Versant Media Group Announced results for most recent quarter on Thursday – first as a standalone company since separation comcast’s NBCUniversal and began trading on the Nasdaq earlier this year.
The report revealed continued pressure on traditional pay-TV bundles, but highlighted growth in digital platforms and licensing businesses.
Versant stock rose nearly 10% on Thursday.
Straight-line distribution revenue for the company’s pay-TV network, which includes CNBC, MS NOW and Golf Channel, as well as USA, E!, Syfy, Oxygen and others, fell about 7% to $1.01 billion in the same period. The company said this was due to a decline in subscribers, partially offset by rate increases.
Advertising revenue in the first quarter fell 5% to $368 million, an improvement from a 12% decline in the same period last year.
However, content licensing revenue increased 113.5% to $121 million, largely due to the licensing of the perennially popular reality TV series “Keeping Up with the Kardashians” and other related content to Disney’s Hulu.
Revenue from Versant’s platform business, which includes Fandango, GolfNow and some of its already launched direct-to-consumer units, increased 9.5% to $192 million.
CEO Mark Lazarus said during an earnings call with investors Thursday that the company aims to “build scale and grow our audience” in direct-to-consumer sales.
“Yes, we hope to have a large subscriber base, and we will also determine what the revenue looks like across different forms of content distribution,” he said.
Lazarus added that the company is working to ensure “diversification of revenue across segments.”
More than 80% of Versant’s revenue comes from its pay-TV business. But executives told Wall Street that the company ultimately aims to rebalance its revenue mix so that 50% comes from digital, platform, subscription, ad-supported and transactional businesses.
Overall sales for the period ended March 31 were $1.69 billion, down about 1% from the same period last year. Wall Street analysts polled by LSEG had expected sales of $1.62 billion.
Net income attributable to Versant for the quarter decreased 22% to $286 million, or $1.99 per share, due to lower revenue from its spinout from Comcast and higher public company costs and interest expense, the company said. This was partially offset by tax reductions during the quarter, the company said.
Earnings before interest, taxes, depreciation and amortization decreased 7% year over year to $704 million.
Adjusted EBITDA increased by approximately 5% when compared to standalone adjusted EBITDA, a metric that more directly compares the performance of portfolio companies prior to the spin to their current performance, Bersant said. This was due to lower entertainment programming costs and lower selling, general and administrative expenses, offsetting the decrease in revenue.
growth path
Versant has consistently promoted its strengths in sports and news. The company on Thursday highlighted viewership growth for CNBC and MS NOW, as well as continued momentum for Golf Channel and other live sports and events on its networks.
The company is seeking growth through mergers and acquisitions to acquire more sports rights. Lazarus said Thursday that Versant is “looking at a variety of areas” regarding a potential transaction.
CFO and COO Anand Kini added on Thursday’s conference call that while M&A considerations remain part of Versant’s strategy, the company also strives to maintain a strong balance sheet and is focused on organic growth within the business.
“The revenue growth on our platform this quarter shows real organic growth in GolfNow and Fandango,” Kini said. “So we’re going to look at whether there are inorganic opportunities, (but) even those that fit into those markets and strategies, the threshold is very high.”
The company also continued its previous commitment to return capital to shareholders, primarily due to its low debt burden.
The company on Thursday announced a quarterly cash dividend of 37.5 cents per share for the second consecutive quarter. The new dividend will be paid on July 22 to shareholders of record at the close of business on July 1.
Versant also announced that it will enter into a $100 million early share repurchase agreement starting Friday, which is expected to be completed during the second quarter. Versant repurchased approximately 2.7 million shares of Class A common stock in the first quarter and had approximately $900 million of outstanding authorizations as of March 31, the company said.
Disclosure: Versant is the parent company of CNBC.
