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The Madison Square Garden Company Reports Fiscal 2019 First Quarter Results

New York, N.Y., November 1, 2018 – The Madison Square Garden Company (NYSE: MSG) today reported financial results for the first quarter ended September 30, 2018.

Effective July 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (ASC Topic 606), the new accounting standard for revenue recognition.  The most significant impact of ASC Topic 606 in fiscal 2019 is a change in the timing of when certain Company revenue streams are recognized during the fiscal year.  Prior period results have not been restated to reflect the adoption of ASC Topic 606 and, therefore, the Company’s consolidated and segment results for the fiscal 2019 first quarter are not directly comparable to the results for the first quarter of fiscal 2018.

On a reported basis, for the fiscal 2019 first quarter, the Company generated revenues of $218.1 million, operating loss of $50.8 million and adjusted operating loss of $9.9 million.(1)(2)

Excluding the impact of ASC Topic 606, fiscal 2019 first quarter revenues would have been $258.4 million, an increase of 5% as compared with the prior year period.  In addition, fiscal 2019 first quarter operating loss would have been $15.3 million, an increase of 5%, and adjusted operating income would have been $25.6 million, a decrease of 15%, both as compared to the prior year period.(3)

Executive Chairman and CEO Jim Dolan said, “For fiscal 2019, we are focused on delivering another year of solid operational performance, while we continue to move forward with our Company’s next chapter, our MSG Sphere initiative.  At the same time, we are making important progress on our proposed plans to separate our sports and entertainment businesses – a transaction we believe would position both new companies for long-term growth and value creation.”

MSG Entertainment
For the fiscal 2019 first quarter, MSG Entertainment revenues of $163.0 million decreased 1%, as compared to the prior year period. This primarily reflects lower overall event-related revenues at the Company’s venues and, to a lesser extent, lower suite rental fee revenue, both of which include the impact of ASC Topic 606.  These decreases were offset by the inclusion of results for Obscura Digital, higher sponsorship and signage revenues and increased TAO Group revenue.

Fiscal 2019 first quarter operating income of $1.7 million decreased $8.4 million and adjusted operating income of $9.0 million decreased $9.2 million, both as compared to the prior year period.  The decrease in operating income and adjusted operating income primarily reflects higher selling, general and administrative expenses and, to a lesser extent, higher direct operating expenses and lower revenues.  The increase in selling, general and administrative expenses was primarily due to the inclusion of Obscura Digital results, as well as higher expenses at TAO Group, mainly a result of increases in employee compensation and related benefits and pre-opening costs associated with new TAO Group venues.  The increase in direct operating expenses reflects the inclusion of Obscura Digital results, higher expenses at TAO Group, increased venue operating costs and other net cost increases, offset by a decrease in overall event-related expenses at the Company’s venues.

Excluding the impact of ASC Topic 606, fiscal 2019 first quarter MSG Entertainment revenues would have been $168.0 million, an increase of 2% as compared to the prior year period.  In addition, fiscal 2019 first quarter operating income would have been $2.0 million, a decrease of $8.1 million, and adjusted operating income would have been $9.4 million, a decrease of $8.9 million, both as compared to the prior year period.

MSG Sports
For the fiscal 2019 first quarter, MSG Sports revenues of $55.4 million decreased 32%, as compared to the prior year period.  This was primarily due to the impact of ASC Topic 606, which impacted the timing of local media rights revenue from MSG Networks Inc. as well as suite rental fee revenue, both as compared to the prior year period. The decreases in these revenues more than offset an increase in revenues from league distributions.

First quarter operating loss of $4.1 million increased by $24.5 million and adjusted operating income of $0.6 million decreased by $25.9 million, both as compared to the prior year period.  This reflects the decrease in revenues, which was primarily due to the impact of ASC Topic 606 as described above, and, to a lesser extent, an increase in selling, general and administrative expenses, partially offset by a decrease in direct operating expenses.  The increase in selling, general and administrative expenses primarily reflects higher employee compensation and related benefits, offset by lower advertising and marketing expenses and lower professional fees.  The decrease in direct operating expenses primarily reflects lower professional sports teams’ pre/regular season expenses associated with food, beverage and merchandise sales and lower net provisions for certain team personnel transactions.

Excluding the impact of ASC Topic 606, fiscal 2019 first quarter MSG Sports revenues would have been $90.6 million, an increase of 12% as compared to the prior year period.  In addition, fiscal 2019 first quarter operating income would have been $31.1 million, an increase of $10.7 million, and adjusted operating income would have been $35.8 million, an increase of $9.3 million, both as compared to the prior year period.

Corporate and Other
For the fiscal 2019 first quarter, Corporate and Other’s operating loss of $43.4 million and adjusted operating loss of $19.5 million increased by 9% and 34%, respectively, both as compared with the prior year period.  These increases are primarily a result of expenses related to the proposed spin-off transaction.

Purchase Accounting Adjustments
For the fiscal 2019 first quarter as compared to the prior year period, operating expenses related to purchase accounting adjustments of $5.0 million decreased $0.4 million.

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About The Madison Square Garden Company
The Madison Square Garden Company (MSG) is a world leader in live sports and entertainment experiences. The company presents or hosts a broad array of premier events in its diverse collection of iconic venues: New York’s Madison Square Garden, The Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, CA; The Chicago Theatre; and the Wang Theatre in Boston. Other MSG properties include legendary sports franchises: the New York Knicks (NBA), the New York Rangers (NHL) and the New York Liberty (WNBA); two development league teams – the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL); and esports teams through Counter Logic Gaming, a leading North American esports organization, and Knicks Gaming, MSG’s NBA 2K League franchise. In addition, the Company features the popular original production – the Christmas Spectacular Starring the Radio City Rockettes – and through Boston Calling Events, produces New England’s preeminent Boston Calling Music Festival. Also under the MSG umbrella is TAO Group, a world-class hospitality group with globally-recognized entertainment dining and nightlife brands: Tao, Marquee, Lavo, Avenue, The Stanton Social, Beauty & Essex and Vandal. More information is available at www.themadisonsquaregardencompany.com.

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