MSG Networks avoids bankruptcy by restructuring debt

In a move to avoid bankruptcy, MSG Networks has successfully restructured its debt. An SEC filing on Friday morning revealed that the company reached an agreement with lenders, allowing it to steer clear of financial ruin and potentially attract potential buyers.

As part of the deal, MSG Networks will decrease the rights fees paid to broadcast Knicks games by 28% and Rangers games by 18%. These two teams’ games were costing the company around $187 million this season, as reported in the company’s recent quarterly report. The market responded positively to this news, with Sphere Entertainment, MSG Networks’ parent company, experiencing a more than 10% increase in stock value when trading began on Friday.

Since October, MSG Networks had been grappling with approximately $800 million in debt while negotiating extensions with lenders, according to records of public financial information. It is important to note that Sphere Entertainment and MSG Sports, the parent company of the Knicks and Rangers, are distinct public entities but both are under the leadership of MSG Sports executive chairman James L. Dolan.

MSG Networks’ financial troubles escalated during a seven-week dispute over carriage earlier this year with Altice, the parent company of Optimum TV. Consequently, Altice removed MSG Networks from its lineup, leaving roughly 1 million households, including many on Long Island, unable to watch the Knicks, Rangers, or Islanders.

The refinancing arrangement resulted in MSG Networks obtaining a new $210 million loan, set to mature in December 2029, as outlined in the SEC filing. Moreover, both Sphere and MSG Networks are required to provide lenders with an $80 million cash payment as part of the agreement. The filing also indicated that agreements concerning MSG Networks’ broadcasting rights for the Knicks and Rangers will now expire after the 2028-29 seasons instead of in 2035.

Should Sphere opt to sell MSG Networks, a potential merger partner could be the YES Network, which already collaborates with MSG Networks on the Gotham Sports App. This application offers live streams of games from the Yankees, Nets, Knicks, Rangers, Islanders, and Devils, enhancing the audience reach and broadcasting capabilities of both networks.