Versant Media Group, Inc. Class A Q2 FY2026 earnings call

Brand & Content Performance

• CNBC maintained its position as the leading global business news brand, ranking top 10 among cable networks for 4 consecutive months, delivering its highest-rated quarter in over 5 years, and holding the distinction of attracting the most affluent and educated weekday daytime TV audience for 27 straight quarters.
• MSNOW delivered 7 consecutive months of TV audience growth, with a 14% YoY Q2 viewership increase, averaging 9 hours of weekly engagement per viewer (second-highest across all TV). It ranked as the number one news organization on YouTube in June, generated nearly 3 billion combined YouTube and TikTok views year-to-date, and achieved 11 million monthly podcast downloads. The brand celebrated its 30th anniversary in July.
• Golf Channel delivered its most-watched Q2 PGA Tour coverage since 2020, with major tournament coverage driving viewership.
• USA Network remained a top-five entertainment network among key demographics, extending a 3-decade track record of leadership. In its first WNBA season, the network aired the three most-watched games across cable and streaming, and existing sports content like WWE continued to deliver large audiences.

Strategic Moves & Partnerships

• The company completed multi-year distribution renewals with two large pay TV partners (one U.S.-based, one Canada-based), confirming the value of its content portfolio.
• A new 5-year broadcasting agreement was announced for the Bundesliga soccer league: starting in the 2026/2027 season, over 300 annual matches will air, with 30 premium matches on USA Network and all remaining matches streaming for free on Fandango.
• Fandango was repositioned from a movie ticketing business to a comprehensive entertainment platform, with the launch of a new AVOD service combining ticketing, home entertainment, and free streaming. 50 million consumers visit Fandango or Rotten Tomatoes monthly, providing a large existing user base for the expanded platform.
• Versant acquired Full Swing, a fast-growing, profitable leading golf technology company focused on immersive off-course golf experiences. The acquisition expands Versant's golf ecosystem, serving the fast-growing off-course golf segment which now counts 38 million U.S. participants (more than traditional on-course golf).

Financial & Cost Discipline

• The company delivered 3% YoY adjusted EBITDA growth to $624 million, with adjusted EBITDA margins remaining above 30%.
• Total costs of revenue declined 7% YoY to $650 million, with programming and production costs down 9% YoY driven by efficient content delivery.
• Selling, general and administrative expenses declined 8% YoY to $369 million, with the company continuing to identify organizational efficiencies to support long-term profitability.
• Free cash flow for Q2 was $350 million, with $305 million returned to shareholders year-to-date ($200 million in share repurchases, $105 million in dividends), and an additional $100 million accelerated share repurchase planned for Q3.

Total Q2 2026 revenue was $1.64 billion, a 4% year-over-year decline (a 3% decline excluding the Sports Engine divestiture).

• Linear Distribution: Revenue of $954 million, down 6% YoY, accounting for 58.2% of total revenue. Declines were driven by overall industry subscriber losses, partially offset by contractual rate increases.
• Advertising: Revenue of $423 million, down 0.6% YoY, accounting for 25.8% of total revenue. This was a substantial improvement from the 13% YoY decline in the prior year period, driven by strong demand for news and sports content, improved ratings, and small contributions from the acquired Free TV Networks.
• Platforms: Revenue of $225 million, up 9% YoY excluding the Sports Engine divestiture, making it the fastest-growing segment, accounting for 13.7% of total revenue. Growth was driven by solid performance at both Fandango (higher ticket sales, VOD transactions, and cinema operating platform sales) and GolfNow (increased U.S. bookings, processed payments, and Golf Pass subscriptions).
• Content Licensing and Other: Revenue of $43 million, flat YoY, accounting for 2.6% of total revenue.

• Management raised full-year 2026 revenue guidance from the prior range of $6.15–$6.4 billion to a new range of $6.2–$6.45 billion.
• Full-year adjusted EBITDA guidance was raised from the prior range of $1.85–$2 billion to a new range of $1.9–$2.05 billion.
• Full-year free cash flow guidance is maintained at $1–$1.2 billion, to account for natural quarterly working capital timing fluctuations.
• Management expects programming costs to increase year-over-year in the second half of 2026, driven by increased NASCAR races, the first full WNBA season, and scheduled golf major events. As a result, adjusted EBITDA for Q3 and Q4 is not expected to grow year-over-year.
• Modest increases in SG&A are expected in coming quarters, to support growth initiatives including the development of upcoming direct-to-consumer offerings for MSNOW and CNBC.
• Higher capital expenditure is expected in the second half of 2026, primarily for construction of the company's New York office facility, and second half free cash flow is expected to be lower than first half 2026.

• Ongoing secular industry declines in pay TV subscribers create persistent headwinds for linear distribution revenue.
• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management expectations, as detailed in the company's SEC filings.
• Content licensing revenue is subject to quarterly fluctuations based on the timing of individual licensing agreements.
• The fast-growing AVOD market has multiple established and new competitors, which creates competitive pressure for Fandango's new streaming offering.

Q: How did recent affiliate distribution renewal negotiations differ from when Versant was part of Comcast, and what is the latent demand for MSNOW and CNBC direct-to-consumer offerings outside the current pay TV base?

A: Negotiations were unchanged from prior periods, centered on the value of Versant's strong live news, sports, and entertainment brands for distributors' subscribers, and resulted in mutually beneficial long-term agreements. Both brands already have large, highly engaged audiences outside of pay TV via YouTube, TikTok, live events, and digital publishing, and the new D2C offerings will expand beyond linear TV replication to serve these audiences with additional tailored content. CNBC already has an existing direct-to-consumer business, confirming existing unmet demand.

Q: How much of the full-year guidance increase comes from Full Swing versus underlying business improvements, and how does the new accelerated share repurchase impact the company's M&A appetite?

A: The guidance increase is not attributable to the Full Swing acquisition, which only just closed and will contribute only a partial period this year; the upward revision reflects broad-based improved performance across the entire Versant portfolio. Capital allocation will continue to balance three priorities: investing in growth (including disciplined M&A), returning capital to shareholders, and maintaining a healthy balance sheet. The simultaneous Full Swing acquisition and new share repurchase demonstrates the company's commitment to this balanced approach, and the balance sheet remains strong.

Q: What is Fandango's long-term vision for its new AVOD offering, and how does it differentiate itself from competing AVOD platforms like Pluto TV and Tubi?

A: The vision is to build a comprehensive end-to-end entertainment platform under the Fandango brand that combines content discovery (via Rotten Tomatoes), movie ticketing, transactional VOD, and free ad-supported streaming, with a pre-existing large connected TV install base and 50 million monthly unique visitors across Fandango and Rotten Tomatoes. Key differentiators include exclusive live content (such as 270 annual Bundesliga matches), unique first-party data from Fandango's existing transactional businesses that enables more targeted advertising, and independence from major studios that lets Fandango partner with all content providers equally.

Q: What is Versant's bundling strategy for upcoming D2C launches, and when will the company take ad sales in-house from NBC?

A: D2C offerings will launch independently first, but the company is actively discussing bundling partnerships with distribution partners across the industry, and will pursue any mutually beneficial arrangements, as Versant is not beholden to any single parent company. The current two-year ad sales partnership with NBC is working very well (evidenced by improving ad trends), and a decision on extending the partnership or bringing sales in-house will not be made for months to a year, with both parties evaluating what arrangement serves their mutual best interests.