MSGE - MSG Entertainment rises on revenue beat spin-off talk

Madison Square Garden Entertainment ( NYSE: MSGE ) is 4.2% higher after topping revenue expectations with its fiscal fourth quarter , alongside the previous report it was considering a media/entertainment spin-off.

Revenues grew 74% to $453.5M amid a "robust" calendar of events at its venues as well as a sharp boost in hospitality amid COVID-19 pandemic demand recovery.

Operating loss widened to $56.8M, but adjusted operating income stayed positive at $0.7M, down from a prior-year $2.5M. (A heavier loss on debt extinguishment and other expenses led net loss as reported to more than double, to $99.2M.)

The company also said it's raising its estimated cost to finish the MSG Sphere at the Venetian (set for opening in the second half of 2023). Construction cost is now $2B, up from a prior $1.865B, due to the "impact of inflation and global supply chain pressures."

Actual construction cost through June 30 was about $1.53B.

Revenue breakout: Entertainment, $179M (up 476%); MSG Networks, $139.1M (down 16%); Tao Group Hospitality, $139.8M (up 101%).

Operating income by segment: Entertainment, -$82.5M (vs. prior loss of $103.2M); MSG Networks, $26.7M (down 54%); Tao Group Hospitality, $7.5M (up 160%).

On Thursday, the company said it was exploring a spin-off of its media/entertainment operations that would leave behind the coming MSG Sphere venues and Tao Group Hospitality .

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