Versant Media (VSNT) 2026 年第 3 季法說會：平台成長與重申財測指引

核心要點

• Versant Media 公布 2026 年第三季營收為 15.9 億美元，年減 4%，主因是付費電視業務壓力抵銷了平台的持續成長。
• 調整後 EBITDA 下降 7% 至 3.53 億美元，反映出付費電視營收下降以及體育賽事轉播權成本認列時程的影響，但部分被平台成長與費用自律所抵銷。
• 平台營收成長 10% 至 2.45 億美元。若扣除 SportsEngine 的分拆剝離與 Full Swing 的收購，在 Fandango 與 GolfNow 的帶動下，成長率為 17%。
• 管理層重申 2026 全年營收指引為 62 億至 64.5 億美元，調整後 EBITDA 為 19 億至 20.5 億美元。全年自由現金流目前預計將超越先前預估的 10 億至 12 億美元 展望。
• Versant 以管理層所稱的有利條件完成了四項重大分銷續約。目前有 75% 的頻道用戶合約已延長至 2028 年及以後。
• 迄今該公司已向股東回饋 4.57 億美元，其中包括 3 億美元 的股票回購與 1.57 億美元 的股利。此外，公司還計劃在第四季額外進行 1 億美元的加速股票回購。

主要財務數據

業務與營運表現

據管理層稱，MS NOW 是第三季收視率第二高的有線電視網，總收視人數年增 20%。其觀眾人數已連續 11 個月實現年成長，該公司表示，該頻道本季在 YouTube 上排名第一的新聞機構。市場對 7.99 美元 MS NOW 直面消費者 (DTC) 會員服務 的早期回饋相當正面，尤其是社群功能方面。

CNBC 在開盤時段連續第八個月保持在前十大有線電視網之列。Versant 計劃於 2027 年初推出 CNBC 直面消費者 (DTC) 服務，採用與 MS NOW 類似的「邊測試邊學習」策略。

在體育賽事方面，Versant 於 8 月開始播映德甲聯賽 (Bundesliga) 比賽。該協議涵蓋 每個賽季 300 場比賽，其中約 30 場在 USA Network 播出，其餘則在 Fandango 上串流播放。USA Network 第一個月的收視率比前一年其他電視台的播映情況高出 55%。

該公司在 USA Network 與 CNBC 上播出的首個 WNBA 賽季，使例行賽有線電視收視率較前一年 成長 25%。總決賽第七戰初估吸引了 330 萬名觀眾 收看。

Fandango 創下疫情以來最高的售票紀錄，而 Fandango One 與家庭娛樂業務也貢獻了成長。Versant 擴充了其免費廣告串流電視 (FAST) 頻道陣容，新增四個涵蓋 CNBC、E! 與 Oxygen 內容的頻道，在 Prime Video 和 The Roku Channel 上分銷。

Full Swing 的整合正在進行中。管理層將該項收購主要視為營收綜效的契機，利用 Golf Channel 的行銷資源以及 GolfNow 與 全球 9,000 家高爾夫球場 的合作關係來擴大銷售，且無需付出大幅新增的商業成本。

管理層指引

Versant 重申其 2026 全年展望：

• 營收：62 億至 64.5 億美元
• 調整後 EBITDA：19 億至 20.5 億美元
• 自由現金流：預計將高於先前預估的 10 億至 12 億美元區間

管理層預計第四季調整後 EBITDA 將受到與 2025 年相比 增加四場 NASCAR 賽事 相關的節目製作成本影響。該公司將此歸類為一次性時程影響，預計未來不會出現類似的賽事數量變化。

隨著 Versant 投資於 Fandango AVOD 以及 MS NOW 與 CNBC 的直面消費者 (DTC) 產品，銷售、一般及管理費用 (SG&A) 預計將自近期水準小幅上升。該公司還在評估人工智慧 (AI) 與基礎設施現代化計畫，旨在自 2027 年起提升生產力。

風險與關注焦點

• 付費電視用戶減少仍是線性電視分銷營收的主要壓力。管理層預期該業務將保持獲利，但不再將其視為成長引擎。
• 體育賽事轉播權費用主要集中在 2026 年下半年，額外的 NASCAR 賽事將在第四季帶來顯著的成本逆風。
• 內容授權營收可能因協議簽訂與認列時程而出現季度間的波動。
• MS NOW DTC、Fandango AVOD 與預計推出的 CNBC DTC 服務仍處於早期階段。管理層表示，擴大這些產品的規模將是一個為期多年的過程。
• 平台成長可能會帶來較高的交易相關成本，這反映在第三季其他營收成本 增加 10% 上。

法人說明會問答焦點

管理層表示，體育與新聞仍是 Versant 分銷策略的核心。其體育轉播權投資組合包括涵蓋 NASCAR、PGA 巡迴賽高爾夫、USGA 高爾夫、WWE、英超 (Premier League)、德甲 (Bundesliga) 以及 Pac-12 內容的長期協議。該公司將繼續選擇性地評估轉播權，目前預計不會投資 NFL Sunday Ticket 跨區賽事轉播。

在直面消費者 (DTC) 產品方面，管理層表示目標是儘可能抵銷付費電視用戶流失的影響。MS NOW 和預計推出的 CNBC 服務被設計為互動式會員產品，而非簡單的同步直播，並提供社群功能、獨家內容以及與知名主播與專家互動的管道。

如果能提高規模與價值，Versant 對第三方整合與替代分銷模式持開放態度。管理層表示，公司的獨立性在談判這些合作安排時提供了更大的靈活性。

在併購 (M&A) 方面，管理層並非透過額外收購有線電視網來尋求橫向規模擴張，而是優先考慮能強化新聞、高爾夫、娛樂以及 Fandango 相關服務等現有垂直領域的業務。收購 Full Swing 被舉例說明，因為它可以利用 Versant 現有的銷售、行銷與高爾夫產業合作關係。

管理層表示，大約 70% 的成本結構為變動成本。若不含體育賽事轉播權，公司認為中短期內大部分成本皆具彈性，可支撐其隨營收變化調整支出的能力。

完整法說會逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Greetings. Welcome to Versant Media's Third Quarter 2026 Operating and Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the conference over to Wylie Collins, Executive Vice President, Investor Relations and Treasury. Thank you. You may now begin.

Wylie Collins

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 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'd 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 1995. These statements reflect management's current expectations and are subject to risks 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, November 3, 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 a present we're already a separate independent company.

And with that, I'll turn the call over to Mark.

Mark Lazarus

Thanks, Wylie, and good morning. I'm 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 secular changes, our network portfolio heavy on news and sports with big brands that people care about, will continue to succeed.

Second, that we're 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're making good progress across both of these principles, and it's only been 10 months. With our networks, we've now completed all of our major distribution renewals this year on favorable terms, 4 deals and all.

We understood the questions raised at the time of the spin about our ability to secure attractive carriage renewals. We've now answered that question. 75% our network subscribers are now under contract into 2028 and beyond. So we have clear visibility going forward. Furthermore, we're 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 isn't 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've launched several new initiatives, including MS now direct-to-consumer 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're 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've also acquired several exciting new businesses, most notably full swing, which closed during the third quarter. Integration efforts are progressing well, and we're seeing early success in using Golf Channel and Golf -- now as effective sales and marketing tools for full swing, delivering incremental value. I've 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'm pleased that we're off to such a strong start.

Now some highlights for the quarter that demonstrate the progress we're making. MS -- now is 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 in the #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 audiences at live events with our together in Texas event in Dallas last month having nearly 5,000 attendees and many more who streamed the day long event. CNBC continues to rank among the top 10 cable networks 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 approximately 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 networks. This is a great example of how we approach sports, building a 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're glad the league is part of the Versant and USA sports portfolio.

We're 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 Ana Pigeon became the most watched new cable original series for the year, while Golden Life premiered -- 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've been since the pandemic and Fandango One is continuing to grow. Just as we're expanding the audiences of MS NOW and CNBC, we're taking the same approach with Fandango and golf. The Fandango AVOD service was launched in July. And while still very early, we're encouraged by the initial response. As we continue to add content, the platform is well positioned in the growing AVOD market.

We 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 and creating additional opportunities for advertising revenue. At full swing, we've expanded sales and marketing support and recently announced an expanded partnership with Tron, the world's largest Gulf 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're 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've made meaningful progress in a short period of time and I'm confident in the direction we're heading.

With that, let me hand it over to Anand to talk through some of the financials.

Anand Kini

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% and impacted by the comparison to the 2025 Rider Cup, which takes place every other year. 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%. And Fandango delivered significant growth in ticketing while home entertainment sales and Fandango one 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've mentioned previously, the decline in Q3 adjusted EBITDA compared to the growth earlier this year reflects the timing of sports rights, 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 one-off impact. While I've 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're home to some of Sports most important events, including crowning the NASCAR Cup series can 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 and 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 and 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 in 2027 and beyond.

As part of this initiative, we are modernizing our infrastructure across almost every function in 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 $457 million to shareholders, including $300 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'll turn it back to the operator for Q&A.

Operator

[Operator Instructions] And our first question comes from the line of Sean Diffley with Morgan Stanley.

One, please go ahead with your questions. Ladies and gentlemen, we flash moving on to Michael Ng from Goldman Sachs.

分析師問答

Michael Ng

I just have 2. First, encouraging that you've completed all the carriage agreements in 2026. As you head into '27 and '28, could you talk a little bit more about some of the content investments that you're 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?

Mark Lazarus

Great. Thanks, Michael. So sports and news are obviously working really well for us in terms of having value for distributors or advertisers for audiences. We will continue to be best-in-class in news. We believe MS NOW and CNBC are incredibly valuable brands. have very valuable audiences and reach the most influential people that audiences want to see each and every day. As it relates to sports, our sports deals go long term. I mean, I think that's where we sit -- we did add Bundesliga, we've added Pac-12. We've extended our USGA Golf deal, but long into the 2030s, we have valuable NASCAR, valuable PGA Tour rights. The WWE goes into late into 20s the and premierly goes through the '28 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 center piece. In addition to that, we have a very disciplined approach to original series, where we create both scripted and unscripted series. We've had a lot of success, as we talked about earlier in the call with anagen, the number 1 cable, #1 cable show of the year. We had everything on the menu for USA Network and unscripted show and Golden Life, which just launched.

One of the things we look at is that we want to make sure that we are disciplined that we have -- get good value, create great product, but also have an ability to monetize the back end of these shows. And I think that's evident in the fact that we recently announced that the Golden Life will be on Hulu a couple of weeks after it's on after we launched it on U.S. network. And that helps us both mitigate cost serves as a marketing tool, and we've 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'll work with them on -- and as you've seen many programmers do, we won't be any different. We want to make sure our products are available to those who are already paying for it. But our products are also going to be quite different than just video streaming. We're not creating streamers, we're creating direct-to-consumer interactive products. we're doing it with the MVPD and VMVPD community, not to them.

Michael Ng

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

Mark Lazarus

Yes, I think it's a combination. I mean certainly, Fandango and the box office was a big contributor. But not only that just that Fox was up, but our share of boxes up, and we're growing our where we are in the space and creating a wider playing field for ourselves. Golf also showed growth, golf now in the Titan business. And then Indi Cinema, which eventually we'll all get to calling, including ourselves, the calling at Fandango 1, which is its new name, is creating new revenue opportunities as we're 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.

Anand Kini

Mike, just 1 other thing is on and just to kind of add on, I think what we've seen every quarter is like both businesses big businesses Fandango and Gulf now are contributing. Every quarter might be -- 1 might be a little bit more than the other, but I think we're 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.

Operator

Our next question is from the line of Sean Diffley with Morgan Stanley.

Sean Diffley

All right. Sorry about that. So yesterday, Fox called out some viewership fatigue on news leading up to the midterms. I'm curious how you would describe what you're seeing most recently on MS now. It sounds like pretty good, but 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. We have some big ticket items coming up. Obviously, World Cup more near-term MLB and NFL. There's been some reporting that the NFL Sunday Ticket verdict last week could open up some out-of-market games. I'm curious if that could be of interest to you and just your overall lens for how you assess the rights landscape.

Mark Lazarus

Great. So as it relates to news, I mean we're not seeing currently 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's a testament to the quality of our product to the voices that we have on there and to the trust that our viewers have in our brands and in our talent. But we're showing growth and we have for many quarters in a row, many months in a row on MS now. and that's encouraging. This is an important time.

Today is the -- and use your sports analogy today is the soup bowl for the news organization. in terms of the midterm elections. And our -- we believe that we will continue to grow audiences for MS NOW. That our singular goal. How do we get more people to watch us. And that's going to be by having a variety of voices there, having a tone that's welcoming and it's being interesting and informative. And I think that our producers and our talent are doing that. So we're not seeing any of that view or 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're seeing the value in what we're providing. As it relates to sports, obviously, you're right, an interesting time. The World Cup is coming out, Baseball, NFL, the NHL is not far behind. I think what's going to happen -- I think the big stuff will the big stuff being really NFL World Cup will find homes at a quite high rates. I think there's going to 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 create -- there will be opportunity for that.

Sunday Ticket out-of-market games we're not likely to be investing in the NFL business. I mean in terms of the size of our company today. But I think it's an interesting ruling, and I'm looking forward to seeing how it shakes out.

Operator

Our next question is from the line of Rich Greenfield with LightShed Partners.

Richard Greenfield

Yesterday, just sort of following up on some of the comments that Fox made -- they talked about Fox One having grown subscribers actually more than enough to offset all of their linear declines. And while I don't 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's only several weeks old, you're 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're seeing? I mean I realize 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's a lot of discussion of streamers ingesting other streamers. Essentially, people want to be platforms, Disney's now ingesting Channel 4 in the U.K., Netflix TF1 in France and now -- or YouTube in January is going to 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're going to launch CNBC, so it's sort of a related question, but how are you thinking about ingestion?

Mark Lazarus

Well, So to the broad question of are we going to be able to mitigate sub declines, -- that's our goal. That's what we're trying to do is to take all of the direct-to-consumer and mitigate as much sub decline or all of the sub decline as possible, and that's why we're launching these products plus the Fandango streaming product and creating other growth businesses like buying full swing in Indy cinema and other properties. So we're a slightly different company, obviously, than what and they essentially are streaming their 2 services, FOX News and Fox as FOX 1. I think we're a little bit different than they are. We have our own brands. We have the same goal. We want deep customer relationships. We want to make sure we extend our reach, we want to find as many nonpay TV homes as possible. 799 through testing and other areas bedfeltand turned out is the right price.

We're seeing people sign we're trying to reduce friction for sign up so that we can grow as fast as possible. But we're not streaming our network. That's part of it, but we're much more than just our existing video. We are a membership service. So the MS NOW membership program, Fandango AVOD will be similar. That's free. There is no price. Golf now is a direct-to-consumer transactional business, and CNBC will be more like MS now. We'll 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 want to build community. We're going to have a lot of exclusive content insights from our talent and other experts, information, access will be important. We talked about this is as you said, it's very new, Rich. But is this is a multiyear journey. We're going to have to be patient. We're confident, but it's really early. The ingestion, do you want to...

Anand Kini

Sure, -- just a quick thing. I mean we -- Mark mentioned earlier, Rich, about kind of test learn. And so the products as they are today, we're obviously going to look at kind of what's working, and that will also then dictate kind of pricing and so forth as we go over time and 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 that 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 parties than we've mentioned in the past that we're going to do what's right in terms of value.

And so we're open and are in conversations with parties to kind of figure out whatever is the right path to scale these services, and we're open to different business models. This was 1 of the areas when we got spun frankly, that it gives us the liberty and kind of flexibility to pursue those type deals. And -- as you would expect, we're actively engaged in them for our services.

Mark Lazarus

I think our distribution partners and the message we're sending or what we're talking to them is that we want to be flexible, and we want to 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.

Operator

The next question is from the line of David Karnovsky with JPMorgan.

David Karnovsky

Good morning. When you think about your strategy of leading in specific verticals, are there categories outside of news or go where you would consider building on buying income and how do you think about M&A for cable networks as you to accomplish that?

Mark Lazarus

I'm sorry, could we repeat, I just -- I think it's hard to hear and might be the speaker phone.

David Karnovsky

Yes. When you think about your strategy of being in specific verticals, are there categories outside of news or Gulf 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?

Mark Lazarus

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 it's something were to become available that we believe we could build significant adjacencies around whether it had a television network or not. We still -- there are opportunities to do that.

And I think when you look to the M&A question, we're not out there necessarily looking to buy more cable networks. We're 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've said previously, I think it would prolong our life, but doesn't make our life much better. So we are -- we would like to continue to look into vertical sectors and could others -- 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 media project, but it also could be outside of media.

Anand Kini

David, the only thing I'd add to what Mark said is and clearly see a line here with Mark about -- could we look at other verticals, Sure. But I think it's important in that answer. We really believe in the for we're in, and there's a lot of growth opportunity, and that's where we're focused today. I think our results, if you look at the platform, underlying platform growth of 17%, like we're encouraged, as Mark mentioned earlier, by the MS NOW D2C launch. We're 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 we -- anything in terms of growing outside of that, we'll obviously look at what we're going to look at it those 4 areas, we have big advantages and we think a real right to win and there's a ton of opportunity there. So that is our focus right now.

Operator

Our next question is from the line of Peter Supino with Wolf Research.

Peter Supino

I wondered if you could talk about the advertising environment and your partnership with NBC, whether that's meeting your expectations. It's 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 the reservations business you have and frequently investors don't understand what the thesis is, I wonder if you could lay that out for us.

Mark Lazarus

Sure. So on advertising, over the fullness of time, there have been rep deals that people have repped others. So it's a little bit unique in the way we're set up because we were 1 and now we're 2, but there is some history of that. It is going exceptionally well. They have been great partners. They've delivered on everything that we've discussed with them, they're collaborative. They understand our goals, and they have done a wonderful job representing us and it's going well.

And I think that's evident in the numbers that we're delivering. We were delivering best of industry numbers in terms of advertising. So going well, over time, they and we collectively will decide the right path forward is, but that's a little bit out into the future. But as of right now, it's going extremely well, and I think it's working well for both parties. Then the full swing is also going well. It's 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 9,000 golf courses around the world, and the sales force 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 more and more integration opportunities.

And I think if you watch any of our networks now, you'll see full swing being marketed quite effectively, and we're 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.

Operator

The next question is from the line of David Joyce with Seaport Research Partners.

David Joyce

I was hoping you could drill down a bit more on your cost of revenues. You've added a lot of sports rights, WNBA, Bundesliga, additional NASCAR rights and more entertainment programming. get you your overall cost line was flattish year-over-year. Where are you trimming? And how should we think about this trending going forward? Given that you're also launching these DTC services?

Anand Kini

Dave, it's Anand. Thanks for the question. So -- you're 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 -- and again, the sports that we added, as I talked about in this late we mentioned before, that was an opportunistic deal for us that we saw an opportunity to get some marquee 300 matches some on U.S.A., some on Fandango at what we thought was a very attractive price point that drove value. So it's 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's working the best -- and it kind of also goes back to what Mark mentioned earlier, take entertainment where we talk a little bit about the night. The type of show that we think has very attractive economics and we greenlighted, we greenlighted not only for what it's going to do one, but a lot of confidence it's going to have a back end as well, which we were able to secure and so we're kind of managing the entire portfolio that way and you're seeing it in the numbers.

And we mentioned that the total programming spend in Q3. And then in Q4, we'll be timing-wise impacted by some of the -- particularly in Q4 by NASCAR, but that general philosophy is how we're managing spend in total. And then on -- and then on SG&A, we're also looking, as you can see, we talked about or I mentioned before an initiative to kind of make sure we're harnessing AI and technology to drive efficiency and drive productivity and also make the company a better and better place kind of culturally and for the employees. So you're going to see the impacts of that really starting in '27 and beyond.

And then the final thing I'll just kind of flag is we -- we're very quite 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're seeing us kind of execute against that based on the revenue picture kind of flexing the cost base to make sure we're delivering great margin profitability.

Operator

Our last and final question is from the line of Brent Penter with Raymond James.

Brent Penter

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?

Anand Kini

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

Mark Lazarus

Yes. On the revenue side, I mean, we're able to -- again, we have a large sales force with with golf now. They had a relatively small sales force at full swing. So 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're running across our variety of networks and very well-targeted networks. Obviously, golf channel is highly targeted towards 1 who 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's no incremental dollar outlay to us. It's 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 helped lead us to saying this is the right deal for us.

Brent Penter

And then I 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 define success for platform investments as you think about allocating any given dollar of capital, you're 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.

Mark Lazarus

Yes. 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 sales force and the marketing and our ability to work in the broad scope of the golf community, working with the PGA Tour. They're already a sponsor of the PGA Tour. So that was sort of the thesis behind full swing. The investment into -- and Cinema allowed us to -- 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 a much more integrated solution of technology and sales. It's 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's whether we whether we sell them the technology and then have transaction deals on the TT or whether we have a more favorable relationship, they don't maybe pay us as much for the technology, but we get a larger cut on times. So there's -- 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.

Anand Kini

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

Operator

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.