Versant Media Group, Inc. Class A (VSNT) Q3 2026 Earnings Report, Transcript and Summary

Greetings. Welcome to Versant Media's Third Quarter 26 Operating and Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Wylie Collins, Executive Vice President, Investor Relations and Treasury.

Thank you.

You may now begin.

Thank you, and good morning, everyone. Welcome to Versant Media's third quarter 2026 operating and financial results conference call. Joining us today are Mark H. 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 would 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 2000. These statements reflect management's current expectations and are subject to risk 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 in today's earnings release. All forward looking statements are made as of today, 11/03/2026, 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 will turn the call over to Mark.

Thanks, Will, and good morning. I am going to start by reflecting on our progress relative to the strategy we outlined at the time of the spin. This strategy has 2 core principles. First, while we are subject to Pay TV's secular changes, our network portfolio heavy on news and sports with big brands that people care about, continue to succeed. Second, that we are able to extend outside of pay TV through digital offerings to evolve and grow our business. We believe we have unique advantages in each of our 4 markets. Large, loyal audiences, powerful brands, a proven track record, especially in golf. We have dedicated capital and a strong management team. We are making good progress across both of these principles. And it is only been 10 months. With our networks, we have now completed all of our major distribution renewals this year on favorable terms. 4 deals in all. We understood the questions raised at the time of the spin about our ability to secure attractive carriage renewals. We have now answered that question. 75% of our network subscribers are now under contract into 2028 and beyond. So we have clear visibility going forward. Furthermore, we are generating strong ratings, engagement, and advertising results. This all points to the strength and power of our portfolio for distributors, marketers, and audiences. And while our pay TV business is not a growth engine, it will remain resilient and highly profitable for a very long time. Similarly, we are making meaningful progress with our digital platforms. And revenue is up double digits year to date. We have launched several new initiatives, including MS Now direct-to and Fandango streaming. Both delivering solid results. The CNBC direct-to-consumer will follow early next year. Our initial investment for these new products is measured. as we are scaling existing infrastructure and resources. We are learning what product features resonate the most with consumers and focusing our investment on these areas to drive growth. We believe this test and learn approach mitigates financial risk. We have also acquired several exciting new businesses, most notably Full Swing, which closed during the third quarter. Integration efforts are progressing well and we are seeing early success in using Golf Channel and Golf Now as effective sales and marketing tools for full swing. Delivering incremental value. I have mentioned before that evolving our business model through the growth of our digital platforms is a multiyear journey. This will require some patience, but I am pleased that we are off to such a strong start. Now some highlights for the quarter that demonstrate the progress we are making. MSNow was the second most watched network in all of cable in the third quarter. With total viewership up 20% year over year. MS now has grown its audience year over year for 11 straight months and was the only cable news network to grow in September. MS Now's reach extends well beyond pay television. Ranking as the number 1 news organization on YouTube during the third quarter. Feedback on the MS Now direct to consumer offering has been very positive. With the community experience really resonating with members. MS Now also continues to draw large and enthusiastic audience at live events. With our Together in Texas event in Dallas last month, having nearly 5 thousand attendees, and many more who streamed the day long event. CNBC continues to rank among the top 10 cable network during market hours, now for 8 straight months. In the third quarter, CNBC remained the destination for CEOs and business leaders to share their perspectives on the issues shaping the markets and the economy. This is where CNBC has a sizable advantage. Gaining access to the most prominent market leaders while serving a broad audience across pay TV and digital. In sports and entertainment, we added Bundesliga to our portfolio. Which we began airing in August. We have 300 matches per season with 30 on USA Network and the remainder streaming on Fandango. In its first month on USA, viewership was up 55% versus last year's airings on other. This is a great example of how we approach sports. Building diverse portfolio with broad appeal that translates into strong economics for us. We will remain selective, and the returns must be compelling. Bundesliga cleared that bar, and we are glad the league is part of the Versant and USA Sports portfolio. We are also very pleased with our first WNBA season on USA and CNBC. We aired the most national games of any broadcaster, and regular season cable viewership was up 25% compared to last year. And just on Saturday, we crowned the WNBA champion as game 7 aired on USA Network. With a preliminary number of 3.3 million viewers, a great success. On the entertainment side, our new series Anna Pigeon became the most watched new cable original series for the year. While Golden Life premiered on E! just a few weeks ago. As mentioned, platforms delivered double digit growth in the quarter. Driven by both Fandango and Golf Now. Fandango was particularly strong this quarter with ticket sales reaching the highest they have been since the pandemic and Fandango 1 is continuing to grow. Just as we are expanding the audiences of MS Now and CNBC, we are taking the same approach with Fandango and Golf. The Fandango AVOD service was launched in July, And while still very early, we are encouraged by the initial response. As we continue to add content, the platform is well positioned in the growing AVOD market. Also recently expanded our fast channel lineup, launching 4 new channels featuring content from CNBC, E!, and Oxygen. All 4 will be available on Prime Video and the Roku Channel. Further extending the reach of our brands creating additional opportunities for advertising revenue. At full swing, we have expanded sales and marketing support and recently announced an expanded partnership with TrueN. The world's largest golf and golf related hospitality management company. Before I turn to Anand, I want to leave you with a broader thought. While there are more options for consumers than ever before, audiences are placing the most value on the content and the brands they trust. And this plays right into Versant's advantage. Our pay TV business keeps delivering large audiences and strong profitability. Allowing us to invest in what comes next. We are building on strong relationships we already have with consumers, advertisers, and distributors. While finding new ways to reach and serve those audiences. We have the brands, the financial strength, and the people to execute this transition successfully. We have made meaningful progress in a short period of time, and I am confident in the direction we are heading. With that, I will hand it over to Anand to talk through some of the financials.

Thanks, Mark, and good morning, everyone. Our third quarter results reflect strong execution against our strategic financial and growth objectives. Based on results to date, and expectations for the balance of the year, we are affirming our previously communicated 2026 full year outlook for revenue of $6.2 billion to $6.45 billion and for adjusted EBITDA of $1.9 billion to $2.05 billion We expect full year free cash flow to finish above our $1 billion to $1.2 billion outlook. Turning to the results, Total revenue for the quarter was $1.59 billion a decline of 4%. Consistent with trends in the second quarter and reflecting the secular changes in pay TV partially offset by robust growth in platforms which remains a key priority for us. Breaking down the components of revenue, linear distribution revenue, decreased 6% over the prior year to $935 million with subscriber declines partially offset by contractual rate increases. These trends are similar to what we have seen in prior quarters. Advertising revenue was $373 million down 5%, impacted by the comparison to the 2 thousand 25 Ryder Cup which takes place every other year. but the advertising environment remains positive, supported by continued favorable ratings trends across our networks, and strong demand. Platforms revenue was $245 million up 10% year over year And excluding the Sports Engine divestiture, and Full Swing acquisition, up 17%. Fandango delivered significant growth in ticketing, while home entertainment sales in Fandango 1 also contributed meaningfully to its third quarter performance. Content licensing and other revenue was $41 million, down 24%. As we have discussed previously, this category can fluctuate quarterly based on the timing of licensing agreements. Turning to adjusted EBITDA. Adjusted EBITDA was $353 million down 7% versus the prior year. The decline reflects lower pay TV revenue, partially offset by growth in platforms and disciplined expense management. As we have mentioned previously, the decline in Q3 adjusted EBITDA compared to the growth earlier this year reflects the timing of Sports Right which are weighted towards the second half. To put it in perspective, cumulative adjusted EBITDA for the first 9 months was $1.68 billion up 1% year over year. We expect Q4 adjusted EBITDA as reflected in our outlook, to be impacted by 4 additional NASCAR races compared to 2025, resulting in meaningfully higher programming costs. We do not expect similar changes in race counts going forward and so this will be a 1-off impact. While I have mentioned the timing impacts, on our Q3 and Q4 results this year, sports remain an integral part of our strategy. Generating significant value for viewers, distributors, and marketers. In fact, we are home to some of sports' most important events including crowning the NASCAR Cup Series champion this upcoming weekend. Transitioning now to expenses, We remain focused on managing costs, while investing in our strategic priorities. Programming and production costs were $736 million down 1% versus the prior year due to operating efficiencies, largely in entertainment and news, partially offset by an increase in sports rights costs, as just mentioned. Other cost of revenue was $142 million up 10% versus the prior year reflecting higher transaction volumes associated with platforms revenue growth. Cost of revenue representing the sum of programming and production costs and other cost of revenue, was $879 million up 1% versus the prior year. Selling, general and administrative expenses decreased 12% to $362 million. As discussed last quarter, we expect nominal SG&A costs to increase modestly from recent levels due to our investments in growth initiatives including the Fandango AVOD and the MS Now and CNBC direct to consumer offerings. Across our cost base, we are focused on driving efficiencies while continuing to deliver high quality premium consumer experiences. We are currently identifying opportunities to deploy AI and other technologies to streamline workflows enhance automation, and improve productivity 2027 and beyond. As part of this initiative, we are modernizing our infrastructure across almost every function in the business. While cost efficiency is clearly a focus, these new capabilities will also enhance our decision making speed to market, and overall company culture. Finally, with regard to cash generation, liquidity, and capital allocation, Free cash flow totaled $302 million in the quarter, Our business model continues to deliver strong cash conversion, and as I mentioned, we now expect full year free cash flow to finish above our prior outlook. We maintain a healthy liquidity profile, with approximately $1 billion in cash at quarter end and an undrawn $750 million revolving credit facility. Giving us significant flexibility to execute our strategic priorities. On investments, we follow a disciplined approach. Focusing on opportunities with clear value creation and attractive returns particularly in platforms and initiatives that deepen our relationships with audiences. Reflective of our capital allocation approach, to date, we have returned $157 million to shareholders, including $30 million in share repurchases and $157 million in dividends. Today, we also declared our quarterly dividend and announced plans to commence an additional $100 million ASR in the fourth quarter. Taken together, our year to date performance demonstrates disciplined execution as we invest behind our growth priorities and deliver strong capital returns to shareholders. And with that, I will turn it back to the operator for Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 from your telephone keypad. For participants using speaker equipment, it may be necessary to pick up your hand before pressing the star keys. And our first question comes from the line of Sean Diffley with Morgan Stanley. Please proceed with your question.

Hi, Sean. Please go ahead with your questions.

Ladies and gentlemen, we seem to have lost Sean. I am moving on to Michael Ng from Goldman Sachs. Please proceed with your question, sir.

Hi, good morning. I just have 2. First, encouraging that you have completed all the carriage agreements in 2026. As you head into 2027 and 2028, could you talk a little bit more about some of the content investments that you are making to strengthen your position? And how will DTC products like MS Now DTC and the upcoming CNBC DTC play a role, if at all? Thank you.

Great. Thanks, Michael. So sports and news are obviously working really well for us, in terms of having value for distributors, for advertisers, for audiences. We will continue to, be best in class in news. We believe, you know, MS Now and CNBC are incredibly valuable brands, have very valuable audiences, and reach the most influential that the audiences wanna see each and every day. As it relates to sports, our sports deals go long term. I mean, I think that is where we sit. You know, whether we did add Bundesliga We have added Pac 12. We have extended our USGA golf deal. But long into the 20 thirties, we have valuable NASCAR, valuable PGA tour rights. The WWE goes into late into the 2020s, and Premier League goes through the 20 eighth season. So we feel very secure. We will continue to look at sports properties in a very disciplined way. So sports and news are really the centerpiece. In addition to that, we have a very disciplined approach to original series where we create both scripted and unscripted series. We have had a lot of success as we talked about earlier in the call with Anna Pigeon, the number 1 cable, #1 cable show of the year. We had everything on the menu. From for USA Network, an unscripted show, and Golden Life, which just launched. 1 of the things we look at is that we wanna make sure that we are disciplined that we have good get good value, create great product, but also have an ability to monetize the back end of these shows. And I think that evidence in fact that we recently announced that the Golden Life will be will be on Hulu a couple of weeks after it is on after we launched it on the E! network. And that helps us both mitigate cost, serves as a marketing tool, and we have got great partnerships across many of the streamers to work with us on creating programming and back end value. As far as the D2C products, we will work with the partners with the MVPDs We will work with them on. And as you have seen many programmers do, we will not be any different. We wanna make sure our products are available to those who are already paying for it. But our products are also gonna be quite different than just video streaming. We are not creating streamers. We are creating direct to consumer interactive products. So we. We are doing it with the MVPD and vMVPD community, not to them.

Great. Wonderful. And then for my follow-up, I just wanted to ask about revenue. Organic growth was up 17%, the fastest quarterly growth rate this year. Was the acceleration primarily driven by the improvement in the box office and Fandango online ticket sales. You called out indie cinema piece as well. So I was just wondering if you could also touch on the momentum there. Thank you.

Yeah. I think it is a combination. I mean, certainly, Fandango and the box office was a big contributor. But not only that, just that the box office was up, but our share of box office is up, and we are growing our where we are in the space and creating a wider playing field for ourselves. Golf also showed growth. Golf now and the tee time business And then indie cinema, you know, eventually will all get to calling, including ourselves, get to calling at Fandango 1, which is its new name, is creating new revenue opportunities as we are able to sell that technology into theater chains and theater operators across the globe. So I think you hit it on the head with the largest contributor was Fandango, but every piece of the platform business contributed. And that is not a mistake.

Mike, just 1 more thing, it is Don, and just to kind of add on. I think what we have seen every quarter is, like, both businesses, the big businesses, Fandango and Golf now are contributing. Every quarter, might be 1 might be a little bit more than the other, but I think we are very proud that kind of across the portfolio, those growth businesses with big opportunities, market leaders with room to grow share are in fact doing so.

Thank you. Our next question is from the line of Sean Diffley with Morgan Stanley. Please proceed with your questions.

Great. Thanks, guys. Can you hear me?

Yes, we have you, Sean.

All right. Sorry about that. So yesterday, Fox called out some viewership fatigue on news leading up to the midterms. I am curious how you would describe what you are seeing most recently on MS Now. It sounds like pretty good, but do you expect any tapering in viewership post election And then Mark, I wanted to get your latest high level thinking on sports rights In the next few years, have some big ticket items coming up, obviously, World Cup more near term, MLB and NFL. there is been some reporting that the NFL Sunday ticket verdict last week had opened up some out of market games. I am curious if that could be of interest to you and just your overall lens for how you assess the rights landscape. Thank you.

Great. So as it relates to news, I mean, we are not seeing any fatigue with our audiences. They are our audiences are active and vibrant and growing for MS now, and for that matter with CNBC. I think it is a testament to the quality of our product, to the voices that we are. We have on there, and to the trust that our viewers have in our brands and in our talent. But we are showing growth and we have for many quarters in a row, many months in a row on MS now. And that is encouraging. You know, this is this is an important time. Today is the-- and to use a sports analogy, Today is the Super Bowl for the news organization, in terms of the midterm elections. And we believe that we will continue to grow audiences for MS Now. that is our singular goal. How do we get more people to watch us? And that is gonna be by having a variety of voices there. Having a tone that is welcoming, and it is being interesting and informative. And I think that our producers and our talent are doing that. So we are not seeing any of that viewer fatigue. And in fact, I think some of the viewership is leaving other places and trying us and spending some more time with us because I think they are seeing the value in what we are providing. As it relates to sports, you know, obviously, you are right. An interesting time. The World Cup coming out, baseball, NFL. The NHL's not far behind. I think what is going to happen. I think the big stuff will, the big stuff being really NFL World Cup will find homes at very quite high rates. I think there is gonna have to be some rationalization of portfolios from some of our colleagues across various media. Companies and-- People like us who are interested in finding the right quantity of sports at the right price that serves our distribution and advertiser needs, that there will be-- There will be opportunity for that. Sunday ticket, you know, out of market games, you know, we are not likely to be investing in the NFL business. I mean, in terms of the size of our company today, But I think it is an interesting ruling, and I am looking forward to seeing how it shakes out. Thanks very much.

Thank you. Next question is from the line of Richard Greenfield with LightShed Partners. Please proceed with your questions.

Hi. Thanks for taking the question. Yesterday, just sort of following up on some of the comments that Fox made. They talked about Fox 1 having grown subscribers more than enough to offset all of their linear declines. And while I do not know if that continues in perpetuity, it certainly is pretty interesting given your launch of MS Now's direct to consumer. Especially given that Fox said that it was pretty evenly split engagement wise between sports and news. I guess the question is, like, as you look at MS Now, and I realize it is only several weeks old, you are pricing it at $7.99. I guess, why is that the right price? How are you thinking about pricing? And as you think about the next couple of years, Mark, could this be something that meaningfully impacts the subscriber declines you are seeing? I mean, I realized getting too positive might be ambitious for news. But how are you thinking about sort of the ultimate potential of the MS Now platform? And then just a related question on ingestion. there is a lot of discussion of streamers ingesting other streamers. Essentially people wanna be platforms. Disney is now ingesting channel 4 in The UK, Netflix TF 1 in France, and now. Or YouTube in January is gonna do Peacock. Do you expect to be ingested or do you think MS Now is set to be ingested by other companies over the course? And I know you are gonna launch CNBC, so it is sort of a related question. But how are you thinking about ingestion?

Well, so to the broad question of are we gonna be able to mitigate sub declines that is our goal. that is what we are trying to do is to take all of these direct to consumer mitigate as much sub decline or all of the sub decline as possible. And that is why we are launching these products plus the Fandango streaming product and creating other growth businesses like buying full swing in indie cinema and other properties. So we are a slightly different company, obviously, than what Fox is And they have essentially are streaming their 2 services, Fox News and Fox, as Fox 1. I think we are a little bit different than they are, you know, we have our own brands. We have the same goal. We want deep customer relationships. We wanna make sure we extend our reach. We wanna find as many non pay TV homes as possible. $7.99 through testing and other areas felt and turned out to be the right price. We are seeing we are seeing people sign up. it is. You know, we are trying to reduce friction for sign up so that we can grow as fast as possible. But we are we are not just streaming our network. that is part of it. But we are much more than just our existing video. We are a membership service, so the MS Now membership program. Fandango AVOD will be similar. that is that is free. There is no price. Golf now is a direct to consumer transactional business, and CNBC will be more like MS Now. We will have the ability to stream the service, but existing video will only be a part of what the value for our fans and customers will be. We wanna. We are gonna build community. We are gonna have a lot of exclusive content. Insights from our talent and other experts, Information access will be important. We have we have talked about this is, as you said, it is very new. Richard, but this is a multiyear journey. We are going to have to be patient. We are confident. But it is it is really early. On the ingestion, do you want to-- sure, Anand.

Just a couple quick things. Mark mentioned earlier, Richard, about kind of test and learn. And so the products as they are today, we are obviously gonna look at kind of what is working and that will also then dictate kind of pricing and so forth as we go over time. Kind of how we evolve that to continue to deliver consumer value. So again, we think that approach makes a lot of sense for us. It kind of mitigates some of the financial risk. It enables us to evolve the products as we kind of get user feedback. And then, on your question on kind of platforms and aggregation with third party, I think we have mentioned in the past that we are gonna do what is right in terms of value. And so we are open and are in conversations with parties to kind of figure out whatever is the right path to scale these services. And we are open to different business models. This was 1 of the areas when we got spun, frankly, that it gives us the liberty and flexibility to pursue those type deals. And as you would expect, we are actively engaged in them for our services.

Yes. I think our distribution partners and the message we are sending are when we are talking to them is that we want to be flexible, and we wanna be 1 of your most creative partners in finding the right thing for our collective customers. And I think that as Anand pointed out, that was part of the premise of the spin and allowing us not to have sort of a variety of corporate constituencies inside of our own building. Thank you.

The next question is from the line of David Karnovsky with JPMorgan. Please proceed with your questions.

When you think about your strategy of leading in specific verticals, are there categories outside of news or golf where you would consider building or buying into? And how do you think about M&A for cable networks as an avenue to accomplish that?

I am sorry, could you repeat? it is I think hard to hear. It might be the speakerphone. Yeah.

You think about your strategy of leading specific verticals, are there other categories outside of news or golf Where you would consider building or buying into? And how do you think about M&A for cable networks as an avenue to accomplish that? Okay, great.

So, obviously, NEWS and Golf are 2 of our important verticals. And in news, we have 2 verticals. Business news, personal finance, and news and political opinion. So those are 2 separate verticals. Golf is a third vertical. And the fourth would be entertainment and really centered around sports and entertainment content, but Fandango as a central hub in that. Certainly, there could be other verticals if something were become available that we believe we could build significant adjacencies around, whether it had a television network or not. We still. There are there are opportunities to do that. And I think when you look at the M&A question, we are we are not out there necessarily looking to buy more cable networks We are not looking for horizontal scale. We think, and we believe you all expect us to transition towards growth initiatives. And while buying more scale on cable networks would just continue adding to would add to our scale. And I. And I have said previously, I think it would prolong our life, but does not make our life much better. So we are. We would like to continue to look into vertical sectors, and could other could we go into fifth or sixth verticals? Certainly. But we would need a center or a rallying point around that. It could be some form of a media project, but it also could be outside of media.

And, David, the only thing I would add to what Mark said is, and it completely up to the alignment here with Mark about could we look at other verticals? Sure. But I think it is important in that answer, We really believe in the 4 we are in. there is a lot of growth opportunity and that is where we are focused today. I think if you look at our results, the platform-- Underlying platform growth is 17%. Like, we are encouraged as Mark mentioned earlier, by the MS Now D2C launch. We are launching CNBC D2C early next year. These are big markets We have big brands that a lot of people really love and are looking forward to these new offerings. So that is our focus. So with anything in terms of growing outside of that, we will obviously look at. But we are going to look at it in those 4 areas. We have big advantages and we think a real right to win and there is a ton of opportunity there. So that is our focus right now. Thank you very much.

Our next question is from the line of Peter Supino with Wolfe Research. Please proceed with your questions.

I wondered if you could talk about the advertising environment and your partnership with NBC, whether that is meeting your expectations obviously an unusual situation to have somebody else selling your ad inventory. And then a second question on following up on this topic of M&A. I think your Golf Now acquisition is really interesting and synergistic with reservations business you have, and frequently investors do not understand what the thesis is. So I wonder if you could lay that out for us. Thank you.

Sure. So on advertising, you know, over the fullness of time, there have been you know, rep deals that people have repped others. So it is it is a little bit unique in the way we are set up because we were 1 and now we are 2. But you know, there is some history of that. It is going exceptionally well. They have been great partners. They have delivered on everything that we have discussed with them. They are they are collaborative. They understand our goals. And have done a wonderful job representing us And, it is going it is going well, and I think that is evident in the numbers that we are delivering. You know, we were delivering best of best of industry numbers in terms of in terms of advertising. So going well, you know, over time, they and we collectively will decide what the right path forward is, but that is that is a little bit out into the future. But as of right now, it is it is going extremely well, and I think it is working well for both parties. Then the full swing is also going well. it is new. We just closed not long ago. What we really believe is that in order to continue the transition, and diversifying revenues from pay television to other forms into other sectors in our verticals that full swing as a golf technology company was a very good addition. What it allows us to utilize is the strength of our linear network, golf channel, and the strength of our golf now relationships with 9 thousand golf courses around the world and the Salesforce that works with those golf courses to put more full swing product into the market and sell more full swing product. And then over time, create into more and more integration opportunities. And I think if you watch any of our networks now, you will see full swing being marketed quite effectively, and we are seeing the results of both the marketing power of Golf Channel and the sales power of the Golf Now sales team in helping accelerate the revenue opportunity with Full Swing. Thank you.

Next question is from the line of David Joyce with Seaport Research Partners. Please proceed with your questions.

Thank you. I was hoping you could drill down a bit more on your costs of revenues. You have added a lot of sports rights WNBA, Bundesliga, additional NASCAR rights. And more entertainment programming. Yet your overall cost line was flattish year over year. Where are you trimming? And how should we how should we think about this, trending going forward? Given you are also launching these D2C services? Thanks.

Hi, David. it is Anand. Thanks for the question. So you are right. Look, we have talked about being disciplined in how we manage expenses and to make sure the expenses and the costs that we have are kind of tied to revenue. So we look at the entire portfolio. We did add, as you mentioned, sports that. And again, the sports that we added is, talk about Bundesliga. We mentioned before, you know, that was an opportunistic deal for us that we saw an opportunity to get some marquee content, you know, 300 matches some on USA, some on Fandango at what we thought was a very attractive price point that drove value. So it is those kind of deals where we can fit them within our programming budget, make trade offs elsewhere, and, again, just kind of looking at how we are programming and different types of content, what is working the best. And it kind of also goes back to what Mark mentioned earlier, take entertainment where we talked a little bit about the Golden Lights. The type of show that we think has very attractive economics when we green light it. We green light it not only for what it is going to do on E, but a lot of confidence it is going to have a back end as well, which we were able to secure. So we are kinda managing the entire portfolio that way, and you are seeing it in the numbers. And we mentioned that the total the total programming spend in Q3, and then in Q4 will be timing wise impacted by some of the particularly in Q4 by NASCAR. But that general philosophy is how we are managing spend in total. And then on SG&A, also looking. As you can see, we talked about, or I mentioned before, an initiative to kind of make sure we are harnessing AI and technology to drive efficiency and drive productivity, and also make the company a better and better place culturally and for the employees. So you are gonna see the impacts of that. Really starting in 2027 and beyond. And then the final thing I will just flag is we are very focused on making sure as much of a percentage of our cost base is variable as it can be. So roughly about 70% of the cost base is variable other than sports rights. Everything else is flexible in the short to medium term. And you are seeing us kind of execute against that based on the revenue picture, kind of flexing the cost base to make sure we are delivering great margin profitability.

Last and final question is from the line of Brent Penter with Raymond James. Please proceed with your questions.

Good morning, everyone. Thanks for taking the questions. A couple from me. First, I appreciate the color on full swing revenue in the trending schedule. What can you tell us about the margins on that business even directionally And you talked quite a bit about the strategic rationale and revenue growth opportunity. Are you seeing cost synergies in that business as well?

I can I can I can jump in? Yeah. I will I will start and then pass it over to Mark. So on margins, look, this is a good margin the business. We have mentioned before that full swing is profitable. We bought it as a profitable enterprise, and we are we are expecting that profitability to obviously increase based on some of the synergies that Mark mentioned as a strategic rationale for buying it that we are already implementing. On the cost synergy side, there is a little here and there. But just to be clear, like, this is mostly a revenue synergy story for us. Know, this is a high growth business. So, of course, you. The cost synergies we are realizing are where you would expect them. Some things on the back office and so forth is, you know, where it is it is clearly the right thing to do. But we really here on FullSwing are focused on driving the top line. And that is that is where our focus and those revenue synergies are starting to see them materialize.

Yeah. On the revenue side, I mean, we are able to. Again, we have a large sales force with Golf now. They had a relatively small sales force at full swing. So we can we can really add to that whole sales process without any additional cost. And the same on the marketing. The marketing side, with what we are running across our variety of networks and very well targeted networks. Obviously, Golf Channel is highly targeted towards someone who is. Has a high proclivity to buy something in the golf space. But CNBC also has a huge overlap with that audience, and with the group that would be likely buyers for our products. And the cost is opportunity cost. We will market this instead of maybe something else in our portfolio. So there is no there is no incremental dollar outlay to us. it is it is just a shift in priority. So the revenue opportunity or the revenue synergy is larger than the cost synergy, but both working together is what is what helped lead us to, saying this is the right deal for us.

Understood. Great. And then to kind of take that bigger picture, you all are obviously making lots of investments inorganically as well as organically in the platforms business. So just what generally defines success for platforms investments? As you think about allocating in any given dollar of capital, you are you are returning a lot of capital to shareholders. But as you weigh your different options? What about something like full swing makes it unique? And then how do you kind of define the returns and success of those platform investments?

I think broadly and strategically, the ability to utilize the strength of what already exists in our verticals. And I think Full Swing does that as we talked about the Salesforce and the marketing. And our ability to, to work in the broad scope of the golf community. Working with the PGA Tour. There are already a sponsor of the PGA Tour. So that was sort of the thesis behind full swing. The investment into indie cinema allowed us to. You know, we already work with all of the theater chains or many theater chains. On ticket transactional sales. This allows us to work with them and create and create a much more integrated solution of technology and sales. it is a formula that we followed with Golf Now where we also have an enterprise software business that helps create our relationships with the golf courses and makes our ability to have financial relationships with the golf courses multifaceted. it is whether we sell them the technology and then have transaction deals on the tee times or whether we have a more favorable relationship. They do not maybe pay us as much for the technology. But we get a larger cut on tee times. So it just allows us a lot more flexibility. So the filter of being part of 1 of our verticals already allows us to take advantage of both cost and revenue synergy.

And just on the just from a financial-lens perspective, we have talked and you have heard us talk in the past about our capital allocation which are threefold and doing them all together. Maintaining a healthy balance sheet, returning capital to shareholders and investing in growth. That last 1 is investing in growth. Just to be clear, we do not view investing in growth as a default. Every initiative we have, whether it is organic or inorganic, we have a very strict financial lens and discipline about it has to generate it has to generate value to shareholders. On a bankable basis. So we put everything through that mechanism and look at a lot more things than what we actually do, just to kind of see that in motion. And we are confident because the returns on full swing as we looked at it, very, very favorable. And it is early days, but we are encouraged. Got it. Thanks, guys.

Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.