Versant Q3 2026 Earnings Call Transcript

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Provided by Quartr
November 3, 2026

Key Takeaways

  • Positive Sentiment: 2026 outlook reaffirmed, with revenue expected at $6.2 billion–$6.45 billion and Adjusted EBITDA of $1.9 billion–$2.05 billion; free cash flow is now expected to exceed the prior $1.0 billion–$1.2 billion forecast.
  • Positive Sentiment: Versant completed four major distribution renewals on favorable terms, with 75% of network subscribers contracted through 2028 or beyond, improving visibility despite ongoing pay-TV subscriber declines.
  • Positive Sentiment: Platforms revenue increased 10% year over year, or 17% excluding the SportsEngine divestiture and Full Swing acquisition, led by Fandango ticketing and GolfNow; the company also reported encouraging early results from Fandango AVOD and MS NOW direct-to-consumer.
  • Negative Sentiment: Third-quarter revenue fell 4% to $1.59 billion and Adjusted EBITDA declined 7% to $353 million, primarily because of pay-TV pressure and sports-rights timing. Fourth-quarter EBITDA will face higher programming costs from four additional NASCAR races, although management characterized this as a one-time impact.
  • Positive Sentiment: Versant returned $457 million to shareholders year to date through dividends and repurchases and announced an additional $100 million accelerated share repurchase for the fourth quarter, supported by approximately $1 billion in cash and an undrawn $750 million revolver.
AI Generated. May Contain Errors.
Earnings Conference Call
Versant Q3 2026
00:00 / 00:00

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Operator

Greetings. Welcome to Versant Media's third quarter 2026 operating and financial results conference call. At this time, all participants are in listen-only mode. Question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Wylie Collins, Executive Vice President, Investor Relations and Treasury. Thank you. You may now begin.

Wylie Collins
Wylie Collins
EVP of Investor Relations and Treasury at Versant Media Group

Thank you and good morning, everyone. Welcome to Versant Media's third quarter 2026 operating and financial results conference call. Joining us today are Mark Lazarus, Chief Executive Officer, and Anand Kini, Chief Financial Officer and Chief Operating Officer. Also with us are Jordan Fasbender, General Counsel, and Natalie Candela, Vice President of Investor Relations. Before we begin, I would like to remind you that certain statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Wylie Collins
Wylie Collins
EVP of Investor Relations and Treasury at Versant Media Group

These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to Versant Media's filings with the SEC in today's earnings release. All forward-looking statements are made as of today, November 3rd, 2026, and we undertake no obligation to update them.

Wylie Collins
Wylie Collins
EVP of Investor Relations and Treasury at Versant Media Group

In addition, we may refer to certain non-GAAP financial measures. Information and reconciliations to the most directly comparable GAAP measures are included in today's earnings release and in the materials posted in the investor relations section of our website. During today's call, all comparisons to the prior year are against standalone adjusted figures, which represent our estimated 2025 results as if Versant were already a separate independent company. With that, I will turn the call over to Mark.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Thanks, Wylie, and good morning. I am going to start by reflecting on our progress relative to the strategy we outlined at the time of the spin. This strategy has two core principles. First, while we are subject to pay TV's secular changes, our network portfolio, heavy on news and sports with big brands that people care about, will continue to succeed. Second, that we are able to extend outside of pay TV through digital offerings to evolve and grow our business. We believe we have unique advantages in each of our four markets: large, loyal audiences, powerful brands, a proven track record, especially in golf.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

We have dedicated capital and a strong management team. We are making good progress across both of these principles, and it has only been 10 months. With our networks, we have now completed all of our major distribution renewals this year on favorable terms, four deals in all. We understood the questions raised at the time of the spin about our ability to secure attractive carriage renewals. We have now answered that question. 75% of our network subscribers are now under contract into 2028 and beyond, so we have clear visibility going forward.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Furthermore, we are generating strong ratings, engagement, and advertising results. This all points to the strength and power of our portfolio for distributors, marketers, and audiences. While our pay TV business is not a growth engine, it will remain resilient and highly profitable for a very long time. Similarly, we are making meaningful progress with our digital platforms, and revenue is up double digits year-to-date. We have launched several new initiatives, including MS NOW direct-to-consumer and Fandango Streaming, both delivering solid results. The CNBC direct-to-consumer will follow early next year.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Our initial investment for these new products is measured, as we are scaling existing infrastructure and resources. We are learning what product features resonate the most with consumers and focusing our investment on these areas to drive growth. We believe this test-and-learn approach mitigates financial risk. We have also acquired several exciting new businesses, most notably Full Swing, which closed during the third quarter. Integration efforts are progressing well, and we are seeing early success in using Golf Channel and GolfNow as effective sales and marketing tools for Full Swing, delivering incremental value.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

I have mentioned before that evolving our business model through the growth of our digital platforms is a multi-year journey. This will require some patience, but I am pleased that we are off to such a strong start. Now, some highlights for the quarter that demonstrate the progress we are making. MS NOW was the second most watched network in all of cable in the third quarter, with total viewership up 20% year-over-year. MS NOW has grown its audience year-over-year for 11 straight months and was the only cable news network to grow in September. MS NOW's reach extends well beyond pay television, ranking as the number one news organization on YouTube during the third quarter.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Feedback on the MS NOW direct-to-consumer offering has been very positive, with the community experience really resonating with members. MS NOW also continues to draw large and enthusiastic audiences at live events, with our Together in Texas event in Dallas last month having nearly 5,000 attendees and many more who streamed the day-long event. CNBC continues to rank among the top 10 cable networks during market hours, now for eight straight months. In the third quarter, CNBC remained the destination for CEOs and business leaders to share their perspectives on the issues shaping the markets and the economy.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

This is where CNBC has a sizable advantage, gaining access to the most prominent market leaders while serving a broad audience across pay TV and digital. In sports and entertainment, we added Bundesliga to our portfolio, which we began airing in August. We have 300 matches per season, with approximately 30 on U.S.A. Network and the remainder streaming on Fandango. In its first month on U.S.A., viewership was up 55% versus last year's airings on other networks. This is a great example of how we approach sports, building a diverse portfolio with broad appeal that translates into strong economics for us. We will remain selective, and the returns must be compelling.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Bundesliga cleared that bar, and we are glad the league is part of the Versant and U.S.A. Sports portfolio. We are also very pleased with our first WNBA season on U.S.A. and CNBC. We aired the most national games of any broadcaster, and regular season cable viewership was up 25% compared to last year. Just on Saturday, we crowned the WNBA champion as game seven aired on U.S.A. Network with a preliminary number of 3.3 million viewers, a great success. On the entertainment side, our new series, "Anna Pigeon," became the most watched new cable original series for the year, while "The Golden Life" premiered on E! just a few weeks ago.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

As mentioned, platforms delivered double-digit growth in the quarter, driven by both Fandango and GolfNow. Fandango was particularly strong this quarter, with ticket sales reaching the highest they have been since the pandemic, and Fandango1 is continuing to grow. Just as we are expanding the audiences of MS NOW and CNBC, we are taking the same approach with Fandango and Golf. The Fandango AVOD service was launched in July, and while still very early, we are encouraged by the initial response. As we continue to add content, the platform is well-positioned in the growing AVOD market.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

We also recently expanded our FAST channel lineup, launching four new channels featuring content from CNBC, E!, and Oxygen. All four will be available on Prime Video and the Roku Channel, further extending the reach of our brands and creating additional opportunities for advertising revenue. At Full Swing, we have expanded sales and marketing support and recently announced an expanded partnership with Troon, the world's largest golf and golf-related hospitality management company. Before I turn to Anand, I want to leave you with a broader thought.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

While there are more options for consumers than ever before, audiences are placing the most value on the content and the brands they trust, and this plays right into Versant's advantage. Our pay TV business keeps delivering large audiences and strong profitability, allowing us to invest in what comes next. We are building on strong relationships we already have with consumers, advertisers, and distributors, while finding new ways to reach and serve those audiences. We have the brands, the financial strength, and the people to execute this transition successfully. We have made meaningful progress in a short period of time, and I am confident in the direction we are heading. With that, let me hand it over to Anand to talk through some of the financials.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Thanks, Mark, and good morning, everyone. Our third quarter results reflect strong execution against our strategic, financial, and growth objectives. Based on results to date and expectations for the balance of the year, we are affirming our previously communicated 2026 full-year outlook for revenue of $6.2 billion-$6.45 billion, and for Adjusted EBITDA of $1.9 billion-$2.05 billion. We expect full-year Free Cash Flow to finish above our $1 billion-$1.2 billion outlook.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Turning to the results, total revenue for the quarter was $1.59 billion, a decline of 4%, consistent with trends in the second quarter and reflecting the secular changes in pay TV, partially offset by robust growth in platforms, which remains a key priority for us. Breaking down the components of revenue, linear distribution revenue decreased 6% over the prior year to $935 million, with subscriber declines partially offset by contractual rate increases.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

These trends are similar to what we have seen in prior quarters. Advertising revenue was $373 million, down 5%, impacted by the comparison to the 2025 Ryder Cup, which takes place every other year. The advertising environment remains positive, supported by continued favorable ratings trends across our networks and strong demand. Platforms revenue was $245 million, up 10% year-over-year, and excluding the SportsEngine divestiture and Full Swing acquisition, up 17%. Fandango delivered significant growth in ticketing, while home entertainment sales and Fandango1 also contributed meaningfully to its third quarter performance.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Content licensing and other revenue was $41 million, down 24%. As we have discussed previously, this category can fluctuate quarterly based on the timing of licensing agreements. Turning to adjusted EBITDA. Adjusted EBITDA was $353 million, down 7% versus the prior year. The decline reflects lower pay TV revenue, partially offset by growth in platforms and disciplined expense management. As we have mentioned previously, the decline in Q3 adjusted EBITDA compared to the growth earlier this year reflects the timing of sports rights, which are weighted towards the second half.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

To put it in perspective, cumulative adjusted EBITDA for the first nine months was $1.68 billion, up 1% year-over-year. We expect Q4 adjusted EBITDA, as reflected in our outlook, to be impacted by four additional NASCAR races compared to 2025, resulting in meaningfully higher programming costs. We do not expect similar changes in race counts going forward, and so this will be a one-off impact. While I have mentioned the timing impacts on our Q3 and Q4 results this year, sports remain an integral part of our strategy, generating significant value for viewers, distributors, and marketers.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

In fact, we are home to some of sports' most important events, including crowning the NASCAR Cup Series champion this upcoming weekend. Transitioning now to expenses. We remain focused on managing costs while investing in our strategic priorities. Programming and production costs were $736 million, down 1% versus the prior year due to operating efficiencies, largely in entertainment and news, partially offset by an increase in sports rights costs, as just mentioned. Other cost of revenue was $142 million, up 10% versus the prior year, reflecting higher transaction volumes associated with platforms revenue growth.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Cost of revenue, representing the sum of programming and production costs and other cost of revenue, was $879 million, up 1% versus the prior year. Selling general administrative expenses decreased 12% to $362 million. As discussed last quarter, we expect nominal SG&A costs to increase modestly from recent levels due to our investments in growth initiatives, including the Fandango AVOD and the MS NOW and CNBC direct-to-consumer offerings. Across our cost base, we are focused on driving efficiencies while continuing to deliver high-quality premium consumer experiences.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

We are currently identifying opportunities to deploy AI and other technologies to streamline workflows, enhance automation, and improve productivity in 2027 and beyond. As part of this initiative, we are modernizing our infrastructure across almost every function and business. While cost efficiency is clearly a focus, these new capabilities will also enhance our decision-making, speed to market, and overall company culture. Finally, with regard to cash generation, liquidity, and capital allocation, free cash flow totaled $302 million in the quarter.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Our business model continues to deliver strong cash conversion, and as I mentioned, we now expect full-year free cash flow to finish above our prior outlook. We maintain a healthy liquidity profile with approximately $1 billion in cash at quarter end and an undrawn $750 million revolving credit facility, giving us significant flexibility to execute our strategic priorities. On investments, we follow a disciplined approach, focusing on opportunities with clear value creation and attractive returns, particularly in platforms and initiatives that deepen our relationships with audiences.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Reflective of our capital allocation approach, to date, we have returned $457 million to shareholders, including $300 million in share repurchases and $157 million in dividends. Today, we also declared our quarterly dividend and announced plans to commence an additional $100 million ASR in the fourth quarter. Taken together, our year-to-date performance demonstrates disciplined execution as we invest behind our growth priorities and deliver strong capital returns to shareholders. With that, I'll turn it back to the operator for Q&A.

Operator

Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question, please press star one from your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator

Thank you, and our first question comes from the line of Sean Diffley with Morgan Stanley. Please proceed with your questions. Hi, Sean. Please go ahead with your questions. Ladies and gentlemen, we seem to have lost Sean. I'm moving on to Michael Ng from Goldman Sachs. Please proceed with your questions, sir.

Michael Ng
Michael Ng
Analyst at Goldman Sachs

Hi. Good morning. I just have two. First, encouraging that you've completed all the carriage agreements in 2026. As you head into 2027 and 2028, could you talk a little bit more about some of the content investments that you're making to strengthen your position, and how will DTC products like MS NOW DTC and the upcoming CNBC DTC play a role, if at all? Thank you.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Great. Thanks, Michael. Sports and news are obviously working really well for us in terms of having value for distributors, for advertisers, for audiences. We will continue to be best in class in news. We believe MS NOW and CNBC are incredibly valuable brands, have very valuable audiences, and reach the most influential people that audiences want to see each and every day. As it relates to sports, our sports deals go long term. I mean, I think that's where we sit. We did add Bundesliga. We've added Pac-12. We've extended our USGA golf deal. But long into the 2030s, we have valuable NASCAR, valuable PGA TOUR rights.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

The WWE goes late into the 2020s, and Premier League goes through the 2028 season. So, we feel very secure. We will continue to look at sports properties in a very disciplined way. Sports and news are really the centerpiece. In addition to that, we have a very disciplined approach to original series, where we create both scripted and unscripted series. We've had a lot of success, as we talked about earlier in the call, with "Anna Pigeon," the number one cable show of the year. We had "Everything on the Menu" for U.S.A. Network, an unscripted show, and "The Golden Life," which just launched.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

One of the things we look at is that we want to make sure that we are disciplined, that we get good value, create great product, but also have an ability to monetize the back end of these shows. And I think that's evident in the fact that we recently announced that "The Golden Life" will be on Hulu a couple of weeks after we launched it on the E! Network. That helps us both mitigate cost, serves as a marketing tool, and we've got great partnerships across many of the streamers to work with us on creating programming and backend value.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

As far as the D2C products, we will work with the partners, with the MVPDs. We'll work with them on, and as you've seen many programmers do, we won't be any different. We want to make sure our products are available to those who are already paying for it, but our products are also going to be quite different than just video streaming. We're not creating streamers, we're creating direct-to-consumer interactive products. So, we're doing it with the MVPD and vMVPD community, not to them.

Michael Ng
Michael Ng
Analyst at Goldman Sachs

Great. Wonderful. For my follow-up, I just wanted to ask about platform revenue. Organic growth was up 17%, the fastest quarterly growth rate this year. Was the acceleration primarily driven by the improvement in the box and Fandango online ticket sales? You called out the INDY Cinema piece as well, so I was just wondering if you could also touch on the momentum there. Thank you.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Yeah, I think it's a combination. I mean, certainly, Fandango and the box office was a big contributor. Not only that, just that box was up, but our share of box is up, and we're growing where we are in the space and creating a wider playing field for ourselves. Golf also showed growth, GolfNow and the tee time business. Then INDY Cinema, which eventually we'll all get to calling, including ourselves, get to calling it Fandango1, which is its new name, is creating new revenue opportunities as we're able to sell that technology into theater chains and theater operators across the globe. So, I think you hit it on the head with the largest contributor was Fandango, but every piece of the platform business contributed.

Michael Ng
Michael Ng
Analyst at Goldman Sachs

Great. Thank you, Mark.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Mike, just one other thing, Anand, just to kind of add on. I think what you've seen every quarter is both businesses, the big businesses, Fandango and GolfNow, are contributing. Every quarter, one might be a little bit more than the other, but they were very proud that kind of across the portfolio, those growth businesses with big opportunities, market leaders with room to grow share, are in fact doing so.

Michael Ng
Michael Ng
Analyst at Goldman Sachs

That's very clear. Thank you, Anand.

Operator

Thank you. Our next question is from the line of Sean Diffley with Morgan Stanley. Please proceed with your questions.

Sean Diffley
Sean Diffley
Analyst at Morgan Stanley

Great. Thanks, guys. Can you hear me?

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Yep, we have you, Sean.

Sean Diffley
Sean Diffley
Analyst at Morgan Stanley

All right, sorry about that. Fox called out some viewership fatigue on news leading up to the midterms. I am curious how you would describe what you are seeing most recently on MS NOW. It sounds like pretty good, but do you expect any tapering in viewership post-election? Mark, I wanted to get your latest high-level thinking on sports rights in the next few years. We have some big ticket items coming up, obviously World Cup, more near term, MLB and NFL. There has been some reporting that the NFL Sunday Ticket verdict last week could open up some out-of-market games. I am curious if that could be of interest to you, and just your overall lens for how you assess the rights landscape. Thank you.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Great. As it relates to news, I mean, we're currently not seeing any fatigue with our audiences. Our audiences are active and vibrant and growing for MS NOW, and for that matter, with CNBC. I think it's a testament to the quality of our product, to the voices that we have on there, and to the trust that our viewers have in our brands and in our talent. But we're showing growth, and we have for many quarters in a row, many months in a row on MS NOW, and that's encouraging. This is an important time. Today's the, and to use your sports analogy, today's the Super Bowl for the news organization in terms of the midterm elections.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

We believe that we will continue to grow audiences for MS NOW. That's our singular goal. How do we get more people to watch us? That's going to be by having a variety of voices there, having a tone that's welcoming, and it being interesting and informative. I think that our producers and our talent are doing that. We're not seeing any of that viewer fatigue. In fact, I think some of the viewership is leaving other places and trying us and spending some more time with us, because I think they're seeing the value in what we're providing. As it relates to sports, obviously, you're right, an interesting time.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

World Cup's coming out, baseball, NFL, the NHL's not far behind. I think what's going to happen, I think the big stuff will, the big stuff being really NFL, World Cup, will find homes at quite high rates. I think there's going to have to be some rationalization of portfolios from some of our colleagues across various media companies and people like us who are interested in finding the right quantity of sports at the right price that serves our distribution and advertiser needs, that there will be opportunity for that. Sunday Ticket, out-of-market games, we're not likely to be investing in the NFL business, I mean, in terms of the size of our company today. But I think it's an interesting ruling, and I'm looking forward to seeing how it shakes out.

Sean Diffley
Sean Diffley
Analyst at Morgan Stanley

Thanks very much.

Operator

Thank you. Our next question is from the line of Rich Greenfield with LightShed Partners. Please proceed with your questions.

Rich Greenfield
Analyst at LightShed Partners

Hey, thanks for taking the question. Yesterday, just sort of following up on some of the comments that Fox made, they talked about Fox One having grown subscribers actually more than enough to offset all of their linear declines. While I do not know if that continues in perpetuity, it certainly is pretty interesting given your launch of MS NOW as direct-to-consumer, especially given that Fox said that it was pretty evenly split engagement-wise between sports and news. I guess the question is, as you look at MS NOW, and I realize it is only several weeks old, you are pricing it at $7.99.

Rich Greenfield
Analyst at LightShed Partners

I guess, why is that the right price? How are you thinking about pricing? As you think about the next couple of years, Mark, could this be something that meaningfully impacts the subscriber declines you are seeing? I mean, I realize getting too positive might be ambitious for news, but how are you thinking about sort of the ultimate potential of the MS NOW platform? Then just a related question on ingestion.

Rich Greenfield
Analyst at LightShed Partners

There is a lot of discussion of streamers ingesting other streamers. Essentially, people want to be platforms. Disney is now ingesting Channel 4 in the U.K., Netflix TF1 in France, and now, or YouTube in January is going to do Peacock. Do you expect to be ingested, or do you think MS NOW is set to be ingested by other companies over the course? I know you are going to launch CNBC, so it is sort of a related question, but how are you thinking about ingestion?

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Well, so to the broad question of, are we going to be able to mitigate sub declines? That is our goal. That is what we are trying to do, is to take all of these direct-to-consumer and mitigate as much sub decline or all of the sub decline as possible. That is why we are launching these products, plus the Fandango Streaming product, and creating other growth businesses like buying Full Swing and INDY Cinema and other properties. So, we are a slightly different company, obviously, than what Fox is, and they essentially are streaming their two services, Fox News and Fox, as Fox One. I think we are a little bit different than they are.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

We have our own brands. We have the same goal. We want deep customer relationships. We want to make sure we extend our reach. We want to find as many non-pay TV homes as possible. $7.99 through testing and other areas felt and turned out is the right price. We are seeing people sign up. We are trying to reduce friction for signups so that we can grow as fast as possible. We are not just streaming our network. That is part of it, but we are much more than just our existing video. We are a membership service, so the MS NOW Membership program.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Fandango AVOD will be similar. That is free. There is no price. GolfNow is a direct-to-consumer transactional business, and CNBC will be more like MS NOW. We will have the ability to stream the service, but existing video will only be a part of what the value for our fans and customers will be. We are going to build community. We are going to have a lot of exclusive content, insights from our talent and other experts, information, access will be important. We have talked about this is, as you said, it is very new, Rich, but this is a multi-year journey. We are going to have to be patient. We are confident, but it is really early. On the ingestion, you want to—

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Oh, sure. Just a couple quick things. Mark mentioned earlier, Rich, about kind of test and learn. The products as they are today, we are obviously going to look at kind of what is working, and that will also then dictate kind of pricing and so forth as we go over time, and kind of how we evolve that to continue to deliver consumer value. Again, we think that approach makes a lot of sense for us. It kind of mitigates some of the financial risk. It enables us to evolve the products as we kind of get user feedback.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Then on your question on kind of platforms and aggregation with third parties, I think we have mentioned in the past that we are going to do what is right in terms of value. We are open and are in conversations with parties to kind of figure out whatever is the right path to scale these services, and we are open to different business models. This was one of the areas when we got spun, frankly, that it gives us the liberty and kind of flexibility to pursue those type deals. As you would expect, we are actively engaged in them for our services.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Yeah, I think our distribution partners and the message we're sending or what we're talking to them is that we want to be flexible, and we want to be one of your most creative partners in finding the right thing for our collective customers. I think that, as Anand pointed out, that was part of the premise of the spin and allowing us not to have sort of a variety of corporate constituencies inside of our own building.

Operator

Thank you. The next question is from the line of David Karnovsky with JPMorgan. Please proceed with your questions.

David Karnovsky
David Karnovsky
Analyst at JPMorgan

Good morning. When you think about your strategy of leading in specific verticals, are there categories outside of news or golf where you would consider building or buying into? How do you think about M&A for cable networks as an avenue to accomplish that?

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

I'm sorry, could we repeat? I think it's hard to hear. It might be the speakerphone.

David Karnovsky
David Karnovsky
Analyst at JPMorgan

Yeah. When you think about your strategy of leading in specific verticals, are there categories outside of news or golf where you would consider building or buying into? How do you think about M&A for cable networks as an avenue to accomplish that?

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Okay, great. Yes, obviously news and golf are two of our important verticals. In news, we have two verticals: business news, personal finance, and news and political opinion. So those are two separate verticals. Golf is a third vertical, and the fourth would be entertainment, and really centered around sports and entertainment content, but Fandango as a central hub in that. Certainly, there could be other verticals if something were to become available that we believe we could build significant adjacencies around, whether it had a television network or not.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

There are opportunities to do that. I think when you look at the M&A question, we are not out there necessarily looking to buy more cable networks. We are not looking for horizontal scale. We think, and we believe you all expect us to transition towards growth initiatives. While buying more scale on cable networks would just continue adding to our scale, I have said previously, I think it would prolong our life, but does not make our life much better. So, we would like to continue to look into vertical sectors. Could we go into fifth or sixth verticals? Certainly, but we would need a center or a rallying point around that. It could be some form of media project, but it also could be outside of media.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

David, the only thing I would add to what Mark said is, and it completely obviously aligns here with Mark about, could we look at other verticals? Sure. I think it is important in that answer, we really believe in the four we are in, and there is a lot of growth opportunity, and that is where we are focused today. I think our results, if you look at the platform, underlying platform growth of 17%, like we are encouraged, as Mark mentioned earlier, by the MS NOW D2C launch.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

We are launching CNBC D2C early next year. These are big markets. We have big brands that a lot of people really love and are looking forward to these new offerings. So, that is our focus. Anything in terms of growing outside that, we will obviously look at, but we are going to look at in those four areas. We have big advantages and we think a real right to win, and there is a ton of opportunity there. That is our focus right now.

David Karnovsky
David Karnovsky
Analyst at JPMorgan

Thank you very much.

Operator

Our next question is from the line of Peter Supino with Wolfe Research. Please proceed with your questions.

Peter Supino
Peter Supino
Analyst at Wolfe Research

Hi, good morning. I wondered if you could talk about the advertising environment and your partnership with NBC, whether that is meeting your expectations. It is obviously an unusual situation to have somebody else selling your ad inventory. Then, a second question on following up on this topic of M&A. I think your GolfNow acquisition is really interesting and synergistic with the reservations business you have, and frequently investors do not understand what the thesis is. I wonder if you could lay that out for us. Thank you.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

Sure. On advertising, over the fullness of time, there have been rep deals that people have repped others. It is a little bit unique in the way we are set up because we were one and now we are two, but there is some history of that. It is going exceptionally well. They have been great partners. They have delivered on everything that we have discussed with them. They are collaborative, they understand our goals, and they have done a wonderful job representing us. It is going well, and I think that is evident in the numbers that we are delivering.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

We are delivering best of industry numbers in terms of advertising. So, going well. Over time, they and we collectively will decide what the right path forward is, but that is a little bit out into the future. As of right now, it is going extremely well, and I think it is working well for both parties. Full Swing is also going well. It is new. We just closed not long ago. What we really believed is that in order to continue the transition and diversifying revenues from pay television to other forms into other sectors in our verticals, that Full Swing, as a golf technology company, was a very good addition.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

What it allows us to utilize is the strength of our linear network, Golf Channel, and the strength of our GolfNow relationships with 9,000 golf courses around the world, and the sales force that works with those golf courses to put more Full Swing product into the market and sell more Full Swing product. Over time, create more and more integration opportunities. I think if you watch any of our networks now, you will see Full Swing being marketed quite effectively, and we are seeing the results of both the marketing power of Golf Channel and the sales power of the GolfNow sales team in helping accelerate the revenue opportunity with Full Swing.

Peter Supino
Peter Supino
Analyst at Wolfe Research

Thank you.

Operator

The next question is from the line of David Joyce with Seaport Research Partners. Please proceed with your questions.

David Joyce
David Joyce
Analyst at Seaport Research Partners

Thank you. I was hoping you could drill down a bit more on your cost of revenues. You have added a lot of sports rights, WNBA, Bundesliga, additional NASCAR rights, and more entertainment programming. Yet your overall cost line was flattish year-over-year. Where are you trimming, and how should we think about this trending going forward, given that you are also launching these DTC services? Thanks.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Hi, David. This is Anand, and thanks for the question. You are right. Look, we have talked about being disciplined in how we manage expenses and to make sure the expenses and the costs that we have are tied to revenue. We look at the entire portfolio. We did add, as you mentioned, sports. Again, the sports that we added, like talked about Bundesliga, we mentioned before, that was an opportunistic deal for us, that we saw an opportunity to get some marquee content, 300 matches, some on U.S.A., some on Fandango, at what we thought was a very attractive price point that drove value.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

It is those kind of deals where we can fit them within our programming budget, make trade-offs elsewhere, and again, just looking at how we are programming and different types of content, what is working the best. It also goes back to what Mark mentioned earlier, take entertainment, where we talked a little about "The Golden Life," the type of show that we think has very attractive economics.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

When we greenlight it, we greenlight it not only for what it is going to do on E!, but a lot of confidence it is going to have a backend as well, which we were able to secure. We are managing the entire portfolio that way, and you are seeing it in the numbers. We mentioned that the total programming spend in Q3 and then in Q4 will be timing-wise impacted by some of the, particularly in Q4, by NASCAR, but that general philosophy is how we are managing spend in total.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

On SG&A, we're also looking, as you can see, we talked about, or I mentioned before, an initiative to make sure we're harnessing AI and technology to drive efficiency and drive productivity, and also make the company a better and better place, culturally and for the employees. You're going to see the impact of that really starting in 2027 and beyond.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

The final thing I'll just flag is, we're very focused on making sure as much of a percentage of our cost base is variable as it can be. Roughly about 70% of the cost base is variable. Other than sports rights, everything else is flexible in the short to medium term. You're seeing us execute against that based on the revenue picture, flexing the cost base to make sure we're delivering great margin profitability.

David Joyce
David Joyce
Analyst at Seaport Research Partners

Well, appreciate it. Thank you.

Operator

Thank you. Our last and final question is from the line of Brent Penter with Raymond James. Please proceed with your questions.

Brent Penter
Brent Penter
Analyst at Raymond James

Good morning, everyone. Thanks for taking the questions. A couple from me. First, I appreciate the color on Full Swing revenue and the trending schedule. What can you tell us about the margins on that business, even directionally? You talked quite a bit about the strategic rationale and revenue growth opportunity. Are you seeing cost synergies in that business as well?

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

I can jump in. I'll start and then pass it over to Mark. On margins, look, this is a good margin business. We've mentioned before that Full Swing is profitable. We bought it as a profitable enterprise, and we're expecting that profitability to obviously increase based on some of the synergies that Mark mentioned as the strategic rationale for buying it that we're already implementing. On the cost synergy side, there's a little here and there, but just to be clear, this is mostly a revenue synergy story for us.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

This is a high-growth business, so of course, the cost synergies we're realizing are where you would expect them. Some things on the back office and so forth is where it's clearly the right thing to do. We really here on Full Swing are focused on driving the top line, and that's our focus, and those revenue synergies are starting to see them materialize.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

On the revenue side, we're able to, again, we have a large sales force with GolfNow. They had a relatively small sales force at Full Swing. We can really add to that whole sales process without any additional cost. The same on the marketing. The marketing side with what we're running across our variety of networks, and very well-targeted networks. Obviously, Golf Channel is highly targeted towards someone who has a high proclivity to buy something in the golf space, but CNBC also has a huge overlap with that audience and with the group that would be likely buyers for our products.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

The cost is opportunity cost. We will market this instead of maybe something else in our portfolio, so there's no incremental dollar outlay to us. It's just a shift in priority. The revenue opportunity or the revenue synergy is larger than the cost synergy, but both working together is what helped lead us to saying this is the right deal for us.

Brent Penter
Brent Penter
Analyst at Raymond James

Understood. Great. To kind of take that bigger picture, you all are obviously making lots of investments inorganically as well as organically in the platforms business. Just what generally defines success for platforms investments? As you think about allocating any given dollar of capital, you are returning a lot of capital to shareholders, but as you weigh your different options, what about something like Full Swing makes it unique, and then how do you kind of define the returns and success of those platform investments?

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

I think broadly and strategically, the ability to utilize the strength of what already exists in our verticals, and I think Full Swing does that, as we talked about the sales force and the marketing and our ability to work in the broad scope of the golf community, working with the PGA TOUR. They are already a sponsor of the PGA TOUR. That was sort of the thesis behind Full Swing. The investment into INDY Cinema allowed us to We already work with all of the theater chains, or many theater chains, on ticket transactional sales. This allows us to work with them and create a much more integrated solution of technology and sales.

Mark Lazarus
Mark Lazarus
CEO at Versant Media Group

It is a formula that we followed with GolfNow, where we also have an enterprise software business that helps create our relationships with the golf courses and makes our ability to have financial relationships with the golf courses multifaceted. It is whether we sell them the technology and then have transaction deals on the tee times, or whether we have a more favorable relationship. They do not maybe pay us as much for the technology, but we get a larger cut on tee times. It just allows us a lot more flexibility. The filter of being part of one of our verticals already allows us to take advantage of both cost and revenue synergy.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

And just from a financial lens perspective, we talked, and you heard us talk in the past about our capital allocation principles, which are threefold and doing them all together, maintaining a healthy balance sheet, returning capital to shareholders, and investing in growth. I think that last one, investing in growth, just to be clear, we do not view investing in growth as a default.

Anand Kini
Anand Kini
CFO and COO at Versant Media Group

Every initiative we have, whether it is organic or inorganic, we have a very strict financial lens and discipline about it has to generate returns, it has to generate value to shareholders on a bankable basis. So, we put everything through that mechanism, and we look at a lot more things than what we actually do, just to see that in motion. And we are confident because the returns on Full Swing, as we looked at it, look very, very favorable. And it is early days, but we are encouraged.

Brent Penter
Brent Penter
Analyst at Raymond James

Got it. Thanks, guys.

Operator

Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

Executives
    • Wylie Collins
      Wylie Collins
      EVP of Investor Relations and Treasury
    • Mark Lazarus
      Mark Lazarus
      CEO
    • Anand Kini
      Anand Kini
      CFO and COO
Analysts
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