Good morning. My name is Christie and I will be your conference operator today. At this time, I would like to welcome everyone to the Madison Square Garden Company Fiscal 2016 Fourth Quarter Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Ari Danes, Senior Vice President of Investor Relations for the Madison Square Garden Company. Please go ahead, sir.

Thanks, Christie. Good morning and welcome to the Madison Square Garden Company’s fiscal 2016 fourth quarter and year end earnings conference call. Our President and CEO, Doc O’Connor, will begin this morning’s call with a discussion of some of the company’s recent highlights. This will be followed by a review of our financial results with Donna Coleman, our EVP and Chief Financial Officer. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today’s earnings release, it is available in the Investors section of our corporate website. 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, developments and events may differ materially from those in the forward-looking statements as a result of various factors. These include financial community perceptions of the company and its business, operations, financial condition and the industry in which it operates as well as 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 maybe discussed during this call. Let me point out that on Page 4 of today’s earnings release, we provide consolidated and combined statements of operations and a reconciliation of adjusted operating cash flow or AOCF to operating income. I would now like to introduce Doc O’Connor, President and CEO of the Madison Square Garden Company. Doc O’Connor: Thank you, Ari and good morning everyone. At…

Thank you, Doc and good morning everyone. As you know, the company has now completed its first fiscal year as a standalone live sports and entertainment company. On a reported basis for fiscal 2016, we generated $1.1 billion in revenue, an increase of 4% over the prior year. In addition, we generated AOCF for the year of $68.3 million. Excluding the impact of $41.8 million non-cash write-off recorded during the fiscal 2016 third quarter and $6.9 million in reorganization costs recorded during the fourth quarter, fiscal 2016 AOCF would have been $117 million. The remainder of my comments will primarily be focused on our fourth quarter results. I would first remind you that results for this fiscal 2016 fourth quarter reflect MSG’s financial results on a standalone basis including the company’s post-spin cost structure and actual corporate general and administrative costs. Fiscal 2015 fourth quarter results reflect the allocation of corporate, general and administrative costs based on accounting requirements for the preparation of carve out financial statement. As a result, fourth quarter results do not reflect all of the actual expenses that the company would have occurred had it been a standalone public company in the prior year quarter. With that said, now let’s go to our reported results as compared to the prior year period. For the fiscal 2016 fourth quarter, the company generated total revenues of $217.8 million, a decrease of 15% and an AOCF loss of $13.8 million, half of which reflects the impact of the reorganization costs. At MSG Entertainment, revenues of $84 million decreased 10%. This decrease was primarily due to our revenues for the New York Spectacular and the absence of a $3.6 million insurance recovery recorded in the prior year quarter related to the Christmas Spectacular. This decrease was partially offset by higher…

Thanks, Donna. Christie, can we open up the call for questions?

Sure. [Operator Instructions] And your first question comes from Alexia Quadrani of JPMorgan.

Good morning. This is David Karnovsky on for Alexia. Just a few questions around your Las Vegas announcement. First, can you provide any details around total capital investment and timing expenditures? And then on the market itself, can you talk about why this was the right city for expansion and is there any risk of oversupply after both your venue in the T-Mobile Arena are at full operation? And then finally, can you just talk about the lineup of events you are planning there and whether you see a large portion being residencies, where MSG is the promoter? Thanks. Doc O’Connor: Okay, I will take them one at a time. In terms of cost timeframe and the first part of your question, we are still working through our plans, including design, timeline, financing options. And as I mentioned earlier, we are planning to share the details on many of those aspects of our new venue later this fiscal year. So, we will have more to say on that momentarily. As is the case with every investment we make, we take into careful consideration the potential risk and reward with the ultimate goal of creating long-term asset value for the company and our shareholders. On the issue of strategic rationale and why we believe this will lead to asset value creation for our shareholders, let me start by saying that Las Vegas is one of the few entertainment destination marketplaces in the world. The city attracts more than 40 million people a year, yet it does not have a state-of-the-art large scale venue that is focused solely on attracting major concerts and touring shows to the city. Up to now, it’s not been a major stop for major national tours, because the buildings that exist were dated and mostly smaller in…

Thanks for the question, David. Christie, we will take the next caller.

Your next question is from Brandon Ross of BTIG.

Hi guys. Thanks for taking the questions. I wanted to cover two topics, first on the New York Spectacular, so the performance was not up to expectations this year, at least so far despite the changes you guys made to the content and your excitement over the content, can you give a little bit more color on why it fell short and how long it may be before we see the New York Spectacular contribute to the bottom line and then how long you give it, if it doesn’t. And then secondly, your sports teams are obviously, the crown jewels of your portfolio, but there has been a shift among millennials and younger generations away from sports and towards eSports, is eSports a place of interest for you guys and would you consider buying eSports teams or doing something with eSports besides just hosting tournaments in the venues? Thank you. Doc O’Connor: On the New York Spectacular, as we said, ticket sales are not what we hope for, but again we believe we made a number of decisions with this year’s show that have established the foundation that we can build on going forward. We think we have a clear path to where we want to be. Remember, this was essentially a new offering with a largely new show in a new time period. As I mentioned, we were very pleased with the audiences and critics response. I will speak to the quality of the content. We feel we made a really good show. The buzz around the show, the social media data, positive word of mouth led to consistently improved week-over-week attendance throughout nearly all of the summers run, a trend we think bodes well for next year. Nearly 50% of the attendees said they wanted to come back…

Thanks for the questions, Brandon. Christie, we will take the next caller.

Your next question comes from John Janedis with Jefferies.

Hi, good morning. Doc, can you talk about the strategic rationale behind the Townsquare investment, meaning as you know the vast majority of their events are small rather than music festivals, so is this the gesture considering a shift to smaller events and go for volume, is there a pass for a majority stake there and there is some speculation in the press, so can you confirm what you pay it? Thank you. Doc O’Connor: I will take the last part first. We purchased 3.2 million shares, which represents a 12% stake on a fully diluted basis for $23.1 million. As for strategic rationale, we think that this investment makes both strategic and financial sense. We believe in the management team first and foremost and in many ways, we share a strategic perspective with them. On the issue of the size of their events and their live events, we see a really saturated market in the large scale live music concerts and we like their niche approach to the festival business, something that Boston Calling, which I am sure we will talk about in a minute, shares that prospective in some of their other assets. But we think that Madison Square Garden and Townsquare have a lot of similarities. We have unique assets and expertise, we have deep industry relationships, we have strong connections with diverse and passionate audiences and we will use each of these to build valuable communities whether that’s sports fans, concertgoers, radio listeners, festival attendees and so on. We chose an investment as opposed to any other type of relationship because we think it better aligns our businesses and we can – so that we can explore our collective strength and build and drive opportunities for both companies. While we have nothing to announce right now, those possibilities include block booking artists across Townsquare festivals, Boston Calling events and Madison Square Garden venues, posting Townsquare events at MSG venues and working together to create new live content. Gaining additional insight into the festival business is important to us. We think that they have a lot to offer us in that regard and we will be sharing best practices. And we can use each company’s class platforms for cross-promotional and marketing opportunities. Is there anything else as part of that question that I am missing. We have no current plans to increase our stake. The investment in the company is a shared belief in music, live events and creating community.

Thanks for the question, John. Christie, we will take the next caller.

Your next question comes from David Miller with Loop Capital Markets.

Yes. Hey guys. Doc, just a question on the Knicks, what are your targets for – or how should we think about the Knicks’ payroll for fiscal ‘17 and perhaps even fiscal ‘18 if you are willing to talk about it, what kind of increases and/or decreases in the Knicks’ payroll should we be thinking about versus fiscal ‘16 and what are your targets for profitability for the team if you are willing to reveal that? And then I have follow-up. Thanks. Doc O’Connor: I am going to hand that over to Donna, if I might.

Sure. Well, as you know we are firmly committed to fielding championship caliber teams and that supports many of our revenue streams. In fiscal 2017, we are going to benefit from our one-thirtieth share of the significant increase in the NBA national media rights revenue. Related to the increased in revenue, we will also expect a significant increase in player compensation costs, primarily as a result of the increase in the league salary cap threshold, which will increase from $70 million in the 2015, ‘16 season to $94 million in the 2016, ‘17 season. We also will expect an impact on revenue sharing among the team. So you will kind of expect to see an increase in both revenue and player comp expense in the coming year.

Thanks for the question, David. Christie, we will take the next caller.

Your next question comes from David Joyce from Evercore ISI.

Thank you. I was wondering if you could help us understand your decision process of how to invest in these entertainment opportunities between going straight into MSG versus to equity line and what was driving the bigger loss in the equity investments this quarter?

I will just answer the second part of that second – the question. As you will see in our filing later, the increase in the equity loss this quarter was primarily due to an investment we had in Finding Neverland show, which was announced that it’s going to be closing on August 21 and as a result, we wrote off approximately $7 million, which was our remaining investment after the recouping some of our capital. Doc O’Connor: If I am understanding the first part of your question, it’s about taking minority interest in unconsolidated investments in the company. And if I am correct in that assumption, then what I have to say about that is that taking minority stakes in company’s unconsolidated investments, they are not the centerpiece, they are not the centerpieces of our investment strategy. We evaluate these types of investments on a case-by-case basis. And first and foremost, these types of investments need to make strategic sense for the company. With the Townsquare example, we believe first and foremost that strategically it made sense. We also happen to have gotten into that investment in a very attractive price. So we also believe that it made financial sense. But on an ongoing basis, we are not basing our investment strategy on taking minority or unconsolidated investments.

I guess what I was asking was the decision to put some of those into MSG as opposed to Azoff MSG joint venture? Doc O’Connor: Because again, it’s from a strategic level, it made sense in our opinion, to align them with Madison Square Garden as opposed to MSG in this example.

Great. Thanks David. Christie, we will take the next caller.

Your next question comes from Ryan Fiftal of Morgan Stanley.

Great. Good morning. Two, if I may. So first, we have seen this year a couple of minority stakes sale for NBA teams and the valuations or at least the ones reported in the press were pretty full, I would say surprisingly full, given that they are non-controlling stakes and we normally assume so much of the team value is tied up in control, so I am wondering have you thought about are there any opportunities along those lines, something like you could sell minority stakes and shrink the equity with the proceeds to potentially try to exploit your discounts to private market value? Doc O’Connor: We have no plans to sell minority stakes in any of our teams at this time.

And is that – you don’t think there is financial merit to it or it complicates the operations or any help with how you think about that? Doc O’Connor: All of the above. We have no plans to do anything of the kind.

Okay. And then just a quick one, any update on Penn Station redevelopment plans and are there any signposts we should be watching there? Thanks. Doc O’Connor: We don’t have any update on Penn Station. The potential to create and renovate – create a new entrance for Penn Station and renovate the station itself. The Governor said from the beginning there are number of different possibilities, some of which include us and some do not. And we stand with the Governor, as I have said before, and his vision for a re-imagined Penn Station and Moynahan train station and the value that they will bring to all New Yorkers in the whole region and we will continue to work with his office on a plan that’s beneficial to all involved, but we don’t have any specific update on those issues as of this moment.

Thanks, Ryan. Christie, we have time for one last caller.

Sure. Your final question comes from Robert Roth of FBN Securities.

Yes, thanks for taking my questions. Could you just update us a little bit as to why on May 27 you guys put in place a 10b5-1 plan related to stock repurchases and give us a little bit of a sense as to how we can expect to see those pace moving forward given that plan is in place?

Sure, absolutely. The 10b5-1 plan that we put in place gives us the ability to move forward on our share repurchase program while we continue to actively pursue growth opportunities. And that was particularly valuable to us in the last few months as we explored some of the opportunities that Doc has discussed on the call. As we said, we are very committed to our share repurchase program, which we believe reflects our confidence and the value of our assets and our growth prospects. We are very pleased with the way we are executing on the repurchase program and having now repurchased over 1 million shares in just over 4% of our Class A shares. And as we look ahead, we will continue to evaluate and assess how to best execute the programs. We may employ opportunistic open market purchases. We may put another 10b5-1 plan in place, but we will do it as we feel it’s most appropriate for the company.

Okay, great. And one follow-up if I may. Could you give us any sense as to what you are looking at in terms of season ticket prices going forward into the ‘17, ‘18 timeframe and looking ahead any sense as to what that might look like? Doc O’Connor: Sure. For current subscribers to the Knicks, there will be no price increase. For current Rangers subscribers, we will have a blended approximate 7% increase for again earnings subscribers. For our new inventory, whether it’s individual tickets, new partial plans or group sales, we will be dynamically pricing that inventory as we have in the past. And that, I want to clarify is for ‘16, ‘17 seasons and we are not in a place where we are extrapolating what ‘17 ‘18 will look like.

And thank you with that, I will return the floor to Ari Danes for any additional or closing remarks.

Thank you for joining us. We look forward to speaking with you on our fiscal 2017 first quarter earnings conference call. Have a good day.

Thank you. This does conclude today’s conference call. You may now disconnect.