MSG Networks (MSGN) 3 May 202020 Q3 Earnings call transcript

Good morning and welcome to the MSG Networks Fiscal 2020 Third Quarter Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Ari Danes, Investor Relations. Please go ahead.

Thank you, Christie. to fiscal welcome conference third and call. morning MSG XXXX Networks’ quarter Good and will Andrea with company’s CEO, The President Greenberg, of company’s a the begin operations. discussion call today’s results Chief Financial and followed review by This Officer Richter, will EVP, of Treasurer. be financial company’s the with a Bret

will As we how you understand call we is, will questions, given uncertain these the remarks. are some current provide today’s we to operate And include our on while in fluid environment perspective third times, prepared pleased only quarter results. have

do not it website. you the Investors have If today’s a corporate earnings is section copy release company’s the of available in of

Factors community in financial as it company of with filings this as disclaims operations, its and during the Commission, obligation the well in XXXX. result guarantees factors company’s discussed results, which from not that in any Please the take any statements such to are described the statements and that and meaning statements analysis of operates; future forward-looking discussion differ the The within cautioned results are include note and materially Securities perceptions company contain financial that condition may business, Exchange forward-looking the the a the of or various of operations Risk of and of forward-looking management’s the those maybe sections industry financial discussion Litigation involve Investors may forward-looking uncertainties risks Securities and entitled statements performance Today’s of of including and update and that constitute developments therein. Private condition the and factors. following. events These Act contained Reform and results call. statements any actual as

statements discuss income. on X to operations On operating non-GAAP income adjusted of certain X consolidated and release, earnings today’s Lastly, and call. we reconciliation a operating measures provide will of we of today’s Pages financial

free net activities provided addition, In provide by a of of we to the cash Page release, flow. reconciliation cash X on operating earnings

With Andrea. turn call the to that, now over I will

we possible. Thank several remarks to I us we those We as our tried extending had to by joining been coronavirus have company, And face. the company on that facing is profound weather are by currently time, appreciate fact impact today’s COVID-XX. the The period we challenges pandemic affected of have we but you, unknowns, that morning has Ari. preparing confident just for as thoughts we everyone uncertainty would like who to a continue expect the to be this start helpful today. Despite our to not this while world. are on some well-positioned our in

navigate We MSG believe sports, remain leader the will its foundation and advertising with so popularity wide-ranging built and all is regional Networks sports That the live entertainment return as a months and enduring has that solid enthusiasm firm and us evident programming in relationships partners. includes in our believers a we the affiliates in foundation of ahead. see through as for we benefit which healthy, longstanding, we teams,

we year, balance a And financial fiscal provides with more have refinancing us sheet strong even on with cash earlier a completed we hand. addition, substantial this debt In which flexibility.

continue a shareholders We our is and free of our have the for also benefit we that track generating cash record of flow long will expectation do substantial to so.

with of our forward already We regular assess their our NBA in live end been NHL pause we content seasons. our seasons. had providing since At the telecast you XXX with enables of NHL has stay over the and focus remaining a NHL for as games leagues the that were been best In time, our know, NBA teams, and contact seasons. in including has and partners, there connected remain the leads, As that as close their current XXXX/XX affiliates meantime, on the approaching to network. all NBA path advertisers, XX, viewers both continue March to the and

games programming the utilizing on front, supplementing teams. many teams insights the this MSG and our craze. week fresh the conferencing team, at-home with working the show technology This since using content Linsanity as XXX very excitement library, and we XXXX/XX interviews classic are key weekday viewers creative well and of MSG collections from On video from been current are remotely of extensive scheduled our version our our mid-March, players Network, In enjoying mix thematic participants. cases, producing a and has as of

But an light-hearted engagement and focused go to average have platforms content. our our financial NHL few interactive week including on of in the regular spend would providing social color, some I seen We current detail pause as through first, the minutes shortly. the a Bret in and how seasons us. to more team-related high like during compared results impacted seasons we also levels NBA delivering on will additional

versus we a X% $XX period prior quarter, third income. of in in operating revenue, million $XXX For and generated decrease the adjusted year million our fiscal

subscriber revenue same a affiliate second rate in rates. was distributors our attributable X% decline approximately A affiliate as the year-over-year Our portion higher from to impact offset of the the an the subscribers fiscal acceleration by declines which average with a lower had quarter, results decrease of of in decrease was during same subscribers, the recent majority impact two reflect the driven about the of of that rate quarters.

quarter’s year, with which successfully distributors, new we two have revenue. earlier The our of we discussed, carriage affiliate this this impact largest of is concluded renewals these rate fiscal increases. in agreements include As previously reflected

professional third an as part the compared front, prior advertising due for additional expected in the sports increase the year. with to in telecasts quarter we revenues advertising On had

the advertising because decline. aired and season of And sales regular expenses offset did games the certain significantly fewer the not in year-over-year to NHL absence quarter revenue. however, of a advertising games seasons And As impact we revenue which games in is a resulted we commissions, costs, in various possible these potential variable I while the third the on decrease result a in have and quarter decreases pandemic, the as also NBA led not did scenarios. that otherwise remaining this advertising basis, while such would the production the pause note under remains expenses permanently situation impact our on the canceled. been directly not examined in revenues fluid, have our results. and This also part in

NHL these in contractual to rights our than economy, our measures of have and canceled, fiscal were free industry, flow the the As games in games. both any would we making agreements, majority substantial we and loss I expect is of our XXXX teams’ predict rest on That negative fortunate our final even to the to it subscribers, been it of affiliate impact will mentioned are to and delivered should material operating continue and pandemic advertisers seasons if NBA the our air. seasons the and of earlier, of vast number Hypothetically, stages games. regular the without the expect and impact adjusted said even protections difficult impact given company generate the have income COVID-XX we for to those larger to from of the cash to the have

situation. would come their together of support with shareholders Everyone creativity spirit contact York New about. close the thanking in our employees, this a has end by monitor partners, teamwork viewers embrace to sports partners during period. continue like for are stay in to is our plan I as what great to and we Our and all and

I will now turn take who the to financial our will Bret results. call over you through

everyone. good and morning Andrea you, Thank

compared third decline reflecting higher of driven in fiscal quarter. the Let’s period. XXXX financial million partially the $XX.X with offset million decrease decreased rates. was revenue, impact primarily Total affiliate X% results a subscribers, in discuss as the for approximately by our year of $XXX $X.X This the by affiliate million prior revenues or

second year-over-year revenue While than second our of a our to affiliate as the remind quarter, in $X.X in the revenue economic benefited for that quarter. our million you a $X.X was adjustment results affiliate million are I million have for variety given there results our affiliate contracts would greater quarter of on that from decrease decrease fiscal any favorable calls, past discussed earnings revenue, affiliate impact can of we $X.X provisions certain and

live lower the The professional with prior fewer the partially sports in games telecasts seasons. of programming-related year result contractual to the year-over-year operating X% as increases. telecasts compared cost prior impact rate net decrease live year, offset year a by by mainly $X.X million expenses the to live was partially NHL decreases, primarily offset other compared approximately as to fees result the increases. advertising sports Advertising with higher due related with due a revenue from $X.X expense, telecasts, sales Direct in This decreased fewer as compared quarter, of primarily pause million rights was to other sales sports includes quarter. prior million the NBA professional due of of $XX.X and which increased or

$XX.X income of decreased decreased to and advertising $XX.X expenses XX% This prior marketing compared as lower million sales with SG&A million year related to expenses. of commissions, or benefits Reported Adjusted operating for million. XX, primarily with was advertising extent, revenues due compensation largely $XXX.X lower X XX% higher in period. and was expenses, the and operations employee costs. a $X.X operating the March SG&A the to from period, lesser ending as the million free months flow year offset prior direct and, decrease partially due by continuing XXXX, cash compared

our sheet, debt of billion cash was million, outstanding as balance cash $X.XX was million $XXX equivalents $XXX while revolver and to Turning approximately total our total XXXX, were XX, March undrawn. and

end approximately months leverage $XX X.Xx quarter interest trailing quarter $XXX for remained was operating income. adjusted debt our Our Net the while by average XX million decreased ratio approximately rate at to X.X%. net million

million mandatory we third our the credit principal the of with During $X.X made agreement. accordance fiscal quarter, payment of terms a in

in company The As terms facility our the this amended fiscal financial flexibility. and significant XXXX. earlier we of for Andrea extended period with beginning provide our credit October a year, noted X-year facilities amended

a context, XX-month flow the To to free example, And as our total we substantial generated we principal For trailing for cash payments is provides in expectation put months. will flow. in in free over of XX forward that noted, next credit that mandatory the generate period. Andrea $XXX our only $XX during continue facility million cash during going million

resumed Lastly, fiscal reflection during of our we a share repurchase our quarter, confidence business. the our in strength third of the program,

since Class XXXX, an at currently January million maintain We approximately million allocation. opportunistic A capital repurchased price this share, and X, to a have remaining looking than shares buyback X% for shares we to will share per represented average approach more million $XX.X of have continue amount and ahead, our $XXX X.X disciplined $XX.XX outstanding. authorization, under Specifically, of

over turn now will Ari. the to back I call

a have look for Until We and Bret then, on to you, good speaking earnings safe next joining Thank with day. call. forward and you you us. and stay thank all our healthy

today’s you. conclude Thank This does conference call.

may You disconnect. now

[No for this event] Q&A session