Cable TV subscribers flee Knicks channel owned by MSG Networks
Jim Dolan is having a bad week, and the Knicks’ season hasn’t even started yet.
On Wednesday, MSG Networks Inc., the sports-channel operator where Dolan is executive chairman, said its subscribers shrank by 6.5 percent last quarter, or more than twice the rate of the broader pay-TV industry. The subscriber losses sent the company’s shares tumbling as much as 14 percent, their biggest drop ever.
David Joyce, an analyst at Evercore ISI, downgraded the stock, citing “dramatic subscriber losses.”
“We are incrementally concerned about the subscriber trends and affiliate revenue impacts,” Joyce said in a note to clients.
The stock decline came a day after shares of Madison Square Garden Co., a separate live-entertainment company also led by Dolan, had a record decline after it disclosed the steep cost of building a new venue in Las Vegas.
Consumers are dropping their cable-TV subscriptions in favor of cheaper online options, threatening the futures of cable-channel owners like MSG Networks that rely on collecting subscriber fees to grow their profits. Sports channels have become especially vulnerable in the era of cord-cutting, as TV distributors create cheaper packages that don’t include them.
MSG Networks disclosed the subscriber losses while reporting fourth-quarter revenue and profits that fell short of analysts’ expectations.
Four years ago, the Dolans shifted the sports channels, which air New York Knicks and New York Rangers games, into a company separate from those famous sports franchises and venues like Madison Square Garden and Radio City Music Hall.