Great catch on the Kardashian library masking the revenue decline.If we accept a faster decay curve, how does that defeat the near-term equity math? With a 19% FCF yield, zero debt maturities until 2031, and a newly launched $100M ASR, doesn't aggressively retiring the float at a 3.1x EBITDA multiple create massive per-share value over the next 3 years regardless of the terminal asset value?
Thanks for reading and for the great question. In a vacuum, a 19% FCF yield and retiring the float at a 3.1x multiple looks great, yes. But it relies on the assumption that the denominator (shares) will shrink faster than the numerator (cash flow)...
I think this math breaks down when Versant cannot stem its structural revenue declines. Aggressively retiring the float only creates value if the biz operations stabilize. If you buy back stock today but earnings continue to drop over the next 3 years, the terminal value of the asset collapses. 3 years from now, you are left with lower earnings, a lower valuation, and the realization that you severely overpaid for those shares!
Even looking at Einhorn's own estimates, which I think are too bullish, he models 2029 FCF falling to $700M, a -40% decline from 2026 levels. I think the revenue + earnings erosion will be even steeper and last much longer than those models suggest.
Ultimately, financial engineering cannot outrun deteriorating unit economics. You can temporarily prop up the per-share metrics by shrinking the float, but you cannot buy back your way out of a melting ice cube. Thanks for reading and subscribing! Please keep the questions coming and check out my other deep dives. - Accrued Interest
Fair push on the denominator math. Looking at the Platforms segment, even if we strip out the INDY acquisition, the underlying drivers are purely transaction-based (GolfNow payment processing scaling and GolfPass hitting record subscriber levels). Given that these marketplaces capture a share of real-world consumer activity rather than fixed Pay TV affiliate fees, do you see any scenario where the organic scaling of this digital tail structurally changes the terminal value equation before the linear core fully melts?
Great question. Keep them coming! So as I've mentioned in many of my writings over the past year, my background is in corporate FP&A. I know exactly what it's like to roll up different divisions for earnings reports. From that experience, I can tell you that management teams will often sell a fantasy of organic growth by lumping together a hodgepodge of businesses that have no business being grouped together, specifically so that analysts and investors can't accurately track them.
As I noted in the article, it is incredibly suspicious that Versant gives you exactly zero concrete information or KPIs regarding the actual performance of their golf businesses, such as GolfNow or GolfPass. In my experience, the only reason a company refuses to include a breakout or provide a supplemental data sheet for these KPIs is because the numbers aren't nearly as good as they want you to think they are....
Could the organic growth in these other transactional businesses be enough to eventually make up for the linear decay? Maybe! But the whole point of my article is: why would you want to take that bet blind? If you are super bullish on the golf business, you are completely free to buy the stock for that reason alone. However, I think it is a massive red flag that this basic information isn't even provided to investors.
Given the glaring lack of information, I am going to assume that the organic growth from this digital tail is simply not strong enough to make up for the real linear TV declines, which are only going to accelerate from here. Thx
Do you think the management of Versant is incompetent optimists, or do they know that what they are saying is BS and just want to stay as long as possible to collect fat paychecks?
RE: I totally get why it looks that way from the outside w/ Versant. But my take is that it's less about incompetence or bad faith, and more about management being stuck for legal reasons.
Because the Comcast spin-off was structured as a tax-free separation under Section 355 of the IRS code, Versant is locked into a Morris Trust agreement. They can’t sell the company, do a major merger, or let a change of control happen for 2 full years after the January 2026 spin. That clock doesn't run out until early 2028.
So they can’t break the rules or else get a massive tax bill for Comcast shareholders — and Versant has to cover it. They can’t entertain any deals even if they wanted to.
I think these tiny bolt-on deals like INDY Cinema and Free TV Networks are small enough to stay within the rules. Buybacks are allowed – but I disagree with that.
What I find funny though is the same year the lock-up expires is the exact same year: 1) the NBC ad-sales agreement runs out, 2) ~55% of their carriage deals reset, and 3) the sports rights come up for renewal. So the moment they're finally free to make a real strategic move is also the moment their leverage at the negotiating table is at its absolute lowest.
Whether that ends in a PE buyout, a fire sale, or just a long slow grind I honestly don't know yet. But I'll definitely be writing about it here as it develops. Stay tuned! 👀
Really appreciate you reading and taking the time to comment Ray, especially on a piece this long! Lol🙏 Keep the questions coming folks.
Good point, i am not that familiar with split tax rules. Seems Q4 2027 is a good time to short it then? Or is there a way of them to solve all 3 challenges?
1. There is NO long-term path forward for a company whose cash flow is based on third-tier linear cable networks to remain public. By 2H 2027, basically 1yr from today, Versant will be in trouble unless there is a plan for them to sell the cable networks or combine with another media company. $VSNT is underlevered, so it makes it easier for any potential buyer, financial or strategic, to lever up to buy them out.
2. I think it is possible that VSNT cuts some sort new deal with NBC / consortium of other media companies to help them sell their ad inventory. It is possible in the future they play little brother and tag on to a joint bid for sports rights /take some games that other players don't want. Whatever they do, the economics right now are as good as they are going to get! Their margins on their content are only going to fall.
3. I think investors are WAY underestimating the degree to which cord cutting is still occurring in the U.S. I think there's a 50-50 chance earnings get crushed before 2028, purely because people are signing up for YouTube TV skinny bundles.
David Einhorn's presentation made me realize that even sophisticated American investors still don't understand the thesis, so I think upside is difficult here. Great questions, keep them coming! Hahaha
Thank you very much Justin for reading and subscribing! I know Versant is not the most popular stock to talk about, so I really wanted to make this article value-added by showing everyone how you can reverse engineer and deconstruct another investor's thesis.
Great catch on the Kardashian library masking the revenue decline.If we accept a faster decay curve, how does that defeat the near-term equity math? With a 19% FCF yield, zero debt maturities until 2031, and a newly launched $100M ASR, doesn't aggressively retiring the float at a 3.1x EBITDA multiple create massive per-share value over the next 3 years regardless of the terminal asset value?
Thanks for reading and for the great question. In a vacuum, a 19% FCF yield and retiring the float at a 3.1x multiple looks great, yes. But it relies on the assumption that the denominator (shares) will shrink faster than the numerator (cash flow)...
I think this math breaks down when Versant cannot stem its structural revenue declines. Aggressively retiring the float only creates value if the biz operations stabilize. If you buy back stock today but earnings continue to drop over the next 3 years, the terminal value of the asset collapses. 3 years from now, you are left with lower earnings, a lower valuation, and the realization that you severely overpaid for those shares!
Even looking at Einhorn's own estimates, which I think are too bullish, he models 2029 FCF falling to $700M, a -40% decline from 2026 levels. I think the revenue + earnings erosion will be even steeper and last much longer than those models suggest.
Ultimately, financial engineering cannot outrun deteriorating unit economics. You can temporarily prop up the per-share metrics by shrinking the float, but you cannot buy back your way out of a melting ice cube. Thanks for reading and subscribing! Please keep the questions coming and check out my other deep dives. - Accrued Interest
Fair push on the denominator math. Looking at the Platforms segment, even if we strip out the INDY acquisition, the underlying drivers are purely transaction-based (GolfNow payment processing scaling and GolfPass hitting record subscriber levels). Given that these marketplaces capture a share of real-world consumer activity rather than fixed Pay TV affiliate fees, do you see any scenario where the organic scaling of this digital tail structurally changes the terminal value equation before the linear core fully melts?
Great question. Keep them coming! So as I've mentioned in many of my writings over the past year, my background is in corporate FP&A. I know exactly what it's like to roll up different divisions for earnings reports. From that experience, I can tell you that management teams will often sell a fantasy of organic growth by lumping together a hodgepodge of businesses that have no business being grouped together, specifically so that analysts and investors can't accurately track them.
As I noted in the article, it is incredibly suspicious that Versant gives you exactly zero concrete information or KPIs regarding the actual performance of their golf businesses, such as GolfNow or GolfPass. In my experience, the only reason a company refuses to include a breakout or provide a supplemental data sheet for these KPIs is because the numbers aren't nearly as good as they want you to think they are....
Could the organic growth in these other transactional businesses be enough to eventually make up for the linear decay? Maybe! But the whole point of my article is: why would you want to take that bet blind? If you are super bullish on the golf business, you are completely free to buy the stock for that reason alone. However, I think it is a massive red flag that this basic information isn't even provided to investors.
Given the glaring lack of information, I am going to assume that the organic growth from this digital tail is simply not strong enough to make up for the real linear TV declines, which are only going to accelerate from here. Thx
Simeon, thanks for taking the time to engage. Appreciate the back-and-forth and looking forward to your next deep dive!
Very interesting.
Do you think the management of Versant is incompetent optimists, or do they know that what they are saying is BS and just want to stay as long as possible to collect fat paychecks?
RE: I totally get why it looks that way from the outside w/ Versant. But my take is that it's less about incompetence or bad faith, and more about management being stuck for legal reasons.
Because the Comcast spin-off was structured as a tax-free separation under Section 355 of the IRS code, Versant is locked into a Morris Trust agreement. They can’t sell the company, do a major merger, or let a change of control happen for 2 full years after the January 2026 spin. That clock doesn't run out until early 2028.
So they can’t break the rules or else get a massive tax bill for Comcast shareholders — and Versant has to cover it. They can’t entertain any deals even if they wanted to.
I think these tiny bolt-on deals like INDY Cinema and Free TV Networks are small enough to stay within the rules. Buybacks are allowed – but I disagree with that.
What I find funny though is the same year the lock-up expires is the exact same year: 1) the NBC ad-sales agreement runs out, 2) ~55% of their carriage deals reset, and 3) the sports rights come up for renewal. So the moment they're finally free to make a real strategic move is also the moment their leverage at the negotiating table is at its absolute lowest.
Whether that ends in a PE buyout, a fire sale, or just a long slow grind I honestly don't know yet. But I'll definitely be writing about it here as it develops. Stay tuned! 👀
Really appreciate you reading and taking the time to comment Ray, especially on a piece this long! Lol🙏 Keep the questions coming folks.
Good point, i am not that familiar with split tax rules. Seems Q4 2027 is a good time to short it then? Or is there a way of them to solve all 3 challenges?
Here's how I see the situation.
1. There is NO long-term path forward for a company whose cash flow is based on third-tier linear cable networks to remain public. By 2H 2027, basically 1yr from today, Versant will be in trouble unless there is a plan for them to sell the cable networks or combine with another media company. $VSNT is underlevered, so it makes it easier for any potential buyer, financial or strategic, to lever up to buy them out.
2. I think it is possible that VSNT cuts some sort new deal with NBC / consortium of other media companies to help them sell their ad inventory. It is possible in the future they play little brother and tag on to a joint bid for sports rights /take some games that other players don't want. Whatever they do, the economics right now are as good as they are going to get! Their margins on their content are only going to fall.
3. I think investors are WAY underestimating the degree to which cord cutting is still occurring in the U.S. I think there's a 50-50 chance earnings get crushed before 2028, purely because people are signing up for YouTube TV skinny bundles.
David Einhorn's presentation made me realize that even sophisticated American investors still don't understand the thesis, so I think upside is difficult here. Great questions, keep them coming! Hahaha
Great responses. Yeah, the dinosaurs are dead. P/E will buy them out for cashflow till Versen drop dead.
great writeup!
Thank you very much Justin for reading and subscribing! I know Versant is not the most popular stock to talk about, so I really wanted to make this article value-added by showing everyone how you can reverse engineer and deconstruct another investor's thesis.