investor and the MS NOW to that highly engaged audience.
Yes, that's right, Mark. I think, Peter, what part of that also kind of may be implicit or embedded in your question is, would we go to market in different ways. And I think that answer is yes. So sure, we're going to offer it direct to consumers. But clearly, we're open to different opportunities to distribute through other partners, whether that's bundling or packaging or other distributors. And we will, in fact, be active in kind of striking that. I mean it's all about kind of driving value and driving scale. And there's actually a lot of folks that are interested, frankly, in working with us on that. And those conversations, we'll discuss them at the right time, but they're ongoing.
Our next question is from the line of Jessica Reif Ehrlich with Bank of America.
Two questions. First one is on advertising. So in addition to your existing business, which obviously has a big advertising component, your new businesses, whether direct-to-consumer or free TV or dependent, at least in part on advertising. So could you give us a little bit of color on the current market and talk through some of the levers that you can control to maybe improve the advertising trajectory in the current year, whether pricing or sell-through, cross-platform packaging, measurement, et cetera, data, so that would be great if you can give some real color.
And then secondly, second completely different topic, but on sports, with the larger media companies facing what's likely a very expensive NFL renewal, does this open the door for you to buy what would be considered secondary or tertiary sports, but growing sports, whether like women's sports or upcoming sports and maybe bigger picture, I mean, sports is obviously a focus. How do you think that your sports strategy will evolve?
So why don't I take the second one first. And yes, as the NFL comes to market and we'll discuss new arrangements with some of the other media companies, we believe that there will be and some -- one of our competitors actually said a rebalancing of the sports portfolios. We believe that there will be a rebalancing of the sports portfolios and that, that will leave opportunity for us who have a heritage in sports, who have strong sports properties and legacy to begin with, but we also have broad reach.
And with USA Network in particular, it's as broad a reach vehicle as any other cable television asset and/or pay television asset. And we believe that there will be opportunity for us to get involved in properties that we might not have otherwise gotten involved with. We're open to conversations. We're having ongoing conversations. We've built out our own production unit, and we are prepared for the sports landscape to be shifting, and we will be in the middle of that. We will be disciplined, but we'll be in the middle of that.
As it relates to advertising, I'll start out. I mean, I think we're still -- for the next 2 years, NBCUniversal is representing us. That has been a very strong and proven go-to-market strategy, not just for us, but for them to have the scale of our assets and their assets under one umbrella. That's the way we've done it for the last 15 years, and it's been a very successful model.
We will continue that at least for the next 2 years, and then they will -- they and we will decide on the right future strategy for our ad sales and theirs. We are moving some of our advertising outside of pay TV, and you mentioned DTC and free TV networks. That allows us to reach other marketers. It allows us to be involved more in the programmatic sales and to more of -- the more technology-driven sales with Fandango, with GolfNow, we have a lot of data and information about our customers and we'll to use that to target advertising in the free TV and the digital spaces.
Our next question is from the line of Kutgun Maral with Evercore ISI.
I just had a follow-up on linear distribution. I think we're all aware of the secular challenge across -- challenges across the industry, along with more skinny and genre-based packages coming to market. But as you go into your future negotiations, do you see any offsets to some of these industry-wide headwinds when it comes to pricing, for example at networks like MS NOW, which seems quite underpriced in terms of affiliate fees per subscribers compared to its cable network peers or cable news network peers. And is there anything more specifically you can share on expectations for linear distribution revenue growth in 2026 specifically?
Well, on the broader question, I mean, sure, we all believe all of our networks are underpriced, but thank you for recognizing that. We -- listen, news and sports have been the predominant focus on the new packaging. We are fortunate or we are strategic in having both of those sets of assets. We have 2 news networks and 2 networks that are sports with Golf Channel and USA Network. So we're in all of those packages, and that has been very helpful for us in retaining our distribution and our revenues.
I think those kind of packages will continue. And Anand kind of talked about it a little earlier on the D2C side. We're a new stand-alone company. We don't have as many competing constituencies as we had in the larger company. So we will be as flexible and creative as we can be while making sure we retain the value that we are able -- that we think our networks deserve and that the audiences have shown that they deserve.
And on the 2026 question, we have pretty good visibility here. We have actually very good visibility, I should say. I think we've mentioned that we have about 16% of our subscribers are up for renewal, but obviously, that means 84% are not that we have kind of security on that. And so in terms of what the kind of trajectory would be, what we assume is that the pace of cord cutting is -- it's not been getting worse. We assume that it's kind of roughly the same that we've seen now for a while, kind of that high single digits then offset by some contractual rate increases. So that probably dimensionalizes in terms of what we're kind of looking for as you look forward in '26.
Next question is from the line of David Joyce with Seaport Research.
A couple of clarifications and other questions. On the affiliate fees, are you starting to negotiate your carriage on your own as they expire? Or was there a complete separation already versus the Comcast and Universal -- NBCUniversal deals?
And then secondly, on your various other platform companies, do you anticipate providing trends on the data of the users or subscription numbers. Just wondering what we could look for in terms of some more data points and trends there.
So on the distribution question, yes, we have our own distribution negotiation team, and we are handling all of those deals on a going-forward basis ourselves. We're already in -- we have an established group of people that came to us some from Comcast, from NBCU, some from outside and have strong relationships across the industry, and we're out there in the marketplace, building upon those relationships.
Yes. I think in terms of then the kind of the platforms revenue, like right now, we're just -- we're going to continue to report, of course, kind of good visibility in the platforms revenue line, which we think provides a good meaningful indicator of how that business is scaling. Again, just to be very clear, what's in there is kind of the big businesses are GolfNow, Fandango, SportsEngine and some of the new D2C initiatives that we just talked about. And like over time, again, we'll provide a little color commentary as we launch these services. I think Mark referred to earlier with a few launching in 2026. So expect to talk a little bit more about them. But like I said, we think right now that the way we're running the business is really looking at that platform's revenue in total and also then looking at our revenue mix as well. I mean we referred to earlier the percentage of our revenues that come from outside pay TV, which platforms is a big percentage going from 17% to 19%. And our goal is about getting that to about 33% over 3 to 5 years. So we'll continue to provide visibility on that as well.
Okay. I appreciate that. And one final question, actually. On the Fandango AVOD service that you're going to be launching, what's the anticipated library availability there? Is there anything that you have exclusive? Or what are the kind of the windowing availabilities that are going to be on there?
Yes. It will be a combination of content we own, content we license. As part of our linear deals, we have licensed content from a lot of different studios, in particular, Universal and where we will be able to use part of our windows that we -- that were met for the linear networks to run on our -- on the new AVOD service. So the combination of those and then other third-party deals.
Yes, that's right. So some of it will be -- as Mark just mentioned, it will be kind of exclusive in a way to Versant sometimes where it may be available, as you just said, on our television networks as well as then the Fandango AVOD, but you wouldn't be able to watch it anywhere else. And then other types of programming, it may be available also on other platforms, too. The thing that we've seen on AVOD success is, a, that you don't need to be exclusive for the vast preponderance.
The market doesn't really necessarily want that or I should say need that. A lot of it's about the brand and Fandango is a really big brand, having a great user experience, and we're continuing to invest in that so you can actually discover the programming that is there. And then also a lot of knowledge of the customer. And one of the big advantages we have in our -- in Fandango AVOD is we already know the customer. These are scaled services where people are logging on to their connected TV. So we can provide recommendations to them. The advertising will be targeted. And so we think there's a lot of areas not only on content, but in other features where we have a real look.
I think to enhance one of Anand's point is Fandango is already a big broad brand. It's already on people's phones and connected TVs because of buying moving tickets and also it's a top 5 home video service for buying and renting movies and TV series. So we already have a large installed base. It's now a matter of converting them and showing them to -- that we have a strong free AVOD service, something that we have seen the trends across the industry as a growth vehicle. And we believe that the combination of our brand and our content and our large installed base will help us grow quickly.
Our final question today comes from the line of Doug Creutz with TD Cowen. Thank you. Ladies and gentlemen, this will conclude today's conference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
Financial data from Versant Media Group
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 6,604 6,604 |
-
100%
|
|
| - Direct Costs | 2,871 2,871 |
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43%
|
|
| Gross Profit | 3,733 3,733 |
-
57%
|
|
| - Selling and Administrative Expenses | 1,527 1,527 |
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23%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 2,207 2,207 |
-
33%
|
|
| - Depreciation and Amortization | 1,035 1,035 |
-
16%
|
|
| EBIT (Operating Income) EBIT | 1,172 1,172 |
-
18%
|
|
| Net Profit | 758 758 |
-
11%
|
|
In millions USD.
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Company Profile
Versant Media Group, Inc. operates as an industry media and entertainment business that operates in four core markets: political news and opinion, business news and personal finance, golf and athletics participation and sports and genre entertainment. The company is headquartered in Englewood Cliffs, New Jersey. The company went IPO on 2025-12-15. The firm operates across four core markets: political news and opinion, business news and personal finance, golf and athletics participation and sports and genre entertainment. The company serves these markets through a portfolio of brands comprised of renowned networks and complementary digital platforms. The firm produces, licenses and acquires content that it distributes through a variety of outlets, including its networks and digital platforms, delivering value to key constituents: the viewing audience, paying subscribers, advertisers, distributors and licensing counterparties. The Company’s portfolio of brands includes CNBC, MS NOW, USA Network, Golf Channel, Oxygen, E!, SYFY, along with complementary digital assets including Fandango, Rotten Tomatoes, GolfNow and GolfPass. The company is also a provider of national premium free over-the-air digital broadcast networks (diginets) and free ad-supported streaming TV (FAST) channels.


