Prepared remarks
Greetings. Welcome to Versant Media's Second Quarter 2026 Operating and Financial Results Conference Call. Please note that this conference is being recorded. I'll now turn the conference over to Wylie Collins, Executive Vice President of Treasury and Investor Relations. Thank you. You may begin.
Thank you, and good morning, everyone. Welcome to Versant Media's Second 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'd 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. 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 and today's earnings release. All forward-looking statements are made as of today, August 6, 2026, and we undertake no obligation to update them. 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 stand-alone adjusted figures, which represent our estimated 2025 results as if Versant were already a separate independent company. And with that, I'll turn the call over to Mark.
Thank you, Wylie, and good morning, everybody. Our second quarter results reinforced the strength of our portfolio and the strategy that we're executing: to win with premium live content, extend the reach of our iconic brands and accelerate growth across our platforms. Across news, sports and entertainment, our brands continue to grow audiences and engagement while delivering value for viewers, advertisers and our distribution partners. Our TV portfolio now reaches more than 120 million viewers each month with double-digit audience increases in aggregate across our networks. We also recently completed multiyear renewals with two large pay TV distribution partners, one in the U.S. and one in Canada, further highlighting the value of our portfolio. That strength gives us confidence to invest where we see the greatest opportunities, growing our digital platforms, advancing our direct-to-consumer offerings and deepening our audience relationships. Together, these investments extend our audience reach and build upon the foundation of our iconic, highly cash-generative brands. Our performance this quarter demonstrated our strong execution of this strategy across the portfolio. Let's walk through a few of the highlights. CNBC reinforced its position as the leading global business news brand. During market hours, the network ranked among the top 10 cable networks for the fourth consecutive month and delivered its highest-rated quarter in more than five years. Coverage of the SpaceX IPO drove CNBC's highest-rated day during that same period. CNBC continues to generate the most affluent and educated weekday daytime audience in all of television, a distinction it has maintained for 27 consecutive quarters. The network also featured exclusive interviews with business leaders and policymakers, including Jeff Bezos, whose appearance generated more than 100 million video views across all platforms. MSNBC also built on its momentum, delivering its seventh consecutive month of audience growth in TV and expanding its reach on digital platforms. In June, viewers watched an average of nine hours each week, the second-highest level of engagement across all of television. MSNBC saw a 14% increase in viewership in the second quarter versus last year. That momentum extended well beyond television. Year-to-date, the network generated nearly three billion combined YouTube and TikTok views and in June ranked as the number one news organization on YouTube. Podcast engagement was also healthy with more than 11 million audio downloads during the month. In July, we celebrated MSNBC's 30th anniversary, an important milestone for one of the country's leading news brands. MSNBC continues to accelerate. Golf Channel also had an outstanding quarter. PGA TOUR coverage delivered the network's most-watched second quarter since 2020, with comprehensive coverage across all of golf, including the Masters, PGA Championship, U.S. Open and PGA TOUR and its signature events. In sports and entertainment, USA remained a top five entertainment network among key demographics, extending a track record of leadership spanning more than three decades. Live sports continue to drive large, highly engaged audiences. In the WNBA's first season on USA, the network aired the three most-watched games across cable and streaming, while League One Volleyball increased viewership over its inaugural season, and the WWE continued to deliver large audiences. We're investing in sports where we believe we can create long-term value. Last month, we announced a five-year agreement with the Bundesliga, one of Europe's most renowned soccer leagues, known for passionate fans, iconic clubs and athletes and global appeal. Beginning this season, we will broadcast more than 300 live matches annually with at least 30 premium matches airing on USA Network and all remaining matches streaming for free on Fandango. This agreement builds on our year-round sports offerings, expands our reach with soccer fans and creates more opportunities to engage audiences across platforms. In addition to Bundesliga, the start of our NASCAR Cup Series coverage on USA Network begins this Sunday, and the return of the Premier League later this month provide a strong lineup of live sports as we enter the second half of the year. In entertainment, we're driving viewership with a balanced portfolio of original programming and proven franchises. Our strategy is to build brands that engage audiences across multiple platforms for years to come, and that strategy is delivering results. Everything on the Menu saw double-digit ratings growth in its second season, and we're excited to build on that momentum with our next generation of originals, including Anna Pigeon and The Golden Life, set to premiere this month and in the fall, respectively. Platforms continue to be an important part of our long-term strategy, and both Fandango and GolfNow delivered strong results. We are evolving Fandango from a leading movie ticketing business into a comprehensive entertainment platform. A few weeks ago, we launched our new AVOD service, bringing ticketing, home entertainment and free streaming together under the Fandango name. AVOD is one of the fastest-growing areas in media, and we enjoy clear advantages from the well-known Fandango brand, broad connected TV distribution, rich first-party data and unique and exclusive content, most recently with the addition of the upcoming live Bundesliga matches. The Fandango platform we're creating is anchored by a differentiated core business as demonstrated by healthy ticketing volume growth. In any given month, 50 million consumers visit either Fandango or Rotten Tomatoes to decide what to watch. Together, these platforms enjoy loyal customer relationships and support our long-term growth strategy. GolfNow realized broad-based growth, including domestic rounds booked, global course relationships, payments volume and GolfPass subscribers. We are further strengthening our leadership in golf and platforms with the acquisition of Full Swing. Full Swing is a leading sports technology company serving one of the fastest-growing segments in the golf industry through immersive off-course golf experiences. The acquisition expands our portfolio with an interactive offering, spanning immersive simulation, launch monitors, virtual greens, integrated software and performance data. As a trusted partner to many of the game's top players, Full Swing is growing rapidly, is profitable and generates healthy recurring revenue. We believe Versant's leadership in golf uniquely positions us to accelerate adoption of Full Swing's technology across both consumer and commercial markets. We believe there is meaningful upside in this market. Today, there are 38 million off-course U.S. golfers, exceeding the number who play on traditional courses. And since 2019, the number of off-course golfers grew more than 60%, and simulator golfers grew by more than 150%. More importantly, Full Swing will expand our golf ecosystem by broadening our relationship with the golf community. Together with Golf Channel, GolfNow and GolfPass, we are uniquely positioned to connect premium content, commerce, technology and participation, creating more ways to engage golfers throughout their journey. There are also additional opportunities beyond golf, including baseball, where Full Swing's technology is already used by both college and professional teams. We are also advancing our direct-to-consumer strategies around MSNBC, which will launch its direct-to-consumer experience ahead of the midterm elections, giving audiences new ways to engage with its hosts, programming and community while deepening engagement, strengthening the brand's relationships with viewers and fans. And at CNBC, we're developing a next-generation digital platform that will combine CNBC's trusted journalism, exclusive access to leading voices in business and AI-powered investing tools to become a premier destination for investors. Taking a step back, our accomplishments this quarter reinforced what we've believed since becoming an independent company just over seven months ago. We continue to deliver premium content that expands our audiences, drove compelling results across pay TV and platforms, renewed distribution agreements with valued partners and advanced the strategic initiative that will further strengthen our leadership in golf. Looking ahead, we'll continue to invest where we see competitive advantages and clear return, extending the reach of our brands while creating long-term value through scalable platforms. Today's announcement of an additional $100 million accelerated share repurchase program alongside our quarterly dividend reflects our commitment to returning capital to shareholders, the enduring strength of our business and the confidence in the opportunities ahead. With that, let me turn it over to Anand.
Thanks, Mark, and good morning, everyone. Our second quarter results reflect another quarter of disciplined execution of our strategy and progress toward our financial objectives. We delivered EBITDA growth, strong margins and meaningful free cash flow while continuing to invest in the business to drive growth. Based on the strength of our first half performance and our expectations for the balance of the year, we are raising our full year outlook. We are increasing our revenue guidance from a prior range of $6.15 billion to $6.40 billion to a new range of $6.20 billion to $6.45 billion, and we are increasing adjusted EBITDA guidance from a prior range of $1.85 billion to $2.00 billion to a new range of $1.90 billion to $2.05 billion. On free cash flow, we are maintaining our prior expectation of $1.0 billion to $1.2 billion to account for natural quarterly fluctuations in working capital timing. Turning to our results. Total revenue for the quarter was $1.64 billion, a decline of 4% compared to the prior year. Excluding the impact of the SportsEngine divestiture, revenue declined 3%. Our performance reflects the resilience of our brands, strong audience engagement and continued momentum in platforms, mitigating the secular changes in pay TV. Turning now to the components of revenue. Linear distribution revenue was $954 million, down 6% year-over-year, reflecting subscriber declines that were partially offset by contractual rate increases. These trends were consistent with the prior year's performance. Advertising revenue was $423 million, reflecting a slight 0.6% decline year-over-year compared with a 13% decline in the prior year period. The improvement was driven by strong demand across our news and sports portfolio, favorable network ratings and additional revenue from our acquisition of Free TV Networks. Platforms was the fastest-growing part of Versant, with revenue increasing to $225 million in the quarter and continues to play an important role in evolving our revenue base. Excluding the impact of the SportsEngine divestiture, revenue increased 9%, driven by momentum at both Fandango and GolfNow. Fandango generated solid growth in tickets sold, video-on-demand transactions and sales of our new cinema operating platform, while GolfNow delivered increases in U.S. bookings, payments processed and GolfPass subscriptions. We're encouraged by the performance and continued progress in scaling platforms. Content licensing and other revenue was $43 million, which was flat year-over-year, following the sharp uptick in the first quarter. As we've discussed previously, this category can fluctuate from quarter-to-quarter based on the timing of licensing agreements. We view content licensing as a growth area over time as there's continued demand for our own programming and library. Adjusted EBITDA for the quarter was $624 million, an increase of 3%, and reflects the breadth and depth of our audience, continued platforms growth and disciplined expense management. Our margins remain above 30%. Turning to expenses. We are focused on managing costs while investing behind our strategic priorities. Programming and production costs were $522 million, down 9% from prior year, as we continue to deliver premium content in a cost-efficient manner. Programming costs fluctuate throughout the year, largely based on the timing of sports events. As we shared on the first quarter call, we expect sports rights costs to meaningfully increase in the second half, further impacted by an increase in NASCAR races this year, our first season with the WNBA and golf events. Each of these reflects the strength of our sports portfolio and breadth of audience. In light of this, we expect second half programming costs to increase year-over-year and in turn, adjusted EBITDA for Q3 and Q4 is unlikely to demonstrate growth versus the prior year. Other cost of revenue were $128 million, $1 million higher than in the prior year quarter. Increased costs due to higher transactional volumes related to our digital platforms and from our acquisition of INDY Cinema, now rebranded Fandango1, were largely offset by decreased costs from our divestiture of SportsEngine. Total cost of revenue, representing the sum of programming and production costs and other cost of revenue were $650 million, down 7% from the prior year. Selling, general and administrative expenses were $369 million, a decrease of 8% compared to the prior year. Looking ahead, we expect modest increases in SG&A as we support our growth initiatives, including the development of the upcoming MSNBC and CNBC direct-to-consumer offerings. We're focused on identifying efficiencies across our organization that will benefit 2026 and beyond, such as by optimizing our infrastructure and deploying technology to streamline workflows and improve productivity. Finally, with regard to cash generation, liquidity and capital allocation. Free cash flow totaled $350 million during the quarter. As we've noted before, the timing of working capital and tax payments can create quarterly variability in free cash flow, and we anticipate higher CapEx in the second half of the year, largely associated with construction at our New York office facility. As with adjusted EBITDA, we continue to anticipate that second half free cash flow will be lower than the first half. Despite these timing distinctions, our business model delivers strong cash conversion on an annual run rate basis. We ended the quarter with approximately $1.5 billion of cash, which, together with our strong free cash flow generation, supports our capital allocation priorities of investing in the business, returning capital to shareholders and maintaining a strong balance sheet. Demonstrating our commitment to returning capital to shareholders, we repurchased $100 million of stock in the second quarter under the previously announced accelerated share repurchase transaction. Through today, we have returned $305 million to shareholders this year, through $200 million of share repurchases and $105 million in dividends. This morning, we also announced our intention to commence an additional $100 million ASR during the third quarter. At the same time, we're deploying capital into long-term growth areas with investments in the MSNBC and CNBC D2C offerings, the Fandango AVOD and on disciplined M&A such as the recent acquisition of Full Swing. We believe Full Swing, with its clear alignment and synergy with our leading golf brands, will generate attractive financial returns and value for shareholders. In the second quarter, we executed and advanced our strategic priorities with financial discipline, positioning us well for the balance of the year and beyond. And with that, I'll turn it back to the operator for Q&A.
Questions and answers
And our first question comes from the line of Peter Supino with Wolfe Research.
I wondered if you could discuss your affiliate renewals and what, if anything, about those negotiations was different than the tone of negotiations under Comcast. And then also, if you could answer a second question, it would be about the direct-to-consumer expansions of MSNBC and CNBC. I wonder what data or perspective you might have on the latent demand for those brands outside of the pay TV subscriber base of today?
Thanks, Peter. So I'll touch on the affiliate side. We did some deals while we were still part of NBCUniversal in 2025, and then we have a few deals up this year. There was really no change in how we approached it or how the distributors approached it. We had very similar conversations. It was really about the value of our brands, the strength of our brands and what it does for them to keep their subscribers happy. The fact that we have a lot of live news and sports, we have some strong entertainment content and that we are able to deliver audiences to our distribution partners made those conversations quite similar to anything we've experienced in the past. So I'll call it business as usual. It was different because we were a different company, but very similar conversations. And I think we had outcomes that both we and the distributors feel very good about and that we have long-term partnerships. As it relates to the D2C, MSNBC and CNBC are very strong brands with highly engaged audiences. We are creating direct-to-consumer products, not just streaming products, because they are broader than just streaming. It's about serving those engaged audiences with content that is not merely replicative of what we do on television. So the strength of MSNBC's highly engaged audience, already watching nine hours a week on average, and the size and scale of the audience that may or may not be watching us every day, who are interested in the point of view that MSNBC has, I think we'll be able to have a strong marketplace as we enter it. CNBC already has direct-to-consumer businesses. We know that there's demand. We're simply reimagining them and making them stronger and creating a destination for retail investors with a toolkit.
Yes. And just to add on, Peter, there are a couple of indicators to reinforce what Mark said. We mentioned before that MSNBC has one of the biggest YouTube and TikTok presences. So outside of pay TV, we're already amassing big audiences. We have a big live events business that CNBC has had for some time and MSNBC has as well. And then also, we have two publishing businesses—the websites and the apps for both MSNBC and CNBC—that are amassing big audiences as well. So it's not just what Mark said; it's also the audience signals across platforms. The existing CNBC subscription services and these other assets demonstrate there's a lot of appeal for those brands outside of pay TV.
Our next question comes from the line of Michael Ng with Goldman Sachs.
I have two questions as well. First, on SportsEngine and Full Swing. Very encouraging to see the upgrade in revenue and EBITDA, despite the disposition of SportsEngine, which I think is about a $90 million headwind to full-year revenue. But my question is, how much of the guidance increase was related to Full Swing contributions net of the SportsEngine disposition versus improvements in the underlying business? And then secondly, I was wondering if you could talk about the ASR and what that means for your appetite for additional M&A, if there's any relation there?
Sure. Thanks, Mike. On the guidance and your point on Full Swing, just to be very clear, our update in guidance is not because of the acquisition of Full Swing. As you know, we're getting a partial period here given we just closed the acquisition, and we established taking our outlook up based on the entirety of the portfolio. There's a lot of ins and outs, as you mentioned. The SportsEngine divestiture comes out, and Full Swing comes in. But no, the guidance change reflects the confidence we have in the underlying business. It's much more reflective of the momentum across the portfolio. Going forward, not only for the second half of the year, but beyond, we see that momentum continuing. On the second question on the accelerated share repurchase and M&A, we view our capital allocation policy—and I think we've demonstrated this—as an 'ands' approach. We're going to invest to grow the business, we're going to return capital to shareholders, and we're going to maintain a healthy balance sheet. This quarter, we executed the Full Swing transaction and continued returning capital to shareholders through the dividend and share buybacks, which demonstrates this balanced approach. Our balance sheet remains healthy, and we'll continue to operate with those principles in mind.
The next question is from the line of Rich Greenfield with LightShed Partners.
So I bought a new Sony TV the other day. When I was setting it up, I had maybe 10 or 15 apps preinstalled that asked whether I wanted to add them to my new TV setup with Google TV. Fandango was one of those 15, along with other much more high-profile apps, which surprised me. You've rolled out the Rotten Tomatoes app and announced a Fandango AVOD approach similar to what others have done. Now we've got other players replicating that model. It seems like there's a larger strategy you're noodling on around the movie entertainment business and how you monetize it, similar to the golf vertical where you've gone deep and the finance vertical where you're going deeper. Could you lay out what you're thinking vision-wise? Are there assets you need to acquire to build this out, or is it all internal? Just give us a peek into what you're thinking because I feel like there's something there.
Sure. Thanks. I hope you clicked yes and installed that. We start with Fandango as a very strong brand, widely known mostly as a movie ticket buying service. We started with a strong brand and a large installed base in the connected TV world. That's a strong base to expand from. Where we aspire to move this is to create a comprehensive entertainment platform where consumers under one brand can find where movies are, buy tickets to theaters, rent or buy films or TV series, and watch for free at home with differentiated and exclusive content. With Rotten Tomatoes, we have a great discovery platform. We have 50 million people coming through the Fandango and Rotten Tomatoes properties in any given month. The ability to expose and transact with them across all three areas—free AVOD, buy or rent, and ticketing—is unique. Our transactional business around movie tickets and buying and renting films gives us differentiated targeting and advertising capabilities. That, attached to our installed base and our independence from any single studio, gives us a clear advantage.
What differentiates you from Pluto or Tubi? There are a lot of players. Disney yesterday said they're launching an AVOD service. Paramount said they're thinking of it for Paramount Plus. What makes Fandango unique from a product standpoint?
I think content will matter for each of us, and our Bundesliga deal—where 270 matches will be exclusive to Fandango Stream—gives us a unique selling proposition. More broadly, because of the transactional business around movie tickets and the commerce we operate, our ability to target content and advertising will be distinct. That, combined with our large installed base and our independence from studios, provides advantages. We have deals and windows for movies and TV series that will help differentiate us as well.
The next question is from the line of David Karnovsky with JPMorgan.
Your linear distribution decline moderated a bit relative to last quarter. Is this seasonality, trends in pay TV, or something specific to your deals? And second, can you discuss the better trends in advertising? What networks have driven this? Is it mainly about ratings? You also mentioned the recent acquisition, which we assume is Free TV Networks. Can you frame that contribution and how it's performing to date?
We have long-term deals with most operators and completed two more recently. We're not blind to the headwinds everyone in the industry is facing, but we're able to strike deals that mitigate some of those headwinds. The remainder of the mitigation comes from our capital allocation and investments in the business, both organically and through strategic, disciplined M&A. So while distribution trends are a headwind, our strategy is to mitigate them and make significant headway.
On the advertising question, the strength was pretty broad-based. A hallmark of our business is that about 60% of our audience is sports, news and live event-focused programming, which is resonating very well. Mark discussed rating successes across the board, particularly in those areas, and that engagement has driven demand from marketers. It's not one specific network driving the strength; it's broad-based. As for the acquisition, Free TV Networks is contributing, but the underlying organic growth across the portfolio is the primary driver of the improvement versus the prior period.
The next question is from the line of David Joyce with Seaport Research Partners.
A bit more on the pending direct-to-consumer launches. Given the fluidity in bundling, packaging platforms and integrating third parties, what is your view on your strategy there? Would you look to partner to help drive subscriptions? How much do you want to lean into Peacock since they may need more scale? And on the advertising side, what are you doing with NBC ad sales, and when would you want to take that back in-house?
On D2C, we'll launch independently to start. We do have deals with MVPD and distribution partners that allow for bundling into what they're offering customers, which can be an opportunity to quickly gain more subscribers and usage. We are in active discussions across the industry about where bundles might make sense. One advantage as an independent company is we can work with any and all partners; we are not beholden to a single distributor. Over time, you'll see us pursue partnerships where they make sense.
Regarding the commercial sales agreement with NBCUniversal, our deal has been going very well. They've been strong sellers and stewards of our brands. The agreement has a term—we will assess at the appropriate time whether it makes sense to continue, change the arrangement, or handle sales in-house. We're months, if not a year, away from that determination, and for now we're focused on partnering with them.
Our next and final question is from the line of Brent Penter with Raymond James.
First, what's the biggest synergy opportunity you see in Full Swing? It clearly fits within a portfolio of golf businesses, but can you help us understand, in practical terms, what the biggest benefits are from being under the Versant roof?
Quite simply, golf participation is growing, and we have a golf ecosystem of Golf Channel, GolfNow and GolfPass that can accelerate adoption. There are a couple of practical forms this will take. First, we can market the Full Swing product to both commercial entities and consumers through our existing golf platforms. Second, GolfNow has a massive sales force that talks to golf courses and golfers every day, and they will now have another product to sell to those establishments. So we see significant revenue synergies—expanding exposure and sales for Full Swing immediately through our channels. Often M&A synergies focus on cost; for us, this is largely about revenue synergy.
You continue to execute on these M&A opportunities. Is there a limit on size you're willing to entertain for M&A? You used the word 'disciplined,' and you've been committed to leverage levels. But if something larger comes up, what's the willingness to use the balance sheet or equity to take advantage of that?
On that question, our leverage target of approximately 1.25x is a North Star. Anything we do would be expected to align with getting back to that level in relatively short order. We would not exclude considering larger transactions, but they would have to pass our disciplined process: add value to shareholders, be a great strategic fit, and where we can add unique value, like the synergies Mark mentioned for Full Swing. Capital structure and allocation must align with our three guiding principles: grow and evolve the business, maintain a healthy balance sheet, and drive value for shareholders while returning capital.
And I think, hopefully, we've proven that through our recent execution, and we do have capacity because of the way we've managed the business to date.
Ladies and gentlemen, thank you for participating. This does conclude today's teleconference. You may now disconnect your lines at this time, and have a wonderful day.