Versant Media Group on Thursday revealed results for its latest quarter – the first as a standalone company following its separation. Comcast NBCUniversal and began trading on Nasdaq earlier this year.
The report reveals continued pressure on the traditional pay TV package, but highlights growth in digital platform and licensing activities.
Versant shares rose about 10% in early trading.
Linear distribution revenue from its pay-TV networks — which include CNBC, MS NOW and Golf Channel as well as USA, E!, Syfy and Oxygen — declined about 7% during the period, to $1.01 billion. The company said this was due to declining subscriber numbers and partially offset by rate increases.
First-quarter advertising revenue fell 5% to $368 million, seen as an improvement over the same period last year, when it saw a 12% decline.
Revenue from content licensing, however, increased 113.5% to $121 million, largely driven by the licensing of the long-running hit reality series “Keeping Up With the Kardashians” and other related content to Disney’s Hulu.
Revenue from Versant’s platform businesses, which include Fandango, GolfNow and some of the already launched direct-to-consumer units, rose 9.5% to $192 million.
CEO Mark Lazarus said during Thursday’s earnings conference call with investors that the company aims to “build scale and expand our audience” in direct-to-consumer sales.
“Yes, we hope that this will come with a large subscriber base, and we will rate ourselves as [to] how the revenues are looking from all of our different forms of content distribution,” he said.
Lazarus added that the company strives to ensure “revenue diversification within each of our verticals.”
More than 80% of Versant’s revenue comes from the pay TV business. However, executives told Wall Street they aim to eventually rebalance its revenue mix so that 50% comes from its digital, platform, subscription, ad-supported and transactional businesses.
Overall revenue for the period ended March 31 was down about 1% from the same quarter last year, to $1.69 billion. Wall Street analysts polled by LSEG expected revenue of $1.62 billion.
Net income attributable to Versant declined 22% to $286 million, or $1.99 per share, for the quarter, which the company said was due to lower revenue, higher public company costs and interest expenses following the Comcast spinoff. This was partially offset by lower taxes during the quarter, it said.
Adjusted earnings before interest, taxes, depreciation and amortization fell 7% from the same period last year to $704 million.
Compared to standalone adjusted EBITDA, a metric to more directly compare pre-spin portfolio company performance to current results, adjusted EBITDA increased by about 5%, Versant said. This was due to lower spending on entertainment programming and lower selling, general and administrative expenses, which offset the decline in revenue.
Growth Pathways
Versant has always touted its strength in sports and news. On Thursday, the company highlighted audience 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 exploring growth through mergers and acquisitions and securing more sports rights. On Thursday, Lazarus said Versant had “studied in various areas” regarding potential deals.
Chief Financial Officer and Chief Operating Officer Anand Kini added during Thursday’s call that while exploring mergers and acquisitions remains a part of Versant’s strategy, the company also seeks to maintain a healthy balance sheet and is focused on organic growth within its business.
“Our platform revenue growth this quarter demonstrates that this is truly organic growth across GolfNow and Fandango,” Kini said. “So we’re going to look to see if there are any inorganic opportunities, [but] they have a very high threshold even if they fit into these markets and these strategies. »
The company also maintained its previous commitment to return capital to its shareholders, mainly due to its low debt.
The company declared a quarterly cash dividend on Thursday for the second consecutive quarter, each time at 37.5 cents per share. The new dividend is payable on July 22 to shareholders of record at the close of business on July 1.
Versant also announced that it plans to enter into a $100 million accelerated share repurchase agreement, beginning Friday, which it expects to finalize during the second quarter. Versant repurchased nearly 2.7 million shares of Class A common stock during the first quarter, with approximately $900 million remaining in authorization as of March 31, it said.
Disclosure: Versant is the parent company of CNBC.