News Details

Madison Square Garden, Inc. Reports Second Quarter 2010 Results

August 6, 2010

NEW YORK, Aug 6, 2010 (GlobeNewswire via COMTEX News Network) -- Madison Square Garden, Inc. (Nasdaq:MSG) today reported financial results for the second quarter ended June 30, 2010.

Madison Square Garden's second quarter 2010 revenues increased 9.5% to $227.1 million compared to the prior year period, primarily reflecting an increase in revenue in the company's MSG Media and MSG Entertainment segments. Adjusted operating cash flow ("AOCF")(1) increased 303.7% to $42.4 million and operating income increased $34.5 million to $25.7 million, as compared to the second quarter of 2009. On an overall basis, AOCF and operating income growth were primarily driven by higher MSG Media revenue and lower operating expenses in the MSG Sports segment.

Second quarter net income of $14.0 million ($0.18 per diluted share) increased $17.9 million compared to a loss of $3.9 million (loss of $0.05 per diluted share) in the prior year period. The increase in net income primarily reflects the growth in operating income discussed above.

Madison Square Garden President and CEO Hank Ratner said: "Madison Square Garden's strong second quarter growth is a continued reflection of the integrated approach to our dynamic content, iconic venues and programming distribution platforms. We are enthusiastic about the strategy we have in place and continue to see all three of our business segments as meaningful contributors to our profitability over the long term. In addition, the transformation of Madison Square Garden into a state-of-the-art facility is now underway and we remain confident that the transformed Arena will further enhance our growth profile in the years ahead."

Results from Operations

Segment results for the quarters ended June 30, 2010 and 2009 are as follows:

                                   Revenue                   AOCF             Operating Income (Loss)
                          ------------------------  -----------------------  --------------------------

                                     Q2       %       Q2      Q2       %                  Q2       %
  $ millions              Q2 2010   2009    Change   2010    2009    Change   Q2 2010    2009    Change
                          -------  ------  -------  ------  ------  -------  ---------  ------  -------
  MSG Media                $134.5  $113.8   18.2 %   $62.1   $39.9   55.7 %      $56.7   $33.3   69.9 %
  MSG Entertainment          46.8    41.0   14.0 %  (20.0)  (11.8)  (70.5)%     (22.8)  (16.1)  (41.6)%
  MSG Sports                 63.9    68.6   (6.9)%     3.5  (15.8)       --        0.6  (19.3)       --
  Other (including
   eliminations)           (18.0)  (16.0)  (12.2)%   (3.2)   (1.8)  (76.5)%      (8.7)   (6.6)  (31.2)%
                          -------  ------  -------  ------  ------  -------  ---------  ------  -------

  Total Company            $227.1  $207.3    9.5 %   $42.4   $10.5  303.7 %      $25.7  ($8.8)       --
                          -------  ------  -------  ------  ------  -------  ---------  ------  -------

  Note: Does not foot due to rounding

  --  See definition of adjusted operating cash flow ("AOCF") included in the
      discussion of non-GAAP financial measures on page 3 of this earnings
      release.


MSG Media

MSG Media revenues for the second quarter 2010 rose 18.2% to $134.5 million, primarily driven by affiliate fee revenue growth, and by an increase in advertising revenue. Affiliate fee revenue increased $19.7 million compared to the year ago period, largely attributable to higher contractual affiliation rates, including the impact of a new long-term affiliation agreement with Cablevision, which was effective January 1, 2010. Advertising revenue increased $1.0 million compared to the year ago quarter. AOCF increased 55.7% to $62.1 million and operating income rose 69.9% to $56.7 million, both as compared to the year ago period. These results primarily reflect the growth in affiliate and advertising revenue, as well as lower direct operating expense and lower selling, general and administrative expense.

MSG Entertainment

MSG Entertainment revenues for the second quarter 2010 rose 14.0% to $46.8 million, primarily led by an increase in the number of live entertainment events held at Radio City Music Hall. The segment's AOCF loss increased by $8.3 million to a loss of $20.0 million and operating loss increased by $6.7 million to a loss of $22.8 million, both as compared to the prior year. MSG Entertainment AOCF and operating income results in the second quarter of 2010 include a $9.9 million impairment charge and operating losses related to a live entertainment production, slightly offset by improved net results at our owned and operated venues, and lower selling, general and administrative expense.

MSG Sports

MSG Sports revenues for the second quarter 2010 decreased 6.9% to $63.9 million. The decrease in revenues was primarily attributable to a decline in sports team playoff revenues and the absence of a marquee arena boxing event such as the one held in the second quarter of 2009, partially offset by higher broadcast rights revenue and regular season sports team ticket revenue. AOCF improved by $19.4 million to $3.5 million while the segment's operating income improved by $19.9 million to $0.6 million. The improvement in AOCF and operating income mainly reflects lower sports team operating costs and lower selling, general and administrative expense.

About Madison Square Garden

Madison Square Garden is a fully-integrated sports, entertainment and media business. The company is comprised of three business segments: MSG Sports, MSG Entertainment and MSG Media, which are strategically aligned to work together to drive MSG's overall business, which is built on a foundation of iconic venues and compelling content that MSG creates, produces, presents and/or distributes through its programming networks and other media assets. MSG Sports consists of owning and operating sports franchises, including the New York Knicks (NBA), the New York Rangers (NHL), the New York Liberty (WNBA), and the Hartford Wolf Pack (AHL). MSG Sports also features other sports properties, including the presentation of a wide variety of live sporting events including professional boxing, college basketball, track and field and tennis. MSG Entertainment is one of the country's leaders in live entertainment. MSG Entertainment creates, produces and/or presents a variety of live productions, including the Radio City Christmas Spectacular featuring the Radio City Rockettes, throughout the country. MSG Entertainment also presents or hosts other live entertainment events such as concerts, family shows and special events in MSG's diverse collection of venues. These venues include Madison Square Garden, Radio City Music Hall, the Theater at Madison Square Garden, the Beacon Theatre, the Chicago Theatre and the Wang Theatre. MSG Media is a leader in production and content development for multiple distribution platforms, including content originating from MSG's venues. MSG Media consists of the MSG Networks (MSG, MSG Plus, MSG HD and MSG Plus HD) regional sports networks and the Fuse Networks (Fuse and Fuse HD), a national television network dedicated to music. MSG Media is also responsible for managing interactive initiatives across all business segments. More information is available at www.msg.com.

The Madison Square Garden, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7079

Non-GAAP Financial Measures

We define adjusted operating cash flow ("AOCF"), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization, excluding share-based compensation expense or benefit and restructuring charges or credits. Because it is based upon operating income (loss), AOCF also excludes interest expense (including cash interest expense) and other non-operating income and expense items. We believe that the exclusion of the expense or benefit of awards under our equity plans (including restricted shares, restricted stock units, stock options and stock appreciation rights) allows investors to better track the performance of the various operating units of our business without regard to either the distortive effects of fluctuating stock prices and/or the settlement of an obligation that is not expected to be made in cash.

We believe AOCF is an appropriate measure for evaluating the operating performance of our business segments and the company on a consolidated basis. AOCF and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and AOCF measures as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators. AOCF should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Since AOCF is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of AOCF to operating income (loss), please see page 4 of this release.

This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industry in which it operates and the factors described in the Company's filings with the Securities and Exchange Commission, including the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

Conference Call Information:

The conference call will be Webcast live today at 10:00 a.m. EDT at www.msg.com

Conference call dial-in number is 877-347-9170 / Conference ID Number 90227143

Conference call replay number is 800-642-1687 / Conference ID Number 90227143 until August 13, 2010

                            MADISON SQUARE GARDEN, INC.

                  CONSOLIDATED OPERATIONS DATA AND RECONCILIATION
                               (Dollars in thousands)
                                    (Unaudited)


                                       Three Months Ended      Six Months Ended
                                             June 30,              June 30,
                                      ---------------------  --------------------

                                         2010       2009        2010       2009
                                      ---------  ----------  ---------  ---------


  Revenues                            $ 227,131   $ 207,336  $ 533,632   $488,654
                                      ---------  ----------  ---------  ---------

  Adjusted operating cash flow        $  42,442  $   10,512   $ 90,945   $ 26,496

    Share-based compensation expense    (2,548)     (4,512)    (5,859)    (6,850)
                                      ---------  ----------  ---------  ---------
  Operating income before
   depreciation and amortization         39,894       6,000     85,086     19,646

    Depreciation and amortization      (14,199)    (14,768)   (29,260)   (30,496)
                                      ---------  ----------  ---------  ---------
  Operating income (loss)                25,695     (8,768)     55,826   (10,850)
  Other income (expense):
    Interest income (expense), net        (988)       (397)    (1,106)      (668)

    Miscellaneous, net                       --       2,000      2,000      2,000
                                      ---------  ----------  ---------  ---------
    Income (loss) from operations
     before income taxes                 24,707     (7,165)     56,720    (9,518)

    Income tax benefit (expense)       (10,694)       3,266   (25,326)      3,678
                                      ---------  ----------  ---------  ---------

  Net income (loss)                    $ 14,013   $ (3,899)   $ 31,394  $ (5,840)
                                      ---------  ----------  ---------  ---------
  Basic net earnings (loss) per
   common share                          $ 0.19    $ (0.05)     $ 0.43   $ (0.08)
                                      ---------  ----------  ---------  ---------
  Diluted net earnings (loss) per
   common share                          $ 0.18    $ (0.05)     $ 0.41   $ (0.08)
                                      ---------  ----------  ---------  ---------

  Basic weighted average common
   shares (000s)                         73,957      73,309     73,705     73,309
  Diluted weighted average common
   shares (000s)                         76,773      73,309     76,488     73,309

        ADJUSTMENTS TO RECONCILE ADJUSTED OPERATING CASH FLOW TO
                        OPERATING INCOME (LOSS)


The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating cash flow as described in this earnings release:

  --  Depreciation and amortization. This adjustment eliminates depreciation
      and amortization in all periods.
  --  Share-based compensation benefit (expense). This adjustment eliminates
      the compensation benefit (expense) relating to restricted stock,
      restricted stock units, stock options and stock appreciation rights
      granted under our employee stock plans and non-employee director plans
      in all periods.


                 MADISON SQUARE GARDEN, INC.

       CONSOLIDATED OPERATIONS DATA AND RECONCILIATION
                    (Dollars in thousands)

                         (Unaudited)

  REVENUES

                                Three Months Ended

                                     June 30,
                               --------------------
                                                        %

                                  2010       2009     Change
                               ---------  ---------  -------
  MSG Media                    $ 134,482  $ 113,767    18.2%
  MSG Entertainment               46,765     41,024    14.0%
  MSG Sports                      63,874     68,575   (6.9)%

  Inter-segment eliminations    (17,990)   (16,030)
                               ---------  ---------  (12.2)%
    Total Madison Square
     Garden, Inc.              $ 227,131  $ 207,336
                               =========  =========     9.5%

                                 Six Months Ended

                                     June 30,
                               --------------------
                                                        %

                                  2010       2009     Change
                               ---------  ---------  -------
  MSG Media                    $ 273,987  $ 232,058    18.1%
  MSG Entertainment               88,238     79,032    11.6%
  MSG Sports                     206,537    210,162   (1.7)%

  Inter-segment eliminations    (35,130)   (32,598)
                               ---------  ---------   (7.8)%
    Total Madison Square
     Garden, Inc.              $ 533,632  $ 488,654
                               =========  =========     9.2%

  ADJUSTED OPERATING CASH FLOW AND OPERATING INCOME (LOSS)


                           Adjusted Operating             Operating Income
                               Cash Flow                       (Loss)
                          -------------------           --------------------

                           Three Months Ended            Three Months Ended
                               June 30,                       June 30,
                          -------------------           --------------------

                                                  %                              %
                             2010      2009     Change     2010       2009     Change
                          ---------  --------  -------  ---------  ---------  -------
  MSG Media                 $62,113   $39,880    55.7%    $56,660    $33,340    69.9%
  MSG Entertainment        (20,037)  (11,752)  (70.5)%   (22,844)   (16,132)  (41.6)%
  MSG Sports                  3,545  (15,815)       --        587   (19,337)       --

  All other                 (3,179)   (1,801)             (8,708)    (6,639)
                          ---------  --------  (76.5)%  ---------  ---------  (31.2)%
    Total Madison Square
     Garden, Inc.           $42,442   $10,512             $25,695   $(8,768)
                          =========  ========   303.7%  =========  =========       --



                           Adjusted Operating             Operating Income
                               Cash Flow                       (Loss)
                          -------------------           --------------------

                           Six Months Ended               Six Months Ended
                               June 30,                       June 30,
                          -------------------           --------------------

                                                  %                              %
                             2010      2009     Change     2010       2009     Change
                          ---------  --------  -------  ---------  ---------  -------

  MSG Media                $123,892   $83,574    48.2%   $112,437    $70,260    60.0%
  MSG Entertainment        (32,750)  (26,059)  (25.7)%   (39,129)   (33,711)  (16.1)%
  MSG Sports                  6,952  (27,022)       --        521   (33,606)       --

  All other                 (7,149)   (3,997)            (18,003)   (13,793)
                          ---------  --------  (78.9)%  ---------  ---------  (30.5)%
    Total Madison Square
     Garden, Inc.           $90,945   $26,496             $55,826  $(10,850)
                          =========  ========   243.2%  =========  =========       --

               MADISON SQUARE GARDEN, INC.

               CONSOLIDATED BALANCE SHEETS
                 (Dollars in thousands)

                       (Unaudited)


                                             December
  (In thousands, except par     June 30,        31,
   value)                         2010         2009
  ---------------------------  -----------  -----------
  ASSETS                       (Unaudited)
  Current Assets:
    Cash and cash equivalents   $  319,745    $ 109,716
    Restricted cash                 11,414        7,139
    Accounts receivable (less
     allowance for doubtful
     accounts of $2,386 and
     $2,337)                       108,983      130,460
    Net receivable due from
     Cablevision                    23,351        7,845
    Prepaid expenses                33,038       36,849
    Advances due from a
     subsidiary of
     Cablevision                        --      190,000

    Other current assets            29,578       37,049
                               -----------  -----------
      Total current assets         526,109      519,058
    Property and equipment,
     net of accumulated
     depreciation of $395,466
     and $375,223                  363,061      342,005
    Other assets                   129,543      131,820
    Amortizable intangible
     assets, net of accum.
     amortization of $104,874
     and $105,351                  139,013      148,028
    Indefinite-lived
     intangible assets             158,096      158,096

    Goodwill                       742,492      742,492
                               -----------  -----------

                               $ 2,058,314  $ 2,041,499
                               -----------  -----------

  LIABILITIES AND EQUITY
  Current Liabilities:
    Accounts payable               $ 1,506      $ 7,104
    Accrued liabilities:
      Employee related costs        57,791       71,646
      Other expenses                86,252       85,815

    Deferred revenue               128,549      133,584
                               -----------  -----------
      Total current
       liabilities                 274,098      298,149
    Defined benefit and other
     postretirement
     obligations                    55,947       45,165
    Other employee related
     costs                          37,801       44,407
    Other liabilities               62,816       63,568

    Deferred tax liability         513,907      484,107
                               -----------  -----------

      Total liabilities            944,569      935,396
                               -----------  -----------
  Commitments and
   contingencies
  Stockholders' Equity:
    Class A Common stock, par
     value $0.01, 360,000
     authorized; 62,247
     outstanding                       624           --
    Class B Common stock, par
     value $0.01, 90,000
     authorized; 13,589
     outstanding                       136           --
    Preferred stock, par
     value $0.01, 45,000
     authorized; none
     outstanding                        --           --
    Additional paid-in
     capital (paid-in
     capital, for the period
     prior to the
     Distribution)               1,023,081    1,042,283
    Treasury stock                 (3,723)           --
    Retained earnings              109,267       77,873
    Accumulated other
     comprehensive loss           (15,640)     (14,053)
      Total stockholders'
       equity                    1,113,745    1,106,103
                               -----------  -----------

                               $ 2,058,314  $ 2,041,499
                               ===========  ===========

                      MADISON SQUARE GARDEN, INC.

                     SELECTED CASH FLOW INFORMATION
                         (Dollars in thousands)

                              (Unaudited)


                                                   Six Months Ended
  (In thousands)                                       June 30,
  ----------------------------------------------  -------------------

                                                     2010      2009
                                                  ---------  --------

  Net cash provided by operating activities        $ 70,798  $ 15,529
                                                  ---------  --------

  Net cash used in investing activities            (41,766)  (23,810)
                                                  ---------  --------
  Net cash provided by (used in) financing
   activities                                       180,997     (461)
                                                  ---------  --------
  Net increase (decrease) in cash and cash
   equivalents                                      210,029   (8,742)
  Cash and cash equivalents at beginning of
   period                                           109,716    70,726
                                                  ---------  --------

  Cash and cash equivalents at end of period      $ 319,745  $ 61,984
                                                  =========  ========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Madison Square Garden, Inc.

CONTACT:  Madison Square Garden, Inc.
Barry Watkins, Executive Vice President, Communications
(212) 465-5920
Alysia Lew, Vice President, Financial Communications
(212) 465-5925
Ari Danes, CFA, Vice President, Investor Relations
(212) 465-6072

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