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

Versant Media Group The Wall Street company will release its first earnings report as a public company on Tuesday, giving Wall Street its first glimpse inside a company made up primarily of pay-TV networks.

the Comcast Affiliate – consisting of CNBC, MS Now, USA Network, Golf Channel, Syfy, E! and Oxygen, as well as digital properties including Fandango, Rotten Tomatoes, GolfNow and Sports Engine – which debuted on the Nasdaq in January after one of the media industry’s most significant transactions in recent years.

The company’s first quarterly results will provide more detail on 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 deep pressure.

Before going public, Versant released financial statements that showed a decline in revenue in recent years. Versant’s assets generated revenue of $7.1 billion in 2024, down from $7.4 billion in 2023 and $7.8 billion in 2022, according to a Securities and Exchange Commission filing.

Versant stock is down about 25% since its debut in January. The company’s market capitalization is approximately $4.8 billion.

It’s rare these days to see pure media stocks going public — especially ones that consist solely of TV networks. last year Newsmaxa conservative news network, began trading on the New York Stock Exchange. Its shares initially rose before falling sharply since its debut.

Versant generates more than 80% of its total revenue from pay TV distribution. While the business remains lucrative, the long-time cash cow of the media industry is declining as customers flee the package in search of streaming alternatives.

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

He added, “We feel very confident in our position. I think the deals we concluded last year confirm that.”

Versant’s sports and news-heavy content slate has been a key part of its pitch to investors — as has its light debt load and focus on digital properties as future drivers of revenue and earnings growth.

“The focus on sports and news is positive, as Versant has far fewer lower-value general entertainment networks that some of its peers have,” Raymond James analysts wrote in a research note earlier this year. “While Versant lacks ‘tier one’ sports like the NFL, NBA, college football, etc., we believe its sports lineup (large golf rights, WWE, NASCAR, etc.), along with MS NOW, CNBC and other networks, supports VSNT’s value to distributors.”

Before its debut, NBCUniversal had negotiated carriage agreements with most major distributors, e.g Charter Communications and Google YouTube TV, which included Versant Networks. These agreements remain in place for at least the next two years even after the breakup — an important cushion as these negotiations become increasingly fraught and can lead to content disruption.

“More than half of our pay-TV subscribers are governed by agreements that extend through 2028 and beyond… and many of our sports agreements… extend beyond 2030,” Anand Kenny, Versant’s chief operating officer and chief financial officer, said during the investor day. “We consider this really important because the long-term nature of these partnerships highlights the stability of our business and also provides great visibility in the coming years.”

Versant Networks will face its first test on its own at the negotiating table this year when its two distribution agreements are renewed, according to people familiar with the matter, who spoke on condition of anonymity because they were not authorized to speak publicly. A Versant spokesman declined to comment on upcoming discussions.

News and sports networks typically carry more weight during such negotiations, but blackouts are becoming more common, even for those with top-tier rights like the NFL.

However, traditional package TV has shown a glimmer of stability recently, despite the focus on live streaming.

Charter, one of the largest bundle distributors in the U.S., reported the addition of cable customers in the quarter ended Dec. 31 — its first quarterly gain since 2020.

However, Comcast and other distributors are still reporting customer losses — albeit at a slower rate than recent declines. This is a sign of potential stability, according to Craig Moffitt, an analyst at MoffettNathanson.

Given its weight toward traditional television networks, Versant’s leadership has told Wall Street that it is in the midst of a transformation.

“We view 2026 as the first year of our business model transition,” Kenny said in December.

Versant executives have told Wall Street of their intention to invest in its direct-to-consumer products and expand into ad-supported television, among other growth initiatives.

Longer term, executives are targeting a future in which 50% of Versant’s revenue comes from pay TV, with the other 50% coming from its digital, platform, subscription, ad-supported and transactional businesses.

Mergers and acquisitions are another part of the equation, although expansion into linear TV networks is not in the plan, executives said. The company has already announced deals such as the acquisition of Free TV Networks, a provider of free-to-air digital streaming networks.

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

Comcast’s bid for Versant channels was an attempt to separate itself from a declining business. Warner Bros. Discovery It began down a similar path — announcing it would separate its television networks from its broadcast assets — before reaching a deal with Paramount Skydance To sell the entire company.

Analysts who initiated coverage of Versant listed various highlights of the business, from strong free cash flow to a portfolio full of sports and news, while still expressing some hesitation.

“We have a Neutral rating on VSNT due to secular challenges in the linear networking business, while… [remaining] “They are encouraged by the company’s efforts in the platform space,” Goldman Sachs analysts said in a January research note.