3, 2026 CALL PARTICIPANTS Executive Vice President, Investor Relations and Treasury - Wylie CollinsChief Executive Officer - Mark H.
LazarusChief Financial Officer and Chief Operating Officer - Anand KiniGeneral Counsel - Jordan FasbenderVice President of Investor Relations - Natalie Candela Total Revenue -- $1,594 million, representing a 4.2% decline year over year.Adjusted EBITDA -- $353 million, a 7.4% decrease compared to standalone adjusted figures in the prior year period.Linear Distribution Revenue -- $935 million, down 5.8% due to subscriber declines partially offset by contractual rate increases.Advertising Revenue -- $373 million, a 5.3% decrease reflecting the timing of the Ryder Cup in 2025.Platforms Revenue -- $245 million, growing 9.6% year over year or 17.4% excluding the impact of acquisitions and divestitures.Free Cash Flow -- $302 million for the quarter, supporting the company's capital allocation strategy.Full-Year Revenue Guidance -- $6.2 billion to $6.45 billion, reaffirmed by management based on year-to-date performance.Full-Year Adjusted EBITDA Guidance -- $1.9 billion to $2.05 billion, reaffirmed for the 2026 fiscal year.Full-Year Free Cash Flow Outlook -- Higher than the previously communicated range of $1 billion to $1.2 billion.MS Now Viewership -- Growing 20% year over year during the third quarter, ranking as the second-most-watched network in all of cable.Network Distribution Coverage -- Visibility into 75% of network subscribers who are now under contract through 2028 and beyond.WNBA Regular Season Viewership -- Increasing 25% for regular season cable games compared to the previous year.WNBA Finals Engagement -- 3.3 million viewers for Game 7, which aired on USA Network.Shareholder Returns -- $457 million returned to date through a combination of dividends and share repurchases.Quarterly Dividend -- $0.375 per share, declared for the fourth quarter of 2026.Accelerated Share Repurchase -- $100 million planned for commencement in the fourth quarter.SG&A Expenses -- $362 million, a decrease compared to $372 million in the prior year period.Programming and Production Costs -- $736 million, down 1% versus last year due to operating efficiencies in entertainment and news.Cash Balance -- $1,051 million in cash and cash equivalents at the end of the quarter.Full Swing Revenue Contribution -- $23 million in revenue during the third quarter following its acquisition.Content Licensing and Other Revenue -- $41 million, down 23.6% primarily due to the timing of licensing agreements.FAST Channel Expansion -- Four new channels launched featuring content from CNBC, E!, and Oxygen across Prime Video and the Roku Channel.Operational Efficiency -- Management initiated a modernization program utilizing artificial intelligence to streamline workflows and improve productivity starting in 2027.
Need a quote from a Motley Fool analyst? Email [email protected] Kini stated, "We expect Q4 adjusted EBITDA as reflected in our outlook, to be impacted by 4 additional NASCAR races compared to 2025, resulting in meaningfully higher programming costs," indicating a specific headwind for upcoming margins.Lazarus acknowledged that the company is subject to pay TV's secular changes, though he noted the portfolio remains resilient.
Versant Media Group, Inc.
(VSNT +1.64%) reported third quarter results featuring a decline in total revenue to $1,594 million, which management attributed to secular headwinds in the pay television sector.
The company stated that growth in its digital platforms and the completion of key distribution renewals provided visibility into its long-term financial stability.
Management reaffirmed full-year guidance for revenue and adjusted EBITDA while raising its expectations for free cash flow.
The company reported that it continues to prioritize news and sports content to maintain audience engagement and advertising demand across its linear and digital networks.
Strategic distribution renewals have secured visibility for 75% of network subscribers into 2028 and beyond.The company is shifting its digital strategy toward membership models and interactive products.
CEO Lazarus stated, "We are learning what product features resonate the most with consumers and focusing our investment on these areas to drive growth."Management indicated that the focus for upcoming digital products remains on membership services and community interaction.
CEO Lazarus stated, "Existing video will only be a part of what the value for our fans and customers will be."Integration of the Full Swing acquisition leverages the company's existing 9,000 golf course relationships and its specialized sales force to drive revenue without incremental marketing costs.Management indicated that approximately 70% of the total cost base, excluding sports rights, is now variable or flexible in the medium term.The company maintains a test and learn investment approach for digital scaling to mitigate financial risk while identifying high-resonance features for consumers.Modernization efforts including the deployment of artificial intelligence are planned to enhance operational efficiency starting in 2027.
CFO Kini stated that these capabilities will enhance "decision making speed to market, and overall company culture." INDUSTRY GLOSSARY ASR: Accelerated Share Repurchase, a transaction where a company buys back its shares immediately from an investment bank.AVOD: Ad-supported video on demand, a digital service where users watch content for free in exchange for viewing advertisements.DTC: Direct-to-consumer, referring to content or products sold directly to the end user, bypassing traditional distributors like cable companies.FAST channel: Free ad-supported streaming television, a linear-style channel delivered over the internet without a subscription fee.MVPD: Multichannel video programming distributor, a service provider that delivers multiple television channels, such as a cable or satellite company.Pay TV: Subscription-based television services, including traditional cable and satellite providers.Standalone Adjusted EBITDA: A non-GAAP measure that estimates EBITDA as if the company had been operating as an independent, standalone entity in prior periods.
Full Conference Call Transcript Operator: Greetings.
Welcome to Versant Media's Third Quarter 26 Operating and Financial Results Conference Call.
At this time, all participants are in a listen-only mode.
A question and answer session will follow the formal presentation.
Please note this conference is being recorded.
I will now turn the conference over to Wylie Collins, Executive Vice President, Investor Relations and Treasury.
Wylie Collins: Thank you.
Operator: You may now begin.
Wylie Collins: Thank you, and good morning, everyone.
Welcome to Versant Media's third quarter 2026 operating and financial results conference call.
Joining us today are Mark H.
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 would 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 2000.
These statements reflect management's current expectations and are subject to risk 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 in today's earnings release.
All forward looking statements are made as of today, 11/03/2026, 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 will turn the call over to Mark.
Lazarus: Thanks, Will, and good morning.
I am going to start by reflecting on our progress relative to the strategy we outlined at the time of the spin.
This strategy has 2 core principles.
First, while we are subject to Pay TV's secular changes, our network portfolio heavy on news and sports with big brands that people care about, continue to succeed.
Second, that we are able to extend outside of pay TV through digital offerings to evolve and grow our business.
We believe we have unique advantages in each of our 4 markets.
Large, loyal audiences, powerful brands, a proven track record, especially in golf.
We have dedicated capital and a strong management team.
We are making good progress across both of these principles.
And it is only been 10 months.
With our networks, we have now completed all of our major distribution renewals this year on favorable terms.
4 deals in all.
We understood the questions raised at the time of the spin about our ability to secure attractive carriage renewals.
We have now answered that question.
75% of our network subscribers are now under contract into 2028 and beyond.
So we have clear visibility going forward.
Furthermore, we are generating strong ratings, engagement, and advertising results.
This all points to the strength and power of our portfolio for distributors, marketers, and audiences.
And while our pay TV business is not a growth engine, it will remain resilient and highly profitable for a very long time.
Similarly, we are making meaningful progress with our digital platforms.
And revenue is up double digits year to date.
We have launched several new initiatives, including MS Now direct-to and Fandango streaming.
Both delivering solid results.
The CNBC direct-to-consumer will follow early next year.
Our initial investment for these new products is measured.
as we are scaling existing infrastructure and resources.
We are learning what product features resonate the most with consumers and focusing our investment on these areas to drive growth.
We believe this test and learn approach mitigates financial risk.
We have also acquired several exciting new businesses, most notably Full Swing, which closed during the third quarter.
Integration efforts are progressing well and we are seeing early success in using Golf Channel and Golf Now as effective sales and marketing tools for full swing.
Delivering incremental value.
I have mentioned before that evolving our business model through the growth of our digital platforms is a multiyear journey.
This will require some patience, but I am pleased that we are off to such a strong start.
Now some highlights for the quarter that demonstrate the progress we are making.
MSNow was the second most watched network in all of cable in the third quarter.
With total viewership up 20% year over year.
MS now has grown its audience year over year for 11 straight months and was the only cable news network to grow in September.
MS Now's reach extends well beyond pay television.
Ranking as the number 1 news organization on YouTube during the third quarter.
Feedback on the MS Now direct to consumer offering has been very positive.
With the community experience really resonating with members.
MS Now also continues to draw large and enthusiastic audience at live events.
With our Together in Texas event in Dallas last month, having nearly 5 thousand attendees, and many more who streamed the day long event.
CNBC continues to rank among the top 10 cable network during market hours, now for 8 straight months.
In the third quarter, CNBC remained the destination for CEOs and business leaders to share their perspectives on the issues shaping the markets and the economy.
This is where CNBC has a sizable advantage.
Gaining access to the most prominent market leaders while serving a broad audience across pay TV and digital.
In sports and entertainment, we added Bundesliga to our portfolio.
Which we began airing in August.
We have 300 matches per season with 30 on USA Network and the remainder streaming on Fandango.
In its first month on USA, viewership was up 55% versus last year's airings on other.
This is a great example of how we approach sports.
Building diverse portfolio with broad appeal that translates into strong economics for us.
We will remain selective, and the returns must be compelling.
Bundesliga cleared that bar, and we are glad the league is part of the Versant and USA Sports portfolio.
We are also very pleased with our first WNBA season on USA and CNBC.
We aired the most national games of any broadcaster, and regular season cable viewership was up 25% compared to last year.
And just on Saturday, we crowned the WNBA champion as game 7 aired on USA Network.
With a preliminary number of 3.3 million viewers, a great success.
On the entertainment side, our new series Anna Pigeon became the most watched new cable original series for the year.
While Golden Life premiered on E! just a few weeks ago.
As mentioned, platforms delivered double digit growth in the quarter.
Driven by both Fandango and Golf Now.
Fandango was particularly strong this quarter with ticket sales reaching the highest they have been since the pandemic and Fandango 1 is continuing to grow.
Just as we are expanding the audiences of MS Now and CNBC, we are taking the same approach with Fandango and Golf.
The Fandango AVOD service was launched in July, And while still very early, we are encouraged by the initial response.
As we continue to add content, the platform is well positioned in the growing AVOD market.
Also recently expanded our fast channel lineup, launching 4 new channels featuring content from CNBC, E!, and Oxygen.
All 4 will be available on Prime Video and the Roku Channel.
Further extending the reach of our brands creating additional opportunities for advertising revenue.
At full swing, we have expanded sales and marketing support and recently announced an expanded partnership with TrueN.
The world's largest golf and golf related hospitality management company.
Before I turn to Anand, I want to leave you with a broader thought.
While there are more options for consumers than ever before, audiences are placing the most value on the content and the brands they trust.
And this plays right into Versant's advantage.
Our pay TV business keeps delivering large audiences and strong profitability.
Allowing us to invest in what comes next.
We are building on strong relationships we already have with consumers, advertisers, and distributors.
While finding new ways to reach and serve those audiences.
We have the brands, the financial strength, and the people to execute this transition successfully.
We have made meaningful progress in a short period of time, and I am confident in the direction we are heading.
With that, I will hand it over to Anand to talk through some of the financials.
Anand Kini: Thanks, Mark, and good morning, everyone.
Our third quarter results reflect strong execution against our strategic financial and growth objectives.
Based on results to date, and expectations for the balance of the year, we are affirming our previously communicated 2026 full year outlook for revenue of $6.2 billion to $6.45 billion and for adjusted EBITDA of $1.9 billion to $2.05 billion We expect full year free cash flow to finish above our $1 billion to $1.2 billion outlook.
Turning to the results, Total revenue for the quarter was $1.59 billion a decline of 4%.
Consistent with trends in the second quarter and reflecting the secular changes in pay TV partially offset by robust growth in platforms which remains a key priority for us.
Breaking down the components of revenue, linear distribution revenue, decreased 6% over the prior year to $935 million with subscriber declines partially offset by contractual rate increases.
These trends are similar to what we have seen in prior quarters.
Advertising revenue was $373 million down 5%, impacted by the comparison to the 2 thousand 25 Ryder Cup which takes place every other year.
but the advertising environment remains positive, supported by continued favorable ratings trends across our networks, and strong demand.
Platforms revenue was $245 million up 10% year over year And excluding the Sports Engine divestiture, and Full Swing acquisition, up 17%.
Fandango delivered significant growth in ticketing, while home entertainment sales in Fandango 1 also contributed meaningfully to its third quarter performance.
Content licensing and other revenue was $41 million, down 24%.
As we have discussed previously, this category can fluctuate quarterly based on the timing of licensing agreements.
Turning to adjusted EBITDA.
Adjusted EBITDA was $353 million down 7% versus the prior year.
The decline reflects lower pay TV revenue, partially offset by growth in platforms and disciplined expense management.
As we have mentioned previously, the decline in Q3 adjusted EBITDA compared to the growth earlier this year reflects the timing of Sports Right which are weighted towards the second half.
To put it in perspective, cumulative adjusted EBITDA for the first 9 months was $1.68 billion up 1% year over year.
We expect Q4 adjusted EBITDA as reflected in our outlook, to be impacted by 4 additional NASCAR races compared to 2025, resulting in meaningfully higher programming costs.
We do not expect similar changes in race counts going forward and so this will be a 1-off impact.
While I have mentioned the timing impacts, on our Q3 and Q4 results this year, sports remain an integral part of our strategy.
Generating significant value for viewers, distributors, and marketers.
In fact, we are home to some of sports' most important events including crowning the NASCAR Cup Series champion this upcoming weekend.
Transitioning now to expenses, We remain focused on managing costs, while investing in our strategic priorities.
Programming and production costs were $736 million down 1% versus the prior year due to operating efficiencies, largely in entertainment and news, partially offset by an increase in sports rights costs, as just mentioned.
Other cost of revenue was $142 million up 10% versus the prior year reflecting higher transaction volumes associated with platforms revenue growth.
Cost of revenue representing the sum of programming and production costs and other cost of revenue, was $879 million up 1% versus the prior year.
Selling, general and administrative expenses decreased 12% to $362 million.
As discussed last quarter, we expect nominal SG&A costs to increase modestly from recent levels due to our investments in growth initiatives including the Fandango AVOD and the MS Now and CNBC direct to consumer offerings.
Across our cost base, we are focused on driving efficiencies while continuing to deliver high quality premium consumer experiences.
We are currently identifying opportunities to deploy AI and other technologies to streamline workflows enhance automation, and improve productivity 2027 and beyond.
As part of this initiative, we are modernizing our infrastructure across almost every function in the business.
While cost efficiency is clearly a focus, these new capabilities will also enhance our decision making speed to market, and overall company culture.
Finally, with regard to cash generation, liquidity, and capital allocation, Free cash flow totaled $302 million in the quarter, Our business model continues to deliver strong cash conversion, and as I mentioned, we now expect full year free cash flow to finish above our prior outlook.
We maintain a healthy liquidity profile, with approximately $1 billion in cash at quarter end and an undrawn $750 million revolving credit facility.
Giving us significant flexibility to execute our strategic priorities.
On investments, we follow a disciplined approach.
Focusing on opportunities with clear value creation and attractive returns particularly in platforms and initiatives that deepen our relationships with audiences.
Reflective of our capital allocation approach, to date, we have returned $157 million to shareholders, including $30 million in share repurchases and $157 million in dividends.
Today, we also declared our quarterly dividend and announced plans to commence an additional $100 million ASR in the fourth quarter.
Taken together, our year to date performance demonstrates disciplined execution as we invest behind our growth priorities and deliver strong capital returns to shareholders.
And with that, I will turn it back to the operator for Q&A.
Operator: Thank you.
We will now be conducting a question and answer session.
If you would like to ask a question, please press 1 from your telephone keypad.
For participants using speaker equipment, it may be necessary to pick up your hand before pressing the star keys.
And our first question comes from the line of Sean Diffley with Morgan Stanley.
Please proceed with your question.
Wylie Collins: Hi, Sean.
Please go ahead with your questions.
Operator: Ladies and gentlemen, we seem to have lost Sean.
I am moving on to Michael Ng from Goldman Sachs.
Please proceed with your question, sir.
Michael Ng: Hi, good morning.
I just have 2.
First, encouraging that you have completed all the carriage agreements in 2026.
As you head into 2027 and 2028, could you talk a little bit more about some of the content investments that you are making to strengthen your position? And how will DTC products like MS Now DTC and the upcoming CNBC DTC play a role, if at all? Thank you.
Lazarus: Great.
Thanks, Michael.
So sports and news are obviously working really well for us, in terms of having value for distributors, for advertisers, for audiences.
We will continue to, be best in class in news.
We believe, you know, MS Now and CNBC are incredibly valuable brands, have very valuable audiences, and reach the most influential that the audiences wanna see each and every day.
As it relates to sports, our sports deals go long term.
I mean, I think that is where we sit.
You know, whether we did add Bundesliga We have added Pac 12.
We have extended our USGA golf deal.
But long into the 20 thirties, we have valuable NASCAR, valuable PGA tour rights.
The WWE goes into late into the 2020s, and Premier League goes through the 20 eighth season.
So we feel very secure.
We will continue to look at sports properties in a very disciplined way.
So sports and news are really the centerpiece.
In addition to that, we have a very disciplined approach to original series where we create both scripted and unscripted series.
We have had a lot of success as we talked about earlier in the call with Anna Pigeon, the number 1 cable, #1 cable show of the year.
We had everything on the menu.
From for USA Network, an unscripted show, and Golden Life, which just launched.
1 of the things we look at is that we wanna make sure that we are disciplined that we have good get good value, create great product, but also have an ability to monetize the back end of these shows.
And I think that evidence in fact that we recently announced that the Golden Life will be will be on Hulu a couple of weeks after it is on after we launched it on the E! network.
And that helps us....
