The Knicks' losses this season are "piling up off the court," according to Claire Atkinson of the N.Y. POST. Albert Fried & Co. Dir of Research Rich Tullo, in a note to clients, wrote that MSG Media, which owns the team, is "expected to see operating profit decline" by $7.2M this season "due to lower ad revenue on MSG Network -- thanks to an 11 percent decline in ratings." Tullo: “(W)e think MSG takes a revenue hit on poor Knicks play.” He "estimates that MSG will lose" $6M in ad revenue in the three months ending Dec. 31, dropping to $188M, plus another $6M in the following quarter. Tullo noted with MSG Media operating at a 60% profit margin, the "lost revenue translated" into $7.2M in "lost operating profit." Tullo added that a "weak scatter ad market -- and the Garden’s policy of not pre-selling ads at the beginning of the season but rather closer to when games are played -- adds to the slide." Atkinson wrote the "expected lower ad revenue could be mitigated" by a successful season for the NHL Rangers (N.Y. POST, 12/20). Tullo wrote of the Knicks' decrease in TV audience compared to the beginning of last season, "Following more than 20 games highlighted by creative destruction, we think the sample set is large enough to determine lower estimates." But Tullo wrote MSG is "insulated somewhat from a bad season in that only 30 percent of revenues from the MSG Network come from advertising, while the rest is made up of affiliate fees that are locked in" (ESPN.com, 12/19).
