Versant Media Group, Inc. Class A (VSNT) Earnings

Management highlights

### Strategic Priorities - Core strategy: Leverage market-leading brands anchored in live sports and news, deliver premium content, expand audience reach, and accelerate growth of direct-to-consumer (D2C) and digital platforms beyond linear pay TV - Maintain balanced capital allocation: preserve a strong balance sheet, invest in organic and inorganic growth opportunities, and return capital to shareholders via dividends and share repurchases ### Segment Operational Highlights - **CNBC (Business News & Personal Finance)**: Delivered its highest-rated quarter in four years, with double-digit YoY viewership growth. Davos WEF coverage drew its largest audience in five years, and new early-morning program *Morning Call* launched to extend pre-market coverage. Acquired AI-driven investment platform StockStory to accelerate CNBC D2C product development. - **MSNOW (Political News & Opinion)**: Achieved its most-watched quarter since 2024, with double-digit YoY viewership growth. Averaged over 30 million weekly viewers, with second-highest weekly engagement (9 hours per viewer) across all US cable networks. Digital platforms delivered a record Q1, with over 1.6 billion combined year-to-date views on YouTube and TikTok, and 60% YoY growth in original podcast downloads. The MSNOW D2C offering is on track to launch in late 2026. - **Golf Channel**: Retained its position as the number one golf media outlet. Drew the largest *Players' Championship* audience in two decades, and reached 13.5 million unique viewers during Masters week. Golf Pass hit an all-time high for subscribers, boosted by the Rory McIlroy partnership, and GolfNow grew tee-time booking and payment transaction volumes. A new Golf Channel app with built-in vertical video support has launched. - **Sports & Genre Entertainment (USA Network, E!)**: Delivered the largest Olympic audience in USA Network history for the Milan Cortina Winter Olympics, reaching ~75% of US pay TV households and ranking number one among sports and entertainment cable networks. The first season of League One Volleyball was a breakout success, and the inaugural WNBA season on USA Network has kicked off. The Critics' Choice Awards simulcast on E! and USA Network doubled YoY viewership. Content library licensing for iconic titles confirms ongoing strong demand for Versant's intellectual property across evolving distribution models. - **Platforms**: Delivered high single-digit YoY growth, and remains the company's top strategic priority for long-term revenue diversification. The Fandango ad-supported video on demand (AVOD) service is on track to launch later in 2026. Recent small tuck-in acquisitions (Indie Cinema, StockStory, Free TV Networks) have expanded platform capabilities and accelerated the company's evolution beyond linear TV. ### Capital Return Updates - Board declared a quarterly cash dividend of 37.5 cents per share - $100 million of Class A shares repurchased in Q1 under the $1 billion authorization approved Q4 2025 - A new $100 million accelerated share repurchase agreement was announced, expected to complete in Q2 2026 - Most of the Sports Engine business was sold on May 1, 2026 as part of strategic alternatives review, with no material impact on full-year financials ### Financial Performance Highlights - Adjusted EBITDA of $704 million, up 5% YoY, with adjusted margins holding above 30% - Free cash flow of $558 million, supported by timing of working capital movements expected to normalize over the year - Total cash balance of $1.2 billion at quarter-end, maintaining strong liquidity

Guidance

Versant Media maintained its full-year 2026 guidance unchanged from prior announcements: - Full-year total revenue is expected to land between $6.15 billion and $6.4 billion - Full-year adjusted EBITDA is guided between $1.85 billion and $2.0 billion - Full-year free cash flow is expected to be between $1.0 billion and $1.2 billion - Management expects quarterly revenue volatility driven by the lumpy nature of content licensing transactions, and higher programming costs in the second half of 2026 (particularly Q4) driven by sports rights timing, which is already incorporated into the full-year guidance - Free cash flow is expected to see ongoing variability through the remainder of the year due to working capital timing differences, which is also reflected in the full-year outlook - A modest increase in SG&A costs is expected for the full year to support growth initiatives including D2C product development, alongside a modest increase in capital expenditures primarily for the Manhattan facility build-out and platform growth investments, both of which are incorporated into the current guidance

Segment performance

Versant Media reported total Q1 2026 revenue of $1.69 billion, a 1% year-over-year decrease: 1. Linear Distribution: Revenue of $1.01 billion, representing 59.8% of total revenue, down 7% YoY. The decline is driven by ongoing cord-cutting trends, partially offset by contractual rate increases, and is consistent with prior year trajectory. 2. Advertising: Revenue of $368 million, representing 21.8% of total revenue, down 5% YoY. This is a material improvement from the 12% YoY decline in Q1 2025, supported by strong ratings and advertiser demand for news content. 3. Platforms: Revenue of $192 million, representing 11.4% of total revenue, up 9% YoY. Growth was driven by strong performance from GolfNow and Fandango, with the newly integrated Fandango One (formerly Indie Cinema) already contributing to results. 4. Content Licensing and Other: Revenue of $121 million, representing 7.2% of total revenue, up significantly from $57 million YoY. This increase was driven by the multi-year licensing deal for *Keeping Up with the Kardashians* and other library titles, with all revenue from the deal recognized in Q1 per GAAP rules.

Risks & headwinds

- Ongoing secular decline in linear pay TV (cord-cutting) continues to pressure linear distribution and advertising revenue, the company's two largest revenue segments - skinny bundle tiering by major MVPDs may negatively impact distribution for non-sports, non-news entertainment assets - Content licensing revenue is inherently lumpy and variable quarter-to-quarter, creating potential for unexpected revenue swings - Large sports rights transactions carry material capital and profitability risk if audience or advertising expectations are not met - D2C product launches carry execution risk, and may not achieve expected subscriber or revenue diversification targets

Analyst Q&A

• Q: Advertising outperformed expectations this quarter. How much of this came from organic news cycle strength versus growth initiatives, and is this outperformance sustainable? What has your experience been with skinny bundles across your portfolio? /

  A: The advertising improvement was driven entirely by organic strength of the core live news and sports portfolio, not new growth initiatives like Free TV Networks. The Olympics did not provide a material halo effect, as NBC held the advertising rights for the Games. Management notes advertiser demand for live premium content remains strong, and the outperformance is expected to be sustainable. The company is well positioned across all skinny bundle tiers, with news and sports networks included in targeted sports/news bundles, and manages the portfolio to maximize total linear distribution revenue.

• Q: Can you share go-to-market details for the upcoming MSNOW D2C and Fandango AVOD launches, and how much will you invest to launch these services? /

  A: MSNOW will be a subscriber-based service that includes original content, community features, and broader perspectives beyond linear programming, but pricing has not been finalized. Fandango AVOD will be a free ad-supported service that leverages existing first-party data from Fandango's ticketing and home entertainment businesses to deliver relevant advertising. Most required infrastructure is already in place from existing operations, so total incremental investment is not substantial and is already incorporated into full-year guidance. Most incremental spending will go toward marketing to build consumer awareness.

• Q: How should investors measure success for your D2C strategy, and what consumer trends are you seeing in skinny bundle tiering? /

  A: The core goal of D2C is to grow overall audience scale and diversify revenue across verticals, rather than relying solely on linear distribution. D2C is also expected to help reduce linear subscription declines by creating a circular audience flow across platforms. In terms of skinny bundles, management confirms strong consumer demand for sports and news tiers, where most of Versant's key networks are included. Entertainment assets remain stable, and the company is flexible with creative distribution models (like multicast free broadcasting for Oxygen) to maintain reach without damaging partner relationships.

• Q: How do you balance share repurchases versus M&A for capital allocation, and do you see opportunities for small to mid-sized sports rights coming available as large competitors focus on the NFL? /

  A: Maintaining a strong balance sheet, investing in growth, and returning capital to shareholders are all equal priorities, and the company is well positioned to execute on all three. M&A will focus on accretive, revenue-diversifying opportunities within Versant's existing verticals, with a high valuation threshold. As large competitors increase spending on NFL rights, management expects smaller to mid-sized sports rights will become available, and is well positioned to selectively pursue attractive opportunities in baseball, hockey, soccer, and other sports, consistent with disciplined capital allocation.