|
☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
27-0624498
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Common Stock
|
MSGN
|
New York Stock Exchange
|
Large accelerated filer
|
☑
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
Class A Common Stock par value $0.01 per share
|
—
|
46,560,251
|
Class B Common Stock par value $0.01 per share
|
—
|
13,588,555
|
|
|
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Page
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September 30,
2019 |
|
June 30,
2019 |
||||
ASSETS
|
|
(unaudited)
|
|
|
||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
360,363
|
|
|
$
|
226,423
|
|
Accounts receivable, net
|
|
107,988
|
|
|
108,349
|
|
||
Related party receivables, net
|
|
2,549
|
|
|
16,091
|
|
||
Prepaid income taxes
|
|
3,545
|
|
|
1,968
|
|
||
Prepaid expenses
|
|
2,950
|
|
|
2,003
|
|
||
Other current assets
|
|
4,552
|
|
|
5,286
|
|
||
Total current assets
|
|
481,947
|
|
|
360,120
|
|
||
Property and equipment, net
|
|
9,031
|
|
|
9,302
|
|
||
Amortizable intangible assets, net
|
|
32,878
|
|
|
33,743
|
|
||
Goodwill
|
|
424,508
|
|
|
424,508
|
|
||
Operating lease right-of-use assets
|
|
15,095
|
|
|
—
|
|
||
Other assets
|
|
38,472
|
|
|
39,226
|
|
||
Total assets
|
|
$
|
1,001,931
|
|
|
$
|
866,899
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
412
|
|
|
$
|
907
|
|
Related party payables
|
|
996
|
|
|
941
|
|
||
Current portion of long-term debt
|
|
23,065
|
|
|
111,789
|
|
||
Current portion of operating lease liabilities
|
|
4,926
|
|
|
—
|
|
||
Income taxes payable
|
|
7,898
|
|
|
—
|
|
||
Share repurchase obligation
|
|
253,078
|
|
|
—
|
|
||
Accrued liabilities:
|
|
|
|
|
||||
Employee related costs
|
|
7,350
|
|
|
15,466
|
|
||
Other accrued liabilities
|
|
6,770
|
|
|
13,898
|
|
||
Deferred revenue
|
|
907
|
|
|
185
|
|
||
Total current liabilities
|
|
305,402
|
|
|
143,186
|
|
||
Long-term debt, net of current portion
|
|
1,076,849
|
|
|
906,228
|
|
||
Long-term operating lease liabilities
|
|
12,433
|
|
|
—
|
|
||
Defined benefit and other postretirement obligations
|
|
24,485
|
|
|
25,834
|
|
||
Other employee related costs
|
|
4,826
|
|
|
4,713
|
|
||
Other liabilities
|
|
190
|
|
|
2,310
|
|
||
Deferred tax liability
|
|
244,995
|
|
|
243,396
|
|
||
Total liabilities
|
|
1,669,180
|
|
|
1,325,667
|
|
||
Commitments and contingencies (see Note 9)
|
|
|
|
|
||||
Stockholders' Deficiency:
|
|
|
|
|
||||
Class A Common Stock, par value $0.01, 360,000 shares authorized; 61,540 and 61,287 shares outstanding as of
September 30, 2019 and June 30, 2019, respectively |
|
643
|
|
|
643
|
|
||
Class B Common Stock, par value $0.01, 90,000 shares authorized; 13,589 shares outstanding as of September 30, 2019 and June 30, 2019
|
|
136
|
|
|
136
|
|
||
Preferred stock, par value $0.01, 45,000 shares authorized; none outstanding
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
—
|
|
|
9,916
|
|
||
Treasury stock, at cost 2,719 and 2,972 shares as of September 30, 2019 and June 30, 2019, respectively
|
|
(417,691
|
)
|
|
(179,561
|
)
|
||
Accumulated deficit
|
|
(242,946
|
)
|
|
(282,414
|
)
|
||
Accumulated other comprehensive loss
|
|
(7,391
|
)
|
|
(7,488
|
)
|
||
Total stockholders' deficiency
|
|
(667,249
|
)
|
|
(458,768
|
)
|
||
Total liabilities and stockholders' deficiency
|
|
$
|
1,001,931
|
|
|
$
|
866,899
|
|
|
|
Three Months Ended
|
||||||
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September 30,
|
|||||||
|
2019
|
|
2018
|
|||||
Revenues
|
|
$
|
160,981
|
|
|
$
|
164,464
|
|
|
|
|
|
|
||||
Direct operating expenses (including related party expenses of $39,003 and $38,092, respectively)
|
|
68,660
|
|
|
66,655
|
|
||
Selling, general and administrative expenses (including related party expenses of $3,191 and $3,080, respectively)
|
|
22,320
|
|
|
16,903
|
|
||
Depreciation and amortization
|
|
1,727
|
|
|
2,045
|
|
||
Operating income
|
|
68,274
|
|
|
78,861
|
|
||
Other income (expense):
|
|
|
|
|
||||
Interest income
|
|
1,928
|
|
|
1,592
|
|
||
Interest expense
|
|
(10,815
|
)
|
|
(11,922
|
)
|
||
Other components of net periodic benefit cost
|
|
(258
|
)
|
|
(405
|
)
|
||
|
|
(9,145
|
)
|
|
(10,735
|
)
|
||
Income from operations before income taxes
|
|
59,129
|
|
|
68,126
|
|
||
Income tax expense
|
|
(16,062
|
)
|
|
(21,196
|
)
|
||
Net income
|
|
$
|
43,067
|
|
|
$
|
46,930
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
||||
Basic
|
|
$
|
0.57
|
|
|
$
|
0.63
|
|
Diluted
|
|
$
|
0.57
|
|
|
$
|
0.62
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
75,063
|
|
|
74,895
|
|
||
Diluted
|
|
75,464
|
|
|
75,693
|
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Net income
|
|
$
|
43,067
|
|
|
$
|
46,930
|
|
Other comprehensive income (loss) before income taxes:
|
|
|
|
|
||||
Pension plans and postretirement plan:
|
|
|
|
|
||||
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
||||
Amortization of net actuarial loss included in net periodic benefit cost
|
|
134
|
|
|
119
|
|
||
Amortization of prior service credit included in net periodic benefit cost
|
|
(1
|
)
|
|
(2
|
)
|
||
Settlement gain
|
|
—
|
|
|
(8
|
)
|
||
Other comprehensive income before income taxes
|
|
133
|
|
|
109
|
|
||
Income tax expense related to items of other comprehensive income
|
|
(36
|
)
|
|
(32
|
)
|
||
Other comprehensive income
|
|
97
|
|
|
77
|
|
||
Comprehensive income
|
|
$
|
43,164
|
|
|
$
|
47,007
|
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
43,067
|
|
|
$
|
46,930
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1,727
|
|
|
2,045
|
|
||
Amortization of deferred financing costs
|
|
751
|
|
|
751
|
|
||
Share-based compensation expense
|
|
4,659
|
|
|
3,676
|
|
||
Provision for doubtful accounts
|
|
(167
|
)
|
|
(6
|
)
|
||
Change in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
509
|
|
|
1,144
|
|
||
Related party receivables, net
|
|
13,562
|
|
|
9,755
|
|
||
Prepaid expenses and other assets
|
|
330
|
|
|
1,095
|
|
||
Accounts payable
|
|
(495
|
)
|
|
(1,159
|
)
|
||
Related party payables, including payable to MSG
|
|
55
|
|
|
373
|
|
||
Prepaid/payable for income taxes
|
|
6,320
|
|
|
5,408
|
|
||
Accrued and other liabilities
|
|
(15,455
|
)
|
|
(11,311
|
)
|
||
Deferred revenue
|
|
722
|
|
|
(168
|
)
|
||
Deferred income taxes
|
|
1,564
|
|
|
4,445
|
|
||
Net cash provided by operating activities
|
|
57,149
|
|
|
62,978
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(1,233
|
)
|
|
(830
|
)
|
||
Net cash used in investing activities
|
|
(1,233
|
)
|
|
(830
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Principal repayments on Term Loan Facility (see Note 7)
|
|
(18,750
|
)
|
|
(93,750
|
)
|
||
Proceeds from Revolving Credit Facility (see Note 7)
|
|
100,000
|
|
|
—
|
|
||
Share repurchase costs
|
|
(367
|
)
|
|
—
|
|
||
Taxes paid in lieu of shares issued for share-based compensation
|
|
(2,859
|
)
|
|
(3,658
|
)
|
||
Net cash provided by (used in) financing activities
|
|
78,024
|
|
|
(97,408
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
133,940
|
|
|
(35,260
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
226,423
|
|
|
205,343
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
360,363
|
|
|
$
|
170,083
|
|
|
|
Common
Stock
Issued
|
|
Additional
Paid-In
Capital
|
|
Treasury
Stock
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||||||
Balance as of June 30, 2019
|
|
$
|
779
|
|
|
$
|
9,916
|
|
|
$
|
(179,561
|
)
|
|
$
|
(282,414
|
)
|
|
$
|
(7,488
|
)
|
|
$
|
(458,768
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,067
|
|
|
—
|
|
|
43,067
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
97
|
|
||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
43,164
|
|
|||||||||||
Share-based compensation expense
|
|
—
|
|
|
4,659
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,659
|
|
||||||
Repurchases of Class A Common Stock
|
|
—
|
|
|
—
|
|
|
(253,445
|
)
|
|
—
|
|
|
—
|
|
|
(253,445
|
)
|
||||||
Tax withholding associated with shares issued for share-based compensation
|
|
—
|
|
|
(2,859
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,859
|
)
|
||||||
Shares issued upon distribution of Restricted Stock Units
|
|
—
|
|
|
(11,716
|
)
|
|
15,315
|
|
|
(3,599
|
)
|
|
—
|
|
|
—
|
|
||||||
Balance as of September 30, 2019
|
|
$
|
779
|
|
|
$
|
—
|
|
|
$
|
(417,691
|
)
|
|
$
|
(242,946
|
)
|
|
$
|
(7,391
|
)
|
|
$
|
(667,249
|
)
|
|
|
Common
Stock
Issued
|
|
Additional
Paid-In
Capital
|
|
Treasury
Stock
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||||||
Balance as of June 30, 2018
|
|
$
|
779
|
|
|
$
|
4,067
|
|
|
$
|
(195,881
|
)
|
|
$
|
(460,007
|
)
|
|
$
|
(6,700
|
)
|
|
$
|
(657,742
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,930
|
|
|
—
|
|
|
46,930
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
77
|
|
||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
47,007
|
|
|||||||||||
Share-based compensation expense
|
|
—
|
|
|
3,676
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,676
|
|
||||||
Tax withholding associated with shares issued for share-based compensation
|
|
—
|
|
|
(3,537
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,537
|
)
|
||||||
Shares issued upon distribution of Restricted Stock Units
|
|
—
|
|
|
(4,206
|
)
|
|
13,167
|
|
|
(8,961
|
)
|
|
—
|
|
|
—
|
|
||||||
Cumulative effect of adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
372
|
|
|
—
|
|
|
372
|
|
||||||
Balance as of September 30, 2018
|
|
$
|
779
|
|
|
$
|
—
|
|
|
$
|
(182,714
|
)
|
|
$
|
(421,666
|
)
|
|
$
|
(6,623
|
)
|
|
$
|
(610,224
|
)
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
Accounts receivable (including advertising receivable included in related party receivables, net)
|
|
$
|
112,073
|
|
|
$
|
130,422
|
|
Contract asset, short-term (included in other current assets)
|
|
40
|
|
|
839
|
|
||
Deferred revenue, short-term
|
|
907
|
|
|
185
|
|
||
Deferred revenue, long-term (included in other liabilities)
|
|
190
|
|
|
230
|
|
|
|
Three Months Ended
|
||||
|
|
September 30,
|
||||
|
|
2019
|
|
2018
|
||
Weighted-average number of shares for basic EPS
|
|
75,063
|
|
|
74,895
|
|
Dilutive effect of shares issuable under share-based compensation plans
|
|
401
|
|
|
798
|
|
Weighted-average number of shares for diluted EPS
|
|
75,464
|
|
|
75,693
|
|
Anti-dilutive shares
|
|
2,223
|
|
|
573
|
|
|
|
September 30, 2019
|
|
June 30,
2019 |
||||
Affiliate relationships
|
|
$
|
83,044
|
|
|
$
|
83,044
|
|
Less accumulated amortization
|
|
(50,166
|
)
|
|
(49,301
|
)
|
||
|
|
$
|
32,878
|
|
|
$
|
33,743
|
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||||
Equipment
|
|
$
|
36,795
|
|
|
$
|
35,642
|
|
Furniture and fixtures
|
|
1,726
|
|
|
1,726
|
|
||
Leasehold improvements
|
|
18,584
|
|
|
18,505
|
|
||
Construction in progress
|
|
417
|
|
|
1,058
|
|
||
|
|
57,522
|
|
|
56,931
|
|
||
Less accumulated depreciation and amortization
|
|
(48,491
|
)
|
|
(47,629
|
)
|
||
|
|
$
|
9,031
|
|
|
$
|
9,302
|
|
|
|
2015 Term Loan Facility
|
|
Deferred Financing Costs for 2015 Term Loan Facility
|
|
2015 Revolving Credit Facility
|
|
Net
|
||||||||
September 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Current portion of long-term debt
|
|
$
|
23,125
|
|
|
$
|
(60
|
)
|
|
$
|
—
|
|
|
$
|
23,065
|
|
Long-term debt, net of current portion
|
|
979,375
|
|
|
(2,526
|
)
|
|
100,000
|
|
|
1,076,849
|
|
||||
Total
|
|
$
|
1,002,500
|
|
|
$
|
(2,586
|
)
|
|
$
|
100,000
|
|
|
$
|
1,099,914
|
|
June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Current portion of long-term debt
|
|
$
|
114,375
|
|
|
$
|
(2,586
|
)
|
|
$
|
—
|
|
|
$
|
111,789
|
|
Long-term debt, net of current portion
|
|
906,875
|
|
|
(647
|
)
|
|
—
|
|
|
906,228
|
|
||||
Total
|
|
$
|
1,021,250
|
|
|
$
|
(3,233
|
)
|
|
$
|
—
|
|
|
$
|
1,018,017
|
|
|
|
September 30, 2019
|
|
June 30, 2019
|
||||
Other current assets
|
|
$
|
417
|
|
|
$
|
417
|
|
Other assets
|
|
—
|
|
|
104
|
|
|
|
Three Months Ended
|
||
|
|
September 30,
2019 |
||
Operating lease cost
|
|
$
|
1,372
|
|
Variable lease cost
|
|
53
|
|
|
Total operating lease cost
|
|
$
|
1,425
|
|
|
|
September 30,
2019 |
|
Weighted average discount rate for operating leases
|
|
3.29
|
%
|
Weighted average remaining operating lease term in years
|
|
3.99
|
|
Remainder of fiscal year ending June 30, 2020
|
|
$
|
4,280
|
|
Fiscal year ending June 30, 2021
|
|
4,374
|
|
|
Fiscal year ending June 30, 2022
|
|
3,672
|
|
|
Fiscal year ending June 30, 2023
|
|
3,379
|
|
|
Fiscal year ending June 30, 2024
|
|
2,816
|
|
|
Thereafter
|
|
—
|
|
|
Total undiscounted operating lease payments
|
|
18,521
|
|
|
Less: imputed interest
|
|
1,162
|
|
|
Total operating lease liabilities
|
|
17,359
|
|
|
Less: current portion of operating lease liabilities
|
|
4,926
|
|
|
Non-current operating lease liabilities
|
|
$
|
12,433
|
|
|
|
Three Months Ended
|
||
|
|
September 30,
2019 |
||
Cash paid for amounts included in the measurement of operating lease liabilities
|
|
$
|
1,468
|
|
•
|
Level I — Quoted prices for identical instruments in active markets.
|
•
|
Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
|
•
|
Level III — Instruments whose significant value drivers are unobservable.
|
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
September 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Money market accounts
|
|
$
|
28,721
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,721
|
|
Time deposits
|
|
322,906
|
|
|
—
|
|
|
—
|
|
|
322,906
|
|
||||
Total assets measured at fair value
|
|
$
|
351,627
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
351,627
|
|
June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Money market accounts
|
|
$
|
17,619
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,619
|
|
Time deposits
|
|
201,524
|
|
|
—
|
|
|
—
|
|
|
201,524
|
|
||||
Total assets measured at fair value
|
|
$
|
219,143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
219,143
|
|
|
|
Pension Plans
|
|
Postretirement Plan
|
||||||||||||
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
121
|
|
|
$
|
111
|
|
|
$
|
13
|
|
|
$
|
18
|
|
Other components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
|
354
|
|
|
402
|
|
|
15
|
|
|
38
|
|
||||
Expected return on plan assets
|
|
(244
|
)
|
|
(144
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized actuarial loss (a)
|
|
134
|
|
|
119
|
|
|
—
|
|
|
—
|
|
||||
Amortization of unrecognized prior service credit (a)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
||||
Settlement gain (a)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost
|
|
$
|
365
|
|
|
$
|
480
|
|
|
$
|
27
|
|
|
$
|
54
|
|
|
Number of
|
|
Weighted-
Average
Exercise
Price Per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term (In Years)
|
|
Aggregate Intrinsic
Value
|
||||||||
|
Nonperformance
Based
Vesting
NQSOs |
|
Performance
Based
Vesting
NQSOs |
|
|||||||||||
Balance as of June 30, 2019
|
1,277
|
|
|
1,277
|
|
|
$
|
20.87
|
|
|
5.52
|
|
$
|
3,132
|
|
Granted(a)
|
556
|
|
|
557
|
|
|
14.33
|
|
|
|
|
|
|||
Balance as of September 30, 2019
|
1,833
|
|
|
1,834
|
|
|
$
|
18.88
|
|
|
5.92
|
|
2,111
|
|
|
Exercisable as of September 30, 2019
|
924
|
|
|
536
|
|
|
$
|
19.07
|
|
|
4.79
|
|
$
|
—
|
|
Risk-free interest rate
|
1.4
|
%
|
|
Expected term
|
5.25 years
|
|
|
Expected volatility
|
30.68
|
%
|
|
Number of
|
|
|
||||||
|
Nonperformance
Based
Vesting
RSUs
|
|
Performance
Based
Vesting
RSUs
|
|
Weighted-Average
Fair Value Per Share
At Date of Grant
|
||||
Unvested award balance as of June 30, 2019
|
541
|
|
|
836
|
|
|
$
|
23.08
|
|
Granted(a)
|
317
|
|
|
316
|
|
|
14.32
|
|
|
Vested
|
(154
|
)
|
|
(279
|
)
|
|
21.39
|
|
|
Unvested award balance as of September 30, 2019
|
704
|
|
|
873
|
|
|
20.03
|
|
|
September 30,
2019 |
|
June 30,
2019 |
||
Customer A
|
25
|
%
|
|
25
|
%
|
Customer B
|
25
|
%
|
|
25
|
%
|
Customer C
|
23
|
%
|
|
23
|
%
|
Customer D
|
14
|
%
|
|
14
|
%
|
|
Three Months Ended September 30,
|
||||
|
2019
|
|
2018
|
||
Customer 1
|
27
|
%
|
|
25
|
%
|
Customer 2
|
26
|
%
|
|
25
|
%
|
Customer 3
|
23
|
%
|
|
23
|
%
|
Customer 4
|
11
|
%
|
|
13
|
%
|
Reported in
|
September 30, 2019
|
|
June 30,
2019 |
||||
Prepaid expenses
|
$
|
1,000
|
|
|
$
|
1,000
|
|
Other current assets
|
4,000
|
|
|
4,000
|
|
||
Other assets
|
36,000
|
|
|
36,000
|
|
||
|
$
|
41,000
|
|
|
$
|
41,000
|
|
Remainder of fiscal year ending June 30, 2020
|
|
$
|
13,750
|
|
Fiscal year ending June 30, 2021
|
|
38,500
|
|
|
Fiscal year ending June 30, 2022
|
|
49,500
|
|
|
Fiscal year ending June 30, 2023
|
|
66,000
|
|
|
Fiscal year ending June 30, 2024
|
|
82,500
|
|
|
Thereafter
|
|
849,750
|
|
|
|
|
$
|
1,100,000
|
|
•
|
the demand for our programming among cable, satellite, telephone and other platforms (“Distributors”) and the subscribers thereto, and our ability to enter into and renew affiliation agreements with Distributors, as well as the impact of consolidation among Distributors;
|
•
|
the level of our revenues, which depends in part on the popularity and competitiveness of the sports teams whose games are broadcast on our networks and the popularity of other content aired on our networks;
|
•
|
the ability of our Distributors to maintain, or minimize declines in, subscriber levels;
|
•
|
the impact of subscribers selecting Distributors’ packages that do not include our networks or Distributors that do not carry our networks at all;
|
•
|
the security of our program signal and electronic data;
|
•
|
general economic conditions especially in the New York City metropolitan area where we conduct the majority of our operations;
|
•
|
the on-ice and on-court performance of the professional sports teams whose games we carry;
|
•
|
the demand for advertising and sponsorship arrangements and viewer ratings for our networks;
|
•
|
competition, for example, from other regional sports networks;
|
•
|
the relocation or insolvency of professional sports teams with which we have a media rights agreement;
|
•
|
our ability to maintain, obtain or produce content, together with the cost of such content;
|
•
|
our ability to renew or replace our media rights agreements with professional sports teams;
|
•
|
the acquisition or disposition of assets and/or the impact of, and our ability to successfully pursue, acquisitions or other strategic transactions;
|
•
|
the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured;
|
•
|
the impact of governmental regulations or laws and changes in such regulations or laws, including with respect to the legalization of sports gaming;
|
•
|
the impact of sports league rules, regulations and/or agreements and changes thereto;
|
•
|
our dependence on The Madison Square Garden Company, AMC Networks Inc., and other third-party providers for the provision of certain services;
|
•
|
cybersecurity and similar risks which could result in the disclosure of confidential information, disruption of our business or damage to our brands and reputation;
|
•
|
our substantial debt and high leverage;
|
•
|
any reduction in our access to capital and credit markets or significant increases in costs to borrow;
|
•
|
financial community perceptions of our business, operations, financial condition and the industry in which we operate;
|
•
|
the tax-free treatment of the Distribution; and
|
•
|
the factors described under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.
|
|
|
Three Months Ended September 30,
|
|
Increase
(Decrease)
in Net
Income
|
||||||||||||||
|
|
2019
|
|
2018
|
|
|||||||||||||
|
|
Amount
|
|
% of
Revenues
|
|
Amount
|
|
% of
Revenues
|
|
|||||||||
Revenues
|
|
$
|
160,981
|
|
|
100
|
%
|
|
$
|
164,464
|
|
|
100
|
%
|
|
$
|
(3,483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct operating expenses
|
|
68,660
|
|
|
43
|
%
|
|
66,655
|
|
|
41
|
%
|
|
(2,005
|
)
|
|||
Selling, general and administrative expenses
|
|
22,320
|
|
|
14
|
%
|
|
16,903
|
|
|
10
|
%
|
|
(5,417
|
)
|
|||
Depreciation and amortization
|
|
1,727
|
|
|
1
|
%
|
|
2,045
|
|
|
1
|
%
|
|
318
|
|
|||
Operating income
|
|
68,274
|
|
|
42
|
%
|
|
78,861
|
|
|
48
|
%
|
|
(10,587
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
|
1,928
|
|
|
1
|
%
|
|
1,592
|
|
|
1
|
%
|
|
336
|
|
|||
Interest expense
|
|
(10,815
|
)
|
|
(7
|
)%
|
|
(11,922
|
)
|
|
(7
|
)%
|
|
1,107
|
|
|||
Other components of net periodic benefit cost
|
|
(258
|
)
|
|
NM
|
|
|
(405
|
)
|
|
NM
|
|
|
147
|
|
|||
|
|
(9,145
|
)
|
|
(6
|
)%
|
|
(10,735
|
)
|
|
(7
|
)%
|
|
1,590
|
|
|||
Income from operations before income taxes
|
|
59,129
|
|
|
37
|
%
|
|
68,126
|
|
|
41
|
%
|
|
(8,997
|
)
|
|||
Income tax expense
|
|
(16,062
|
)
|
|
(10
|
)%
|
|
(21,196
|
)
|
|
(13
|
)%
|
|
5,134
|
|
|||
Net income
|
|
$
|
43,067
|
|
|
27
|
%
|
|
$
|
46,930
|
|
|
29
|
%
|
|
$
|
(3,863
|
)
|
Decrease in affiliation fee revenue
|
$
|
(2,112
|
)
|
Decrease in advertising revenue
|
(639
|
)
|
|
Other net decreases
|
(732
|
)
|
|
|
$
|
(3,483
|
)
|
|
|
Three Months Ended
|
|
Increase (Decrease)
in Adjusted Operating Income
|
||||||||
|
|
September 30,
|
|
|||||||||
|
|
2019
|
|
2018
|
|
|||||||
Operating income
|
|
$
|
68,274
|
|
|
$
|
78,861
|
|
|
$
|
(10,587
|
)
|
Share-based compensation
|
|
4,659
|
|
|
3,676
|
|
|
983
|
|
|||
Depreciation and amortization
|
|
1,727
|
|
|
2,045
|
|
|
(318
|
)
|
|||
Adjusted operating income
|
|
$
|
74,660
|
|
|
$
|
84,582
|
|
|
$
|
(9,922
|
)
|
MSG Networks Inc.
|
||
|
|
|
By:
|
/S/ BRET RICHTER
|
|
|
Name:
|
Bret Richter
|
|
Title:
|
Executive Vice President,
|
|
|
Chief Financial Officer and Treasurer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of MSG Networks Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Andrea Greenberg
|
Andrea Greenberg
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of MSG Networks Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Bret Richter
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Bret Richter
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Executive Vice President, Chief Financial Officer and Treasurer
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/s/ Andrea Greenberg
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Andrea Greenberg
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President and Chief Executive Officer
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/s/ Bret Richter
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Bret Richter
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Executive Vice President, Chief Financial Officer and Treasurer
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