Industry Overview - The Zacks Media Conglomerates industry is thriving due to the consumer shift towards over-the-top (OTT) content, with major players like Disney, Atlanta Braves Holdings, and Madison Square Garden Entertainment investing heavily in original content to attract Gen Z and millennial subscribers [1][2] - The industry's growth is supported by cost-effective alternative packages, such as skinny bundles, which offer lower prices compared to traditional offerings [1] - Challenges include declining broadcast television ratings, reduced demand for home entertainment sales, and advertisers' cautious spending amid inflation and high interest rates [1][2] Trends Impacting the Industry - Original content is driving growth as media companies adapt to consumer preferences for subscription services over traditional pay-TV, leading to increased opportunities for targeted advertising [3] - The demand for high-speed internet is a key catalyst, enhancing the consumption of high-quality videos and binge-watching trends, particularly in international markets with a growing broadband ecosystem [4] - The industry faces difficulties from cord-cutting trends and the maturation of the pay-TV sector, which has led to increased competition from streaming services [5] Industry Performance - The Zacks Media Conglomerates industry ranks 44 within the broader Zacks Consumer Discretionary sector, placing it in the top 18% of over 245 Zacks industries, indicating positive earnings outlook [6][8] - Despite this ranking, the industry has underperformed compared to the broader sector and the S&P 500, returning 4.9% over the past year versus 15.8% for the sector and 10% for the S&P 500 [9] Valuation Metrics - The industry is currently trading at a trailing 12-month price-to-sales (P/S) ratio of 1.51X, significantly lower than the S&P 500's 5.33X and the sector's 2.28X, suggesting potential undervaluation [12] Company Highlights - **Atlanta Braves Holdings**: Reported a 27% year-over-year revenue growth to $47 million, with baseball revenues up 30% to $29 million. The company has a strong cash position of $244.7 million and access to $275 million in liquidity [15][17] - **Disney**: Achieved profitability for Disney+ and Hulu with a combined subscription base of 180.7 million. The company is trading at a discounted P/E ratio of 19.25, with projected 16% EPS growth for fiscal 2025 [20][22] - **Madison Square Garden Entertainment**: Revenues increased by 6% to $242.5 million, with adjusted operating income surging 50% to $57.9 million. The company is well-positioned for continued growth with diverse revenue streams and strong advance sales for upcoming events [25][27]

Financial Performance - For the quarter ended March 2025, Madison Square Garden Entertainment (MSGE) reported revenue of $242.47 million, reflecting a 6.2% increase year-over-year [1] - EPS for the quarter was $0.33, a significant rise from $0.06 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $231.04 million by 4.94%, while the EPS surpassed the consensus estimate of $0.25 by 32.00% [1] Key Metrics - Arena license fees and other leasing revenue amounted to $36.44 million, slightly above the average estimate of $35.24 million, representing a year-over-year decline of 0.7% [4] - Food, beverage, and merchandise revenues were reported at $45.81 million, below the average estimate of $53.65 million, showing a year-over-year increase of 0.9% [4] - Total revenues from contracts with customers reached $206.02 million, exceeding the two-analyst average estimate of $196.69 million, with a year-over-year growth of 7.5% [4] Stock Performance - Shares of MSG Entertainment have returned +23.2% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

PART I. FINANCIAL INFORMATION This section presents MSG Entertainment's unaudited condensed consolidated financial statements, including balance sheets, income, cash flow, and equity, with detailed accounting notes [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section provides the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, cash flows, and equity, along with their accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :--------------------------- | | Total Assets | $1,739,412 | $1,552,707 | | Total Liabilities | $1,729,886 | $1,575,872 | | Total Equity (Deficit) | $9,526 | $(23,165) | | Cash, cash equivalents, and restricted cash | $89,474 | $33,555 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, including revenues, expenses, and net income Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Total Revenues | $242,465 | $228,313 | $788,596 | $773,191 | | Net Income | $8,036 | $2,795 | $64,608 | $77,373 | | Basic Earnings per share | $0.17 | $0.06 | $1.34 | $1.59 | | Diluted Earnings per share | $0.17 | $0.06 | $1.33 | $1.58 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's total comprehensive income, encompassing net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net income | $8,036 | $2,795 | $64,608 | $77,373 | | Other comprehensive income, net of income taxes | $356 | $372 | $1,068 | $1,114 | | Comprehensive income | $8,392 | $3,167 | $65,676 | $78,487 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash provided by operating activities | $142,308 | $111,054 | | Net cash used in investing activities | $(19,379) | $(72,625) | | Net cash used in financing activities | $(67,010) | $(94,476) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $55,919 | $(56,047) | | Cash, cash equivalents, and restricted cash, end of period | $89,474 | $28,308 | [Condensed Consolidated Statements of Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20%28Deficit%29) This section presents changes in the company's equity, including retained earnings and treasury stock, over specific periods Condensed Consolidated Statements of Equity (Deficit) (in thousands) | Metric | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :--------------------------- | | Total Equity (Deficit) | $9,526 | $(23,165) | | Retained earnings | $180,211 | $115,603 | | Treasury stock at cost | $(180,204) | $(140,512) | - Repurchases of Class A common stock, inclusive of excise tax, for the nine months ended March 31, 2025, totaled **$(39,742) thousand** compared to **$(116,386) thousand** for the same period in 2024[18](index=18&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the significant accounting policies, estimates, and other financial disclosures underlying the consolidated financial statements [Note 1. Description of Business and Basis of Presentation](index=8&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) MSG Entertainment operates iconic live entertainment venues and produces marquee content, with its fiscal year ending June 30 and revenues concentrated in Q2 and Q3 - MSG Entertainment is a live entertainment company comprised of iconic venues and marquee entertainment content, operating in one reportable segment[20](index=20&type=chunk) - The company's portfolio of venues includes Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre[21](index=21&type=chunk) - MSG Entertainment became an independent publicly traded company on April 21, 2023, following a distribution from Sphere Entertainment Co., which no longer owns any of the company's common stock[22](index=22&type=chunk) - The company generally earns a disproportionate share of its annual revenues in the second and third fiscal quarters due to the Christmas Spectacular and arena license fees from the New York Knicks and Rangers[25](index=25&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details MSG Entertainment's key accounting policies, including consolidation, estimates, revenue recognition across various offerings, and the impact of recently issued accounting pronouncements - The company's revenue is categorized into 'Revenues from entertainment offerings' (service revenue), 'Food, beverage, and merchandise revenues' (product revenue), and 'Arena license fees and other leasing revenue' (lease revenue)[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) - Revenue from entertainment offerings includes ticket sales, venue license fees, sponsorship, suite licenses, and advertising commissions[32](index=32&type=chunk) - Revenue from arena license fees and other leasing includes rental fees from agreements with MSG Sports for the Knicks and Rangers, and sublease income[39](index=39&type=chunk) - ASU 2023-07 (Improvement to Reportable Segment Disclosures) will be effective for Fiscal Year 2025, leading to changes in segment reporting disclosures[44](index=44&type=chunk) - ASU 2023-09 (Improvements to Income Tax Disclosures) will be effective for Fiscal Year 2026, requiring more detailed income tax disclosures[45](index=45&type=chunk) [Note 3. Revenue Recognition](index=16&type=section&id=Note%203.%20Revenue%20Recognition) This section disaggregates revenues by category, details contract balances like receivables and deferred revenue, and outlines remaining performance obligations from long-term agreements Revenue by Category (in thousands) | Revenue Category | Three Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | | :------------------------------------------------ | :----------------------------------------------- | :---------------------------------------------- | | Total revenues from entertainment offerings | $160,214 | $593,571 | | Food, beverage, and merchandise revenues | $45,808 | $124,104 | | Arena license fees and other leasing revenue | $36,443 | $70,921 | | **Total revenues** | **$242,465** | **$788,596** | Contract Balances (in thousands) | Contract Balance | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------- | :--------------------------------- | | Receivables from contracts with customers, net | $93,877 | $74,113 | | Contract assets, current | $8,812 | $7,844 | | Deferred revenue, including non-current portion | $238,293 | $215,581 | - As of March 31, 2025, remaining performance obligations under contracts totaled **$577,885 thousand**, with **40%** expected to be recognized over the next two years and **60%** thereafter, primarily from sponsorship and suite license agreements[54](index=54&type=chunk) [Note 4. Restructuring Charges](index=18&type=section&id=Note%204.%20Restructuring%20Charges) The company recognized minimal restructuring charges for termination benefits in the current fiscal year, a significant decrease from the prior year's substantial workforce reduction expenses Restructuring Charges (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | | :-------------------- | :----------------------------------------------- | :---------------------------------------------- | | Restructuring charges | $84 | $14 | | Restructuring charges (prior year) | $2,362 | $14,803 | - The restructuring liability was reduced to **$0** as of March 31, 2025, from **$7,140 thousand** as of June 30, 2024[55](index=55&type=chunk) [Note 5. Investments](index=18&type=section&id=Note%205.%20Investments) This note details the company's equity investments, primarily in Townsquare Media and Executive Deferred Compensation Plan trusts, summarizing realized and unrealized gains and losses Investment Portfolio (in thousands) | Investment Type | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :---------------------------------- | :--------------------------------- | | Townsquare Class A common stock | $1,031 | $1,438 | | Other equity investments with readily determinable fair values held in trust | $4,737 | $4,226 | | Equity method investments and equity investments without readily determinable fair values | $783 | $656 | | **Total investments** | **$6,551** | **$6,320** | Realized and Unrealized (Loss) Gain (in thousands) | Realized/Unrealized (Loss) Gain | Three Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :---------------------------------------------- | | Unrealized (loss) gain — Townsquare | $(120) | $(357) | | Unrealized (loss) gain — Executive Deferred Compensation Plan | $(45) | $149 | | Realized gain from shares sold — Townsquare | $0 | $5 | | **Total realized and unrealized (loss) gain** | **$(165)** | **$(203)** | - In the nine months ended March 31, 2024, the company recognized a realized gain of **$1,548 thousand** from the sale of DraftKings shares, with cash proceeds of **$12,844 thousand**[61](index=61&type=chunk) [Note 6. Property and Equipment, Net](index=19&type=section&id=Note%206.%20Property%20and%20Equipment%2C%20Net) This note breaks down the company's net property and equipment, including land, buildings, and leasehold improvements, and reports associated depreciation and amortization expenses Property and Equipment, Net (in thousands) | Asset Category | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------- | :--------------------------------- | | Land | $62,768 | $62,768 | | Buildings | $1,015,673 | $1,011,308 | | Equipment, furniture, and fixtures | $358,211 | $348,075 | | Leasehold improvements | $164,178 | $133,267 | | Construction in progress | $567 | $10,193 | | Total Property and equipment | $1,601,397 | $1,565,611 | | Less: accumulated depreciation and amortization | $(974,415) | $(932,078) | | **Property and equipment, net** | **$626,982** | **$633,533** | Depreciation and Amortization Expense (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :---------------------------------------------- | | Depreciation and amortization expense | $14,372 | $42,336 | | Depreciation and amortization expense (prior year) | $13,182 | $39,972 | [Note 7. Goodwill and Intangible Assets](index=20&type=section&id=Note%207.%20Goodwill%20and%20Intangible%20Assets) This note reports the carrying amounts of goodwill and indefinite-lived intangible assets, confirming no impairment charges were identified in Fiscal Year 2025 Goodwill and Indefinite-Lived Intangible Assets (in thousands) | Asset Category | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------- | :--------------------------------- | | Goodwill | $69,041 | $69,041 | | Trademarks | $61,881 | $61,881 | | Photographic related rights | $1,920 | $1,920 | | **Total indefinite-lived intangible assets** | **$63,801** | **$63,801** | - No impairments of Goodwill or Indefinite-lived intangible assets were identified during the annual qualitative impairment test in the first quarter of Fiscal Year 2025[63](index=63&type=chunk) [Note 8. Commitments and Contingencies](index=20&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note discusses contractual obligations and legal matters, confirming no material changes to non-cancelable obligations and full repayment of a related party loan, with no anticipated material adverse effect from lawsuits - No material changes in non-cancelable contractual obligations occurred during the nine months ended March 31, 2025, beyond ordinary course activities[65](index=65&type=chunk) - The **$65,000 thousand** Delayed Draw Term Loan Facility with Sphere Entertainment was fully drawn and repaid in Fiscal Year 2024[66](index=66&type=chunk) - Management does not believe that the resolution of current lawsuits will have a material adverse effect on the company[67](index=67&type=chunk) [Note 9. Credit Facilities](index=21&type=section&id=Note%209.%20Credit%20Facilities) This note details the National Properties Facilities, including a $650 million term loan and $150 million revolving credit facility, outlining balances, interest rates, and compliance with financial covenants Debt Carrying Value (in thousands) | Metric | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------- | :--------------------------------- | | Current portion of long-term debt | $28,438 | $16,250 | | Long-term debt, net of deferred financing costs | $577,409 | $599,248 | | **Total carrying value of debt** | **$613,438** | **$625,625** | - The National Properties Facilities consist of a **$650,000 thousand** senior secured term loan facility and a **$150,000 thousand** revolving credit facility, maturing on June 30, 2027[69](index=69&type=chunk)[71](index=71&type=chunk) - As of March 31, 2025, the company had **$131,633 thousand** of available borrowing capacity under the National Properties Revolving Credit Facility, and the interest rate on the facilities was **6.92%**[69](index=69&type=chunk)[70](index=70&type=chunk) - MSG National Properties and its restricted subsidiaries were in compliance with all financial covenants (minimum liquidity, debt service coverage ratio, maximum total leverage ratio) as of March 31, 2025[72](index=72&type=chunk) [Note 10. Pension Plans and Other Postretirement Benefit Plans](index=22&type=section&id=Note%2010.%20Pension%20Plans%20and%20Other%20Postretirement%20Benefit%20Plans) This note details net periodic benefit costs for pension and postretirement plans, contributions to qualified plans, defined contribution expenses, and Executive Deferred Compensation Plan assets and liabilities Net Periodic Benefit Costs and Expenses (in thousands) | Metric | Nine Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net periodic cost for Pension Plans | $2,521 | $2,535 | | Net periodic cost for Postretirement Plan | $122 | $90 | | Savings Plans expenses | $6,352 | $5,825 | | Union Savings Plan expenses | $1,092 | $621 | - The company contributed **$3,300 thousand** to a non-contributory, qualified cash balance retirement plan for non-union employees during the nine months ended March 31, 2025[82](index=82&type=chunk) Deferred Compensation Plan (in thousands) | Deferred Compensation Plan | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------- | :--------------------------------- | | Assets (included in Other non-current assets) | $4,737 | $4,226 | | Liabilities (included in Other non-current liabilities) | $(4,760) | $(4,226) | [Note 11. Share-based Compensation](index=25&type=section&id=Note%2011.%20Share-based%20Compensation) This note summarizes share-based compensation expense for RSUs and PSUs, fair value of vested awards, unrecognized compensation cost, and details on grants and vesting during the period Share-based Compensation Metrics (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :---------------------------------------------- | | Share-based compensation expense | $6,250 | $21,834 | | Share-based compensation expense (prior year) | $5,611 | $19,561 | | Fair value of awards vested | $1,130 | $37,028 | | Fair value of awards vested (prior year) | $2,004 | $31,155 | - As of March 31, 2025, there was **$40,672 thousand** of unrecognized compensation cost related to unvested RSUs and PSUs, expected to be recognized over approximately **2.0 years**[90](index=90&type=chunk) - During the nine months ended March 31, 2025, **484 RSUs** and **386 PSUs** were granted, while **542 RSUs** and **400 PSUs** vested[91](index=91&type=chunk) [Note 12. Related Party Transactions](index=27&type=section&id=Note%2012.%20Related%20Party%20Transactions) This note details transactions with related parties, including the Dolan Family Group, Sphere Entertainment, and MSG Sports, summarizing revenues and expenses, and noting changes in commercial agreements and related party status - The Dolan Family Group collectively beneficially owns **100%** of the company's Class B Common Stock and approximately **3.6%** of Class A Common Stock, representing about **64.1%** of the aggregate voting power[92](index=92&type=chunk) Related Party Revenues and Operating Credits (Expenses) (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Nine Months Ended March 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :---------------------------------------------- | | Revenues from related parties | $47,709 | $94,470 | | Total operating credits (expenses), net | $28,158 | $90,150 | - The commercial agreement with CPC for sponsorship sales services is being wound down following a termination notice on September 20, 2024[94](index=94&type=chunk) - 605, LLC is no longer considered a related party as of September 13, 2023, following its sale to iSpot.tv[95](index=95&type=chunk) [Note 13. Additional Financial Information](index=28&type=section&id=Note%2013.%20Additional%20Financial%20Information) This note provides supplementary financial details, including cash composition, prepaid expenses, other assets/liabilities, risk concentration, lease activities, stock repurchase program status, and income tax expenses Selected Financial Information (in thousands) | Metric | As of March 31, 2025 (in thousands) | As of June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------- | :--------------------------------- | | Cash, cash equivalents, and restricted cash | $89,474 | $33,555 | | Total prepaid expenses and other current assets | $101,756 | $90,801 | | Total other non-current assets | $140,910 | $110,283 | | Total accounts payable, accrued and other current liabilities | $175,470 | $203,750 | - In February 2025, the company recognized a right-of-use lease asset of **$116,963 thousand** and an additional lease obligation of **$115,335 thousand** for new office space, followed by a **$9,700 thousand** impairment[105](index=105&type=chunk) - The company repurchased **1,117,601 shares** of Class A Common Stock for **$39,692 thousand** (excluding excise tax) during the nine months ended March 31, 2025, with approximately **$70,000 thousand** remaining available under the Stock Repurchase Program[106](index=106&type=chunk)[202](index=202&type=chunk) - Income tax expense for the nine months ended March 31, 2025, was **$43,124 thousand** (effective tax rate of **40%**), significantly higher than **$397 thousand** (effective tax rate of **1%**) in the prior year, primarily due to state and local taxes, nondeductible officers' compensation, and the utilization of net operating losses[109](index=109&type=chunk)[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes MSG Entertainment's financial condition and results for the three and nine months ended March 31, 2025, covering business overview, factors affecting results, revenue/expense analysis, adjusted operating income, liquidity, capital resources, and seasonality [Introduction](index=31&type=section&id=Introduction) This introduction highlights that the MD&A contains forward-looking statements and specifies the company's fiscal year-end - The MD&A contains forward-looking statements that involve risks and uncertainties, and actual results may differ materially[111](index=111&type=chunk) - The company reports on a fiscal year basis ending on June 30th[114](index=114&type=chunk) [Business Overview](index=32&type=section&id=Business%20Overview) This section provides an overview of MSG Entertainment as a live entertainment company, its iconic venues, marquee content, and its status as an independent publicly traded entity - MSG Entertainment is a live entertainment company with iconic venues and marquee content, operating as a single reportable segment[119](index=119&type=chunk)[120](index=120&type=chunk) - The company's venues include The Garden, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre, and it produces the Christmas Spectacular[120](index=120&type=chunk) - The company became an independent publicly traded entity on April 21, 2023, following a distribution from Sphere Entertainment Co[122](index=122&type=chunk) [Factors Affecting Results of Operations](index=33&type=section&id=Factors%20Affecting%20Results%20of%20Operations) This section discusses key factors influencing operating results, including event attraction, MSG Sports agreements, Christmas Spectacular popularity, and potential impacts of economic conditions - Operating results are largely dependent on the ability to attract concerts and other events, revenues from agreements with MSG Sports, and the continuing popularity of the Christmas Spectacular[123](index=123&type=chunk) - Weak economic conditions, particularly in the New York City and Chicago metropolitan areas, could negatively affect demand for suite licenses, tickets, concessions, merchandise, sponsorship, and the number of events[124](index=124&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's revenues, expenses, operating income, and net income for the current and prior periods Results of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Change YoY (%) | Nine Months Ended March 31, 2025 (in thousands) | Change YoY (%) | | :------------------------------------------------------------------------------------------------ | :----------------------------------------------- | :------------- | :---------------------------------------------- | :------------- | | Total Revenues | $242,465 | 6% | $788,596 | 2% | | Revenues from entertainment offerings | $160,214 | 10% | $593,571 | 2% | | Food, beverage, and merchandise revenues | $45,808 | 1% | $124,104 | (3)% | | Arena license fees and other leasing revenue | $36,443 | (1)% | $70,921 | 9% | | Total Direct operating expenses | $(138,870) | 2% | $(433,653) | 3% | | Selling, general, and administrative expenses | $(52,112) | 3% | $(155,047) | (3)% | | Depreciation and amortization | $(14,372) | (9)% | $(42,336) | (6)% | | Impairment of long-lived assets | $(9,700) | NM | $(9,700) | NM | | Restructuring charges | $(84) | 96% | $(14) | 100% | | Operating income | $27,327 | 63% | $147,846 | 22% | | Net income | $8,036 | 188% | $64,608 | (16)% | - The increase in revenues from entertainment offerings for the three months was driven by higher revenues subject to sharing with MSG Sports (**$6,250 thousand**), Christmas Spectacular production (**$4,907 thousand**), and venue-related sponsorship/signage/suite fees (**$4,628 thousand**), partially offset by lower event-related revenues (**$3,601 thousand**)[130](index=130&type=chunk) - The decrease in food, beverage, and merchandise revenues for the nine months was primarily due to lower sales at concerts, partially offset by higher sales at other live entertainment/sporting events, Christmas Spectacular, and Knicks/Rangers games[142](index=142&type=chunk) - Operating income increased by **$10,524 thousand** for the three months and **$27,045 thousand** for the nine months, primarily due to increased revenues, decreased direct operating expenses, and lower restructuring charges, partially offset by increased impairment of long-lived assets[161](index=161&type=chunk) - Interest expense decreased by **$2,625 thousand** for the three months and **$4,963 thousand** for the nine months, mainly due to lower average borrowings and lower interest rates under the National Properties Facilities[163](index=163&type=chunk) - Income tax expense for the nine months ended March 31, 2025, was **$43,124 thousand** (**40%** effective rate), compared to **$397 thousand** (**1%** effective rate) in the prior year, reflecting state/local taxes, nondeductible officer compensation, and utilization of net operating losses[168](index=168&type=chunk)[169](index=169&type=chunk) [Adjusted Operating Income (Loss) ("AOI")](index=40&type=section&id=Adjusted%20operating%20income%20%28loss%29%20%28%22AOI%22%29) This section defines and reconciles Adjusted Operating Income (AOI), a non-GAAP measure used to evaluate the company's core operating performance - Adjusted Operating Income (AOI) is a non-GAAP financial measure used to evaluate the company's operating performance, excluding items such as depreciation, amortization, impairments, share-based compensation, and restructuring charges[171](index=171&type=chunk)[173](index=173&type=chunk) Adjusted Operating Income (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Change YoY (%) | Nine Months Ended March 31, 2025 (in thousands) | Change YoY (%) | | :-------------------------------- | :----------------------------------------------- | :------------- | :---------------------------------------------- | :------------- | | Operating income | $27,327 | 63% | $147,846 | 22% | | Adjusted operating income | $57,871 | 50% | $223,792 | 13% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's primary sources of liquidity, including cash, operating cash flows, and credit facilities, and analyzes changes in cash flows from operating, investing, and financing activities - Primary sources of liquidity include cash and cash equivalents, cash flows from operations, and available borrowing capacity under the National Properties Revolving Credit Facility[178](index=178&type=chunk) - As of March 31, 2025, the company had **$88,953 thousand** in unrestricted cash and cash equivalents, **$613,438 thousand** in total debt outstanding, and **$131,633 thousand** in available borrowing capacity under the National Properties Revolving Credit Facility[179](index=179&type=chunk) - Net cash provided by operating activities increased by **$31,254 thousand** for the nine months ended March 31, 2025, primarily due to an increase in net income (adjusted for non-cash items) and improved working capital[189](index=189&type=chunk) - Net cash used in investing activities decreased by **$53,246 thousand** to **$19,379 thousand**, primarily due to the absence of a loan to a related party under the delayed draw term loan facility[191](index=191&type=chunk) - Net cash used in financing activities decreased by **$27,466 thousand** to **$67,010 thousand**, mainly due to decreased principal debt repayments and stock repurchases[192](index=192&type=chunk) [Seasonality of Our Business](index=44&type=section&id=Seasonality%20of%20Our%20Business) This section explains the seasonal nature of the company's business, with a disproportionate share of revenues and operating income earned in the second and third fiscal quarters - The company generally earns a disproportionate share of its revenues and operating income in the second and third fiscal quarters[193](index=193&type=chunk) - This seasonality is driven by the Christmas Spectacular production and arena license fees from MSG Sports for the Knicks' and Rangers' home games at The Garden[193](index=193&type=chunk) [Recently Issued Accounting Pronouncements and Critical Accounting Estimates](index=44&type=section&id=Recently%20Issued%20Accounting%20Pronouncements%20and%20Critical%20Accounting%20Estimates) This section refers to Note 2 for recently issued accounting pronouncements and confirms no material changes to critical accounting estimates from the prior fiscal year - Recently issued accounting pronouncements are discussed in Note 2 to the financial statements[194](index=194&type=chunk) - There have been no material changes to the company's critical accounting estimates from those set forth in the 2024 Form 10-K[195](index=195&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes to market risk disclosures from the 2024 Form 10-K and quantifies the impact of hypothetical interest rate increases on interest expense - There were no material changes to the disclosures regarding market risks in connection with the company's pension and postretirement plans from the 2024 Form 10-K[196](index=196&type=chunk) - A hypothetical **200 basis point** increase in floating interest rates as of March 31, 2025, would increase the company's interest expense on outstanding credit facilities by **$12,269 thousand** annually[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[198](index=198&type=chunk) - There were no material changes in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2025[199](index=199&type=chunk) PART II - OTHER INFORMATION This section provides additional information beyond the financial statements, covering legal proceedings, equity security sales, and required exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits, but management does not anticipate a material adverse effect on its financial position from their resolution - The company is a defendant in various lawsuits[201](index=201&type=chunk) - Management does not believe that the resolution of these lawsuits will have a material adverse effect on the company[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section updates the share repurchase program, detailing Class A Common Stock repurchases during the period and the remaining authorization - The Board of Directors authorized a share repurchase program of up to **$250 million** of Class A Common Stock on March 29, 2023[202](index=202&type=chunk) - During the nine months ended March 31, 2025, the company repurchased **1,117,601 shares** of Class A Common Stock for approximately **$40 million**[202](index=202&type=chunk) - As of March 31, 2025, approximately **$70 million** remained available for repurchases under the Stock Repurchase Program[202](index=202&type=chunk) - In March 2025, **436,008 shares** were repurchased at an average price of **$33.70 per share**[203](index=203&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications, an employment agreement, and iXBRL-formatted financial statements - The exhibits include certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[206](index=206&type=chunk) - An Employment Agreement dated April 7, 2025, between Madison Square Garden Entertainment Corp. and David Collins is included as Exhibit 10.1[206](index=206&type=chunk) - The condensed consolidated financial statements are formatted in Inline Extensible Business Reporting Language (iXBRL)[206](index=206&type=chunk)

Financial Data and Key Metrics Changes - For the fiscal third quarter, the company reported revenues of $242 million, an increase of $14.2 million or 6% year-over-year [13] - Adjusted operating income (AOI) for the quarter was $57.9 million, reflecting a $19.3 million or 50% increase compared to the prior year [15] Business Line Data and Key Metrics Changes - Revenues from entertainment offerings increased by $14 million or 10%, driven by higher per event revenues and an increase in the number of events year-over-year [14] - The Christmas Spectacular generated over $170 million in total revenues across 200 performances, with year-over-year growth in per show attendance and average ticket prices [11] Market Data and Key Metrics Changes - The company hosted over 1.5 million guests across 195 events during the quarter, indicating strong consumer demand for live entertainment [9] - Concert bookings saw a year-over-year decrease in the number of events, primarily due to the absence of three Billy Joel performances from the prior year [10] Company Strategy and Development Direction - The company aims for mid to high single-digit AOI growth for the fiscal year and continues to prioritize opportunistic capital returns to shareholders [7] - There is a focus on improving premium hospitality offerings and marketing partnerships, with notable sponsorship renewals [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the New York Arena concert market and tough comparisons due to last year's events, but remains optimistic about solid AOI growth for fiscal 2025 [22] - The company is encouraged by early booking activity for fiscal 2026, with expectations of setting a new record for concerts at The Garden [27] Other Important Information - The company has repurchased approximately $40 million of its Class A common stock to date this fiscal year, including $15 million during the third quarter [8][16] - As of March 31, the company had approximately $89 million in unrestricted cash and a debt balance of approximately $613 million [16] Q&A Session Summary Question: AOI growth and fourth-quarter outlook - Management noted several factors impacting the fourth quarter, including a decline in the overall New York Arena concert market and tough comparisons from last year [20] Question: Concert bookings for 2026 - Management indicated positive signs for concert bookings in fiscal 2026, with substantial visibility into upcoming events [27] Question: Penn Station project and theater sale - Management expressed commitment to improving Penn Station and surrounding areas, with no current updates on the potential sale of the theater [33] Question: Christmas Spectacular and tourism exposure - Approximately 10% of Christmas Spectacular tickets sold were to international tourists, with a low to mid single-digit percentage for concert ticket sales [34] Question: Growth drivers for Christmas Spectacular - Management highlighted growth potential through more shows and higher average ticket yields, with advanced ticket sales pacing up over 60% in gross ticket revenue [41] Question: Capital returns strategy - Management reiterated three main priorities for capital allocation, including maintaining a strong balance sheet and opportunistically returning capital to shareholders [46]

Financial Data and Key Metrics Changes - For the fiscal third quarter, the company reported revenues of $242 million, an increase of $14.2 million or 6% year over year [12] - Adjusted operating income (AOI) for the quarter was $57.9 million, up $19.3 million or 50% compared to the prior year quarter [14] Business Line Data and Key Metrics Changes - Revenues from entertainment offerings increased by $14 million or 10%, driven by higher per event revenues and an increase in the number of events year over year [13] - The Christmas Spectacular generated over $170 million in total revenues across 200 performances, with year over year growth in per show attendance and average ticket prices [10] - There was a year over year decrease in the number of concerts at venues, primarily due to the absence of three Billy Joel performances from the prior year [8] Market Data and Key Metrics Changes - The company hosted over 1.5 million guests across 195 events during the quarter, reflecting strong demand for live entertainment [7] - International tourists accounted for approximately 10% of Christmas Spectacular ticket sales, while a low to mid single-digit percentage of concert ticket sales at The Garden came from international tourists [32][33] Company Strategy and Development Direction - The company is focused on opportunistically returning capital to shareholders, having repurchased approximately $40 million of Class A common stock to date this fiscal year [6][15] - The company is committed to improving the surrounding area of Penn Station and is open to considering strategic options regarding the theater [30][31] Management's Comments on Operating Environment and Future Outlook - Management noted that the overall New York Arena concert market is down compared to last year, impacting fourth-quarter expectations [20] - Despite challenges, management remains optimistic about solid AOI growth for fiscal 2025, with improving per event trends [22] Other Important Information - The company has approximately $89 million of unrestricted cash and a debt balance of approximately $613 million as of March 31 [15] - The company has $70 million remaining under its current buyback authorization [15] Q&A Session Summary Question: AOI growth guidance for the fourth quarter - Management acknowledged several factors impacting the fourth quarter, including a tough comparison to last year due to fewer concerts and playoff games [20][21] Question: Concert bookings for 2026 - Management indicated positive signs for concert bookings in fiscal 2026, with substantial visibility and potential for record-setting concerts at The Garden [26][27] Question: Penn Station project and theater sale - Management confirmed ongoing commitment to improving Penn Station and surrounding areas, with no further updates on the theater sale [30][31] Question: Christmas Spectacular and international tourism exposure - Management estimated that international tourists accounted for about 10% of Christmas ticket sales and a low to mid single-digit percentage of concert sales [32][33] Question: Growth drivers for the upcoming Christmas season - Management sees growth potential through more shows and higher average ticket yields, with advanced ticket sales pacing up over 60% in gross ticket revenue [37][38] Question: Capital returns moving forward - Management reiterated three main priorities for capital allocation: maintaining a strong balance sheet, flexibility for investments, and opportunistically returning capital to shareholders [43][44]

Company Performance - Madison Square Garden Entertainment (MSGE) reported quarterly earnings of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.25 per share, and showing a significant increase from earnings of $0.06 per share a year ago, representing an earnings surprise of 32% [1] - The company posted revenues of $242.47 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.94%, and an increase from year-ago revenues of $228.31 million [2] - Over the last four quarters, MSGE has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance and Outlook - MSGE shares have declined approximately 4.6% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at -$0.39 on revenues of $175.19 million, and $1.04 on revenues of $952.32 million for the current fiscal year [7] - The current Zacks Rank for MSGE is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Media Conglomerates industry, to which MSGE belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

MAY 2025 FORWARD LOOKING STATEMENTS AND MARKET DATA Madison Square Garden Entertainment Corp. (the "Company" or "MSG Entertainment") has filed with the Securities and Exchange Commission an Annual Report on Form 10-K for the year ended June 30, 2024 (the "Annual Report") and Quarterly Reports on Form 10-Q for the quarters ended September 30, 2024, December 31, 2024 and March 31, 2025 (the "Quarterly Reports"). The Annual Report and the Quarterly Reports contain extensive disclosure about the Company and its ...

Financial Performance - FY25 third quarter revenues reached $242.5 million, an increase of 6% compared to the prior year quarter[3] - FY25 third quarter operating income was $27.3 million, reflecting a 63% year-over-year increase[3] - Adjusted operating income for FY25 third quarter was $57.9 million, up 50% from the prior year quarter[3] - Revenues from entertainment offerings increased by $14.0 million, or 10%, to $160.2 million in FY25 third quarter[6] - The Christmas Spectacular production revenues increased by $4.9 million, primarily due to higher ticket-related revenues[12] - Total revenues for the three months ended March 31, 2025, increased to $242.465 million, up from $228.313 million in the same period of 2024, representing a growth of 6.3%[24] - Net income for the three months ended March 31, 2025, was $8.036 million, compared to $2.795 million in the same period of 2024, reflecting a significant increase of 187.5%[24] - Adjusted operating income for the three months ended March 31, 2025, was $57.871 million, up from $38.537 million in the same period of 2024, marking a growth of 50.4%[27] - Basic earnings per share for the three months ended March 31, 2025, was $0.17, compared to $0.06 for the same period in 2024, reflecting an increase of 183.3%[24] Cash and Assets - Cash, cash equivalents, and restricted cash at the end of the period on March 31, 2025, totaled $89.474 million, a substantial increase from $33.555 million at the beginning of the period[32] - Total current assets increased to $307.594 million as of March 31, 2025, compared to $219.084 million as of June 30, 2024, representing a growth of 40.4%[30] - The company reported a net cash provided by operating activities of $142.308 million for the nine months ended March 31, 2025, compared to $111.054 million for the same period in 2024, indicating a growth of 28.1%[32] Debt and Liabilities - Long-term debt, net of deferred financing costs, was $577.409 million as of March 31, 2025, down from $599.248 million as of June 30, 2024, indicating a reduction of 3.0%[30] - Total liabilities as of March 31, 2025, were $1,729.886 million, compared to $1,575.872 million as of June 30, 2024, representing an increase of 9.8%[30] Share Repurchase - The company repurchased approximately $15 million of its Class A common stock in March 2025, totaling $40 million year-to-date[15][16] - The company has approximately $70 million remaining under its existing share repurchase authorization[16] Operational Efficiency - Direct operating expenses associated with entertainment offerings decreased by $5.0 million, or 4%, to $108.0 million in FY25 third quarter[8] - The company remains on track to deliver solid adjusted operating income growth for the fiscal year[3] - The company incurred impairment of long-lived assets amounting to $9.700 million for the three months ended March 31, 2025[27]

Core Insights - Madison Square Garden Entertainment Corp. announced the appointment of David Collins as Executive Vice President and Chief Financial Officer, effective April 14, 2025 [1][2] Company Overview - Madison Square Garden Entertainment Corp. is a leader in live entertainment, operating renowned venues such as Madison Square Garden, Radio City Music Hall, and The Chicago Theatre, hosting a variety of events for millions annually [6] Leadership and Experience - David Collins brings over 30 years of diverse financial experience, having previously served as CFO and Executive Vice President at Harris Blitzer Sports and Entertainment, overseeing finance and operations for major sports teams and venues [3][4] - Collins has held senior financial positions across various industries, including sports, entertainment, energy, and transportation, and began his career as a senior auditor at Ernst & Young [4][5] Strategic Role - In his new role, Collins will collaborate with the executive management team to provide strategic financial insights and oversee financial planning, analysis, and investor relations [2][3]

Core Insights - Madison Square Garden Entertainment Corp., Madison Square Garden Sports Corp., and Sphere Entertainment Co. have announced a partnership with Liquid Death, designating the beverage company as an Official Partner across their premier sports and entertainment assets [1][2][3] Group 1: Partnership Details - Liquid Death will have a significant brand presence as the Official Sparkling Water Partner across various venues, including Madison Square Garden, Radio City Music Hall, and Sphere in Las Vegas [2][3] - The partnership includes Liquid Death being the Official Iced Tea Partner for several venues, with products available at select concession stands [2][4] - Liquid Death will conduct sweepstakes in collaboration with the MSG Family of Companies' iconic properties [4] Group 2: Brand Engagement and Marketing - The partnership allows Liquid Death to engage with fans through interactive initiatives and bold campaigns, including exposure on the Exosphere, the largest LED screen in the world [3][5] - As the Official Sparkling Water Partner of the New York Rangers, Liquid Death will be featured on GardenVision during home games and will have sampling opportunities for fans [5] Group 3: Company Backgrounds - Madison Square Garden Entertainment Corp. is a leader in live entertainment, operating renowned venues and hosting a variety of events annually [6] - Madison Square Garden Sports Corp. manages professional sports teams, including the New York Knicks and New York Rangers, and operates a training center [7] - Sphere Entertainment Co. focuses on redefining entertainment through innovative technologies, with its first venue opening in Las Vegas in September 2023 [8] Group 4: Liquid Death Overview - Liquid Death is one of the fastest-growing non-alcoholic beverage brands, known for its unique marketing approach that combines health and sustainability [9] - The brand offers a range of products, including mountain water and iced tea, packaged in recyclable cans, and supports initiatives to combat plastic pollution [9]