Market Overview

Tullo: Madison Square Garden Stock Might Have Fallen On ESPN Results, NBA Stream Decision


Shares of The Madison Square Garden Co (NYSE: MSG) fell nearly 7 percent on Wednesday after the company announced John Sykes, one of the industry's top entertainment and media executives, had joined its Board of Directors.

In a note to investors, Richard Tullo, Director of Research at Albert Fried & Company, said he thought the stock was down on a couple other events: ESPN results at Walt Disney Co (NYSE: DIS) and the NBA’s decision to Stream individual games for $6.99 each.

Of note, the stock corrected itself in Wednesday's after hours trading. But why did it have such a down day?

The Implications

As Tullo explained, “In the past, NBA season ticket blacked out local games, so Knicks games were unavailable in NYC on NBA season Ticket.” The analysts at Albert Fried & Co. think the same thing is going on with the regional programmers and OTT -- only better.

So, if the NBA starts charging $6.99 per game streamed, “then they will floor the price and let MSG charge $6.99 per game."

The analysts think the price is high enough to provide incentive for fans to subscribe, pretty much like the relationship between Apple Inc. (NASDAQ: AAPL)’s Apple TV and AMC Networks Inc (NASDAQ: AMCX)’s the Walking Dead -- “The download is expensive so fans make sure they have a cable subscription to AMC,” he wrote.

Latest Ratings for MSG

Apr 2020Morgan StanleyMaintainsEqual-Weight
Apr 2020Imperial CapitalMaintainsOutperform
Mar 2020Imperial CapitalMaintainsOutperform

View More Analyst Ratings for MSG
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