Accrued Interest's Simeon McMillan on $VSNT and the evolving media space

Episode Summary

Executive Summary: Andrew Walker interviews Simeon McMillan about Versant, Comcast’s cable-spin asset, and the wider media landscape. McMillan is broadly bearish: he argues Versant is over-earning under NBC’s umbrella, faces major disruption once ad-sales and carriage terms reset, and has limited strategic flexibility until 2028. He sees a few bright spots—especially golf software and CNBC—but thinks legacy media is structurally weakening under podcasting, YouTube, and cord-cutting.

Main Topics: Versant as a late-cycle Comcast spin-off (Priority: 5/5): McMillan explains Versant as Comcast’s linear cable asset carve-out, keeping NBC, Peacock, and Bravo at Comcast while packaging weaker channels into Versant. He argues it is a late, defensive spin-off with limited upside because the business is already in secular decline. 2028 separation and strategic constraints (Priority: 5/5): A central thesis is that Versant is trapped until 2028, when tax/Morris Trust restrictions and the end of NBC’s ad-sales separation limit management’s ability to make strategic moves. He says this makes valuation and dividend analysis unreliable before then. Advertising and carriage economics deteriorating (Priority: 5/5): McMillan stresses that Versant’s reported finances are artificially supported by NBC’s sales infrastructure and that once the umbrella disappears, ad sales and carriage negotiations worsen materially. He expects the company to lose leverage with distributors. Golf assets as an unexpected hidden gem (Priority: 4/5): The golf segment—GolfNow/TeOff plus the Golf Channel—is presented as the most interesting potential asset. McMillan argues the booking software has sticky, recurring economics and could be attractive to a buyer even though it is too small to drive the whole company’s stock story today. CNBC as a trophy asset with disruption risk (Priority: 4/5): CNBC is portrayed as a valuable brand with affluent viewers and strategic optionality for tech or fintech buyers, but also as vulnerable to podcasts, YouTube, and the decline of linear TV. McMillan believes its digital execution is underdeveloped. Sports rights, NFL, and the future of media distribution (Priority: 4/5): The conversation expands into sports media, NFL bidding, and whether streaming platforms like YouTube TV or Netflix could take larger packages. McMillan thinks the NFL still needs broad broadcast reach and that legacy distribution partners will remain important, though bargaining will get harsher. YouTube and podcasting as structural disruptors (Priority: 5/5): McMillan repeatedly frames YouTube and podcasts as the real competitive force eating into legacy TV, financial news, and political talk. He argues talent and content are increasingly self-distributing, weakening the old network model.

Key Arguments: Versant is a weak, late-stage spin-off whose most valuable assets were left behind at Comcast, so the remaining portfolio is mostly lower-quality linear cable. The company is over-earning because NBC’s ad-sales umbrella and bundled distribution relationships temporarily mask the decline in underlying economics. Strategic flexibility is constrained until 2028, making near-term valuation and dividend analysis misleading. The golf booking software business is a real asset with sticky recurring economics and potential standalone value, but it is not large enough to offset media declines. CNBC has valuable brand equity and affluent viewers, but its future depends on whether it can reinvent itself for digital and subscription distribution. Podcasting and YouTube are disrupting both financial news and political talk by letting talent and executives bypass traditional channels. NFL rights remain highly valuable and will drive aggressive bidding, but the league still needs broad US reach, limiting how far streaming-only deals can go. Financial engineering alone cannot solve media’s problems; audience share and distribution power ultimately determine value.

Data Points: Versant dividend yield: about 4% to 4.5% - Walker and McMillan discuss the stock rally after Versant announced a relatively large dividend. Dividend per share: about $1.35 to $1.50 - Estimated annual dividend associated with the new dividend policy. Versant share price: around $35 to $36 - Referenced as the current trading range after the dividend announcement. Estimated fair value: $27 per share - McMillan’s conservative valuation estimate for Versant. Versant EV / free cash flow: about 7x 2026 FCF - McMillan’s adjusted valuation framework for the spin-off. AMC Networks EV / free cash flow: about 7.5x to 8x - Used as a comp to show Versant trading similarly on adjusted metrics. Free cash flow decline: 15% to 20% annually - McMillan says Versant’s free cash flow is rapidly falling. Golf segment revenue: about $600 million on each side / about $600M-$700M total discussed - Walker and McMillan estimate the golf business scale across software and channel assets. Golf booking software market share: about 75% - McMillan estimates Versant controls roughly three-quarters of the third-party golf tee-time aggregation market. Versant growth in golf: mid-single-digit to high-single-digit growth - McMillan infers golf-related growth from earnings-call clues. YouTube TV market share: about 1.5% for Warner Bros. and under 2% for Paramount - Referenced from McMillan’s Nielsen Gauge tracking to show small streaming/linear share for some media assets. Audience / subscriber gains: almost 100% of net customer adds in pay TV over the last 1-2 years came from YouTube TV - McMillan says his tracking shows most pay-TV bundle growth came from YouTube TV. Annual subscription growth milestone: 1,100 subscribers - McMillan mentions his Substack reached about 1,100 subscribers in its first year. NFL Pro Bowl ratings change: down 60% year over year - McMillan cites the newly reformatted Pro Bowl as an example of narrative versus ratings disconnect.

Pivotal Quotes: "Financial engineering is not a strategy." — Simeon McMillan: He uses this to argue media value depends on audience and distribution, not just spin-offs or capital structure. "I think CNBC would be a great trophy asset, but you need a trophy buyer who's willing to pay a trophy price." — Simeon McMillan: He explains why CNBC has strategic value but may not monetize well inside Versant. "The reason why I don't think the more extreme scenarios you laid out... is because at the end of the day, the sports video product is the lowest margin part of their business." — Simeon McMillan: He pushes back on the idea that streaming players will simply bid for huge NFL packages.

Implications: Versant looks structurally challenged until post-2028, while the broader media sector remains pressured by cord-cutting, YouTube, and podcasting. The few high-quality assets—golf software and CNBC—may be worth more separately than inside the current bundle.