MSG Stock Surprises

Analysts may be eating their words about Madison Square Garden Inc., which came in far ahead of expectations for the second quarter.

In an earnings report Aug. 6, MSG announced a profit of $14 million, or 18 cents per share for the second quarter, compared with a loss of $3.9 million, or 5 cents per share, during the same period in 2009.

Analysts polled by Thomson Reuters had reportedly expected earnings of 6 cents per share.

Revenues for Q2 increased 9.5 percent to $227.1 million over the previous year, getting a boost from increased events at MSG’s Radio City Music Hall and higher advertising revenues in the company’s media segment.

Media revenues and lower expenses in the sports segment also played a role in cash flow and operating income. MSG reported adjusted operating cash flow increased 304 percent to $42.4 million and operating income was up $25.7 million compared with an $8.8 million loss in 2009.

Spun off from Cablevision in February, MSG wasn’t expected to impress after years of costly renovations at the arena, a slump in entertainment ticket sales in the recession and the up-and-down fortunes of the Knicks and Rangers.

But president and CEO Hank Ratner said in a statement that MSG continues to see all three segments as “meaningful contributors to our profitability over the long term.”

He also added that following the transformation of Madison Square Garden into a state-of-the art facility, the company expects the venue will “further enhance our growth profile in the years ahead.”

Following the announcement, MSG shares were up 4 percent, closing at $20.21.