USA Sports Leverages Linear TV for Digital Business Growth

Key Quotes

"You know, the thing is, Jordan got what he really wanted out of this deal: a permanent charter that will allow his team to race in every NASCAR Cup level race. NASCAR wanted those charters to be temporary and renewable."

This quote highlights a key outcome of the antitrust lawsuit filed by Michael Jordan's NASCAR team against NASCAR. The author points out that Jordan secured a permanent charter, which was a significant win, contrasting it with NASCAR's initial desire for temporary charters.

"To me, it represents something that every league in America intuitively knows and that is the importance of star power. And yes, John Cena is a bankable star."

This statement from the author emphasizes the critical role of star power in sports leagues. The author uses John Cena's popularity as an example to illustrate how a recognizable and bankable star can draw significant attention and attendance, a concept understood across all major sports leagues.

"My skepticism for working in television... once I heard Mark's vision for the future strategy, once he informed me about who some of the colleagues that he was bringing over and who were joining from NBCCU would be... my skepticism for continuing to grind away corporately in the TV business versus looking at transforming the business and you know growing it via new investment, whether it's organic or inorganic, you know that was I went from skeptic to being fully on board pretty quickly."

Matt Hong explains his initial hesitation about returning to television and how Mark Lazarus's vision and the caliber of the team convinced him. Hong describes a shift from skepticism about the traditional TV grind to enthusiasm for transforming and growing the business through new investments.

"We're going to play a different game than other traditional media companies. We're not going to solely look at things the way... media companies in the past have done it. We're sort of playing a different game and that's namely that we're going to be a different or a modern media company going forward."

Matt Hong articulates the core strategy of Versant as a departure from traditional media approaches. He explains that the company aims to be a modern media entity by not solely relying on traditional revenue streams from airing and monetizing programming.

"Whereas 100% of revenue or EBITDA or cash flow for a traditional media company comes from airing programming and monetizing that programming through distribution revenue and advertising revenue, you know we'll certainly do that... but really the lens at which we'll look through growth and success will be growth and an evolution and success will be through new adjacent digital businesses."

Matt Hong elaborates on Versant's strategic shift towards digital businesses as a primary driver of growth. He contrasts this with traditional media companies, whose revenue is entirely derived from programming, by stating that Versant will supplement traditional revenue with significant investment in new, adjacent digital ventures.

"So, from a legal perspective, completely separate. You know, the same thing that that I just described relative to our league partners, we're doing with our talent as well. So, you know, golf talent for instance, if Terry Hogan and which he will, will continue to spend time on both Golf Channel and NBC going forward, he'll have a direct relationship with us for Golf Channel and USA Network and then a separate direct relationship with NBC Sports going forward for the work that he does."

Matt Hong details the legal separation between Versant and NBC post-spin-off, extending to talent contracts. He explains that talent, like Terry Hogan, will have distinct contractual relationships with both Versant (for Golf Channel and USA Network) and NBC Sports, ensuring clear lines of engagement.

"For us, disciplined just means sports that we feel like we can from a pure financial perspective generate a return on from our combination of distribution revenue and from from advertising revenue. So as wonderful as those properties are, properties like the NFL and the NBA, they don't fit our profile in terms of ability to make a return from them."

Matt Hong explains Versant's disciplined approach to acquiring sports rights, focusing on financial viability. He states that while the NFL and NBA are valuable properties, they do not align with Versant's financial model for generating returns through distribution and advertising revenue.

"A lot of those growth properties happen to be women's sports, so we're certainly bullish on women's sports, but we're also, you know, we don't just broadly classify all women's sports together... but why a lot of the sports that we're newly investing in... yes, those all happen to be women's sports, but I would say from a business perspective, what really binds them more than the fact that they have female athletes is we're confident and are bullish on each of those sports just in terms of their growth."

Matt Hong clarifies Versant's investment strategy in women's sports, emphasizing growth potential over gender classification. He explains that while many of their new investments are in women's sports, the primary driver is the belief in their growth trajectory and the potential for partnership to elevate these properties.

"So we'll have a match of the week for LUV that starts in January... on Wednesday nights in prime time on USA Network... and then we'll air playoffs and the LUV championship game on on USA as well. But really what we'll do is we'll create a franchise for LUV, Wednesday nights on USA Network."

Matt Hong outlines the programming strategy for LUV (volleyball) on USA Network, establishing it as a weekly franchise. He details plans for a "match of the week," playoffs, and the championship game, all to be aired on USA Network on Wednesday nights.

"If I were you, I would double down on NASCAR. So, you know, NASCAR, our ratings were flat to slightly down this past year. I think that's going to be a lot different going forward. I think we with the league have some learnings."

Matt Hong expresses a strong positive outlook on NASCAR's future performance, advising increased investment. He acknowledges recent flat or slightly down ratings but anticipates a significant turnaround due to learnings and strategic adjustments made with the league.