Good morning. My name is Hope, and I'll be your conference operator today. At this time, I would like to welcome everyone to The Madison Square Garden Company Fiscal Third Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. (Operator Instructions) Thank you. I would now like to turn the call over to Ari Danes, Vice President of Investor Relations for The Madison Square Garden Company. Please go ahead, sir.

Thanks, Hope. Good morning, and welcome to The Madison Square Garden Company's Fiscal 2014 Third Quarter Earnings Conference Call. Our President and CEO, Ted Smith will begin this morning's call with the discussion of some of the company's recent highlights. It will be followed by review of our financial results from Bob Pollichino; our EVP and Chief Financial Officer. We will then open the call for questions. During which time we will also have available other members of the management team. If you do not have a copy of today's earnings release, it is available in the Investors section of our website at themadisonsquaregardencompany.com. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the company and its business, operations, financial condition and the industry in which it operates and the factors described in the company's filings with the Securities and Exchange Commission, including the sections entitled Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations contained therein. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. Let me point out that on Page 4 of today's earnings release, we provide consolidated operations data and a reconciliation of adjusted operating cash flow or AOCF to operating income. I would now like to introduce Tad Smith, President and CEO of The Madison Square Garden Company.

Thank you, Ari, and good morning. I am delighted to have joined the company at such an important juncture in its history. MSG as a uniquely positioned company with a diverse and complimentary set of media, entertainment and sports assets. As you know, we operate extremely attractive businesses in growing market with great brands and strong competitive position. We also believe that our ownership of highly sort of live sports and entertainment content provide us with a strategic advantage particularly in today's rapidly changing media and entertainment landscape. This fiscal year will bring a successful end to MSG's first chapter as a public company. A completion of significant, multi-year capital investment cycle has provided us with two world class state of- the- art arenas in the top two entertainment markets in the country. And this will benefit our company for years to come. Going forward our priority is to generate attractive long-term growth for our shareholders. First, we remain committed to operational excellence and maximizing the growth and profitability of our current businesses. This will include exploring incremental growth opportunities within our current asset portfolio including those we can exploit by better harnessing technology. Second, we will continue to look externally for strategic opportunities which enable us to add compelling assets and brands that resonate with our customers and partners, and allow us to utilize our core competencies and assets to bring unique value. In March, we completed one such transaction when we announced that we invested $22.5 million for a 50% stake in Tribeca Enterprises, the company that owns and operate the acclaimed Tribeca Film Festival. We also have the opportunity to increase our stake over time and consolidate Tribeca Enterprises in our financial statements. For MSG, the joint venture augments our portfolio of premier New York City Live…

Thank you, Tad. For our fiscal third quarter we generated total revenues of $459 million, up 11% and consolidated AOCF of $65.7 million, down 28%, both is compared to the prior year third quarter. Third quarter reported results were impacted by certain items of note. This includes executive management transition costs which are included unallocated corporate expenses on an AOCF basis. In addition, MSG Entertainment results which I will discuss in more detail shortly reflect increased direct operating expenses related to a new large scale theatrical production. Excluding the impact of these times, fiscal 2014 third quarter total company AOCF would have been approximately $88 million. In terms of our business segment results as compared to the prior year third quarter, MSG Media generated $190.8 million in revenues, an increase of $6.2 million or 3%. Affiliation fee revenue increased $10 million primarily due to higher affiliation rate partially offset by the impact of a small decrease MSG Networks subscriber versus the prior year quarter. Advertising revenue increased slightly primarily due to higher sale generated from the telecast of NHL game and to a lesser extent to regional programming on MSG Network, partially offset by lower Knicks related advertising sale. Although revenues decreased $4.1 million primarily due to the expiration in April of 2013 of a short term program and licensing agreement. Third quarter AOCF of $92 million decreased 4% primarily due to an increase in direct operating expenses largely offset by the increase in revenues. The increase in direct operating expenses primarily reflect a return to normal levels of right fee expenses due to return to full NHO regular season scheduled for all four NHL team carried on MSG Network. With respect to our four quarter, please note that we expect MSG Media advertising revenue to be impacted by fewer…

Thanks Bob. Hope, can we open up the call for questions.

(Operator Instructions). Your first question comes from the line of Bryan Goldberg from BofA Merrill Lynch.

Hi, thanks. I've got two questions. First for Tad, you have been at the company for a few months now. And given the focus on generating long-term growth for shareholders, I am curious to hear your observation so far on the most compelling organic or internal opportunities to drive growth and then how are you thinking about external sources of growth? It seems as of the levers the company had so far been in the entertainment space so I guess you envisioned future external opportunities given and how to support media opportunities stock up in this regard and then I got a follow up.

Okay, thank you. First of all, as I have been here -- this is actually I think my eight week anniversary day if I am not mistaken so I will dive into some of the organic opportunities as you said. But you have to understand that this is a lighter touch than you would get further down in a subsequent call. With that, I think you can look at the organic opportunities in several areas and these are merely observations. Observation number one, I think there are opportunities for us to harness technology more effectively. And that can be in a range of different ways but one specific area that comes to mind is in data and analytic. Understanding in the market place how to use data in a high quality way to target as more effectively it seems to me a robust area of growth. Secondly, I would say that understanding areas where we can differentiate our product in the market place vis-à-vis other competition. Focusing on the customer relentlessly, understanding that there is, in a fact a heterogeneous demand curve for our services and tailoring exactly the right service to each one of those segment. But by the way part and parcel is understanding the nature of the segment is in my mind an area. By the way that opens up yet another area when you think about how we price. And that can be not just sort of list price which I think where everyone focuses on but how do we think about pricing and sponsoring, pricing and marketing, how do we take about the pricing curve precisely to the demand curve. And that is here another area. I think another area also as I step back and think reflect on it comes from the natural transition…

Yes, thank you, that was helpful. My follow up is on your disclosure around the softer subtrends at the RSNs, I believe this is called out in last earnings call as well so is there any additional color you can share on the drivers of this. Is this a share shift to a distributor they doesn't carry the networks or is there a broader pay TV subscription issues in your market area. I guess any color you could provide would be great.

Well, let me start by saying I am very confident in the underlying strength of our networks and in sports and the power of the sports in our networks. And so when I look at the business, admittedly from eight weeks, when I look at it and certainly our people here are very confident about it as well. With particular respect to the subscribes as you might imagine that we had look at it knowing that it would be my first earnings call, I want to think that it was interesting is that if you just look at our affiliates subscribers over the last 12 months there has been no material change in subs of those affiliate that we do business with. So you might be (inaudible) then how does we have a very modest, by the way a very modest subscribe loss, and we believe that is largely a result of new tearing but when you step back from the new tearing we know also that our affiliate revenue grew sharply in the quarter. We are very confident in the structure of our business in the market place. And we think that we have a number of protections in regards to that going forward. And we will continue to seek and develop more as we go through affiliate agreement. So that is an area that we are very focused on. We are not concerned about it and we are very much excited about the future overall of our networks and sports bundle that we have.

Your next comes from the line of Ryan Fiftal with Morgan Stanley.

Thank you. Two questions if I may. The first is the follow up on capital allocation. So I guess aside from any specific opportunities may be it would help if you could share some of your thoughts and your philosophy behind M&A, the kind of strategic or financial threshold or framework you bring, when you are considering M&A opportunity?

You me generically?

Yes.

Sure. I think with M&A generally you want to look at whether it is first and independently of anything we might bring an attractive business, doesn't have robust return, doesn't have a strong competitive position, is the market large attractive and growing. Do we anticipate by the regulatory consumer demand or technological discontinuities to somehow impair the business going forward? And if we conclude it the end of that, that it is an attractive business, we then want to look at whether we are the classic natural owners of it. Is there some set of capabilities, competencies skill where we can enhance the value of the business with us and then from that would that economic rent that we create exceed our cost of capital and then can we have some acquisition that is a reasonable deal that we have overall and return investment that it saves our cost of capital for the shareholders. That's the general framework we intend to use. And I would say beyond that there is really not much else to say.

That is pretty comprehensive, thank you. And then just a second question following on the Fuse side. First, can you help just size the impact your results when you pull that business out of your financial and then may be a little more broadly thinking back to the strategy at the time of thing, Fuse was really considered to be strategic asset that link your live entertainment cable network businesses so I was wondering if you could talk about how the company's view on that, may be your thought that led to the sale.

Hi, this is Bob. Let me give you a little bit landscape of what you are going to be seeing with Fuse. So first thing that you should be aware of the fact for variety of reasons Fuse does not quality for discontinued operations accounting and so a prior period when you look on, to be looking at our financials will not recast to reflect the result excluding Fuse, and going forward Fuse will simply at the conclusion of the transaction just not be reflected in our financial results. And of course we expect that to occur within the first quarter of 2015. So thinking about the economics, we are thrilled with what we are able to accomplish with Fuse and as you know we have a sale in place, but when we look at the financial results prospectively you will not see any material impact on AOCF on a total company basis as a result of Fuse.

With particular respect to the strategy part of your question. I would say it is important to see when you look at Fuse, we built a really phenomenal asset in the distribution of Fuse and to a great extent that asset has -- was apparent from the sale had a substantial value to other party. And when we looked at the landscape we thought it made the more sense for our shareholders and the future prospects of Fuse to give that asset to another entity that could take better advantage of the distribution we have created than we could and yet at the same time retain a minority stake so we secondly have auction value on the future growth for our shareholders to be created there. And we think that made the more sense. And we are very excited about it.

And did you retain any efforts on editors to put content that generated by your live entertainment business on that network, kind of acting as a producer?

Well, we can't product content for anyone. Not necessarily just you.

Your next question comes from the line of David Miller with Topeka capital market

Yes, hey, guys. I have a number of questions. First of all, Bob, the $9.5 million increase related to the new large scale theatrical production, I assume its heart and light [Ph] .and is the $9.5 million, is that an acceleration of the amortization schedule? Did you take any impairment charge or is the $9.5 million something else and then I have a follow up.

There was no impairment charge on hearts and light [ph] investment.

Okay and then I think one of the reasons the stock taking a hit here is because of just this MSG Sports line. It just seems like every single year there is really very little follow through AOCF, I just think the way you guys -- just seems like with the Knicks, cost going up, I am not just talking about payroll but just cost in general, operating cost to run the team just keeping going up all the time. And the story with the sports line with that you had the Garden in place, concession are firing, suite revenue is working, everything sold out and is just that there is never any follow through on that line vis-à-vis margin expansion. I am wondering if you can speak to that.

Listen with particular respect to our sports team, they have a tremendous strategic position, there is enormous rent accruing to our shareholders from them, you can see it throughout the organization. As far as the other points you have I mean they weren’t really question other than to say I hear you and I understand what you are saying.

Okay and then related to that Tad, if you could just speak to the overall strategic rationale of the Azoff MSG joint venture, I think I get it, I get the symbiosis there, I get the synergy is there but for the shareholders that are on this call I think they look at that as kind of a sort of murky deal that isn't talked about very much, so we may be could just kind of highlight the strategic rationale of that deal and how that fits into your portfolio. I would really appreciate it. Thanks very much.

Sure, well, I have actually spent a great deal of time with Irving in my first eight weeks. And let me tell you I am very excited about the venture strategically for us for a number of reasons. The venture as you know and Irving has a tremendous opportunity and deep relationship with talent and also frankly a lot of experience in businesses in and around the ones we operate including the one we operate. So from my perspective someone like that in an entrepreneurial way can see potentially disruptive, value creating opportunities in the businesses that we play in. And by the way we have vehicle where he can pursue them in ways that create substantial value for our shareholders. And that's for my perspective is very exciting and has the potential to be significant breakout growth in the future and also value creation in the future. It doesn't mean necessarily that every single quarter we will have something to talk about Irving. But it also doesn't mean necessarily that our Azoff venture is doing anything other than creating great value for our shareholders and I am very optimistic about it.

Your next question comes from the line of Amy Yong, Macquarie.

Thanks. I have two questions. Tad, first you talked a lot about external growth. But do you feel like any parts of your own portfolio is under monetizing anyway, I think you mentioned sponsoring in advertising. And part of the business where -- will you focus on accelerating the growth organically over the next few quarters? And my second question is on heart and light [ph] can you just quantify the near-term financial impact given the postponement and what other investments are needed? Thanks.

I want that Bob you take the second part of the question first on heart and light [ph]

I am not yet sure I understood the question on heart and light [ph]

Sure. Can you just talk about I guess the financial impact given the postponement and how much more investments are needed as we think about it being pushed out into 2015?

Well, the financial impact was reflected in the quarter that is $9.5 million that we spoke to. And I don't think we can yet speak to what we are going to tweak the show that's a project that is currently underway, I am positive that it will have some more investments in it but as Tad said it is tweaking around what we have already created.

Yes, I am sorry if I let you the impression that somehow I was not enthusiastically in favor of organic growth across each of our businesses. So let me just say, of course, yes, I am. And what I meant to say earlier was that it should come from several different areas. First, a general mindset change, gentle mindset change from maximizing cash flow to seeking and taking advantage of organic growth opportunities throughout the organization in each and every business unit. And that's an important thing when management begins to focus on that good things start to happen. And secondly I think concurrent with that each of the businesses and I mean each of the division and the businesses within them can begin to think about a portfolio of innovation meaning when you start thinking about organic growth you think about okay, I know what I can do to achieve growth this year. What I am going to have to do for next year. You begin to thinking ahead about how you build innovation after innovation after innovation. And by the way technology I think I mentioned earlier had application to grow our revenue in every single one of our businesses, data and analytics has opportunities to improve our reach with customers, our understanding with the customers needs, our pricing for customers in every single one of our businesses, we have at the moment underway a team that is looking at not just pricing but finding new inventory where we can expand our sponsorship revenue, finding new opportunities to get revenue and ad sales area in places other than just the gain, how do we think about extending our revenue reach and growth in areas that are on shoulder period of the game, every single element of this all the way through, not to mention, in the entertainment area, how do we think about targeting our marketing more effectively, how do we think about understanding what the price point is, how do we think about dynamic pricing of tickets, every single bit of this is to me is an area and in sports today, again the same opportunities here lie how do we think about exactly marketing more effectively, how do we add -- still up, call it -- or fill up the arena wins, Liberty is there, how do we think about positioning differently, how do we think about making sure that we provide the most value ad that we can and create differentiated experience for the Knicks, how do we think about making sure that every single suite is priced correctly for the Rangers. Every single one of these will going to be tackling and we already are.

Your next question comes from the line of Vasily Karasyov for Sterne Agee. Vasily Karasyov - Sterne Agee & Leach Inc: Thank you, good morning. Tad, welcome to the community. So two questions. One about CapEx remaining on the transformation project if I may. And the other one I will ask right away. So the sports segment has never been easy to model. Now we have more changes going on there so if you guys could give us talk at least about puts and takes in terms of cost and revenue over the next couple of years, what's going to happen with the management changes have been so on. Anything that we could think of in terms of estimating cost and revenue that would be great. Thank you.

Well, let me just say the sports segment is a premier segment not just at our company, not just in the nation but really in the world. It is an enviable asset with great businesses asset. We love it. And I don't know what else to say and it has bright future. Bob, you want to comment on the specific question he asked about the --

Sure, so the two pieces. As I said before that with respect to the transformation we still have an expectation of our cost not to exceed $1.050 billion, through March 31, we incurred approximately $1.028 billion, and of the $1.028 billion we paid actually in cash $991 million, so then with respect to the Forum, our expectation is that the total acquisition and renovation cost are approximately $120 million net of certain tax credit and loan forgiveness. Through March 31, with respect to the acquisition, renovation cost incurred is about $117 million, of which approximately $95 million has been paid in cash. And that $95 million in inclusive of the acquisition cost, the cost to renovate, les the impact of the historic tax credit and the loan. That's where we stand right now.

Your next question comes from the line of (inaudible) Unidentified Analyst Thank you. If you could please provide some update on the competitive landscape with the Barclay Center? And secondly how many events at Radio City Music Hall were there last year that we are comping against while it's dark? Thank you.

Well, let me take the first part of your question. I don't have comment on any particular competitor. But what I will say and you might find it interesting is that we did an analysis from November 1 of the most so the 2013 to the end of April, 2014, the one just completed. Based upon publicly available data and we included in that all of the major arenas in the New York City DMA and we looked at based -- again on the publicly available data how many concert night were there and what, how many of them went for the arena versus the rest of the crowd. We also compare that to a five year picture before the transformation and the result to me were very interesting. The first insight we had is this between November 1 of last year and the end of the April this year, the number of concern night at the arena, a, went up but b, and perhaps more interestingly to some of you on the call that there was no material market share change in those concert night at the arena during that period in question.

Your next question comes from the line of Ben Mogil, - Stifel, Nicolaus. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.,: Hi, good morning and thanks for taking my question. And Tad, welcome. So just sort of two questions. One for Tad and one for Bob. So, Tad, you talked about technology and getting to know the customer better and everything like that. Do you see a world where over time you just disaggregate some of your intermediaries, like eventually you do ticketing yourself, you have big two ticketing venues, you want to know the customer better, you disaggregate the intermediary, and the same thing on the broadcast side that you feel there is room even working with an MSOs for some kind of direct to consumer kind of offering.

I love those questions. I am tempted to say something but I am just mindful, I am only been here eight weeks and I love the question so and they are very intriguing, so ask me again on subsequent call. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.,: Okay.

I know it is a great question. And if I have been here a year and half and really have sort of a robust, look because the key answers to those questions is all about data and how the entry barriers are changing and how the things are intermediating, and they are great question, it is just a little early for me on the call. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.,: Okay, that's fair enough. And then I think Bob just for you. I want to understand little better the $9.5 million sort not charge if you will or cost around hearts and lights [ph].I am kind of curious given the show didn't really open I think at best in previews, why you want to able to sort of keep capitalizing and everything other than marketing expenses and so the way you that you are doing film accounting where you sort of capitalizing everything other than marketing and so to keep capitalizing that until the show actually opens or is that sort of the size of the show is going to be some different enough and what it started off being if you had to sort of make these adjustments.

Well, it's actually, Tad. I will answer that one for you. Bob is right here all of it -- but you actually answered your own question in part with your question. And what I mean by that is some of the expenses were not able to be capitalized according to generally accepted accounting principle and you mentioned one marketing and some other operating cost. So let me just speak to heart and light [ph] for a minute. Heart and lights, and frankly the spring show for us is not only something that is critically important for our strategy, it is something and it is hard to sort of convey that when we are talking about the postponement. It is something that's deeply exciting to all of us for the company. And what I mean by that is this, what happens with heart and light we were very excited about it, their marketing was beginning to fill, and we saw the first run through about two weeks before the show was scheduled to open. By the way you might ask why we wait so late, the first run through was this contingent upon fantastic, marvelous set, we had a lot of things coming together and so we pulled it out altogether for the first run through, every time the Rockettes went up, our heart soared, the set was fantastic and amazing and the technology was dazzling. However, the narrative just didn't -- when you put it all together narrative just wasn't as good and an experience as our customers who come to expect. And so we made the decision because this is not like opening a Broadway show or opening movie where you do a run and then you close down and you move one. This is something that we anticipate being a perennial asset that our shareholders are excited about and there are customers are thrilled to attend every year, year after year. And so we made -- we would have love by the way to have simply opened it later. That was an option except as I mentioned earlier in the call that we are thrilled to have the NFL draft, this coming week inside Radio City, so we simply ran out of time. It has been postponed. And then we said, okay, well let's look at the rest of the summer, was there another option, in fact, well to our shareholders like Radio City is booked for the rest of the year. So we said we really had to make a decision and the decision was rather open up something where we know the Rockettes are fantastic, the set is dazzling, the technology is great, everything about is excites us. But the narrative just isn't quite right, let's postpone. And that's what happens.

Thank you. Your final question comes from the line of Michael Morris from Guggenheim

Thanks, good morning, guys. Tad, I am trying to reconcile your comments about maximizing shareholder value with the fact that you are guys aren't using any debt financing right now in a period of pretty much historic low interest rate, seems to be that even conservatively about a billion dollar of capacity there. So I guess my questions are pretty specific. One, are you philosophically opposed to using debt financing? Two, do you think that your businesses don't lend themselves to debt financing or using that-- using debt financing or three, you talked about investing in the business and I think that most of us are comfortable or supportive but if you call billion dollar of capacity, do you see a billion dollars worth of investment opportunities out there that would preclude you from or maybe give you the opportunity later on to use your balance sheet. Thanks.

Well, I am going to ignore the third part of your question if you don't mind. Let me address the first two. In short I would say this, whether and how a company -- well the precise optimal capital structure of a company, the weighted average cost to capital, the exact mix, both in the gearing of the business and what it can do in the cycle, the predictability of the revenue, the predictability of the cash flow, all of those things combined with the relative level of leverage it can support is a very, very important conversation for any management and board to consider. And we do that here. So it is not as if we have any sort of you or we don't understand optimal capital structure, we don't understand weighted average cost to capital, we don't understand either. We understand all of that fully well here. What I think I said and what we really mean is that for the time being and for the time being only we are focused on building the assets value and long-term value of our company. And should that change we will certainly let you know. By the way may be interesting for you to hear that as you know our chief financial officer Bob Pollichino has announced his retirement, so as you might imagine I am interviewing a lot of CFO candidate. And when I ask them this question, what is your view on capital allocation, to a person, they all say something important that resonate with me and frankly resonate with our company which is the most important thing to focus on first is what is the strategy and what are the growth opportunities for the company looking forward and the you look at the sources and uses of cash and how to apply thereafter. And that's exactly what we are doing and that's exactly what should refer from my comments.

Okay, all right and then just operationally, we are seeing the start of some consolidation of distributors, obviously, Time Warner Cable and Comcast are both customers of your -- you work with both of them, does their consolidation impact you in the near-term with respect to your affiliate fees and affiliate fee potential and how do you think about the longer term opportunity or risk given some potential for more consolidation in Pay TV space?

In the near term, no, we have contract that our contracts that give us some comfort. And long term obviously I go back to what I said about the underlying strength of our sports assets and also the strengths of our network. We believe that our networks have a real must have value and we are very confident that that will be sustained in the future. Secondly, I would say that if you look at the composition of the New York DMA it tends to be highly fragmented among the various MVPDs and moreover it is not obvious us to us that Comcast /Time Warner combination would materially change that. So we think our future is very bright.

There are no further questions at this time. I would now like to turn the call back over to Ari Danes.

Thanks for joining us. We look forward to speaking with you on yearend call, August. Have a good day.