Q4 A Slam Dunk At MSG3/18/2010 6:00 PM Eastern
In its first quarterly conference call as a separate publicly traded company, Madison Square Garden reported a strong fourth quarter, spurred almost entirely by affiliate fee increases at its cable networks and a return to profitability for its sports teams.
For the period ended Dec. 31, revenue at MSG rose 3.6% to $412 million and adjusted operating cash flow more than doubled from $25.5 million in 2008 to $62.9 million in the current period.
Cablevision Systems spun off its Madison Square Garden unit on Feb. 9. The company began trading on the NASDAQ on Feb. 10.
Driving those increases was MSG Media, which consists of the MSG regional sports channels and Fuse. Revenue at MSG Media rose 13.8% in the quarter to $128.5 million and AOCF rose 73.5% to $41.2 million. Spurring that growth was a $12.5 million increase in affiliate fee revenue in the quarter.
At MSG Sports, which includes its professional sports teams the New York Knicks and the New York Rangers, revenue was flat in the period at $123.7 million. But the teams reported positive AOCF of $3.8 million in the period, compared to a $22.9 million AOCF deficit in the same period of 2008.
On a conference call with analysts, MSG Sports president Scott O'Neill said that since the Feb. 19 National Basketball Association trading deadline - when the team picked up veteran players Tracy McGrady and Eddie House and cleared substantial room under the salary cap for future deals- the Knicks have received 1,950 new 2010-2011 season ticket orders. Last year the team didn't reach that mark until Sept. 4. MSG Sports also benefited from lower player salary costs - the Knicks, MSG CEO Hank Rattner said, will be under the NBA salary cap for the first time in 15 years, positioning it for the upcoming summer free agency market.
Rattner added that the planned renovation of the Madison Square Garden arena is progressing according to plan, with the lower bowl revamp expected to be completed for the start of the 2011-2012 season and the upper bowl by the start of the 2012-2013 season. Rattner said the project is expected to cost between $775 million and $850 million.
At MSG Entertainment, which includes concert venues Madison Square Garden, Radio City Music Hall, the Beacon Theater and the Chicago Theater, revenue was flat at $177 million, but AOCF was down 25.7% to $19 million, mainly due to increased costs for a new Cirque du Soleil show at the Beacon and the expansion of touring shows for its Radio City Christmas Spectacular.
MSG stock was up 33 cents each (1.7%) to $20.37 per share in early trading Thursday.