UPDATE, 8:10 AM: MSG CEO Hank Ratner told analysts that he can’t say much about the lockout “in light of (NBA) league restrictions.” But it has created problems. “We are exploring opportunities to bring other live events to the Garden” to replace the lost games, he says. It’s been tough to do so at the last minute, though. Ratner has scheduled two performances and adds that “we’re going to use the influence that we have as Madison Square Garden to schedule as many dates as we can.” Can companies that have bought suites at the Garden cancel them? The company says not to worry — but won’t give specifics. Season-ticket holders can get refunds, including for the eight Knicks home dates that have been lost. MSG is required to send the cash out within 10 days and include a 1% annual interest rate payment retroactive to October 1. The company says the lost games won’t cause its sports TV channels to run afoul of its cable and satellite affiliation agreements. The deals have provisions for work stoppages; hockey and Knicks-related programs will fill in for some of the lost games. MSG Media President Mike Bair says that “the vitality of the market for hockey has been better than last year and better than our plan.” Meanwhile the company continues to upgrade the Garden, and says the total bill should come to $980M.
PREVIOUS, 5:42 AM: We’ll have to wait for the company’s quarterly conference call with analysts to find out what how badly the NBA lockout might hurt the owner of the New York Knicks, MSG regional sports networks, and the Madison Square Garden arena. There was no mention of it in this morning’s earnings report. But the disruption follows a strange quarter as the company closed Madison Square Garden and the Theater at Madison Square Garden for upgrades. MSG reported net income of $21.3M, up 10.5% vs the same period last year, on revenues of $177.6M, down 6.9%. The revenue figure was well ahead of the $173.88M that analysts expected. And earnings, at 28 cents a share, zoomed past the 10 cents the Street anticipated. Revenues at MSG Media — with cable networks including the regional sports channels and Fuse Networks –were up 3.9% to $138.6M. Ad sales rose $1.25M, but the company says that a $4.5M increase in revenues from pay TV distributors was “significantly offset” by the expiration of some affiliation agreements. MSG Entertainment, which includes the company’s venues, saw a revenue drop of 27.7% to $27.6M from the shut down of The Garden. And MSG Sports — with teams that also include the New York Rangers and New York Liberty — was down 21.9% to $28.8M, again attributed to the closing of The Garden. “We re-opened The Garden on schedule in late October and are pleased with the progress we have made on all fronts with respect to the Transformation project,” CEO Hank Ratner said. “We remain focused on our company’s business objectives and are confident in our ability to drive long-term growth.”
Following the earnings release, Miller Tabak analyst David Joyce upgraded his stock recomendation to “buy” from “neutral.” In addition to the results, which beat his expectations, he says there’s been “creeping positive speculation in the stock that the NBA lockout could be coming to an end soon, as both sides have continued to work hard in the negotiations.” Although games have been cancelled through November, “there is still hope.”
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