Thanks everyone for joining us here. I'm excited to announce Anand Kini, who's the Chief Operating Officer and Chief Financial Officer of Versant. Welcome, Anand.
Thank you. Thanks for having me.
Maybe just start off with some high-level questions. You know, I think at your Investor Day, Versant was described as unleashed to grow further beyond the bundle. Maybe you could start by just recapping the core thesis for Versant as an independent company, how it differs from its prior role at Comcast, and where do you see Versant in, say, three to five years?
Sure. We're a leading media company, and the way we look at ourselves is we've got kind of big brands in four large dynamic markets: Personal Finance and Business News, Political News and Opinion, Golf, and then Genre Entertainment and Sports. We start within pay TV. These brands are, you know, CNBC, MS NOW, USA, Golf Channel, exceptionally strong, and these brands are in really live. We have about 60% of our audience is live news and live sports. That's exactly what marketers want, what distributors want, and what advertisers want. We start with a very strong position in pay TV, a very profitable business for us, and we have a really good runway with those businesses.
You combine the fact that those brands that also command very large audiences, things like MS NOW is, kind of the perennial number two rated network in all of cable, not just in news. They're very similar to, like, the Golf Channel has more hours of golf on it than all other television networks combined. You take the audience strength and the brands, and that enables us to extend these businesses outside of pay TV. We're already kinda doing that. We have a platforms business that includes GolfNow, a tee times reservation business, as well as Fandango, a movie ticketing business, that is, you know, about $850 million in revenue.
We're supplementing that with new services like a D2C service for CNBC and MS NOW, AVOD for Fandango, and that's what we're gonna be growing significantly. One metric we use is our percentage of our revenue that comes from pay TV and comes from non-pay TV. That's a big metric. As we continue to grow these others, today we're, like, 81% pay TV and 19% not. We're gonna kinda evolve that over time to, like, 33% over the next three-five years non-pay TV and then 50/50. That's a little bit of our trajectory going forward and kind of how we're thinking of the business. It really is about strongly profitable and then evolving the business model.
In terms of then how we're kinda different than where we were before, and I come from NBCUniversal and Comcast, I think. We have a great deal of respect for the, you know, for our previous parent. I think a couple of things. We obviously have our own capital allocations and our own capital. In the old, in my old job at NBCU, our priorities might have been Peacock, or it might have been the film studio, or it might have been kinda theme parks. These businesses were frankly not invested in. That cash flow was harnessed for those. Now, we kinda have these businesses to pursue the strategy we just talked about, but extending these brands into new audiences and evolving the business. We're a smaller company. We're more nimble, more flexible.
We're faster from an execution perspective. Like, you know, we're more efficient, and that's not any smirch on Comcast. It's given our size as a spin, we're able to do that. You know, our trajectory, as I just mentioned, is kinda to evolve this business and kinda drive profitability, and to kinda grow the business over time as we extend its reach. While we're doing that, maintain a healthy balance sheet and deliver a lot of value to shareholders, both in terms of dividends, share buybacks, and obviously stock appreciation.
If you look at the four key verticals, Business News, Politics, News, Golf, Athletics, and Entertainment, in your view, which of these verticals represents the most significant near-term value creation opportunity, and which one requires the most investment and transformation in order to realize that potential?
I know it's gonna sound a little like a cop-out, admittedly. In these four verticals, we view them all as very attractive. You know, putting a fine point on it, like, if I take CNBC, which probably in this audience people are very familiar with, it is this brand that resonates very, very deeply, particularly for the retail investor. As we're thinking about a new digital consumer service oriented to the retail investor, providing them information to make smart investment decisions. We've surveyed our consumers. They really want this offering. There's. It's a fragmented market in terms of where they get this advice today, and it's not coming from a brand that they trust or has the information that only CNBC can provide.
Similarly, if you take MS NOW, as I mentioned, like, the number two by audience network in all of cable, and yet other than having a text-based kind of website and an app, we've never had a digital video service, an ability for this business that people want more and more of, it's one of the, not only audience, but it has one of the highest engagements. I mean, the average viewer watches nine hours a week. They want to interact more significantly with it. They wanna have, like, opportunities to kind of virtually meet, say, some of the talent, Rachel Maddow, et cetera.
Mm-hmm.
We've never done that before. That's a big opportunity. Similarly in Golf, like, we've already established a significant, big, successful business there digitally, but we've only scratched the surface. Like I said, we're synonymous with Golf, and the Golf market is growing, and we can provide more and more, you know, more tee times bookings, more consumer technology services. Then similarly on Fandango, on the entertainment side, we're very bullish on our AVOD service for Fandango we've announced. We already have a big business in ticketing and at-home entertainment. This is a natural extension now for consumers who wanna watch stuff for free with ads. I should say on all of these. Like the investment profile is kind of. It's moderate in that we have a lot of synergies.
These are businesses that already have an existing audience, so the cost per customer acquisition is, you know, really efficient from that perspective because of our audience scale. We already have existing technology and video infrastructure that we can harness, and we have these brands that resonate. We're able to do it in a very cost-effective way to kind of evolve the business.
You had your first earnings call a week ago. I just wanna give you the opportunity to share with investors what makes Versant different and what might be underappreciated in the stock.
I think a couple things. If I was to kind of list out what I think really makes us different is list out some of the things that come top of mind. There's a lot. A, I've mentioned before the strength of our brands. B is kinda live, you know, the live news, live sports.
Yeah.
Third is the size of our audience. Fourth is kind of our existing success already, and we're building on it in digital. Five is probably the health and the strength of our financial model and our capital structure. To go a little further on a few of them. On the brands, again, these our brands resonate. They’re universally known. They instill kind of deep emotions in folks. Even a brand like MS NOW, which, you know, some people love, some people don't like, but it's a brand that matters to the people when it kind of stirs emotions. And I think those brands and you combine with live, kind of the second component I mentioned. Producing live events is hard. It is like.
A lot of other companies have tried, and they're not always good at it. We've developed the real expertise. You have to have the on-air talent. You have to have the production capabilities. In sports, you obviously have to have the sports rights. We have all of that. Then, you know, you combine that then with the audience size that we already talked about, and we're big in terms of really almost all of our networks. Those things that enable us to build this platform and I think, and build a digital business.
While there's a lot of companies that wanna do this in terms of transitioning from pay TV and kinda taking these audiences and migrating them, I think you have to have those three things, live brands that kinda can migrate, as well as big audiences that you can harness to bring over. We uniquely have it, and we've already kind of demonstrated it, and this platform business already exists, and it's kinda scaling very nicely. The final aspect of, I said, the business financial strength kind of provides us the capital to be able to execute that while at the same time delivering value to our shareholders in the near term and the long term and maintaining a healthy balance sheet. I think those are kind of all the components I think that make us very different.
Yeah. Helpful. Maybe we could talk about the 2026 outlook a bit. I think, you know, you're projecting a continued but moderating decline in revenue and EBITDA. Can you just help us understand what the key drivers of that are, and, you know, maybe if you could talk about when you expect the company to return to growth and what the key factors are for getting to that point?
Sure. You know, the revenue and EBITDA, the starting kind of revenue where 2026 guides us, we have really good visibility. You know, for example, if you look at our revenue in general, linear distribution, which is obviously our pay TV subscriber fees, the vast majority of our deals are not up till 2028 and beyond. We have about 16% that are up in 2026 for renewal. That's only a small percentage. Those are obviously important renewals, but the vast majority are not.
Our assumption here is that you could definitely take a more bullish case than we've taken, and we'll see the pace of pay TV, the secular challenges in terms of cord cutting, we're assuming kinda stay as they have been.
Okay.
Kind of high single digits, offset them by contractual rate increases. There's some indications obviously that over the last quarter or so that things have gotten a little bit better. I know Charter gained video subs last quarter. We hadn't seen that in a while. To the extent that's better than what we think, that would obviously be kind of a tailwind to us. We factored kind of that in. The advertising market is healthy. We feel pretty good about that. On the rest of revenue, on platforms revenue, we're bullish. We've stated it on the earnings call that we're expecting kinda high single digit kind of revenue growth organically in platforms. You kinda put that all in, it kinda leads to the revenue guidance that we gave.
Then on EBITDA, we factored in the expenditures for these new initiatives I just mentioned, whether it's the D2C initiatives on CNBC, MS NOW, Fandango. Those are all kind of baked in, then to, you know, a number that we think still reflects really strong profitability, significant cash flow generation of over $1 billion. We're kind of both driving profitability and evolving the business at the same time. As you then kinda look past that, you know, our model after 2026 is really drive profitability, evolve the business. That's gonna lead to stabilization of the top line in the medium term. In the long term, really to drive growth both on the top and the bottom line and really create Versant as a platform for growth, you know, over time.
That's kind of the entire trajectory and how we're running the business.
Okay. Maybe we could talk just about the revenue mix. You've outlined this long-term goal to shift to basically revenue mix to parity, so half of it coming from outside of pay TV, half of it coming from pay TV. You know, that number from non-pay TV was 17% in 2024, 19% in 2025. What are the key milestones for narrowing that gap, getting to the 50%, and also getting to that medium-term 33% goal?
I think a couple. In terms of the things to look at how we manage the business, one will be. I've mentioned this Platforms revenue, which really consists of GolfNow, Fandango, SportsEngine, and some of our CNBC D2C initiatives. That's the one where we're expecting high single-digit growth for 2026. That's the, you know, that business we think has or that area has a lot of growth, not just in 2026 but going forward. Continued strong growth there will be one big hallmark of it. Another part of kind of this mix of non-pay TV will be on advertising. Our advertising today has a healthy amount of digital advertising that is not associated with pay TV.
Some of the initiatives like the AVOD on Fandango, we have this business, Free TV Networks, we acquired, which is an over-the-air business that has entertainment programming that'll drive that area. You know, we expect that the advertising trajectory will improve, particularly as we kind of evolve it and to have more from non-pay TV sources driving that advertising. In general, we are going to be regularly updating everybody on this mix percentage that, as you mentioned, was 17% and 19%, you know, for 2024 and 2025. We will keep investors informed of, you know, that trajectory. Like, I think I said, those two areas of looking at Platforms revenue and advertising.
The other one too will be we have an area that's not huge today, but it's several hundred million dollars of content licensing. We own a bunch of our content. Like we announced a few weeks ago, we sold the Kardashians franchise to Hulu. That was a very good deal for us. We own a lot of content in True- Crime. We have, like, a franchise called Snapped with 700 episodes. That has a lot of demand, both internationally as well as domestically. That'll be another area you could expect.
While it's a little chunky, just given the accounting of content licensing, where it won't be a linear increase necessarily every year, that will be also a source where something to kind of, you know, look at as we continue to kinda drive towards that 33% mix and then 50% over time.
On your earnings call, you talked about Platform revenue growth in the high single-digit range for this year. Can you talk about what comprises the Platform business and the drivers behind that growth? Do you expect acceleration in Platform revenue growth in 2027 and beyond as these digital initiatives really gain momentum?
What's in there is, again, the biggest businesses in there are GolfNow and Fandango, the two biggest ones today. Both of those businesses from a share perspective have a lot of room to grow. Let's take GolfNow. It is the leading online way to book tee times for those if you're a golfer. But still it's less than 10% share of tee time. It doesn't really have a notable digital competitor. The biggest competitor is actually a telephone. It's a far better way to book tee times than you know, any other way. We've seen this in other businesses like OpenTable for restaurants, for example. I mean, it's become the preferred way to make a restaurant reservation for the most part.
For us, this is about adding more sales capabilities. This is an area where when we were owned by NBCUniversal, we didn't necessarily have the capital to deploy to get more feet on the street, to sell it into more courses, to kinda grab more share there. That will be a big driver as we continue to go forward on Platforms growth. Similarly, this is true with Fandango too, which is 10% of tickets sold. There's room to grow on that 'cause again, it's an advantaged way of going to the theater. You get a reserved seat. In addition on both of them, there's a lot of adjacent markets right next to us of where we are today that we think are gonna be very fruitful to drive more growth.
For example, you know, on GolfNow, for those of you who are golfers, there's a tremendous amount of consumer technology, whether it's simulator or range finders or so forth. We talk to golfers better than that argument about any other company given our Golf Channel and our Golf thesis, our GolfNow business. You'll see that continue to expand and extend and again, leveraging the low cost per customer acquisition. In Fandango, we did the same thing with buying INDY Cinema Group. We have an existing relationship with exhibitors that we're providing their ticketing services. Now we're gonna provide operating software opportunities for them as well. The CNBC D2C will be a component of that too, which we're very bullish about servicing the retail investors.
We expect that growth profile that I mentioned is gonna be very strong for many years to come, and that there's a lot of runway here.
Yeah. You mentioned the direct-to-consumer investments, including the membership community for MS NOW and CNBC, for retail investors. How do you view the profitability profile of these ventures? Are these gonna be managed as sort of loss leaders early on to build a user funnel, or do you expect them to be accretive to the P&L in the near term? Maybe if you could just help to frame how much incremental costs are associated with the launches of these services.
Sure. The initial investment is relatively modest. I think a lot of folks are used to kinda the media D2C services, and it's a very significant investment early. Again, I come from NBC, so we were part of it with Peacock. This is very different. We very purposefully are not doing a Versant D2C service. Rather, we're doing D2C services bespoke to each brand. I think the reason that's important is that you can then very much harness the synergies that you have with each brand. I mentioned, for example, on CNBC, the spending, the cost per customer acquisition, given we already have a television audience and a big brand that people have very positive disposition to, retail investors are already with us.
To kinda get them now to, you know, subscribe to this service is significantly more efficient than if you're trying to approach this in a very different way. The investment and also technology-wise, we have a lot of it already in-house. Like, we have video infrastructure. We have a couple CNBC D2C services today that have video playback. We have the Fandango infrastructure. We have a lot of commerce infrastructure at GolfNow. We're using what we have. Sure, there's some investment on, like, the user interface. There's some investment in marketing. It is much more modest than, you know, really what I think a lot of folks would expect. It's embedded in our 2026 guidance. I would not. In general, that's the approach. Relatively modest levels of investment.
The payback in any of these services, the payback's not instantaneous. There is gonna be some moderate initial investment, and then the payback's measured over years. This is also not the model where you're expecting payback five years from now.
Right.
It's pretty quick. It's measured in. You know, we expect positive contribution to the P&L in the near term.
You mentioned the low share that Fandango and GolfNow both have less than 10%. What's the target market share for each of these businesses? You know, where do you think you can get to, and what are the kind of the critical steps to realizing that share potential?
Yeah. I mean, we haven't publicly stated that we're trying to target X share or Y. You know, for us, we know there's a lot of room to grow, and we're gonna pursue that growth. Really it's a lot about, again, executing on sales initiatives. It's execution fundamentally.
Mm-hmm.
I mean, like on GolfNow, it's about just making sure the awareness of the offering continues to increase, making sure we're in more Golf courses, public Golf courses so people can avail themselves of the service. You know, we can debate what the ceiling of the opportunity is, but I think most people would agree that if it's 10% for these, there's a lot of room on the upside for this to be significantly more. Again, we also think about the kinda share, not only in the specific verticals that they're in today, like tee time reservation or software or for Fandango, tee time, but it's these are brands that one service is the golfer, Fandango services kind of the entertainment consumer.
We look at it almost in a broader sense about what's the kind of wallet share or time share for that entire ecosystem. That's one of the reasons that AVOD makes a lot of sense. You could imagine that we're gonna extend these brands into other kind of adjacent areas that we think will enable them to continue to be significantly larger than where they are today.
I wanted to ask you about the Free TV acquisition and the planned launch of Fandango AVOD service. They, you know, they signal a significant push into the ad-supported non-pay TV space. How are you going to differentiate these AVOD offerings in a crowded market with incumbents like, you know, Tubi and Pluto and The Roku Channel, et cetera?
Sure. Look, we have a lot of respect for those competitors. They've done very well, Tubi in particular, and Lachlan Murdoch has been very vocal about it. As I said, I mean, I think it's an impressive what they've done. We view Fandango as having some of its own unique advantages in the space. Now I'll start by saying this is a growing market on free. It's pretty clear that there's some consumer subscription fatigue, both with SVOD as well as with pay TV. What you're seeing is from a market share standpoint, you know, free offerings, FAST, free platforms are continuing to grow. It's both in terms of streaming as well as over the air. One of the reasons we bought, as you said, the kind of Free TV Networks.
We see significant kind of just a market tailwind across the board, and we think that's gonna continue for a while. In terms of Fandango and some of the advantages it has, well, one is it's a known brand that people have a very positive kind of disposition towards. It's kinda known for all things entertainment. The recognition of the brand through all the work we've done is amongst the highest of entertainment brands. Two, it has an existing distribution footprint. We're in just about every single connected TV platform. As you think about making sure that consumers are gonna be able to access this free AVOD service, that's often a pretty big hurdle. How do you make sure you're in those platforms? We already are. Then three, we have consumer data.
Because we're already there and it's one of the biggest, most popular ways people are renting and buying movies and TV series today, as well as getting tickets, we kinda know things on a, you know, a PII-compliant basis about what do you like to watch? What have you watched in the past? We have credit card information. That's relevant both on a recommendation perspective, so we can make sure we get the right programming in front of you, and also from an ad monetization angle, 'cause we can go with a more targeted ad load, which makes the viewing experience better, makes the marketing and the advertising more effective. A lot of our competitors, the viewership is on an unauthenticated basis, and so they don't have that, they don't have that benefit at all.
Finally, on Fandango, we have a lot of existing studio relationships because we're serving the studios through exhibitors. We're also serving the studios directly 'cause we're selling their films and TV series for purchase. For us to be able to secure content for the AVOD based on those existing studio relationships, we have an advantage there as well. I think we're walking in with some significant advantages in this space that we're very bullish on.
It sounds like it. Maybe we can shift a little bit and talk about distribution. I think, you know, you noted that over half of your pay TV subscribers are covered by agreements extending through 2028 and beyond, with only 16% up for renewal this year. Can you discuss the renewal cadence for the rest of your affiliate contracts? Are there any significant renewals on the horizon over the next, say, two to three years? How do you see the renewal process going without the support of NBC broadcast, which, you know, obviously you had for some of your previous renewals?
Sure. To get the numbers out there, we've got 16%, as we mentioned this year, and call it about a quarter next year in 2027, and then most of the balance in 2028 and beyond. We do have a few coming up this year itself. We feel very good about the renewal. And a couple reasons why. A, there was a bunch of renewals done at the very end of 2025 and end of last year, and they were on one hand, yes, they were done together with NBC, but the counterparties and we were public on many of them, like say YouTube TV, that was done at the end of the year. The counterparties obviously knew we were spinning. In many ways, those deals were done almost on a basis where the spin was happening.
They could use that information as part of the negotiation. We were very satisfied where we came out. To be very specific, like on YouTube, which they have introduced new packaging constructs. On their news and sports package, our news and sports networks, very specifically Golf Channel, USA Network, CNBC, MS NOW, they're in that construct. We got the rates that we're pleased with too. We think we have kind of a case study that these deals went successfully demonstrating the power of our portfolio. At the end of the day, we have big audience, you know, networks that people really care about, in again, news and sports, which is what distributors want. We think we're set up very well.
Then other couple aspects that also make us very bullish is A, our content very uniquely has a heavy amount of exclusivity within the pay TV ecosystem. If you look at a lot of the renewals industry-wide, I think one of the things that's complicated them for some of the other media companies is there's some leakage where a lot of the programming that are being offered to the MVPDs is also being offered direct to consumer, often at price points that if you're a distributor, you view as kind of internally cannibalistic to what you're offering on a wholesale basis. We don't really do that. Our sports are really exclusive to the pay TV platform. That carries a lot of weight.
I think from a you know from a distributor value proposition perspective, we're reinforcing that value to them in ways that some of our peers are not. Also we don't have, like we're benefiting. Sure, we don't have NBC with us and anybody would love to have the power of football behind them obviously. I'm not gonna say that's not the case. You also don't have the streaming issue. You don't have a distributor. You're not distributing a Peacock or another big streamer on a direct-to-consumer basis that has some of the same content. There's some of those specifics of how this is structured, we think are very beneficial to us.
You've got this two-year partnership with NBCUniversal for ad sales. What happens after that second year? Should we expect Versant to build out its own independent sales force and infrastructure? How would you manage that transition? How do you think having your own sales independent from Comcast will impact your financials?
We're gonna have a few different options. As you mentioned, it's a couple-year deal, so we have some time. I think really three ways we could see this evolving. One is we may renew, that's both parties would have to agree to that, meaning NBC as well as Versant. Recall that we did this deal really for a couple reasons initially. One, there was just a speed. We were trying to get the spin done and to stand up our own sales force at that time would've been hard. Very importantly also, we think it was the right thing for both companies, even independent of speed. This has been a proven go-to-market kind of winning approach.
NBC, as when we were part of NBC, kind of very typically led the upfront in terms of volume, was one of the leaders in pricing as well, has effectively sold and scatter and driven yield. Proven ability to bundle this inventory and sell it. The benefit that we bring to NBC is that we're addressing unique audiences so they can go to agencies and kind of make sure that those agencies and the marketers are able to kind of deliver different types of audience reach. Also the pricing is different. I mean, clearly NFL inventory is priced at one level. You know, our inventory is still premium price, but not at the same level.
There's a little bit of dollar cost averaging to the agencies and the marketers about getting reach on a cost-effective basis that we uniquely can deliver. We're, you know, there's a real chance that we decide that mutually this is an advantageous relationship and we extend. Part two, we had a lot of this even before we set up this arrangement with NBC. There's a lot of other parties that we're interested in potentially selling for us. We decided not to pursue them this go around, but that'll be there. Again, there's a bunch of folks that kind of see the value NBC has it with having us, and they would like to participate as well. We think there will be a pretty active market of third-party sellers. Then three, we could do our own sales force.
We're not starting at zero, meaning we do have our own salespeople today on digital. NBC sells most of our, almost all of our TV inventory. Some of our digital inventory, a good chunk of our digital inventory, we actually have our own sales force that's selling it. Digital continues to grow, so that'll become a bigger part of the overall sales, and we could launch our own initiative, our own sales organization if we wanted to. We feel like there's a lot of options here. We're gonna pick the one that kind of value maximizes in the short and the long term, and we think we're really well positioned for that.
On the digital inventory that you're selling yourself, how much of that is programmatic versus, you know, manual?
We do. It's a blend in terms of we do both. I think you'll see our programmatic go up over time. Like as I think we're looking at, for example, the AVOD offering that we're going to, you'll see more and more of it.
Okay.
Today a bunch of it is direct. I think we're seeing that shift that we will lean into programmatic increasingly as we add more and more digital sources.
Another partnership you have with NBCU is for the Olympics, and I think that goes through the 2028 games in L.A. Beyond the Olympics and that ad sales partnership, are there any other ongoing operational or technological arrangements with Comcast that, you know, are material to the company we should be thinking about?
Yeah. Not from a material. Like, the biggest material interrelationship between the company is in fact the ad sales one we just talked about. The Olympics. Just to be very clear on how the Olympics work, we, you know, we love having the Olympics. It provides obviously healthy ratings for us. It's a good promotional platform. Economically, NBC buys the time on our networks.
Okay.
Economically, it's not a like not having the Olympics will not kinda cause any economic impact on us directly. You know, we'll see what happens after 2028. Other than those, we of course have some transition service agreements on technology that are not material financially that we will migrate off of relatively quickly. There's an existing transition service agreement on some sports production, and again, we'll migrate it off of that relatively quickly. Not a huge economic impact for us. Then there's a brand license on CNBC that that's a five-year license between the two companies. And that's pretty much it. There's not a lot of kinda dependency or connectivity in that, in a negative sense, I should say.
Yeah
between the two. Of course, we have our Comcast Cable carriage deal, which is done at arm's length. When that comes up for renewal, we'll, you know, we're very, you know, optimistic that we'll renew that on favorable terms.
Okay. Maybe we could talk about costs, you know, especially given some of the top line pressures. You know, despite more adoption of skinny and genre-based bundles, the cable networks, you know, face these secular pressures. How do you manage costs to offset the top line pressure, and what are the areas of the cost structure that have the most opportunity to actually save?
Yeah. About 70% of our cost base is kind of addressable in the short term. One way to think of our costs is using round numbers. A little more than half of our costs are programming, and of programming, about half of programming is sports rights. Once you take that out, basically that math will work about 70-ish% is not sports rights, which those are more fixed. Everything else, whether it's entertainment, news programming, you know, SG&A, of course, those are all kind of pretty addressable and variable in the short term. In terms of then our opportunity on cost. We will flex costs appropriately. You know, if revenue does not materialize the way we think, we will pull those levers to kinda help mitigate the impact on the bottom line.
The other thing in terms of where the opportunity is, because of the need to kinda execute the spin within a quick timeframe, you know, we have to replicate a lot of the NBCU infrastructure technology-wise. We set up the org to be efficient, so we're all shared services everywhere other than programming for the brands. Everything else is we don't have brand-specific resources. That being said, technology-wise, in terms of enabling us to, say, take advantage of automation, take advantage of some of the AI capabilities, like in the back office, finance, HR, and increasingly, even the front office, so to speak, like in production, we need to have more modern infrastructure, which we are actually developing right now.
It's a big priority for 2026 to enable us to unlock those savings, probably first starting in the back office and then increasing up and down the value chain. That is gonna be an area. Frankly, we're gonna do that. It's not in response to any kind of revenue pressure. We're gonna do that regardless because it's the right thing to do.
Yeah
to maximize profitability, I think there's a material opportunity there for incremental efficiency.
Let's talk about sports. Many of your competitors are obviously focused on NFL rights. What can Versant do to capitalize on the other sports rights that might come to the market over the next couple of years? Any particular sports that you've got your eye on at this point?
We're very happy with our sports portfolio. For those who aren't familiar, it's like anchored by you know NASCAR, PGA Tour, USGA, which is the U.S. Open. We just extended our deal with the PGA of America for the Ryder Cup. We have Premier League and WWE. The list goes on. We've built a very position we're very proud of in women's sports that we think is a big growth opportunity. With WNBA, which is new to us, we're one of the biggest kinda media partners of the WNBA as well as League One Volleyball, women's volleyball league, which is also the ratings have been quite strong, and then we have the LPGA. We don't have to expand into more sports. It'll be opportunistic based on where there's clear value.
Value in terms of distribution, value in terms of helping us evolve the business model and advertising. I think Mark mentioned this on the earnings call we had. You know, the NFL looks like it's gonna be kind of trying to renew their deals. We can argue on timing, but one would presume that's gonna have a pretty significant rights reset.
Yeah
for the existing media partners. Presumably, that could result in some of the existing media partners either taking a different view on NBA. For those of NBA, that's a long-term deal. Those rights are set. On other sports, they may, whether that's sub-licensing opportunities or whether that is not maybe engaging in renewals. We'll look at that. We think, again, we're very unlikely to be in the NFL and NBA business.
Right.
We don't think that really makes sense for us. In those other sports, there may be real opportunities for us. Those sports want linear distribution on kind of popular networks like we have, like on a USA, but it's gonna have to make sense for us economically. We're not gonna do it just to add to the sports portfolio.
Yeah. As you navigate, you know, what is a competitive market for sports rights, how do you plan to manage that cost inflation, you know, while at the same time you're investing in new content to drive growth?
Yeah, we'll be very disciplined here. Like, I think to the extent we are gonna add to sports, we'll find offsets elsewhere. Like, again, part of, I think, the economic calculus, we're just gonna have to make sense. We'll be okay. If we're gonna do this because it's gonna add, say, distribution value. We're gonna look at the overall programming lineup that we have and say, "Where are we spending elsewhere?" I think it is. We're gonna make those trade-offs there. We wouldn't envision this to be up, you know, adding to the cost structure, with the kind of, with the hope that we're gonna have a business model that comes. The business model is gonna have to be established upfront, and we'd make those trade-offs.
Okay. Got it. Let's move to capital allocation. You've laid out a clear capital allocation framework. Maybe you could walk us through how you're prioritizing uses of cash, particularly trade-offs between M&A, organic investment and shareholder returns.
You know, we're in a, I think, a very privileged position that we're happy for. We have a very cash generative business, and we have a very healthy balance sheet. We're thankful that, you know, Comcast enabled us to have this opening day healthy balance sheet. We're a 1x net leverage today. We've set our targets 1x-5x. You know, we've guided for 2026 or over $1 billion of free cash flow. I mention that because when it comes to kind of capital allocation, we have three priorities that we can execute concurrently. Rather than it being an or, it's an and. Those three are. We're gonna maintain a healthy balance sheet, as I mentioned, that 1x-5x leverage is our North Star.
We're gonna invest in growth organically and with a high bar inorganically. We're gonna return capital to shareholders. We've announced the $50 annualized dividend. We've announced the board authorization of $1 billion share buyback. We're gonna do all three of them. I think a lot of our peers can't because of different financial constraints they may have. We're in the position where we're able to execute all three. That's, you know, we view them all in equal priority. We're gonna execute all three together.
Okay. Just on the M&A side, seems like your strategy appears to be focused on smaller targeted deals like INDY Cinema and Free TV, things that are highly aligned with the company's strategy. Is it fair to say that large-scale transformative M&A is off the table for the foreseeable future as you know, kinda focus on these other initiatives?
I wouldn't say anything is kinda off the table. I think part of our job, kind of fiduciary-wise, is to look at everything and see what is gonna, you know, accrete the most value for shareholders, and we will look at everything. Clearly, as I mentioned, part of our capital allocation kind of priorities are that healthy balance sheet. Getting back to that North Star of 1x-5x leverage, that's gonna be a consideration in terms of transaction size is our confidence and ability to get back to those levels kind of quickly.
Right.
That being said, like, you know, I think if I was looking at M&A priorities, kind of the principles we have is we mostly are focused, or largely we expect to be focused on the four markets we're in, that I mentioned before. We wanna have things that evolve our business to that, you know, I was talking about the, you know, evolving to a healthy, a bigger mix from non-pay TV over time, getting that 50% longer term. We really want to make sure these, obviously, transactions generate significant value with clear synergies that we can kinda bank on. The bolt-ons make a lot of sense. We've done them. Could there be something that's bigger and transformative?
I mean, I think it would depend on the circumstances and the bar will be very high to make sure that it hits every one of those criteria I just mentioned.
All right, great. We'll wrap up there. Thanks so much.
Thank you. I appreciate it.