MSG Networks and its Wall Street lenders have agreed to extend through January their negotiations on $829 million debt initially due to have been paid off in October.
MSG Networks, a division of Sphere Entertainment, and its bond holders extended the forbearance period until midnight of Jan. 31. Originally the term loan of $829.1 million came due in mid-October, but Sphere and its lenders agreed to extend the negotiation window into December and then again through Jan. 10. The new agreement, disclosed in a regulatory filing Friday evening, gives the parties more time to work out a resolution.
A regional sports network whose content includes all four New York and New Jersey NHL teams as well as the NBA’s Knicks, MSG Networks is under financial pressure from the large term loan being due as well as losing carriage at the end of 2024 by Optimum, a large New York metro region cable system owned by Altice USA.
Like every other RSN, MSGN is navigating an environment where the steady fees paid by cable systems are declining as consumers stop paying for cable and opt to stream instead.
The fate of the MSG debt is of keen interest to investors in Sphere, best known for operating the iconic Las Vegas theater of the same name. Wall Street analysts feel Sphere would benefit from convincing debt holders to take less money than the $829 million face value, or putting MSG Networks in Chapter 11 bankruptcy reorganization, which effectively gives the company to its creditors. A similar situation played out over the past two years when Sinclair Inc. put its RSN business, Diamond Sports Network, into Chapter 11, removing that business’ $8.6 billion in debt from its books. As with Sinclair, the RSN’s debt is owed solely by the MSG arm—creditors can’t make a claim on Sphere, even though it is the corporate parent.
Friday’s filing on the extended forbearance notes that MSG Networks has $4.1 million in interest payments to make on the outstanding balance. MSG hasn’t missed paying interest on its loan despite the negotiations on the fate of the loan principal.
