MSG Networks matched analysts expectations for the first quarter of its 2021 fiscal year as the return of live sports helped the company battle the pandemic slump.
The sports media company reported first quarter revenues of $157.4 million, missing analysts expectations by just 0.16%. This compares to revenues of $160.98 million from a year ago, a decline of 2% year-over-year. MSG Networks also reported quarterly earnings of $0.61 per share, in line with analysts expectations. It reported $0.57 per share a year ago.
MSG Networks owns two regional sports and entertainment networks and a companion streaming service that is broadcast in the New York designated market area, as well as portions of New York, New Jersey, Connecticut and Pennsylvania. It has the local rights for several teams, including the New York Knicks, Rangers, Islanders, New Jersey Devils and Buffalo Bills.
Considering the ongoing pandemic and its effect on sports cable networks, the New York-based sports media company hung onto its performance due to the return of live sports. With fans returning to watch broadcasts, so too did advertising dollars.
Advertising revenue increased $3.6 million due to the Rangers and Islanders participation in the NHL’s return to play effort this season, the company reported.
“We experienced strong engagement and advertising results during our fiscal first quarter tied to the return of live sports to our networks, which we believe firmly underscores the importance of our live local sports content and the value it delivers to our affiliates, advertisers and fans,” MSG Networks CEO Andrea Greenberg said in a statement.
However, some cable subscribers did not return after the sports stoppage. The company saw an 8.5% subscriber drop, highlighting the continued trend of people flocking away from the traditional paid TV cable model.
But MSG Networks plans to lean on its content library and media rights deals to not only offer more content to subscribers, but to also pivot into the digital world. The trend of cord cutting has been accelerating due to the pandemic as traditional networks try to keep their subscribers by offering more digital content.
The company has also been increasing its programming and integration opportunities with sports betting companies in the form of preview shows and nightly segments. DraftKings and FanDuel returned to spend advertising dollars alongside NHL content as the season resumed.
“While we await the start of the 2020-21 NBA and NHL seasons, we continue to introduce new content to engage our viewers, while we navigate the ever-changing media landscape which remains impacted by the ongoing COVID-19 pandemic,” Greenberg said.
MSG Networks shares have lost about 48.6% since the beginning of the year versus the S&P 500’s gain of 1.2%, according to analysts at Zacks Equity Research.