Versant Media Group, Inc. Q3 FY2026 earnings call

• Network Stability & Growth: Completed all major distribution renewals on favorable terms, with 75% of subscribers contracted through 2028. MSNOW is the second-most-watched cable network with viewership up 20% YoY; CNBC remains in the top 10.
• Digital Platform Expansion: Revenue from platforms grew double digits. Launched MSNOW Direct-to-Consumer (DTC) and Fandango AVOD. Fandango ticket sales reached pandemic highs; Golf Now continues strong growth.
• Sports Portfolio: Added Bundesliga (viewership up 55% on USA Network) and successfully aired WNBA finals with 3.3 million viewers for Game 7. Maintained long-term rights for NASCAR, PGA Tour, WWE, and Premier League.
• M&A Integration: Full Swing acquisition closed in Q3 with positive early integration results, leveraging Golf Channel and Golf Now for sales and marketing.
• Content Strategy: New series 'Anna Pigeon' was the most-watched new cable original of the year. Emphasis on disciplined content investment with strong backend monetization potential (e.g., 'Golden Life' on Hulu).

Total revenue was $1.59 billion, a decline of 4% year-over-year. Linear distribution revenue decreased 6% to $935 million due to subscriber declines partially offset by rate increases. Advertising revenue was $373 million, down 5%, impacted by the absence of the 2025 Ryder Cup. Platforms revenue grew 10% year-over-year to $245 million (up 17% excluding divestitures/acquisitions), driven by Fandango and Golf Now. Content licensing and other revenue fell 24% to $41 million. Adjusted EBITDA declined 7% to $353 million.

• Affirmed full-year 2026 revenue guidance of $6.2 to $6.45 billion.
• Affirmed full-year adjusted EBITDA guidance of $1.9 to $2.05 billion.
• Raised full-year free cash flow expectation to finish above the previous outlook of $1 to $1.2 billion.
• Noted that Q4 adjusted EBITDA will be negatively impacted by higher programming costs due to four additional NASCAR races compared to 2025, describing this as a one-off timing impact.

• Pay TV Secular Decline: Continued subscriber losses in linear distribution are impacting overall revenue and EBITDA growth.
• Sports Rights Timing: Variability in sports rights schedules (e.g., Ryder Cup comparisons, NASCAR race counts) creates quarterly volatility in costs and earnings.
• Execution Risk in DTC: The transition to direct-to-consumer models is a multi-year journey requiring patient capital allocation and test-and-learn approaches to mitigate financial risk while scaling infrastructure.

Q: Michael Ng asked about content investments for 2027/28 and how DTC products like MSNOW/CNBC fit into strengthening the business. / A: Mark Lazarus stated sports and news are the centerpiece, citing long-term secured rights through the 2030s. He emphasized a disciplined approach to original series with strong backend monetization (e.g., Hulu deals). Regarding DTC, he clarified they are building interactive membership services, not just video streamers, and intend to work with MVPDs rather than against them.

Q: Sean Diffley asked if MSNOW is experiencing viewer fatigue post-midterms and Versant's lens on upcoming NFL/World Cup rights. / A: Lazarus reported no fatigue, noting MSNOW and CNBC audiences are growing and active, attributing this to trust and quality talent. On sports rights, he predicted rationalization among competitors will create opportunities, but Versant will remain selective. He ruled out investing in NFL Sunday Ticket due to scale constraints but acknowledged interest in how the market evolves.

Q: Rich Greenfield asked why MSNOW is priced at $7.99 and if it can mitigate subscriber declines, plus questions on being 'ingested' by aggregators. / A: Lazarus explained the price was determined via testing and that the service offers more than just video, including community features. He acknowledged the goal is to mitigate sub-declines but stressed it is a multi-year journey. Anand Kini added that they are open to ingestion/aggregation deals with third parties to scale services, leveraging the flexibility gained from the spin-off.

Q: David Joyce asked how cost of revenue remained flat despite adding significant sports and entertainment rights. / A: Anand Kini explained that expenses are managed tightly against revenue. They treat additions like Bundesliga as opportunistic deals funded by trade-offs elsewhere in the portfolio. He highlighted a shift toward variable costs (approx. 70% of the base) and noted that AI-driven efficiency initiatives aimed at reducing SG&A will begin impacting results in 2027.