Versant earnings report will test Wall Street’s appetite for cable TV

Versant Media Group on Tuesday released its first earnings report as a publicly traded company, giving Wall Street its first glimpse inside a company comprised primarily of pay-TV networks.

of comcast Spinoffs — CNBC, MS Now, USA Network, Golf Channel, Syfy, E! and Oxygen, as well as other digital assets such as Fandango, Rotten Tomatoes, Golf Now and Sports Engine, debuted on the Nasdaq in January following one of the most significant deals in the media industry in recent years.

The company’s first quarterly results will reveal details about the asset portfolio that has long been included in Comcast’s NBCUniversal TV results. They will also test Wall Street’s appetite for cable TV at a time when the market is facing serious pressure.

Prior to its listing, Versant released financial reports showing declining revenues in recent years. Versant’s assets generated $7.1 billion in revenue in 2024, down from $7.4 billion in 2023 and $7.8 billion in 2022, according to a filing with the Securities and Exchange Commission.

Versant’s stock price has fallen about 25% since it went public in January, weighed down by selloff expectations related to the spinoff. The company’s market capitalization is approximately $4.8 billion.

These days, it’s rare to see a pure media stock listed, especially one made up entirely of television networks. last year newsmaxThe conservative cable news network began trading on the New York Stock Exchange. The company’s stock price initially soared, but has fallen sharply since its debut.

Versant derives more than 80% of its overall revenue from pay-TV distribution. While the business remains profitable, the perennial cash cow for the media industry is dwindling as customers flee bundles for streaming alternatives.

“At Versant, 62% of our viewers come from live sports and news programming,” CEO Mark Lazarus said at the company’s investor day in December.

“We’re very confident in our position, and I think the deals we struck last year confirm that,” he added.

Versant’s sports and news-focused content is a key part of its pitch to investors, as is its low debt burden and focus on digital assets as a driver of future revenue and profit growth.

“Versant’s focus on sports and news is positive as it has far fewer general entertainment networks with lower value than some of its peers,” Raymond James analysts wrote in a research note earlier this year. “Although Versant does not have ‘tier 1’ sports such as the NFL, NBA or college football, we believe its sports lineup (significant golf rights, WWE, NASCAR, etc.) combined with MS NOW, CNBC and other networks supports VSNT’s value to distributors.”

Prior to its spin-out, NBCUniversal negotiated carriage agreements with most major distribution companies, including: charter communications and Google YouTube TV, which included Versant’s network; These agreements will survive the spin-out for at least the next two years, providing an important buffer as negotiations become increasingly difficult and could lead to content outages.

“More than half of our pay-TV subscribers are governed by contracts that extend beyond 2028…Many of our sports contracts…extend well beyond 2030,” Versant COO and CFO Anand Kini said at an investor day. “We believe this is very important as the long-term nature of these partnerships emphasizes the stability of our business and provides great prospects for the coming years.”

Versant Network will face its first test of the trade this year when negotiating the renewal of two distribution contracts, said the people, who asked not to be identified because they were not authorized to speak publicly. A Versant spokesperson declined to comment on further discussions.

News and sports networks typically have a larger weight in these negotiations, but even networks with top rights like the NFL are increasingly experiencing blackouts.

But despite the emphasis on streaming, traditional TV bundles have shown signs of stability recently.

Charter, one of the largest bundle distribution companies in the United States, reported an increase in cable customers in the quarter ended Dec. 31. This is the first quarterly increase since 2020.

But Comcast and other distributors are still reporting a decline in customers, albeit at a slower rate than recent declines. That’s a sign of possible stabilization, said MoffettNathanson analyst Craig Moffett.

Given its focus on traditional television networks, Versant executives told Wall Street that the company is at an inflection point.

“We see 2026 as the first year of our business model transformation,” Kini said in December.

Versant executives told Wall Street that the company intends to invest in expanding direct-to-consumer products and ad-supported television, among other growth strategies.

Over the long term, management is aiming for a future where 50% of Versant’s revenue comes from pay TV and the remaining 50% from its digital, platform, subscription, ad-supported and transactional businesses.

M&A is also part of the equation, but a larger terrestrial television network is not in the plan, executives said. The company has already announced deals including the acquisition of Free TV Networks, a provider of free digital terrestrial broadcast networks, and Indy Cinema Group, a cloud-based movie operating system built into Fandango.

But the question is whether Wall Street has the patience to see the business evolve beyond its focus on bundles.

Comcast’s spinoff of the Versant channel was an effort to separate itself from a deteriorating business. warner bros discovery The company announced it was going down a similar route, separating its television network and streaming assets, before signing a deal with the company. paramount skydance Selling the entire company.

Analysts who have begun covering Versant have cited various highlights of the business, from strong free cash flow to a portfolio focused on sports and news, but still expressed some hesitation.

“Given the long-term challenges in the linear network business, we have a neutral rating on VSNT, but (still) are encouraged by the company’s efforts in the platform business,” Goldman Sachs analysts said in a January research note.