John Rogers Comments on MSG Networks

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Jul 28, 2020

Shares of owner and operator of regional sports and entertainment networks, MSG Networks Inc. (MSGN, Financial) have been pressured by uncertainty surrounding the financial and operating implications related to the NBA and NHL halting their seasons. Investors are also concerned with continued subscriber losses across Cable, Telco and Satellite video distributors, which has negative implications for affiliate revenue. On a positive note, the company bought back a little more than 6% of shares outstanding in the quarter, further supporting our view that shares are currently undervalued. We believe MSGN’s long term rights agreement to broadcast Knicks and Rangers games through 2035 in the largest Designated Market Area in the country makes these rights more valuable than other regional sports rights, all things equal. We also highlight that despite ratings pressure across all professional sports leagues, sports content remains the most valuable type of content to advertisers because of its live consumption.

From John Rogers (Trades, Portfolio)' Ariel Fund second-quarter 2020 commentary.