CNBC parent's stock is in turmoil: Versant shares pummeled for the third day in a row after Comcast spinoff

By Lukas I. Alpert

The new corporate home to the cable channels CNBC, MS Now and USA Network has started off losing 25% of its market value following separation from Comcast

The way things are going for CNBC's new corporate parent probably wouldn't pass muster with "Mad Money" host Jim Cramer.

CNBC "Mad Money" host Jim Cramer is unlikely to be shouting "Booyah!" for the stock of the financial-news channel's new corporate parent.

Shares of Versant Media Group (VSNT) have fallen for a third day in a row since the stock began trading on Monday following a spinoff from media giant Comcast (CMCSA).

In all, Versant has rapidly lost more than 25% of its market value since it started trading as a stand-alone company comprising what had been NBCUniversal's cable-channel division, which includes CNBC, MS Now (formerly MSNBC), the E channel and USA Network.

Comcast shares have been roughly flat over the same time period.

Versant executives have said the split was intended to unlock the value of the channels and allow them to invest in their own operations the proceeds of the $7 billion in revenue they generate, rather than seeing those funds redirected toward Comcast's theme-park and streaming businesses.

So far, investors have appeared wary, and that has weighed on the stock. Much of the trading is likely being driven by selloffs by large index funds that held big positions in Comcast, and for which Versant does not meet their strict investment guidelines.

Executives say they expect the stock to level off in the coming days, once those portfolio adjustments subside. That has so far played out - with the stock falling 13% on its first day of trading, 10% on Tuesday and about 8.2% on Wednesday.

"It's just going to find a level over the next couple of weeks, I think, but the early days is technical turnover of the shareholder base that's getting distributed shares, you know, repositioning against their own criteria indexes they're in," Comcast co-CEO Mike Cavanaugh said on CNBC's "Squawk Box" on Wednesday.

Still, the market's reaction to Versant in its first days raises questions about the valuation of other big media spinoffs. Warner Bros. Discovery (WBD) has similarly been moving to spin off its cable-channel division alongside the planned sale of its studio and streaming businesses to Netflix (NFLX).

That deal has been complicated by a hostile-takeover effort by Paramount Skydance (PSKY), which has offered to buy the entirety of Warner Bros. Discovery, including the cable channels.

Warner Bros. Discovery's board on Wednesday formally rejected Paramount's latest offer, citing the heavy debt load that deal would entail, and also questioning the valuation Paramount was assigning to WBD's cable business.

Historically, the performance of media-stock spinoffs has relied largely on how the separations were viewed - whether as splits that could stand on their own feet or castoffs of undesirable properties.

In 2015, shares of newspaper company USA Today (TDAY) - which was then called Gannett - fell 6% on the first day of trading after the company was spun off from local-TV-station operator Tegna (TGNA).

Conversely, shares of Starz Entertainment (STRZ) rose 40% on that company's first day of trading in May after it was spun off from Lionsgate Studios (LION), which fell 4.4% that same day.

-Lukas I. Alpert

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01-07-26 1627ET