Media Analyst Sees 'Phil Factor' as Positive for MSG

AP Photo/Richard Drew
Phil Jackson

Don't discount the value of more hot dogs sold and a bidding war between Sean Combs and his ex-girlfriend for Fuse.

David Joyce, an analyst at ISI Media, is reiterating his "buy" rating on the stock of the Madison Square Garden Company after former Los Angeles Lakers coach Phil Jackson was hired to be the president of the New York Knicks.

Suffering Knicks fans will hope Jackson can sway star Carmelo Anthony to re-up with the team after the season. Meanwhile, Joyce is upping his average attendance estimate from 95 percent to 96 percent and forecasting a five percent growth in food and beverage and retail revenue. Previously, Joyce had estimated just a three percent growth for next year.

Of course, Jackson is making a terrific salary (possibly $12 million a year, says Joyce) and thanks to the woeful season by MSG's showcase basketball team, MSG executive chairman James Dolan has announced there will be no ticket price increases next season. Joyce previously assumed a 6.5 percent bump in ticket costs.

STORY: Irving Azoff Gets a Big Assist in Bringing Phil Jackson to Knicks

The analyst has adjusted operating cash flow for MSG to be $12 million from the previous $29 million forecast.

But there are other reasons why the hiring of 11-time NBA champion Jackson potentially represents a positive over the long term. Perhaps most significantly are the TV ratings for MSG and MSG+. Joyce believes advertising growth will be 9.8 percent next year, up from his previous estimates of 5 percent. The analyst also is an optimist when it comes to what he calls "greater playoff season possibilities." (He doesn't mention J.R. Smith.)

Jackson might be capturing the headlines in New York, but Sean "Diddy" Combs is not far from the analyst's mind either.

MSG is said to be entertaining bids for cable music channel Fuse, and the analyst likes what he's hearing about media reports that Combs is interested in bidding $200 million.

"Making the process more interesting is that his former girlfriend Jennifer Lopez, who is now chief creative officer of NuvoTV, also is interested in bidding $200M, also to help gain immediate, wider distribution for that new network," Joyce writes.

Could there be a bidding war?

Joyce says he has a “blue-sky” scenario where 10 million subscribers are added to Fuse's current subscriber base of 75 million, affiliate fees triple to a 19 cent-per-sub-per-month, advertising quadruples and so forth. Eventually, he gets to a $465 million valuation.

Twitter: @eriqgardner