The lender’s and MSG Networks’s unpaid debt negotiation period expires on Friday, which could be good for family Sphere Entertainment and not actually bad for Sinclair Broadcasting, as Diamond Sports demonstrated.
In October,$ 829 million in debt came due for MSG Networks. The local sports network—which broadcasts the NBA’s Knicks and NHL’s Rangers, Islanders, Devils and Sabres—reached a deal with borrowers to postpone triggering a default on the mortgage until mid-December and then again until Friday, according to a regulation processing. Since the date in October, MSGN has accumulated a$ 4.8 million attention payment.
Complicating matters is that MSG Networks in the New York area was terminated by cable system Perfect, which is owned by Altice USA, at the end of its 2024 deal. The fact that the home of executive chair Jim Dolan owns both Orb and MSG Sports, the publicly traded company that holds the Knicks and Rangers, adds difficulty. Under the Altice agreement, MSG Sports generated more than$ 10 per subscriber in revenue. According to Altice USA’s most recent substitute speech, the Dolans previously owned Optimum, but they sold it to Altice in 2016 and are no longer active as directors or major owners. MSG Network claim they made the offer to lower Altice’s annual fee yet as Altice attempted to charge its customers more.

” MSGN is one of the most popular television programs in the New York metropolitan area. A spokeswoman for MSG Networks said in an email that this is a pure and simple value cut from Altice. ” An attempt to add over$ 10 dollars a month right to their bottom line—a$ 10 dollar rate increase on top of a 50 % rate increase. We are still willing to bargain in great devotion to get our development again on Optimum.
Some Wall Streeters believe that Sphere should push for more drastic measures to help the RS N’s debt be reduced or eliminated as a solution to its economic issues.
Even though Dolanhas likely tried to avoid that circumstance, hoping to find a solution with his relationship banks,” the outcome seems to be heading toward Chapter 11,” according to LightShed Partners researcher Brandon Ross in a note next week.
No indications are there plans for a Chapter 11 bankruptcy restructuring for MSG Networks; however, a new agreement or a deal to reduce or reduce the debt could be reached with lenders, or the network was just pay the loan off. Through a director, Subject and Madison Square Garden said they would not comment on the rumors about Chapter 11.

And, at least for Subject, bankruptcy might actually be a wise choice in this situation. The reason is obvious: While RSNs also generate income, they have no genuine growth possibility given the unrelenting cord-cutting of American cable consumers. To traders, RSNs are wasting property and hence a misuse of business capital. They’re even worse when burdened with bill, like MSGN.
The situation of Diamond Sports shows that, at least for family firms, an RSN debt may work out nicely. Sinclair Broadcast Group, which owned at least 90 % of Diamond, put the RSN large into Book 11 in March 2023, quickly wiping Diamond’s$ 8.6 billion loan from its records. That didn’t address all of Sinclair’s problems—Wall City worries about the fees wire pays it to have Sinclair’s local channels and the transition away from TV advertising purchasing by marketers. But now the sports networks Sinclair still owns—the Tennis Channel, along with stakes in Marquee Sports and the YES Network—are seen as positives, “giving it valuable premium content”, Morningstar analyst Matthew Dolgin said. Basically, Wall Street liked the Diamond bankruptcy: Sinclair shares rallied more than 45 % in the month after putting Diamond in bankruptcy. They remain 30 % higher today.
In Sphere’s case, unloading MSG Networks ‘ debt could be just as beneficial.
” The nearest-term catalyst for Sphere shares hinges on the MSG Networks ‘ debt work-out outcome”, Seaport Research analyst David Joyce said in December commentary. ” Every$ 100 million of debt reduction could be worth nearly$ 3 a share to Sphere”. That’s even considering MSG Networks should contribute about 47 % of Sphere’s expected$ 295 million second quarter fiscal 2025 revenue.
In the words of LightShed’s Ross:” We believe MSGN was contributing$ 300-$ 400 million of negative equity value”.
In both analysts ‘ math, separating MSG Networks from Sphere would add an additional 27 % ( under Ross ‘ calculations ) to 58 % ( Joyce’s$ 3 a share ) to its share price. Investors could concentrate on what interests them, such as the possibility of reproducing the Las Vegas Sphere buzz in cities around the world, such as Abu Dhabi, the next planned location. Dropping MSGN “makes the Sphere story much cleaner for investors”, Ross said.

Unlike Sinclair, however, the prospect may not be as simple. For one, a bankruptcy reorganization for MSG Networks increases the likelihood that the Knicks and Rangers ‘ rights to network rights payments will decrease from about$ 180 million this year. ( MSG Sports shares are down about 5 % in January. ) Given that bankruptcy ranks equity owners last among all creditors and almost always wipes out shareholders, as it did Sinclair, it almost certainly would eliminate Dolan ownership in MSGN. It seems very un-Dolan-like to give up on an asset so readily.
Yet there’s a hint that the family may know Sphere and the RSN aren’t good fits. In the original discussion in August 2022 about splitting up MSG Entertainment—another publicly traded business that housed corporate-owned venues, Networks and Sphere—the company suggested that Sphere stand alone with Tao Group Hospitality, a high-end restaurant arm held by Entertainment. The Dolans switched gears, and while Tao was sold off, MSG Networks ended up being a part of Sphere. However, executives continue to make an effort to let investors know that Sphere’s fate is not entirely tied to MSG Networks, as they did in their most recent call with analysts in November.
Sphere’s$ 1.36 billion debt balance on Sept. 30, then-CFO David Byrnes pointed out, “reflected approximately$ 829 million outstanding on the MSG Networks term loan, which, as a reminder, is debt that is recoursed only to MSG Networks”. ( The second paragraph of this article corrects the fact that MSG Networks paid$ 4.8 million in interest on interest on its debt ). A prior version said MSGN missed a$ 4.88 million payment. )