Thank you, Christi. Good morning, and welcome to MSG Networks Fiscal 2021 First Quarter Conference Call.

The company's President and CEO, Andrea Greenberg, will begin this morning's call with a discussion of the company's operations; this will be followed by a review of financial results with Bret Richter, the company's EVP, Chief Financial Officer and Treasurer. After their 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 the company's corporate website. Please take a 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 may be discussed during this call.

Lastly, we will discuss certain non-GAAP financial measures on today's call. On Pages 5 and 6 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income.

In addition, on Page 8 of the earnings release, we provide a reconciliation of net cash provided by operating activities, the free cash flow. With that, I will now turn the call over to Andrea.

Thank you, Ari, and good morning. As we begin our fiscal year, we continue to navigate an ever-evolving media landscape, while we remain committed to our goal of engaging viewers and creating value for our partners.

With the ongoing effects of COVID-19, there is also no question that we are operating in an unprecedented time, which has continued to impact our usual activities. Our first quarter typically means the start of the hockey preseason, however, this fiscal year it instead marked the return of the NBA and NHL to complete their 2019/'20 season.

For our network, the resumption of live sports drove significant engagement in advertising sales as fans tuned in to watch the Rangers and Islanders compete in the NHL's return to play. Household ratings for our telecast of each team Stanley Cup Qualifiers grew over 50% compared to 2019/'20 regular season averages.

This momentum continued for the Islanders into their first round series as ratings increased more than 85% compared to the regular season. In addition, in the qualifying round, MSG Go saw all-time high usage levels.

Both teams set new benchmark for unique viewers and minute stream for a single game. In fact, the Rangers game 2 was the most-viewed live hockey stream in MSG Go's history.

We believe all of this firmly underscores the enduring popularity of live sports, and more importantly, our teams and our markets as well as the value MSG Networks brings to our affiliates, partners and fans. Other programming highlights for the quarter included the return of the New York Red Bulls, as major league soccer resumed its regular season in August; 9 days of live French Open coverage, which we brought to our viewers for the very first time; and the start of the NFL season with our comprehensive coverage of the Buffalo Bills and New York Giants.

And last month, leading up to the NHL Draft and Free Agency, we are at a block of original programming, providing insight into the top picks, trade and potential free agent signings of our teams, including a live Draft Night special featuring an exclusive interview with Alexis Lafrenière, the Ranger's #1 overall pick in the Draft. We will continue to super serve our audiences in the upcoming weeks with similar NBA draft programming and also look forward to introducing other sports stock content.

In addition to engaging our viewers, it is also very important to us that we remain connected to our community, particularly in the current environment. This summer, MSG Networks expanded its award-winning MSG classroom program for the Garden of Dreams Foundation to include the MSG Networks Summer Speaker Series.

This 7-week virtual program provided at-risk high school students with the opportunity to hear from athletes and entertainers on topics such as empowerment, goal setting and achieving success. This series was hosted by former NBA All-Star Allan Houston, and guests included Super Bowl Champion, Justin Tuck; and original Hamilton cast member, Christopher Jackson.

Supporting the Garden of Dreams is always rewarding for everyone involved, and I'd like to thank the students and guests who participated in the special experience. Turning to our financial results.

On the advertising front, our fiscal first quarter benefited from robust sales related to the Rangers and Islanders live game telecast. We saw strength across a number of key categories, with sports gaming a notable bright spot.

Our coverage of the NHL return to play generated high demand from both existing partners, such as DraftKings and FanDuel, and new partners, including bet365, and we expect this momentum in sports gaming to continue into next season. We also saw sustained success from our nonratings based advertising efforts with several of our key partners, including Chase, Kia, Cadillac and Montefiore.

Looking ahead, we remain focused on expanding these efforts. While advertising revenue benefited from our live sports telecast, our affiliate revenue was again impacted by a decline in subscribers, which we believe continues to be a reflection of the changing media landscape.

That said, with the return of live sports this past quarter, we were reminded yet again how valuable our content is, and we will continue to explore additional ways to monetize our media rights and existing library of content. Looking ahead, we remain in close contact with our team and league partners and look forward to the start of the upcoming NBA and NHL seasons.

In closing, I would once again like to thank our employees, partners, viewers and shareholders for their ongoing support. I will now turn the call over to Bret, who will take you through our financial results.

Thank you, Andrea, and good morning, everyone. Let's start with the discussion of our financial results for the fiscal 2021 first quarter.

Total revenues of $157.4 million decreased $3.6 million or approximately 2% as compared with the prior year period. This was driven by a $7.2 million decrease in affiliate revenue, primarily reflecting the impact of the decline in subscribers and to a lesser extent, the impact of a $1 million unfavorable affiliate adjustment in the current year quarter.

This was partially offset by higher affiliate rates and to a lesser extent, the absence of an unfavorable $700,000 affiliate adjustment recorded in the prior year quarter. Advertising revenue increased $3.6 million, primarily due to the Rangers' and Islanders' participation in the 2019/'20 NHL return to play.

Looking ahead, we expect the year-over-year comparability of quarterly advertising results to be impacted by a shift in the timing of the start of the 2020/'21 NBA and NHL regular seasons. Direct operating expenses of $65.1 million decreased $3.6 million or 5% as compared with the prior year quarter, primarily due to lower rights fees expense and to a lesser extent, a decrease in other programming and production-related costs.

The decline in rights fees reflects a reduction in media rights fees related to the 2019/'20 NHL season, partially offset by contractual rate increases. SG&A expenses of $22.5 million increased $200,000 or 1% as compared with the prior year period.

This increase was primarily due to higher advertising sales commissions, partially offset by lower professional fees. The decrease in professional fees includes the absence of $1 million in expenses recorded in the prior year quarter that were not indicative of our core expense base, partially offset by other net increases.

Adjusted operating income of $74.4 million decreased less than 1% as compared with the prior year period due to the decrease in revenues and modest increase in SG&A expenses, offset by lower direct operating expenses. With respect to taxes, our income statement reflects an effective tax rate of 44% for the fiscal first quarter, which includes a $6.7 million noncash expense related to a deferred tax liability adjustment.

In addition, we also recorded a $1.2 million expense resulting from the distribution of certain share-based compensation awards. Excluding these items, our effective tax rate would have been approximately 32% for the quarter.

Reported free cash flow for the quarter was approximately $66.5 million. In terms of our balance sheet, as of September 30, 2020, total cash and cash equivalents were approximately $254.4 million, while total debt outstanding was $1.1 billion, and our $250 million revolver was undrawn.

Our average interest rate for the quarter was approximately 1.7%. Net debt at quarter end decreased by $64 million to $825 million.

And our net leverage ratio decreased to 2.6x trailing 12 months adjusted operating income. During the fiscal first quarter, we made mandatory principal payment of $6.9 million in accordance with the terms of our credit agreement.

For the next 12 months, our credit facilities provide for $44 million in mandatory principal payments. With regard to our share buyback authorization, we did not repurchase shares during the quarter and currently have $146 million remain.

I will now turn the call back over to Ari.

Thank you, Bret. Can we open up the call for questions?

I just wanted to circle back on the subs that you reported for fiscal Q1. I think the 8.5% decline is better than the 8.9% you like called out for May.

And since you report it on a July basis, this does seem to imply some improvements in June and maybe even July. I guess, can you confirm that this is the case and when we can continue to see sort of a better trend?

And really, just any kind of color on that area in general since we have seen some evidence of moderation and some losses of the traditional MVPD.

Sure. Alexia, thanks for the question.

There were a variety of puts and takes this quarter by affiliates. And over the last few months, we have seen a modest improvement in the overall year-over-year rate of subscriber decline that's based on the data we've received to date.

So yes, the modest improvement so far. Also just to note, we were unable to reach an agreement with a small cable operator in Connecticut, named Frontier.

Our agreement with them expired at the end of September. Frontier had filed for bankruptcy earlier this year.

And we've seen from them a pattern of dropping programming networks including before us SNY and YES, so this wasn't a surprise to us. Just to note, this will not have a material impact on our revenue and AOI.

But we do believe that our subscribers will be impacted by the change in media landscape. But it's hard to predict the future in this environment, particularly.

Okay. And just a follow-up, if I may.

Recently Hulu and YouTube dropped the Fox RSNs and YouTube also dropped, I think, New England Sports, if I remember correctly. Would be interested to get your view on why these bundles are pivoting away from regional sports and whether carriage on virtual MVPD still remains an active goal for you guys?

Ari, do you want to take that one?

Yes. So I'll take that one.

Thanks, Andrea. So obviously, hard for us to comment too much on a third-party dispute or negotiation or however you want to characterize it.

I think we still see YouTube TV and Hulu carrying other RSNs. So not sure if there's something specific to the Sinclair situation or NESN situation or what.

I mean for us, we continue to have discussions with operators in the space. We -- it's an evolving but still fairly small segment of the pay TV universe.

And I think we've said before, when coupled with the price for broadband, we've seen the price point of these offerings growing and to become comparable to or maybe even greater than bundles that the traditional guys are offering, and with substantially fewer channels in some cases, and in some cases, with channels that are coming off out of the lineup. That being said, for us, we continue to discuss and explore any and all opportunities for incremental distribution that make financial sense for us and where our content is properly valued.

And we believe our networks and the volume of games and of the local teams that we provide is a compelling value proposition. And it's an important component for any distributor that you can compete in this New York television market, which, as you know, is a highly competitive one.

Some other traditional network businesses are increasingly launching direct-to-consumer products outside of the pay TV bundle -- which companies like AMC Networks or Discovery for quite a while, they didn't pursue that and now they are starting to offer that. So Andrea, you mentioned you are exploring additional ways to monetize your demanded content.

Can you share what your current thought is on making your GO apps or other apps, with all of your content available to consumers without a pay TV subscription? And maybe I understand there is sensitivity to it, but is there not a clearing price perhaps where your distribution partners feel that they're not being -- have their value reduced, but you can still start to grow the business, given that there are so many viewers, especially younger viewers who aren't signing for the pay TV packages?

Sure. And as I said in the past, we continue to actively monitor the direct-to-consumer market price, and we're always looking for new types of offerings if they make financial and strategic sense for us, and as we mentioned in our prepared remarks, other ways to monetize our content.

Adam, do you want to just talk about some of the monetization opportunities?

Sure. I mean, we have a content library, and we have media rights that are extremely valuable.

And for us, that's something that we continue to push for and evaluate. And like, those incremental distribution opportunities are there.

On the direct-to-consumer side, I think we've said we're comfortable with the current business model on the revenue, AOI and cash flow that we generate. We -- of course, the possibilities exist and having those valuable media rights allow us to explore those incremental opportunities in the DTC space, which at a certain price point, may make sense, but we're not there yet.

We haven't made any decisions. We haven't -- it's something that we're monitoring, considering internally and would be something that, at the right time, we would explore both with our distribution partners and then ultimately, test it in the marketplace.

Andrea, in your prepared remarks, you noted the benefit from DraftKings and some of the other sports betting operators on advertising revenue. What do you think the potential could be if online sports betting becomes legal in New York?

And then on top of that, is there anything that you can do kind of incremental to advertising to leverage the online sports betting opportunity more broadly?

Sure. Sure.

Well, as I mentioned and as you just referred to, we saw last season sports betting as a really healthy contributor to our advertising business. FanDuel and DraftKings came back as key sponsors, and we added a new advertiser in bet365 during the return -- the Rangers and Islanders return to play.

We're really excited about the potential for further opportunity as additional markets come into the territory, particularly legalized mobile gaming. We've included some sports gaming programming, including in this recent return to play.

We had DraftKings sponsoring a pregame show. We had DraftKings doing NFL season preview shows for us.

We had a nightly segment with FanDuel. So in addition to just traditional partners, we see tremendous programming and integration opportunities.

I do think and we have mentioned before that to the extent that we add additional territory, integration of sports gaming opportunities into MSG Go is also a significant opportunity for us. So we're actively monitoring the landscape, and we're looking at all sorts of different areas to increase our participation in the marketplace.

That's great. And just one for Bret.

I don't know if it's meaningful or not, but can you estimate -- or do you have an estimate of what the annual cost on the P&L of being a public company are?

Yes. So I think, first and foremost, we run a pretty tight ship with regards to expenses and are very, very cost conscious.

There are certainly some costs that are specific to be an independent public company that wouldn't otherwise be there. But we think those costs are fairly under control.

And with regards to putting a number on it, that's not something we're going to do today, but we do appreciate the insight.

Thanks, Bernie. Christi, can we take 1 last caller, please?

So I was wondering if you could help us understand the financial impact or cost versus revenue relationship as we look at fiscal Q2 with the 2021 season timing sort of influx.

Yes. Why don't I take that?

So I think as we stand here today, we look at the facts and circumstances that we know with regards to 2021. I think we're expecting forward nearly full seasons from the NBA and NHL.

But obviously, those plans are not final. And we continue to be in dialogue with our team and the partners.

But until those plans are final, it's really hard for us to get a picture for you with regards to all the economics there. Clearly, there are certain economics of our business, which are directly tied to the timing of the games add revenue, some production costs.

But with regards to certain of the other elements, including rights for use, we're going to need some definitive facts and circumstances before we can nail all that down.

Thanks, Christi, and thank you all for joining us. We look forward to speaking with you on our next earnings call.

Have a good day.