Cable TV is dying — and can still be a very good business.

Versant CEO Mark Lazarus oversees a cable TV business, but he aims to transform it into something new. The media giant, comprising cable channels such as MS NOW and CNBC, wants to maintain these channels while developing new, cable-free enterprises. A portion of the revenue generated by these channels is distributed directly to shareholders, who appear to favor this approach.

Media companies often attempt to abandon their cable TV networks, as Disney recently did by selling its stake in A&E and other networks for $1.2 billion. Lazarus, however, must retain these networks rather than selling them. He faces three challenges: managing the decline of his cable business, utilizing the ongoing cash flow to develop new businesses for a post-cable era, and paying dividends to shareholders to retain their interest.

A recent update reveals both the difficulties and potential benefits of Lazarus' strategy. Versant's cable distribution revenue declined by 6.3% from the previous year, primarily due to fewer cable subscribers. Advertising also experienced a slight decline, largely because cable channels like CNBC and MS NOW still attract viewers.

The company has raised its annual revenue and profit projections. This positive news is significant because Lazarus does not rely on cable to stimulate growth; he needs the decline to be slow enough to continuously extract cash from it. Conversely, Versant's non-cable TV divisions are expanding. Excluding the performance of SportsEngine, a sports business sold earlier this year, the company's "platforms" business, which includes Fandango and GolfNow, has grown by 9.3%.

The company is also developing digital subscription services linked to its TV properties, like an upcoming MS NOW service. While these initiatives may not replace the decline in Versant's core business in the near future, they indicate the direction the company intends to pursue. Currently, Versant's strategy includes returning cash to investors, which has led to a near-10% increase in the company's stock following its announcement.

Investors may believe in the potential of MS NOW or the resurgence of Fandango. However, they can also benefit from the present business, despite its eventual expiration date. Lazarus aims to prove that the old cable business can generate consistent cash flows, enabling investors to receive returns regardless of the long-term scenario.