It would be easy to think that media spinoff stock Versant Media Group (VSNT) is a doomed prospect. After all, its primary stock in trade is its seven cable networks and its four digital networks. But reports suggest that Versant has plans to go beyond its status as Comcast’s (CMCSA) dumping ground. And those plans could make the difference in whether this company is around in five years. Investors were skeptical, though, and Versant shares dropped fractionally in Wednesday morning’s trading.
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CEO Mark Lazarus recently walked Business Insider through the notion, and there has been some progress made in that direction. Lazarus pointed out what he has in mind for Versant going forward, and the picture makes a disturbing sort of sense. Lazarus started out by noting that, a year ago, Versant’s income was 83% derived from pay television, while 17% was not. Now, it is a straight 80-20 split. That is not exactly a huge change, but it is notable. At that pace, Versant will be only 50% dependent on pay TV in around 10 years.
Versant wants to pursue a strong balance sheet and a low debt load, taking advantage of pay TV’s current state as a diminished but still operating sector to bring in cash for as long as possible. In fact, one of the biggest strategies Versant has is to “…arrest the decline as best we can, by raising ratings.” And amazingly, Versant managed to do that across several of its networks.
Stalking Rights Expiry
In fact, one of the big things that Versant is looking to, in order to arrest its decline, is sports media rights. Versant is already eyeing several leagues where current rights are about to expire, and wants to get in where it can. Lazarus noted that Versant was “well-positioned” to get into those rights—likely thanks to that strong balance sheet it talked about—and take advantage of new content.
In fact, Versant has already started something like that. It has a new relationship with the USGA, with Ryder Cup action, with the WNBA, and a host of other, albeit somewhat lesser, sports. This is not too far removed from what Warner Bros. Discovery (WBD) was trying to do with its own sports operations.
Is Versant Media Group a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on VSNT stock based on two Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 7.16% loss in its share price over the past year, the average VSNT price target of $40.20 per share implies 4.03% downside risk.
