USA Sports’ Digital Glow-Up

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1:04Congratulations! You made the varsity, the podcast. My name is John Arand and I am Puck's sports correspondent and the host of this pod. Today, we're joined by Matt Hong. Matt runs USA Sports, which is the sports division overseeing the former NBC cable channels that are now called Verson. That's USA Network and Golf Channel, basically. CNBC also carries some games, but it's really just USA and golf. And those channels have deals with big sports groups like NASCAR, PGA Tour, Premier League, WWE, WNBA, Pac-12. I could go on. Matt's been in the business for a while. I've known him for at least a couple of decades.

1:46He used to be the COO of Turner Sports for 11 years. And for my money, he's one of the smartest minds in the business. I'm really happy that he's joined us. But before we get to Matt, today is Sunday, December 14th, and here's what I'm watching. Today, I'm not limited to just one thing. Here are two topics that I'm covering right now. First, my focus is on Charlotte, North Carolina. That's where Michael Jordan, yes, the NBA Hall of Famer, emerged as a clear winner coming out of the antitrust lawsuit that he filed against NASCAR. You see, Jordan is the part owner of a NASCAR racing team. And on Thursday, toward the end of a federal antitrust lawsuit, Jordan's team and another NASCAR team called Front Row Motorsports reached a settlement with NASCAR that, to me, should have been reached months ago.

2:39The 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. Now to every courtroom observer that I spoke with, it was clear from the start that NASCAR was losing this case. And it's mystifying to me that the sport didn't come to a settlement earlier. Puck's legal expert, Eric Gardner, told me that a settlement seemed like a foregone conclusion because the judge was leaning on both sides to reach an agreement. And he said NASCAR had to have known that it was facing a losing battle based on several pretrial decisions from the judge.

3:25Plus, when there are such big stakes involved, juries are always risky for both sides, really, but especially for NASCAR, as it was in court against such a famous hometown hero. I mean, imagine trying to convince a jury in Charlotte, North Carolina to rule against Michael Jordan. And second, one quick note on the WWE. I attended John Cena's final match in Washington, D.C. on Saturday night. I taped this pod just before it, but you can already tell how popular that event is. Capital One Arena sold out. Ticket prices on the secondary market approaching four figures. This is a legitimately big event.

4:10And 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. Okay, let's get to USA Sports' Matt Hong. Matt Hong, it is really a pleasure to have you on the pod here. You know, you're a longtime industry veteran. And then you decided to hitch your wagon to in, you know, the 2020s to cable television and and and Verson. Before before we talk about what you're doing with USA Sports and the different networks, talk to me about the conversations that you had, like going through to actually become part of Verson.

5:01Well, John, first of all, it's good to see you. After all these years, you look good and thanks for having me. Yeah, so I think I might have even discussed this with you back in 2019 when I departed my previous situation at TNT Sports that, you know, I wasn't sure that I would work in television again. and it was a unique call that I got from Mark Lazarus in April or so of this past year. And Mark and I have known each other for a number of years and we had spoken and I had kept up with him joining Versant from NBCU. So I wasn't sure if we were, when he texted, I wasn't sure if we were going to catch up on a personal level or if he was going to talk to me about Versant, which wasn't even named Versant yet at the time.

5:59And 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 NBCU would be, guys like Anand Kinney and Dave Patrica, who had wonderful careers at NBCU and could have stayed and been difference makers there. But they had committed to this vision and the strategy that Mark was putting forward at Versant. And so between talking to Mark and Anand and Dave, you know, 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.

6:57You know, that was I went from skeptic to being fully on board pretty quickly. Yeah, you're preaching the gospel now. But I always find this to be interesting. And the advice I always give to people younger in their career is that, you know, where a company is headed is, of course, important. You know, and you have to look at that. But who you're working with, and Mark Lazarus is a – well, I'm sure you knew back at Turner back in the day. He was a Turner and he's been at NBC for the longest time. A very well-respected executive in the business. So as you're making the decision, of course, you're sitting down and you have to believe in the plan or you're not going to do it.

7:45But if you could do like a percentage of like, you know what, it was the people that I was going to work with and who cares what we're going to be selling out there versus, you know what, I really do believe in this plan. And I think this plan will work. Yeah. So most people reasonably think that Mark and I worked together at Turner, but we ended up, John, missing each other just by weeks. And so when I started, I joined Turner Sports in April of 2008, which seems like two lifetimes ago in terms of this industry, for sure. But as I started looking at that opportunity. David was still on the upswing then, Matt.

8:25We've got a plan. We'll get to that. We'll get to that soon. We'll get to that, yeah. Yeah. But as I began looking at the Turner Sports opportunity in 2008, I had not worked in sports before. So I was working at Thompson, now Thompson Reuters at the time. I had worked at AOL as a fellow DC resident of yours for seven years. And I called folks that were working in sports or in television media. And I said, hey, what do you think about this Turner Sports opportunity? And, you know, 100 % of the people said, hey, that's a great opportunity and you should, you know, strongly consider it. But a noteworthy number of people also said, you know, one of the shames is that as much as you'll like the leadership at Turner Sports and Turner, the person that from a style perspective or from a, you know, culture and EQ perspective, or maybe that's most similar to you in terms of how they prioritize culture and EQ, you know, that person just left.

9:26And so, you know, and that person was Mark Lazarus. And so I heard Mark's name for the first time as I was looking at the Turner opportunity in 2008 in the context of people saying it's too bad that that, you know, if you go there, you'll just have missed each other as great as an opportunity is as as exists at Turner and Turner Sports. so uh you know uh when more than five people tell you the same thing about somebody you eventually meet that person uh and and kind of get to know that person and and that that was uh mark and myself uh you know shortly after i joined our sports and we we just maintained uh you know a discussion and a dialogue and and uh you know mark and i had talked about the possibility of me joining him at NBC, you know, prior to when I joined Versant, and it was never the right opportunity or there were family, you know, family in Atlanta, kids in Atlanta, that type of situation.

10:25So when we when we chatted about the Versant opportunity, you know, Mark even opened with the fact that, well, you're an empty nester. And, you know, maybe that changes things a little bit. But really, it was, as you noted, John, it was, it was, it was, you know, probably 50 50 in terms of me buying into the business strategy, that we're going to transform this company and, you know, continue to invest in the core assets, which is linear television, but we're going to also healthily invest in these adjacent digital businesses, which we'll talk about. So that was a strategy that, you know, I really gravitated to.

11:03But if it were just the business strategy and it weren't people like Mark and Anand and Dave Patrica and then, you know, Jeff Benke, our executive producer at USA Sports, who I had worked with previously at Turner Sports and Tom Knapp, who runs Golf Channel and, you know, Celia Cole, who oversees our rights acquisitions. If it weren't for the people, I don't know that, you know, based on the strategy as solid as I may think it is, would have been enough just in terms of, other things that I was working on and getting enjoyment out of. So I think it was probably a healthy 50-50 in terms of being bought in both to the business strategy for Versant and for USA Sports, but also the rest of the leadership team and the culture.

11:49And just what I can heartily confirm six months in, just enjoying the people that you work with, whether it's folks on the senior leadership team at Versant or folks on the leadership team and everybody on the team at USA Sports, there's just a real, for me personally, a real enjoyment in working with these people. I think we've got, you know, I think, and it starts with Mark, I think he brought over or picked what I say internally is the highest combination of IQ, but also EQ leaders, you know, that he had access to. And so it's been super enjoyable for me, from a culture and a teamwork perspective.

12:34And that really makes it more fun. The part of that answer that I like so much is you mentioned empty nesting. Nobody told me how great empty nesting was going to be. It afforded you the opportunity to just move cities and go wherever you want to get the job done. All right, so Mark calls you. The person who gave me the best advice about empty nesting was, I think, on your podcast just a couple weeks ago, but it was Steve Bornstein. And so, you know, it was really, I think we were a year away from being empty nesters. And, you know, I saw Steve at a V Foundation board meeting, and I updated him on that.

13:15And he gave me the best advice, which is sort of, you know, not to sit around and just, you know, look at each other and wonder what your kids are doing, but really to lean into it. All right. So you've been having this dance with Mark for a while. He wanted to bring you over to NBC. Give me his elevator pitch on the business. You understand the culture, you understand the people, you're sold on that. What's the elevator pitch on why, how did he convince you that it was a good idea to jump into the cable business again? Yeah, kind of my version or you know, the overlay that I would put on Mark's elevator pitch of it is that we're going to play a different game than other traditional media companies.

14:03You know, we're not going to solely look at things the way, whether it was at NBCU or whether it was me at Turner, you know, solely the way we're not going to look at the industry or what we're trying to do or our strategy or our success through the same lens that 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. And, you know, 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.

14:52That will continue to be a healthy part of our business for years and years and years to come. But really, the lens at which we'll look through growth and success will be the growth and evolution and success will be through new adjacent digital businesses. So, you know, the example that I use for us in sports is if you look Golf Channel and the adjacent business of businesses of Golf Now and Golf Pass, you know, that vertical of golf. So everything we do in terms of airing programming on Golf Channel, plus the majors and the Ryder Cup that we have on USA Network, that's only about 50 percent of the current revenue for our golf vertical at Versant.

15:41When you take the revenue and the financials of Golf Now and Golf Pass and combine those with the traditional or linear revenue that we get on Golf Channel and on USA Network, it's about 50-50. And so really that model that currently exists for us in the golf vertical, we're going to apply that to the rest of sports. That's the goal for the rest of Versant, whether it's news or financial news or entertainment. It's really looking at it through that lens that we're going to try and compete and that we're going to try and grow. And that's just different from media companies in the past, including the assets that we have at Versa when they were at NBCUniversal.

16:25I want to dive deeper into that. Let me take a quick break. And I just want to ask you a question about, I understand the Golf Channel aspect of it. How does that apply to, say, NASCAR on USA? And we'll talk about that when we get back.

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17:40podcast available on Apple podcasts, Spotify, or wherever you get your podcasts. Matt, are you a golfer? Do you golf? Uh, I think the, the USGA and the PGA of America would consider me a lapsed golfer, but, uh, I'm working hard to get back. I'm working hard. The, uh, the, the, the side business, I actually, I called it side. You probably would kill me for calling it a side business, but the businesses that the golf channel has with, uh, in terms of, you know, uh, doing, uh, tee times and doing like, uh, there's a built in, I can, I can totally see because they've been successful with it for, for years.

18:22I can see how that was going to be successful. Um, on USA, you have, uh, the WNBA, you have NASCAR. What, what are the digital extensions that you can build around those types of sports on USA? So how does that strategy apply over there? Yeah. I mean, as you know, golf is probably the most obvious vertical within sports or within Versant where we can be successful. And we've had incredible success thus far because the crossover between those who watch golf and those who participate in golf is high. So that's probably not an exact, we won't try to exactly replicate that for a NASCAR or for a WWE, as you know, just because the participation crossover is not as high.

19:13What I will say is that, you know, golf is a lifestyle or participating, not necessarily by playing, but by consuming it in some form or fashion, golf outside of just watching golf, that's what we'll seek to do in the rest of our sports areas or the rest of versa. And so it's really about capturing attention and, you know, participation in quotes, even if you're not necessarily participating in the game itself, but participating or capturing activity related to the other sports that we may air or related to, for instance, programming on CNBC or programming on MSNOW outside of when folks are specifically watching those linear channels.

20:00And so it won't necessarily be, you know, again, as you know, participating in the driving of a race car or participating in entertainment wrestling like WWE, but it will be about, you know, finding synergistic businesses where folks spend their time when they're not watching that programming on our networks. So is there a specific example that you're looking at or anything that, you know, with regards to any of the sports that you have there? Yeah, I mean, I would say more to come in terms of things that we're looking at, but we're not ready yet to announce. But I do think a lot of the role, whether it's for myself in sports or for our other leaders, Casey Sullivan for CNBC or Rebecca Cutler for MSNOW, is looking at these inorganic, adjacent, synergistic businesses that if they were to be a part of Versa, could really help drive that growth or transformation that we've talked about.

21:09So nothing specific to share just yet, but you will be the first to know. I like that. Thank you very much. When is a spinoff? That's coming in a couple of weeks, right? Yeah. So from a technical perspective, Friday, January 2nd will be when if you're a Comcast shareholder, you'll then hold shares of both Comcast and Versant. And then our go public date. So the first day that you or anybody can trade in Versant stock on NASDAQ will be the following Monday. So Monday, January 5th will be our sort of birth date as a new public company. What is your relationship with NBC going to be like going forward?

21:55Yeah, I would, you know, I've, we with NBC have, have gone back and forth on what's the perfect analogy to describe it, whether it's, you know, I think the best one that I've come up with is, we are, we were twins, we were siblings or twins that shared a bedroom throughout high school, and now we've gone off, off to college and to different colleges. And so, you know, in some ways, and we had to divide up who was getting what in terms of the bedroom that we used to share. I would call us close cousins or something in that neighborhood going forward. From a legal perspective, we'll be completely separate.

22:37So, you know, we will have and one of the things that we've worked on over the past few months is from a league rights and a league relationship perspective, we'll be separate going forward. So, you know, whether it's NASCAR or the PGA Tour or Premier League or WWE, we and our legal team spent a lot of time, you know, either having contracts that will stay with NBCU like Olympics. You know, that's a discussion with NBCU about continuing to air Olympics on USA Network and CNBC going forward. NASCAR is the opposite. NASCAR is a contractual relationship that is coming with us to USA Sports and Versant from a legal perspective.

23:24And then there's a discussion with NBCU and NBC Sports about continuing to air four of the 14 races in the coming years on NBC, with 10 airing on USA Network. It really starts from the pledge that we collectively made to fans and to the leagues that wherever programming aired in 2024 or 2025, it would continue to air or fans could continue to find that same programming on the same networks post-spin in 2026. And so, you know, Olympics, that relationship stays with NBCU, but programming, Olympic programming will continue to air, you know, this winter and from LA on USA Network and CNBC. You know, NASCAR, we talked about, was the inverse.

24:15And then the majority of our rights deals, you know, we took one contract and split it into two. So that there's a direct relationship between us and the PGA Tour for Golf Channel. But there's a direct relationship going forward between NBC and the PGA Tour for the events that air on NBC on Saturday, Sunday. So from a legal perspective, completely separate, you know, the same thing 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 Gannon, 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, whether it's golf or Olympics or NBA over there.

25:13So legally separate, but from a, you know, as we continue to use each other's programming on respective networks, we'll continue to be, you know, very close in terms of that regard. and then you know as we look at new sports rights will all other things being equal Rick Cordell and I both said will be opportunistic and and you know where it makes sense for us for each of us to continue to partner we will absolutely do so and we'd like to do so but you know for us as Versa and USA Sports we will have a unique opportunity to partner with others whereas you know 100 % of the time we previously would have partnered with with NBC Sports and and Peacock, you know, we will have the opportunity to partner with others where it makes sense as well.

26:02It's not even a trend anymore. Everybody's doing it. The idea of streaming and you've seen, you know, ESPN launched, ESPN Unlimited, you know, Paramount Plus, Peacock, of course, you've been dealing with for a while. Your old company, Warner Brothers Discovery, who knows where they're going to go if they go to Netflix and go off on their own. They've talked about, well, we really do have to set up our own streaming service to get out there. How are you viewing that aspect of the business with Versin? Or not with Versin, with USA Sports? Yeah. I mean, we are, you know, we continue to be super bullish on the, well, I'll call it the linear model.

26:45But the linear model, you know, there's a healthy component of the linear model, which already involves streaming. So if you just look at all across Versant in the trailing 12 months, over 14 billion hours of content was viewed across the eight Versant networks. So 14 billion, a healthy amount of which was live sports. And so as a number that exceeds many, if not most of the streamers and most other media companies in terms of total consumption of viewership across our networks for the past 12 months. So there's a lot to continue to be bullish about in terms of that core business. And we are, even as we will try to transform that business with the addition of digital businesses like we talked about.

27:40You know, a lot of those hours were consumed via our own or via MVPD streaming platforms. platforms. So authenticated streaming, whether it's through the YouTube TV platform or any of our other distributors or the USA Network platform. So those are ubiquitous and extremely user-friendly streaming platforms of our linear networks. And so that's our strategy for now. We're leaning into it. Again, we think that the number of hours viewed across our networks, when you combine both linear delivery, but also the streaming delivery via authenticated streaming, super healthy. That's our strategy for now.

28:27And I saw in your investor conference, the amount of money that you still make from these cable channels and that type of streaming that you talked about, it's still, that's a significant business that's out there. Yeah, I mean, I think you said it perfectly. It's a good and significant business. It is not a growing business. We realize that. But as a core business, it's seven plus billion in revenue, two plus billion in EBITDA. That's a good size business. And really what it is, it's a great jumping off point. Or as we say, it makes us an exceedingly well-funded startup so that we can look at investing in that core business to continue to have it be as healthy and as large for as long a period of time as possible.

29:20But also really good cash flow that we can look at these other businesses that are adjacent to this core business. It's so wild to hear you say that. USA Network. That's one of the original cable networks. I believe it was among the first cable networks to have sports back with Kay Kopovitz doing an NBA deal back in the day. And you're talking about it in startup terms. The most old school of cable networks is now a startup. That's a pretty unique way to look at it. Yeah, and that was actually some of the appeal of joining Versant for me personally as well. You have this sort of freedom and flexibility of a startup, but you have that history and that legacy, whether it's of USA Network or the financials that are moving over.

30:11So it's sort of the best of both worlds in terms of stability and legacy and history, but also really the ability to pick a new name for the sports division and pick our team members, whether they're new from the industry, like Muriel Brady, who joined as our new VP of programming, or the predominance of our team that's moving over from NBC Sports. It was a unique opportunity to get the benefits and the safety of a strong legacy business, but the sort of fun and the ability to build from scratch part that exists with the startup. Matt, I want to take one more quick break. I want to come back and I want to get into one of my favorite topics, sports rights.

31:05Hi, I'm Angie Hicks, co-founder of Angie. When you use Angie for your home projects, you know all your jobs will be done well. Roof repair? Done well. Kitchen sink install? Done well. Deck upgrades? Done well. Electrical upgrade? Done well. Angie's been connecting homeowners with skilled pros for nearly 30 years, so we know the difference between done and done well. Angie, the one you trust to find the ones you trust. Find a pro for your project at Angie.com. So Matt, I know NFL rights are coming up maybe next year, maybe the year after. And I know that you're not going to be sitting down trying to pick up a package of NFL sort of live game rights.