Ari Danes - Vice President of Investor Relations Tad Smith - President and Chief Executive Officer Bob Pollichino - Executive Vice President and Chief Financial Officer

Bryan Goldberg - BofA Merrill Lynch, Ryan Fiftal - Morgan Stanley. David Miller - Topeka capital market Amy Yong - Macquarie Research Vasily Karasyov - Sterne Agee & Leach Inc Benjamin E.

Mogil - Stifel, Nicolaus & Co., Inc.,

Thanks, Hope. Good morning, and welcome to The Madison Square Garden Company's Fiscal 2014 Third Quarter Earnings Conference Call.

Our President and CEO, Ted Smith will begin this morning's call with the discussion of some of the company's recent highlights. It will be followed by review of our financial results from Bob Pollichino; our EVP and Chief Financial Officer.

We will then open the call for questions. During which time we will also have available other members of the management team.

If you do not have a copy of today's earnings release, it is available in the Investors section of our website at themadisonsquaregardencompany.com. Please take 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 or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the company and its business, operations, financial condition and the industry in which it operates and 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. Let me point out that on Page 4 of today's earnings release, we provide consolidated operations data and a reconciliation of adjusted operating cash flow or AOCF to operating income.

I would now like to introduce Tad Smith, President and CEO of The Madison Square Garden Company.

Thank you, Ari, and good morning. I am delighted to have joined the company at such an important juncture in its history.

MSG as a uniquely positioned company with a diverse and complimentary set of media, entertainment and sports assets. As you know, we operate extremely attractive businesses in growing market with great brands and strong competitive position.

We also believe that our ownership of highly sort of live sports and entertainment content provide us with a strategic advantage particularly in today's rapidly changing media and entertainment landscape. This fiscal year will bring a successful end to MSG's first chapter as a public company.

A completion of significant, multi-year capital investment cycle has provided us with two world class state of- the- art arenas in the top two entertainment markets in the country. And this will benefit our company for years to come.

Going forward our priority is to generate attractive long-term growth for our shareholders. First, we remain committed to operational excellence and maximizing the growth and profitability of our current businesses.

This will include exploring incremental growth opportunities within our current asset portfolio including those we can exploit by better harnessing technology. Second, we will continue to look externally for strategic opportunities which enable us to add compelling assets and brands that resonate with our customers and partners, and allow us to utilize our core competencies and assets to bring unique value.

In March, we completed one such transaction when we announced that we invested $22.5 million for a 50% stake in Tribeca Enterprises, the company that owns and operate the acclaimed Tribeca Film Festival. We also have the opportunity to increase our stake over time and consolidate Tribeca Enterprises in our financial statements.

For MSG, the joint venture augments our portfolio of premier New York City Live Entertainment brand while also providing us with a high profile entry into the festival business with a team that is created one of the most successful festivals in the world. We will also explore joint partnership opportunities which we believe provide a compelling opportunity to drive incremental growth at both companies.

Tribeca now has access to our marketing and promotional expertise and platform along with our knowledge of ticketing and booking which we expect will increase both awareness and attendance for the festival along with other Tribeca events. One early example of the types of opportunities we plan to develop took place last month, as weekend theatre served as backdrop for the opening night of a Tribeca Film Festival which feature the world premier of a documentary with the legendary hip hop artist Nas followed by his live performance, by the way it was fantastic.

We believe this transaction will benefit our company and shareholders and look forward to supporting Tribeca's vision going forward. Separately, after exploring strategic alternatives for Fuse, in April we entered into an agreement to sell the network to SiTV Media.

Fuse will operate along side SiTV Media's other network NUVOtv, a premier entertainment network developed in collaboration with superstar Jennifer Lopez who serves as a network's chief creative officer. Under the terms of the deal we will receive $226 million as well as 15% stake in the combined company with the equity component subject to potential reduction based on certain performance metrics.

We currently expect the transaction to close in our fiscal 2015 first quarter and look forward to the continued success of the network. Another significant company initiative is our new large scale theatrical production designed for Radio City Music Hall.

As we are sure you heard we made the decision to postpone this year's limited run engagement until 2015 after concluding that additional work was needed to ensure we deliver the unforgettable experience our customers have come to expect from us. We are confident that the final production will be a spectacular one of a kind show and continue to expect that will become a key franchise for our company.

One of the biggest announcements this past quarter was that Phil Jackson, one of the most admired and successful basket ball minds in the NBA has been named president of the New York Knicks. With an extraordinary history of success that includes 13 NBA championships, we believe Phil is the idea executive to lead the Knicks as w work towards the team achieves both short and long-term success.

I'll now give a brief update on other events at our business segment starting with MSG Media. Our regional sports networks MSG and MSG+ is provide a strong financial foundation for our overall company continue to be recognized for their commitment to programming excellence.

Recently MSG Media was awarded 16 New York Emmy award including 14 for MSG Network, the most of any single network or station. MSG Media has now won a total of 216 Emmys in its history including an impressive 99 for MSG Network over the past seven years beating every single network or station in the region during that period.

On the ratings front, regular season ratings for Rangers were higher as compared to the last full regular season. While Knicks' ratings were lower versus last year reflecting the team's record this season.

Still, we are committed to getting the Knicks back on the past success and expect ratings to respond accordingly in the seasons ahead. In addition to serving and the exclusive local broadcast home to the New York Liberty, New York Islanders, New Jersey Doubles and Buffalo Sabres, we also recently announced an extension of our agreement major league soccer New York Red Bulls ensuring that MSG Networks will continue as a team's regional television home.

The Red Bulls franchise has been a great partner for 18 years and we are proud to continue that relationship. Turning to MSG Entertainment.

Our portfolio of venues continues to play host to an exciting and diverse array of artists and events. On January 15, we celebrated the return of the fabulous Forum with the first of six concerts by the legendary Eagle.

This past quarter the Forum also welcome Justin Timberlake, Alejandra Guzman, Imagine Dragons, Paul Simon and Sing, Toby Mac and Kings of Leon as well as the Dalai Lama. We continue to be very pleased with the enthusiastic response from artists, music fans, marketing partners and promoters and are encouraged by the level of interest for potential events with the Forum in fiscal 2015.

This includes our recent announcement that the popular MT Music Award will be broadcast live from the Forum on Sunday, August 24. We are excited that the VMA's will have the distinction of being the first major award show ever to take place at the fabulous Forum and its over 45 years history.

With this announcement serving as yet another example how the music and entertainment industry is in breaking reinvention of the venue. Back in New York at the world's most famous arena, our new relationship with Billy Joel has gotten off to an excellent start with the first four shows playing to sold out crowd.

We are looking forward to the upcoming eight announced shows which run through December 18 and all are continuing to sell out. The Garden also hosted multi night performance by Justin Timberlake and Paul Simon and Sing along with the Westminster Kennel Club Dog Show, while at the theatre at Madison Square Garden highlight this past quarter included Robin Thicke, Ellie Goulding for two sold out shows and family favorite Sesame Street Live for a multi show run.

Other highlights during the quarter included the Allman Brothers Band for 10 sold out shows at the weekend as well as comedian Chelsea Handler who now played two shows each of the theatre at Madison Square Garden, the Chicago Theatre and the Wang Theatre. Looking forward fourth quarter highlights will include Billy Joel's continued run as well as Lady Gaga and Allman Band the Garden.

Allman Band will also play the Forum where other highlights include Chelsea Handler and the Backstreet Boys with Avril Lavigne. Highly anticipated events at Radio City Music Hall include a multi night engagement with comedian Dave Chappelle, with all five performances already sold out.

We were also pleased that NBC popular show America's Got Talent will return to Radio City Music Hall this upcoming season with live episode airing from the hall twice week starting in late July. Early audition rounds for America's Got Talent were held in April in the theatre Madison Square Garden as was family's favorite Disney Live, both for multi show engagement.

And at the weekend, notable events include multi show engagements with Cold Play Eddie Izzard and Ringo Starr as well as several special events including MTV and Fox upfronts. Turning MSG Sports.

With respect to the Rangers, the team had a successful regular season finishing second in the metropolitan division and fifth overall in the Eastern conference the rangers have now made the playoff eight of the last nine years making them one of only 14 to realize that achievement. The team begins its second round playoff series against the Pittsburgh Penguins tonight after defeating the Philadelphia flyers in an exciting seven game first round series.

And you heard on previous earnings call, the 2013-2014 season marked the fourth consecutive year Knicks season tickets have been sold out and the seven straight year Rangers season ticket has been sold out. With teams playing to at or near capacity crowd at the Garden all year.

These results reflect the continued popularity of our team and strong consumer interest in visiting the transformed Madison Square Garden arena. For the 2014-15 season, we have announced that we are not raising prices for next tickets.

With respect to the Rangers, season ticket prices have increased by an average of 3%. And while it is still early in the process, we are pleased with the current pace of season ticket renewal for both teams.

We also announced in March that we acquired the rights own and operate an NBA development league team that will play in White Plains New York beginning this November. The team will be NBA D league's 18 team and the exclusive affiliates of the next.

This opportunity allows to develop players closer to our training facility and to provide high level, affordable basketball entertainment to a community that is embraced to Knicks for generations. We are also excited to welcome back to the Garden the New York Liberty who because of the transformation have played their home game at the prudential centre for the last three seasons.

Liberty enters its second season under Head Coach and General Manager Bill Laimbeer and in mid April acquired superstar center Tina Charles who in 2010 was the top WNBA draft pick and rookie of the year before being named league MVP and taking home Olympic gold in 2012. We look forward to an exciting season with the team's make 17th home opener against the Chicago Sky.

Meanwhile, MSG Sports continue to host a variety of very memorable sporting events in our fiscal third quarter including the East regional finals of the NCAA division one man basket ball championship which return to the MSG and New York City for the first time in more than 50 years. During this exciting two day event UConn beat Iowa state and Michigan state before going on to become NCAA national champion.

We look forward with a newly transformed Garden to continue to attract this type of marketing events. Other events this quarter included the Big East Tournament which returns to the Garden for the 32nd consecutive year.

The BNP Paribas showdown for the seventh consecutive year of the Garden which featured 2013 Wimbledon Champion Andy Murray, Grand Slam champion Novak Djokovic, tennis legend John and Patrick McEnroe and of course the Bryan brothers. And Men's Freestyle Wrestling World Cup, a two day even which mark the first sporting event held at the reinvented Forum.

Looking ahead highlights in our fourth quarter include the NFL draft, which takes place at Radio City Music Hall next week and I think load-in starts tomorrow, the return of boxing to the Forum as four division World Champion Juan Manuel Marquez battles former Junior Welterweight World Champion Mike Alvarado in a highly anticipated match that will be televised live on HBO. And a night of championship boxing at the world's most famous arena as three division World champion Miguel Cotto challenges WBC middleweight Champion Sergio Martinez.

Before turning the call over to Bob, I want to address two items. First, we are aware that some members of the investment community may prefer we return capital to shareholders.

Our objective here is to increase the value of our company's asset for shareholders over the long term. When MSG was spun off from Cablevision four year ago for example, we issued dividends and share repurchases and instead invested our capital into the Garden's transformation.

A project that has been a clear success and one that the stock market rewarded. So for the time being and only for the time being, our priority is to find new opportunities that enhance our company's growth and asset value over the long term.

Second, I would like to take a moment on the behalf of the entire company. To thank Hank Ratner who has played a terrific leadership role in driving the company's significant growth since it has been off from cablevision.

And spearheading the company's key strategic initiative including the historic transformation of the Garden. Hank has played and continues to play an integral role in helping to set corporate direction and drive the overall advancement of the company and he has a special and valued advisor to me.

So thank you to Hank. We are excited for our company's next chapter which will include continuing to strengthen our position as one of the country's leading media, entertainment and sports company.

I also look forward to getting to know the investment community and plan to be with many of you in the coming months. With that I'll turn the call over to my colleague Bob.

Thank you, Tad. For our fiscal third quarter we generated total revenues of $459 million, up 11% and consolidated AOCF of $65.7 million, down 28%, both is compared to the prior year third quarter.

Third quarter reported results were impacted by certain items of note. This includes executive management transition costs which are included unallocated corporate expenses on an AOCF basis.

In addition, MSG Entertainment results which I will discuss in more detail shortly reflect increased direct operating expenses related to a new large scale theatrical production. Excluding the impact of these times, fiscal 2014 third quarter total company AOCF would have been approximately $88 million.

In terms of our business segment results as compared to the prior year third quarter, MSG Media generated $190.8 million in revenues, an increase of $6.2 million or 3%. Affiliation fee revenue increased $10 million primarily due to higher affiliation rate partially offset by the impact of a small decrease MSG Networks subscriber versus the prior year quarter.

Advertising revenue increased slightly primarily due to higher sale generated from the telecast of NHL game and to a lesser extent to regional programming on MSG Network, partially offset by lower Knicks related advertising sale. Although revenues decreased $4.1 million primarily due to the expiration in April of 2013 of a short term program and licensing agreement.

Third quarter AOCF of $92 million decreased 4% primarily due to an increase in direct operating expenses largely offset by the increase in revenues. The increase in direct operating expenses primarily reflect a return to normal levels of right fee expenses due to return to full NHO regular season scheduled for all four NHL team carried on MSG Network.

With respect to our four quarter, please note that we expect MSG Media advertising revenue to be impacted by fewer playoff telecast as well as fewer regular season telecast versus the prior year quarter, specifically we telecast five Rangers first round playoff games this first quarter versus the combined 16 Knicks ranger and Islanders first round playoff games last year. In addition, we telecast 25 regular season games at the Knicks, Rangers, Islanders and Devils this first quarter versus the combined 40 regular season games last year.

Our MSG Entertainment segment generated $52.8 million in revenues, an increase of 49% mainly a result of higher event related revenues at the Garden due to an increase in the number of event primarily more MSG Entertainment promoted event plus entertainment related revenues at the Forum which reopened January 15, 2014. And higher event related sponsorship and signage and suite rental fee revenues driven by both the transformation and the Forum.

This was partially offset by lower event related revenues at Radio City Music Hall which was unavailable for the majority of the quarter. Third quarter AOCF loss of $20.2 million increased $7.1 million due to an increase in direct operating expenses and to a lesser extent an increase in selling, general and administrative expenses largely offset by the increase in revenue.

The increase in direct operating expenses includes a $9.5 million increase related to the company's new large-scale theatrical production. Excluding the $9.5 million increase in expenses, MSG Entertainment AOCF would have improved $2.4 million versus the prior year third quarter.

With respect to our fourth quarter please consider that Radio City Music Hall will again be dark for a significant portion of the quarter given the postponement of our new theatrical production. Our MSG Sports segment generated $233.7 in revenues in the third quarter, an increase of 12%.

The increase in revenues is primarily due to higher event related revenues from other live sporting event, professional sports team regular season ticket related revenue, sponsorship and signage revenue, inter segment broadcast right fees and suite rental fee revenue. Third quarter AOCF of $9.8 million decreased by $1.8 million due to an increase in direct operating expenses and to a lesser extent higher selling, general and administrative expenses, largely offset by the increase in revenues.

The increase in direct operating expenses was primarily due to higher net provision for NBA luxury tax and NBA and NHL revenue sharing expense, team personnel compensation expense and other team operating cost. With respect to our fourth quarter at MSG Sports, please keep mind that the outcome of the playoffs will have a significant impact on year-over-year comparison.

The Rangers began the second round of the playoff tonight and have played four home playoff games so far. As a reminder, the Knicks and Rangers played a combined 11 home playoff game in the fourth quarter of fiscal 2013 which generated approximately $47 million in playoff related revenue and $16.4 million in direct contribution through our sport segment.

Also in our fourth quarter we expect to incur higher team personnel compensation expense, additional team management expenses and higher other team operating cost as well as higher net provision for NBA luxury tax and NBA and NHL revenue sharing expense. With respect to the transformation and the reinvention of the Forum, as we close out these projects, we continue to expect total transformation related construction cost not to exceed $1.050 billion and total acquisition and renovation cost of the Forum to be approximately $120 million, net of certain tax credit and expected loan forgiveness.

As of March 31, total net cash and cash equivalent was $76.5 million. In addition, our $375 million revolver remained un-drawn with the borrowing availability unchanged that $368 million as they remain approximately $7 million of letters of credit outstanding.

I'll now turn the call back over to Ari.

Thanks Bob. Hope, can we open up the call for questions.

Hi, thanks. I've got two questions.

First for Tad, you have been at the company for a few months now. And given the focus on generating long-term growth for shareholders, I am curious to hear your observation so far on the most compelling organic or internal opportunities to drive growth and then how are you thinking about external sources of growth?

It seems as of the levers the company had so far been in the entertainment space so I guess you envisioned future external opportunities given and how to support media opportunities stock up in this regard and then I got a follow up.

Okay, thank you. First of all, as I have been here -- this is actually I think my eight week anniversary day if I am not mistaken so I will dive into some of the organic opportunities as you said.

But you have to understand that this is a lighter touch than you would get further down in a subsequent call. With that, I think you can look at the organic opportunities in several areas and these are merely observations.

Observation number one, I think there are opportunities for us to harness technology more effectively. And that can be in a range of different ways but one specific area that comes to mind is in data and analytic.

Understanding in the market place how to use data in a high quality way to target as more effectively it seems to me a robust area of growth. Secondly, I would say that understanding areas where we can differentiate our product in the market place vis-à-vis other competition.

Focusing on the customer relentlessly, understanding that there is, in a fact a heterogeneous demand curve for our services and tailoring exactly the right service to each one of those segment. But by the way part and parcel is understanding the nature of the segment is in my mind an area.

By the way that opens up yet another area when you think about how we price. And that can be not just sort of list price which I think where everyone focuses on but how do we think about pricing and sponsoring, pricing and marketing, how do we take about the pricing curve precisely to the demand curve.

And that is here another area. I think another area also as I step back and think reflect on it comes from the natural transition that an organization has from the prior era where we were focused on funding the very large scale transformation and the Forum, to area where we can begin to very gently, get the organization mind set around looking for organic growth opportunity.

With an overall goal of maximizing cash flow, you have one mindset. When you have another goal which says cash flow is critically important but we also now have a little bit room to start exploring and actually thinking about organic growth opportunities that is interesting and exciting mindset and you can achieve that and yet maintained the fiscal discipline.

And so I think that is yet another area of where I see organic growth. With particular respect to inorganic or sort of external growth, a strategic growth if you will, yes, I think there is a lot of opportunity in the entertainment segment but I absolutely would not rule out sports or frankly any other segment.

One of the things we started doing two weeks ago as we put a team on looking at both the internal and external strategic opportunities for the company that work is underway. And it is a little early to say more about that but certainly nothing is off the table.

You have a follow up I believe as well.

Yes, thank you, that was helpful. My follow up is on your disclosure around the softer subtrends at the RSNs, I believe this is called out in last earnings call as well so is there any additional color you can share on the drivers of this.

Is this a share shift to a distributor they doesn't carry the networks or is there a broader pay TV subscription issues in your market area. I guess any color you could provide would be great.

Well, let me start by saying I am very confident in the underlying strength of our networks and in sports and the power of the sports in our networks. And so when I look at the business, admittedly from eight weeks, when I look at it and certainly our people here are very confident about it as well.

With particular respect to the subscribes as you might imagine that we had look at it knowing that it would be my first earnings call, I want to think that it was interesting is that if you just look at our affiliates subscribers over the last 12 months there has been no material change in subs of those affiliate that we do business with. So you might be (inaudible) then how does we have a very modest, by the way a very modest subscribe loss, and we believe that is largely a result of new tearing but when you step back from the new tearing we know also that our affiliate revenue grew sharply in the quarter.

We are very confident in the structure of our business in the market place. And we think that we have a number of protections in regards to that going forward.

And we will continue to seek and develop more as we go through affiliate agreement. So that is an area that we are very focused on.

We are not concerned about it and we are very much excited about the future overall of our networks and sports bundle that we have.

Thank you. Two questions if I may.

The first is the follow up on capital allocation. So I guess aside from any specific opportunities may be it would help if you could share some of your thoughts and your philosophy behind M&A, the kind of strategic or financial threshold or framework you bring, when you are considering M&A opportunity?

You me generically?

Yes.

Sure. I think with M&A generally you want to look at whether it is first and independently of anything we might bring an attractive business, doesn't have robust return, doesn't have a strong competitive position, is the market large attractive and growing.

Do we anticipate by the regulatory consumer demand or technological discontinuities to somehow impair the business going forward? And if we conclude it the end of that, that it is an attractive business, we then want to look at whether we are the classic natural owners of it.

Is there some set of capabilities, competencies skill where we can enhance the value of the business with us and then from that would that economic rent that we create exceed our cost of capital and then can we have some acquisition that is a reasonable deal that we have overall and return investment that it saves our cost of capital for the shareholders. That's the general framework we intend to use.

And I would say beyond that there is really not much else to say.

That is pretty comprehensive, thank you. And then just a second question following on the Fuse side.

First, can you help just size the impact your results when you pull that business out of your financial and then may be a little more broadly thinking back to the strategy at the time of thing, Fuse was really considered to be strategic asset that link your live entertainment cable network businesses so I was wondering if you could talk about how the company's view on that, may be your thought that led to the sale.

Hi, this is Bob. Let me give you a little bit landscape of what you are going to be seeing with Fuse.

So first thing that you should be aware of the fact for variety of reasons Fuse does not quality for discontinued operations accounting and so a prior period when you look on, to be looking at our financials will not recast to reflect the result excluding Fuse, and going forward Fuse will simply at the conclusion of the transaction just not be reflected in our financial results. And of course we expect that to occur within the first quarter of 2015.

So thinking about the economics, we are thrilled with what we are able to accomplish with Fuse and as you know we have a sale in place, but when we look at the financial results prospectively you will not see any material impact on AOCF on a total company basis as a result of Fuse.

With particular respect to the strategy part of your question. I would say it is important to see when you look at Fuse, we built a really phenomenal asset in the distribution of Fuse and to a great extent that asset has -- was apparent from the sale had a substantial value to other party.

And when we looked at the landscape we thought it made the more sense for our shareholders and the future prospects of Fuse to give that asset to another entity that could take better advantage of the distribution we have created than we could and yet at the same time retain a minority stake so we secondly have auction value on the future growth for our shareholders to be created there. And we think that made the more sense.

And we are very excited about it.

And did you retain any efforts on editors to put content that generated by your live entertainment business on that network, kind of acting as a producer?

Well, we can't product content for anyone. Not necessarily just you.

Yes, hey, guys. I have a number of questions.

First of all, Bob, the $9.5 million increase related to the new large scale theatrical production, I assume its heart and light [Ph] .and is the $9.5 million, is that an acceleration of the amortization schedule? Did you take any impairment charge or is the $9.5 million something else and then I have a follow up.

There was no impairment charge on hearts and light [ph] investment.

Okay and then I think one of the reasons the stock taking a hit here is because of just this MSG Sports line. It just seems like every single year there is really very little follow through AOCF, I just think the way you guys -- just seems like with the Knicks, cost going up, I am not just talking about payroll but just cost in general, operating cost to run the team just keeping going up all the time.

And the story with the sports line with that you had the Garden in place, concession are firing, suite revenue is working, everything sold out and is just that there is never any follow through on that line vis-à-vis margin expansion. I am wondering if you can speak to that.

Listen with particular respect to our sports team, they have a tremendous strategic position, there is enormous rent accruing to our shareholders from them, you can see it throughout the organization. As far as the other points you have I mean they weren’t really question other than to say I hear you and I understand what you are saying.

Okay and then related to that Tad, if you could just speak to the overall strategic rationale of the Azoff MSG joint venture, I think I get it, I get the symbiosis there, I get the synergy is there but for the shareholders that are on this call I think they look at that as kind of a sort of murky deal that isn't talked about very much, so we may be could just kind of highlight the strategic rationale of that deal and how that fits into your portfolio. I would really appreciate it.

Thanks very much.

Sure, well, I have actually spent a great deal of time with Irving in my first eight weeks. And let me tell you I am very excited about the venture strategically for us for a number of reasons.

The venture as you know and Irving has a tremendous opportunity and deep relationship with talent and also frankly a lot of experience in businesses in and around the ones we operate including the one we operate. So from my perspective someone like that in an entrepreneurial way can see potentially disruptive, value creating opportunities in the businesses that we play in.

And by the way we have vehicle where he can pursue them in ways that create substantial value for our shareholders. And that's for my perspective is very exciting and has the potential to be significant breakout growth in the future and also value creation in the future.

It doesn't mean necessarily that every single quarter we will have something to talk about Irving. But it also doesn't mean necessarily that our Azoff venture is doing anything other than creating great value for our shareholders and I am very optimistic about it.

Thanks. I have two questions.

Tad, first you talked a lot about external growth. But do you feel like any parts of your own portfolio is under monetizing anyway, I think you mentioned sponsoring in advertising.

And part of the business where -- will you focus on accelerating the growth organically over the next few quarters? And my second question is on heart and light [ph] can you just quantify the near-term financial impact given the postponement and what other investments are needed?

Thanks.

I want that Bob you take the second part of the question first on heart and light [ph]

I am not yet sure I understood the question on heart and light [ph]

Sure. Can you just talk about I guess the financial impact given the postponement and how much more investments are needed as we think about it being pushed out into 2015?

Well, the financial impact was reflected in the quarter that is $9.5 million that we spoke to. And I don't think we can yet speak to what we are going to tweak the show that's a project that is currently underway, I am positive that it will have some more investments in it but as Tad said it is tweaking around what we have already created.

Yes, I am sorry if I let you the impression that somehow I was not enthusiastically in favor of organic growth across each of our businesses. So let me just say, of course, yes, I am.

And what I meant to say earlier was that it should come from several different areas. First, a general mindset change, gentle mindset change from maximizing cash flow to seeking and taking advantage of organic growth opportunities throughout the organization in each and every business unit.

And that's an important thing when management begins to focus on that good things start to happen. And secondly I think concurrent with that each of the businesses and I mean each of the division and the businesses within them can begin to think about a portfolio of innovation meaning when you start thinking about organic growth you think about okay, I know what I can do to achieve growth this year.

What I am going to have to do for next year. You begin to thinking ahead about how you build innovation after innovation after innovation.

And by the way technology I think I mentioned earlier had application to grow our revenue in every single one of our businesses, data and analytics has opportunities to improve our reach with customers, our understanding with the customers needs, our pricing for customers in every single one of our businesses, we have at the moment underway a team that is looking at not just pricing but finding new inventory where we can expand our sponsorship revenue, finding new opportunities to get revenue and ad sales area in places other than just the gain, how do we think about extending our revenue reach and growth in areas that are on shoulder period of the game, every single element of this all the way through, not to mention, in the entertainment area, how do we think about targeting our marketing more effectively, how do we think about understanding what the price point is, how do we think about dynamic pricing of tickets, every single bit of this is to me is an area and in sports today, again the same opportunities here lie how do we think about exactly marketing more effectively, how do we add -- still up, call it -- or fill up the arena wins, Liberty is there, how do we think about positioning differently, how do we think about making sure that we provide the most value ad that we can and create differentiated experience for the Knicks, how do we think about making sure that every single suite is priced correctly for the Rangers. Every single one of these will going to be tackling and we already are.

Thank you, good morning. Tad, welcome to the community.

So two questions. One about CapEx remaining on the transformation project if I may.

And the other one I will ask right away. So the sports segment has never been easy to model.

Now we have more changes going on there so if you guys could give us talk at least about puts and takes in terms of cost and revenue over the next couple of years, what's going to happen with the management changes have been so on. Anything that we could think of in terms of estimating cost and revenue that would be great.

Thank you.

Well, let me just say the sports segment is a premier segment not just at our company, not just in the nation but really in the world. It is an enviable asset with great businesses asset.

We love it. And I don't know what else to say and it has bright future.

Bob, you want to comment on the specific question he asked about the --

Sure, so the two pieces. As I said before that with respect to the transformation we still have an expectation of our cost not to exceed $1.050 billion, through March 31, we incurred approximately $1.028 billion, and of the $1.028 billion we paid actually in cash $991 million, so then with respect to the Forum, our expectation is that the total acquisition and renovation cost are approximately $120 million net of certain tax credit and loan forgiveness.

Through March 31, with respect to the acquisition, renovation cost incurred is about $117 million, of which approximately $95 million has been paid in cash. And that $95 million in inclusive of the acquisition cost, the cost to renovate, les the impact of the historic tax credit and the loan.

That's where we stand right now.

Well, let me take the first part of your question. I don't have comment on any particular competitor.

But what I will say and you might find it interesting is that we did an analysis from November 1 of the most so the 2013 to the end of April, 2014, the one just completed. Based upon publicly available data and we included in that all of the major arenas in the New York City DMA and we looked at based -- again on the publicly available data how many concert night were there and what, how many of them went for the arena versus the rest of the crowd.

We also compare that to a five year picture before the transformation and the result to me were very interesting. The first insight we had is this between November 1 of last year and the end of the April this year, the number of concern night at the arena, a, went up but b, and perhaps more interestingly to some of you on the call that there was no material market share change in those concert night at the arena during that period in question.

Hi, good morning and thanks for taking my question. And Tad, welcome.

So just sort of two questions. One for Tad and one for Bob.

So, Tad, you talked about technology and getting to know the customer better and everything like that. Do you see a world where over time you just disaggregate some of your intermediaries, like eventually you do ticketing yourself, you have big two ticketing venues, you want to know the customer better, you disaggregate the intermediary, and the same thing on the broadcast side that you feel there is room even working with an MSOs for some kind of direct to consumer kind of offering.

I love those questions. I am tempted to say something but I am just mindful, I am only been here eight weeks and I love the question so and they are very intriguing, so ask me again on subsequent call.

Okay.

I know it is a great question. And if I have been here a year and half and really have sort of a robust, look because the key answers to those questions is all about data and how the entry barriers are changing and how the things are intermediating, and they are great question, it is just a little early for me on the call.

Okay, that's fair enough. And then I think Bob just for you.

I want to understand little better the $9.5 million sort not charge if you will or cost around hearts and lights [ph].I am kind of curious given the show didn't really open I think at best in previews, why you want to able to sort of keep capitalizing and everything other than marketing expenses and so the way you that you are doing film accounting where you sort of capitalizing everything other than marketing and so to keep capitalizing that until the show actually opens or is that sort of the size of the show is going to be some different enough and what it started off being if you had to sort of make these adjustments.

Well, it's actually, Tad. I will answer that one for you.

Bob is right here all of it -- but you actually answered your own question in part with your question. And what I mean by that is some of the expenses were not able to be capitalized according to generally accepted accounting principle and you mentioned one marketing and some other operating cost.

So let me just speak to heart and light [ph] for a minute. Heart and lights, and frankly the spring show for us is not only something that is critically important for our strategy, it is something and it is hard to sort of convey that when we are talking about the postponement.

It is something that's deeply exciting to all of us for the company. And what I mean by that is this, what happens with heart and light we were very excited about it, their marketing was beginning to fill, and we saw the first run through about two weeks before the show was scheduled to open.

By the way you might ask why we wait so late, the first run through was this contingent upon fantastic, marvelous set, we had a lot of things coming together and so we pulled it out altogether for the first run through, every time the Rockettes went up, our heart soared, the set was fantastic and amazing and the technology was dazzling. However, the narrative just didn't -- when you put it all together narrative just wasn't as good and an experience as our customers who come to expect.

And so we made the decision because this is not like opening a Broadway show or opening movie where you do a run and then you close down and you move one. This is something that we anticipate being a perennial asset that our shareholders are excited about and there are customers are thrilled to attend every year, year after year.

And so we made -- we would have love by the way to have simply opened it later. That was an option except as I mentioned earlier in the call that we are thrilled to have the NFL draft, this coming week inside Radio City, so we simply ran out of time.

It has been postponed. And then we said, okay, well let's look at the rest of the summer, was there another option, in fact, well to our shareholders like Radio City is booked for the rest of the year.

So we said we really had to make a decision and the decision was rather open up something where we know the Rockettes are fantastic, the set is dazzling, the technology is great, everything about is excites us. But the narrative just isn't quite right, let's postpone.

And that's what happens.

Thanks, good morning, guys. Tad, I am trying to reconcile your comments about maximizing shareholder value with the fact that you are guys aren't using any debt financing right now in a period of pretty much historic low interest rate, seems to be that even conservatively about a billion dollar of capacity there.

So I guess my questions are pretty specific. One, are you philosophically opposed to using debt financing?

Two, do you think that your businesses don't lend themselves to debt financing or using that-- using debt financing or three, you talked about investing in the business and I think that most of us are comfortable or supportive but if you call billion dollar of capacity, do you see a billion dollars worth of investment opportunities out there that would preclude you from or maybe give you the opportunity later on to use your balance sheet. Thanks.

Well, I am going to ignore the third part of your question if you don't mind. Let me address the first two.

In short I would say this, whether and how a company -- well the precise optimal capital structure of a company, the weighted average cost to capital, the exact mix, both in the gearing of the business and what it can do in the cycle, the predictability of the revenue, the predictability of the cash flow, all of those things combined with the relative level of leverage it can support is a very, very important conversation for any management and board to consider. And we do that here.

So it is not as if we have any sort of you or we don't understand optimal capital structure, we don't understand weighted average cost to capital, we don't understand either. We understand all of that fully well here.

What I think I said and what we really mean is that for the time being and for the time being only we are focused on building the assets value and long-term value of our company. And should that change we will certainly let you know.

By the way may be interesting for you to hear that as you know our chief financial officer Bob Pollichino has announced his retirement, so as you might imagine I am interviewing a lot of CFO candidate. And when I ask them this question, what is your view on capital allocation, to a person, they all say something important that resonate with me and frankly resonate with our company which is the most important thing to focus on first is what is the strategy and what are the growth opportunities for the company looking forward and the you look at the sources and uses of cash and how to apply thereafter.

And that's exactly what we are doing and that's exactly what should refer from my comments.

Okay, all right and then just operationally, we are seeing the start of some consolidation of distributors, obviously, Time Warner Cable and Comcast are both customers of your -- you work with both of them, does their consolidation impact you in the near-term with respect to your affiliate fees and affiliate fee potential and how do you think about the longer term opportunity or risk given some potential for more consolidation in Pay TV space?

In the near term, no, we have contract that our contracts that give us some comfort. And long term obviously I go back to what I said about the underlying strength of our sports assets and also the strengths of our network.

We believe that our networks have a real must have value and we are very confident that that will be sustained in the future. Secondly, I would say that if you look at the composition of the New York DMA it tends to be highly fragmented among the various MVPDs and moreover it is not obvious us to us that Comcast /Time Warner combination would materially change that.

So we think our future is very bright.

Thanks for joining us. We look forward to speaking with you on yearend call, August.

Have a good day.