▶ Full Post Text
“Versant” is the name that’s been given to a new entity that spun off from Comcast. Every 25 shares of Comcast got one share of Versant (an absurdly high spin ratio) in the “when issued” market last week, and the stock will begin regular-way trading on Monday Jan 6th.
Versant contains CNBC, MSNBC (renamed MSNOW), USA Network (which has WWE, NASCAR linear rights, WNBA rights, Golf Rights, and Olympics rights - which still have to be shared with NBCU). They also have a bunch of linear cable channels (USA, SYFY, E!), fandango, and Rotten Tomatoes 🍅.
This entity has a $6.8 billion market cap and $1.5 billion net debt. Versant made over $7 billion in trailing revenue, $1.3 billion in net income, and $1.4 billion of FCF in the past 12 months, and its forecast to make another $1.4 billion of FCF in the next 12 months. So about a 5X P/E ratio or a little lower than that on a P/FCF basis. The debt levels look pretty low relative to cash flows at 1.25X EBITDA.
The catch? 62% of the revenues for this group come from linear distributions, and 23% comes from advertising, most of which comes from advertising on linear TV. The worry is that the linear revenues represent a “melting ice cube”.
I think the multiple is low enough, and the pace of “melting” is slow enough, that this could get a nice rebound to a higher 8-12X multiple range. I think the price has probably been pushed down by a lot of forced sellers. Comcast is in the S&P 500, while Versant is not, so all S&P 500 index funds are forced sellers. (On Monday, Versant will enter the S&P 600, adding a smaller pool of forced buyers). In addition, all the “fractional shares” were aggregated, sold in “when-issued” trading last week, and the cash proceeds were distributed to the owners of fractional shares. This creates a second source of forced selling which has pushed the price down.
FOX-A which has some similar assets (news and sports) but trades at 16.6X trailing earnings, and it has $3 billion of debt. But Fox has better news assets (Fox News) and has better sports rights, and the revenues are overall increasing, not declining.
Still I think there’s an enough room between 5X earnings and 16.6X earnings that this stock could get a bounce.
If it doesn’t, I’d guess the insiders, who are pretty incentivized ($25 million of stock for the CEO, $17 million of stock for the CFO), will go out and start using the cash flow to buy back shares. With good visibility to well over $1 billion in cash flow for at least the next 2 years, and a balance sheet with relatively low leverage, they could hold off on debt pay down and buy back a significant portion of the outstanding stock.
There’s also some good upside optionality. I’d guess a big reason they are doing this NOW is because Warner Brothers Discovery is being fought over by Paramount and Netflix. They are probably trying to create a tasty media morsel that can be gobbled up by a bigger player in media, or maybe in big tech.
And eventually, the company could actually execute on building CNBC, MSNOW, and Golf into big streaming assets. That would also be a good outcome.
In the downside, you probably don’t lose too much waiting to see what happens since it’s already priced at just 5X earnings.
Revenue was down 5% in 2023, down 5.1% in 2024, and is down 4.9% in the first nine months of 2025. So it seems to be relatively stable at a 5% decline rate for now, with no clear signs of accelerating revenue decline.
My guess is the ice cube will stick around for a while.
NASCAR linear TV rights still generate a ton of cash. The commissioner of NASCAR said at the investor day, he thinks the shift of NASCAR viewers to streaming is going to be slow, and I agree. I’d bet the decline rate on these revenues is pretty low.
CNBC is an interesting asset to me. The Versant management have described this like the “crown jewel” of the Versant assets. They just launched CNBC+ as a streaming service for $15/month, or $99/year, in April 2025. This seems like a pretty reasonable price for most people with interest in financial markets. The advertising on this media is always going to be valuable, because you generally have a high income viewer. I think the streaming CNBC+ might be able to offset the decline in linear revenues from CNBC.
The editor in chief at CNBC has signaled that they are looking at other ways to milk the CNBC asset. There are tons of fintech companies that would love to partner with CNBC. An example is recently they made an exclusive deal with Kalshi to post their results exclusively when referring to prediction markets. Public documents don’t disclose the nature of the relationship but it seems pretty likely to me that Kalshi is paying CNBC to get their name out there. I could see a broker doing the same thing. (The day that CNBC starts advertising HOOD directly, you’ll know what happened behind the scenes…)
I don’t know if it’s legal to pump your own stock on your own media network, but I would guess that all your favorite CNBC anchors are highly incentivized to do so because they all just got loaded up with restricted stock in VRST. This is standard in the media industry - you want to grant restricted stock to “top talent” that vests over time so you keep the talent around. The angle in this case is that these are not just media talent, but actually financial journalists, who cover financial markets, like their own stock.
My guess is they might be generous with coverage, relative to its pretty modest $7 billion market cap. CNBC has already done a couple of segments on the spinoff, of course with lots of self-aware jokes, but all the anchors know their fortunes are tied up in this as well.
MSNOW is also going to launch a streaming option in 2026. I could see some people paying for a pure stream MSNOW if the pricing is right (sub $15/month). We are heading into an election cycle in 2026, which should boost viewership and advertising revenues. I won’t go into politics but MSNOW but I don’t think it’s controversial to say MSNOW is left of center and CNN is trying to position more towards the center, so there’s probably more room on the left for MSNOW to expand a left-leaning news network.
Golf is also an interesting asset. It also has high income viewers who are valuable to advertisers. I’d guess the decline rate on the linear revenues is going to be high for Golf, but they do get some revenues from viewers from Hulu+, YoutubeTV, etc. And the team behind Golf Channel has cultivated some interesting assets, like GolfNow, which is an online booking service for tee times at golf courses.
Versant gets a fair chunk of revenues every 2 years from the Olympics cycle from rhe 24/7 coverage on USA Networks and CNBC after hours, but NBCU retains the full Olympic rights and will push that through Peacock, Versant will just get free rights to broadcast 24/7 on the linear channels.
I’m not too sure what happens with the other programming they have like SYFY, or E! It will probably migrate over to services like YoutubeTV and continue to dwindle. Fandango is trying to put together an ad supported streamer so maybe it goes to that. But in the meantime, this stuff may be a more rapid decline asset.
All in all I see a lot of reason to like the assets, and I tend to think they will still earn a lot even with linear television revenues in decline. Let me know what you think.