Ari Danes - Vice President of Investor Relations Hank J. Ratner - Chief Executive Officer and President Robert M. Pollichino - Chief Financial Officer and Executive Vice President Ryan O'Hara - President of Content, Distribution & Sales Melissa Miller Ormond - President and Chief Operating Officer Dave Howard - President of MSG Sports.

Benjamin Swinburne - Morgan Stanley, Research Division Bryan Goldberg - BofA Merrill Lynch, Research Division Michael Senno - Crédit Suisse AG, Research Division Benjamin E.

Mogil - Stifel, Nicolaus & Co., Inc., Research Division Amy Yong - Macquarie Research Vasily Karasyov - Sterne Agee & Leach Inc., Research Division David Carl Joyce - ISI Group Inc., Research Division Michael C. Morris - Guggenheim Securities, LLC, Research Division David W. Miller - Topeka Capital Markets Inc., Research Division.

Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to The Madison Square Garden Company Fiscal 2014 Second Quarter Earnings Conference Call.

[Operator Instructions] I would now like to turn the call over to Ari Danes, Vice President of Investor Relations for The Madison Square Garden Company. Please go ahead, sir..

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 Hank Ratner, President and CEO of The Madison Square Garden Company..

artists and promoters, music fans, VIP customers and marketing partners. We are very pleased with the response to the newly reopened venue and look forward to the Forum's continued success, as we leverage our extensive industry relationships and expertise to create a thriving destination for both artists and music fans.

And with the completion of the 2 significant projects, we now own world-class venues in both New York and Los Angeles, linking the top 2 entertainment markets in the country and expanding our position as one of the country's premier live entertainment companies.

Looking ahead, we remain focus on maximizing growth for our existing asset portfolio, while pursuing additional investment opportunities to drive continued value creation over the long term. In addition, no decisions have been made as of yet with respect to our overall capital structure and other potential uses of cash, including a return of capital.

Turning to our MSG Media segment. Media results this quarter reflected the return to normalized revenues and expenses as compared to last year's second quarter which was impacted by the NHL work stoppage.

With respect to MSG Networks, we remain focused on providing the best coverage and in-game telecast in the industry, as for the first time in 3 years, we bring local sports fans all regular seasons of the New York Knicks, Rangers, as well as Islanders, Devils and Buffalo Sabres.

Meanwhile, at Fuse, we continue to execute against our strategy for the network by remaining focused on delivering outstanding programming that targets a highly desirable demographic. As we have previously stated, we are exploring strategic alternatives for Fuse, and we'll have no further comment on this ongoing process during this call.

With respect to MSG Entertainment. The Radio City Christmas Spectacular remains the #1 family holiday show in the country and a key franchise for our company.

This past holiday season, over 1 million tickets were sold for the production in New York, a mid-single-digit percentage increase as compared to last year, while we also saw an overall increase in number of tickets sold in The Theater markets outside of New York.

The bookings side of our entertainment business performed well during the quarter, as our portfolio of venues continue to play host to some of the world's most popular artists and events.

We are now looking forward to the debut of Heart and Lights, our new large-scale theatrical production starring the Rockettes, which begins its limited engagement at Radio City Music Hall in late March. Turning to MSG Sports.

Our sports segment saw improved AOCF results this quarter, reflecting the return of the Rangers to a full regular season schedule, as well as the ongoing benefits of the Transformation. As you know, we are now more than halfway through the NBA and NHL 2013, '14 regular seasons.

The Rangers have had 13 wins over the last 19 games, including wins in both sold-out Yankee Stadium games, as part of the NHL Stadium Series.

Rangers have surged to second place in the Metropolitan Division, as tonight marks their last game before the team goes on break, during which 7 of our players, Eric Lundqvist, Ryan Callahan, Rick Nash, Ryan McDonagh, Derek Stepan, Carl Hagelin and Mats Zuccarello will participate in the Sochi Winter Olympic Games.

Meanwhile, the Knicks, led by Carmelo Anthony, who was named Eastern Conference player of the month of January and who was voted by fans as a starter for the NBA's February 16th All-Star Game, had won 10 out of 19 games since the start of the new year.

We look forward to an exciting second half of the regular season for both teams and believe the Knicks and Rangers are positioned for ongoing success.

Before I turn the call over to Bob Pollichino, I want to take a moment to mention that we announced in early January that after more than 35 years at MSG and its affiliates, Bob will retire as the Executive Vice President and Chief Financial Officer in late 2014.

Until then, Bob will continue with the company while assisting with the search for his successor which the company has commenced. After his retirement, Bob will continue to advise MSG as a consultant for 12 months. As most of you already know, Bob has helped guide the company during a period of unprecedented change in growth.

This includes playing a critical role in key initiatives, such as our spinoff from Cablevision in 2010 and our historic Transformation of Madison Square Garden.

On behalf of the entire company, I'd like to thank Bob for being my friend for 30 years, as well as for many years of service, and I am pleased that he'd be helping us through this transition period. With that, I turn the call over to Bob..

Thank you, Hank, for the kind words. As Hank stated, we generated solid increases in revenues and AOCF in our second quarter, with total company revenues of $509.4 million, up 31%, and consolidated AOCF of $126.6 million, up 17%, both versus the prior year second quarter.

In terms of our business segment results as compared to the prior year second quarter, MSG Media generated $180.7 million in revenues, an increase of $23.9 million or 15%.

Affiliate fee revenue increased $22.2 million, primarily due to the return to a full NHL regular season schedule, and to a lesser extent, higher affiliation rates with an increase in Fuse subscribers and a small decrease in MSG network subscribers versus the prior year quarter.

Advertising revenue increased $5.9 million, primarily due to the return to a full NHL regular season schedule, partially offset by other net advertising revenue decreases. Other revenues decreased $4.2 million, primarily due to the expected expiration in April 2013 of a short-term programming licensing agreement.

Second quarter AOCF of $85.8 million decreased 10%, primarily due to an increase in direct operating expenses, largely offset by the increase in revenues and to a lesser extent, by a decrease in SG&A expenses.

The increase in direct operating expenses primarily reflects normalized levels of production costs and rights fee expenses due to the return to a full NHL regular season schedule.

In our fiscal third quarter, we expect MSG Media AOCF will also reflect the impact of normalized levels of revenues and expenses due to the return to a full NHL regular season schedule. Our MSG Entertainment segment generated $163.1 million in revenues, an increase of 8%.

The increase was primarily due to higher revenues for the Radio City Christmas Spectacular franchise, higher event-related revenues at the Beacon Theatre and The Theater at Madison Square Garden, as well as higher venue-related sponsorship and signage and suite rental fee revenues, which include the continued positive impact of the Transformation.

The increase in revenues for the Radio City Christmas Spectacular franchise was primarily due to an increase in attendance at the Radio City Music Hall production and an increase in both the average ticket price and attendance at the productions outside of New York, partially offset by a lower average ticket price at the Radio City Music Hall production.

Second quarter AOCF of $42.3 million increased 41%, primarily due to the increase in revenues and to a lesser extent, a decrease in direct operating expenses, partially offset by an increase in SG&A expenses.

As a reminder, direct operating expenses in the prior year second quarter included a $5 million impairment charge related to a production of the Radio City Christmas Spectacular outside of New York.

With respect to MSG Entertainment's fiscal third quarter, results will include the impact of the Forum inclusive of marketing expenses associated with the launch of the venue, as well as the beginning of the limited engagement run of Heart and Lights.

In addition, since Heart and Lights will be utilizing the majority of the available days at Radio City for loading and rehearsals until the show's March 27 debut, the booking availability of the hall is very limited this quarter. Our MSG Sports segment generated $183.4 million in revenues in the second quarter, an increase of 104%.

The increase in total segment revenues was primarily attributable to the return of the Rangers to a full regular season schedule. In addition, segment revenues were positively impacted by the continued benefits of the Transformation project.

On an overall basis, the increase in revenues was primarily due to higher professional sports team ticket-related revenue, suite rental fee revenue, food, beverage and merchandise sales, sponsorship and signage revenues, intersegment broadcast rights fees and revenues from league distribution.

Second quarter AOCF of $1.1 million improved by $15.6 million, mainly due to the increase in revenues largely offset by higher direct operating expenses, primarily a result of the return to a full Rangers regular season schedule, and to a lesser extent, higher SG&A expenses.

On an overall basis, the increase in direct operating expenses was primarily due to higher team personnel compensation expenses, net provision for NBA luxury tax and NBA and NHL revenue sharing expense, as well as higher other team operating expenses.

With respect to the Transformation, construction costs incurred during our second quarter were approximately $37 million, while project-to-date costs incurred through December 31 were approximately $1,025,000,000. As we close out this historic project, we continue to expect total Transformation-related construction costs not to exceed $1,050,000,000.

With regard to the Forum, we are very pleased with the dramatic improvements we were able to make, including various changes and additional enhancements that we believe will give the Forum an even greater competitive advantage.

As a result, we now expect total acquisition and renovation costs of the Forum to be approximately $120 million net of certain tax credits and expected loan forgiveness.

We are fortunate that for this level of investment, we now have a state-of-the-art, world-class music and entertainment arena in one of the top 2 entertainment markets in the country. As of December 31, total net cash and cash equivalents was $154.5 million.

In addition, our $375 million revolver remained undrawn, with our borrowing availability unchanged at $368 million as there remains $7 million in letters of credit outstanding. I will now turn the call over to Ryan O'Hara to provide highlights from our MSG Media segment..

Warped Roadies, which follows the crew charged with keeping the Vans Warped Tour running; and Insane Clown Posse Theater, which features the duo, Insane Clown Posse, providing their unique views on music and pop culture. And later that same month, Fuse kicked off the holidays with the exclusive U.S.

television premier of All 17 from Beyoncé's chart-topping self-titled visual album. Meanwhile, in January, Fuse News welcomed a brand news anchor, Georgie Okell, who helped build on the show's commitment, delivering credible, informed news on the world of music.

We are looking forward to March to the return of Funny or Die's Billy on the Street, our unique music and pop culture quiz show, starring daytime Emmy nominee, Billy Eichner.

The critically acclaimed show continues to attract A-list celebrities and for the new season, will include appearances by Lena Dunham, Neil Patrick Harris, Sean Hayes, Lindsay Lohan, Seth Meyers, Amy Poehler, Paul Rudd and Olivia Wilde. Turning to company-wide marketing partnerships.

We continue to have great success in attracting world-class brands and recently formed an important marketing partnership with UPS. As part of a multiyear deal, UPS has been named the official shipping and logistics partner of Madison Square Garden, the Knicks, Rangers, Liberty, concerts and college basketball.

This partnership is yet another excellent example of the value and unmatched integration opportunities we offer for world-class brands across our portfolio of media, sports and entertainment assets. And we continue to pursue additional partnerships with brands that share our commitment to excellence.

I will now turn the call over to Melissa Ormond to provide highlights from our MSG Entertainment segment..

multi-night performances at The Garden by Justin Timberlake; Paul Simon and Sting; and the Westminster Kennel Club Dog Show.

We have Robin Thicke; Ellie Goulding, for 2 sold-out shows, and family favorite; Sesame Street Live for a multi-show run at The Theater at Madison Square Garden; the Allman Brothers Band annual residency for 14 sold-out shows at the Beacon; and comedian Chelsea Handler, playing 2 shows each at The Theater at Madison Square Garden, The Chicago Theatre and the Wang Theatre.

I will now turn the call over to Dave Howard to provide highlights from our MSG Sports segment..

first, individual club lounge seats with in-seat beverage service, which are part of our season ticket inventory and are fully sold-out; and 6 new lounges, with each offering 700 square feet of exclusive hospitality space for up to 42 guests with direct views into the arena bowl.

The lounges, which are the perfect product for large social gatherings and parties, are a brand-new offering that allow us to target a new segment of the market. And we are pleased to report that the market response to this new product has been exceptional.

Meanwhile, MSG Sports continue to host a variety of memorable sporting events in our fiscal second quarter. At The Garden, this included a college basketball lineup, featuring some of the sports biggest names, Duke, Syracuse and Arizona, along with the annual college tournaments of Jimmy V Classic and the Gotham Classic.

Red Hot Hockey, the sold-out matchup between longtime college hockey rivals, Cornell and Boston University, and the WWE, which once again drew near-capacity crowds.

Meanwhile, The Theater at Madison Square Garden played host to a night of championship boxing, as one of the world's most exciting fighters, Gennady Golovkin, successfully defended his WBA and IBO middleweight world titles against world-ranked contender Curtis Stevens.

Just last month, we also welcomed the professional bull riders for 3 consecutive nights. Rivalry on Ice, a 100-year college hockey rivalry between Harvard and Yale, and for the first time, Nitro Circus Live, a thrilling action sports event.

While at The Theater at Madison Square Garden, we hosted undefeated WBO junior lightweight champion Mikey Garcia, as he successfully defended his title against Juan Carlos Burgos.

Upcoming sporting events include the BNP Paribas Showdown for the seventh consecutive year featuring Olympic gold medalist and 2013 Wimbledon champion Andy Murray versus 6-time Grand Slam champion, Novak Djokovic. And of course, college basketball is an addition to our regular season lineup.

It will include the BIG EAST tournament, which returns to The Garden for its 32nd consecutive year. This will be followed in March by the East regional finals of the NCAA Division I Men's Basketball Championship, which returns to MSG and New York City for the first time in more than 50 years. I will now turn the call back over to Ari..

Thanks, Dave.

Christie, can we open the call for questions?.

[Operator Instructions] And your first question comes from Ben Swinburne of Morgan Stanley..

I have 2 questions on the strength in the sports revenue, which, obviously, was up a lot year-over-year.

Can you just help us think about the Rangers' games benefit versus the final phase of the Transformation? Just trying to get a sense for how much of this last phase drove the increase, and you said it was primarily Rangers, but any more color given the dollars here are pretty large.

And then on the MSG Network front, maybe for Ryan on the advertising side. Just wondering if there's anything you could add to the ad trends in the quarter, a little lighter than we thought. I know you mentioned MSG subscribers were down a bit, so maybe that's the explanation. Just some color there would be helpful..

So let me try to help think through the Transformation impact in the quarter. So if you think about the Transformation, the positive impact from the Transformation was primarily concentrated in our sports segment, but there was a smaller benefit in our MSG Entertainment segment.

So for example, MSG Sports suite rental revenue, rental fee revenue, increased about $12 million this quarter. So that increase was due both to the return of the Rangers to a full NHL season and the impact of the Madison level suites which were unavailable for a portion of the prior second year quarter.

And then if you think about it, in addition, the professional sports team ticket-related revenue increased $46 million. This is primarily due to the return of the Rangers. A small portion of that was an increase related to the impact of higher seating capacity this season, as we're now back to seating capacity of our pre-Transformation levels.

Sponsorship and signage revenues increased about $9 million. That was primarily due to the Rangers' return and to a lesser extent, the impact of the Transformation. And then if you think about the entertainment division, you'll see that venue-related sponsorship and signage and suite rental fee revenues increased about $2 million.

And this includes the positive impact of the Transformation. So it's kind of the color on the Transformation..

I'll take the advertising one. On MSG Networks, we saw a portfolio of wide products as you know. On the hockey front, we've been pleased with the overall advertising revenues to date, and we see a nice momentum there.

While on the Knicks side, we had -- advertising revenues were impacted by ratings performance, but going forward, we think we have a very unique position. Live marquee content is only getting more valuable to advertisers, DVR proof, and the demand is obviously good for that type of product. So that's where we sit on that..

Any color on the subscriber declines at MSG? What might have drove that? Or color there?.

Sure. Yes. As we talked about, Fuse subscribers were up, while we saw a small subscriber decrease at MSG Networks. The net of which was not material to affiliation fee revenue this quarter. The small decrease at MSG Networks occurred in the recent months, while the increase at Fuse was primarily due to Fuse being added back to DISH.

So we continue to review it. We believe it's premature to comment definitively on it one way or the other. That being said, we remain more than comfortable on our ability to derive continued affiliation fee revenue growth going forward.

And similar to the advertising answer, the demand for live content and particularly, pro-live content, has never been stronger. So we think that value continues to rise. I think you're seeing that in the marketplace. And in addition, this marquee concept like ours is a real differentiator for our partners and affiliates and advertisers, actually.

So we feel good about our condition -- our business..

Your next question comes from Bryan Goldberg of Bank of America, Merrill Lynch..

Just 2 ones on entertainment. You -- with respect to Heart and Lights, you talked about building a brand for the show can be successful for years to come.

So I guess, from an attendance or an ROI standpoint, what level of performance do we need to see to declare the first 59 shows a success? And then secondly, with respect to the Forum, there were some recent press in the last few weeks indicating interest in your part in acquiring, like, a parking lot or a piece of land adjacent to the arena.

And I'm not asking for a comment, specifically, on that.

But are there additional development opportunities for MSG in the areas immediately surrounding the Forum? Or how should we think about that?.

Okay. So I'll take Heart and Lights first. We're very excited about this show which features a lot of great technology. And any show that's about New York, we feel like will drive a lot of success.

And being able to showcase the Rockettes in all-new ways is a great opportunity for that brand, as well as the Heart and Lights brand, as well as Christmas Spectacular.

There are a lot of factors that will contribute to success for Heart and Lights, including, but certainly not limited to, awareness of the show and of the brand, word of mouth, press reviews, excitement, certainly attendance and per cap are elements of that. And we're excited that the show appeals to New Yorkers, as well as tourists.

So we feel like we have a broad audience base that we will appeal to. With regard to the Forum question on development, there -- we always evaluate every opportunity that's presented to us, that's certainly premature to speculate on any one thing.

We feel that the Forum is contributing to interest in development within Inglewood and upcoming development of -- I would park, is an exciting development for both the Inglewood community, as well as for the Forum. And we'll just continue to keep our options open and evaluate on a prudent basis..

Your next question comes from Michael Senno of Crédit Suisse..

Just one -- another question on the Transformation impact on the Sports segment. As you look ahead to the March quarter, it'll be the first full quarter of full operations.

Beyond that, once we see the growth come through there, do you see additional legs that will -- to the growth from the Transformation and additional benefits that can continue the revenue acceleration beyond that?.

When we look at the current fiscal year, all the impacts of the Transformation are only partially going to be seen, because we didn't reopen until the end of October and all the products and services were not available throughout the year.

So the first time we'll see the full Transformation effects throughout a fiscal year will be for fiscal year '15, the next fiscal year, given that both The Theater and The Garden will be open for the full 12 months instead of essentially about 6 months.

And all the new suites and all of the new sponsorships and all of the new clubs and food and beverage offerings and all those economics won't be kicking in for that full year. And remember, that's not only for sports, but it's also for entertainment, who lost the ability to book those buildings during that period of time.

So we look forward to the fiscal '15 year. And again, that's when the true effects of the Transformation will flow through our financials..

Okay. I just had a second question in regard to ticket pricing power. Yes, you've taken some healthy increases the last couple of years.

And just looking at team performance and more competition in the market, how do you think about the pricing power moving forward? And also, if you would maintain the stance of teams don't make the playoffs of not taking a price increase..

Well, I think our current position is we evaluate every year, and we look at all the factors every single year that relate to the attractiveness and the effects that the Transformation itself has had on our business. Obviously, the teams, their popularity, their performance, all other entertainment options surprised the economy.

I mean, there are so many factors that go into making that calculation. And of course, one of the factors is the supply and demand. And you look of the renewal rates that you did in the prior year, and our renewal rates for both teams were pretty fabulous. So again, it's an analysis that we will be doing.

We will do it each and every year, and we will try to find that right point..

Your next question comes from Ben Mogil of Stifel..

So now that The Garden is basically finished and the same thing on the Forum, can you talk about what sort of normalized CapEx looks like, going forward sort of an -- excluding any kind of new projects that you haven't announced yet?.

I'm not sure that I can give you a specific number. But obviously, in future periods, because those projects are done, the CapEx will decrease substantially. I think you just probably have to go and look at some of our historical levels of CapEx. We do have some higher, better finishes. So that will always enter into the equation.

But I think the historical levels of capital expenditures is a good guide..

Your next question comes from Amy Yong of Macquarie..

2 questions. First, can you update us on the progress you're making over at your JVs? And just help us think through the equity and loss of nonconsolidated affiliates, that line item this quarter.

And the second question is, any updates on just sort of your digital initiatives? It seems like the opportunity here could be pretty big? Streaming rights for the Knicks -- or perhaps views in YouTube?.

As far as the joint ventures, I think as we've said in the past, we don't manage the joint ventures. I guess, we're talking about Azoff, MSG and Brooklyn Bowl. And therefore, the updates relating to those businesses will come from the management teams who are running those businesses.

We can't say, though, that Brooklyn Bowl is scheduled to open in March and has a pretty strong slate of performers that are going to come perform there. So that's exciting.

As far as how the financials are going to be reported by us, Bob, can you take that one?.

Sure. So what you've seen in the release is what we recorded on our P&L this quarter, and that number is about $738 million -- $738,000. It's really just the amortization expense for intangible assets associated with those investments, and it has nothing to do with the results of operations.

We are going to be recording our share of the JVs' income, will be reported on a lagged basis. So in future periods, you'll see us report our pro rata share of income from the 2 JVs. But right now, all you're seeing is the accounting treatment of the reporting of the amortization expense for intangible assets..

And as far as your question relating to digital, digital is a tremendous opportunity for the future of this company. And as a company that controls a lot of content, the more ways that, that content can be distributed out to consumers is the more opportunity there is.

So we look at digital as it relates to our television networks and our ability to transmit. We look at mobile applications. We look at apps themselves. We look at websites and all and the ability to go and take that content and go and stream it, and fit for other purposes is very positive for us.

As well as for the other businesses, the live entertainment in the ability to go and figure out how to augment the limitations and capacity of our building, we continue to touch our customers beyond the building, and even in the building themselves, because applications that can be used in order to enhance the in-venue experience, both The Garden and the Forum are probably the most technologically advanced buildings with their superior Wi-Fi that's been in the building, offering again more opportunity to create more products and services for our customers.

So we look at digital and the opportunities that we'll create is, again, a very positive thing for our company..

Your next question comes from the Vasily Karasyov of Sterne Agee..

I was wondering if you could give us more detail on the increase in sports segment costs and which ones of those are because of the NHL situation last year and which ones are those because of the pay increases of the Knicks, the revenue sharing and so on. Just trying to get to the run rate here..

Okay. So when you look at our sports segment, direct operating expenses are going to be up around $71 million. And really, the overall increase is primarily due to the return of the Rangers to a full regular season. But to a lesser extent, if we think through the components, team personnel compensation expenses increased about $33 million.

And that was really primarily due to the return of the Rangers to a full season schedule, but to a lesser extent, higher Knicks-related compensation expenses. With respect to net provisions for NBA luxury tax and also, the NBA and NHL revenue sharing expense, that increase was about $16 million.

$9.5 million of that increase was related to the NBA luxury tax and $6.5 million was related to the increase in NBA and NHL revenue sharing expense. The increase in the NBA luxury tax was primarily due to the change in the luxury tax rate structure, which we've talked about and you could see in the Q, but to a lesser extent, higher player salaries.

So you'll have a lot more detail when you look at the 10-Q later today. Other team operating expenses increased about $13 million, and that was really primarily due to the Rangers return to a full season schedule. So hopefully, that helps..

Yes, it does. And a follow-up, if I may.

So how should we expect this cost structure to change in the next quarter? And then if I look at the second quarter next fiscal year, would we see a decelerating growth in this cost item?.

Well, we talked about a lot of cost items, so let me pick one that we know there's a trend on. So when you think about the NBA luxury tax expense, we are expecting to see a substantial increase in the NBA luxury tax expense.

And that's really due to the higher projected team compensation cost, but also, as I said before, the implementation of the NBA progressive luxury tax system. What's really happened there is that the luxury tax system moves from $1 in taxes for every $1 the team is over the luxury tax threshold to a system where luxury tax progressively increase.

The higher the luxury tax threshold, a team goes above the luxury tax threshold. We also expect to see a substantial increase in the net provisions for NBA and NHL revenue sharing expense due to our expectations for revenue growth.

So we have to share more of that because we're going to expect to be generating increased revenue, also, though the return of hockey to a full regular season schedule and our expectation is related to player/salary escrow recoveries. Those are some big pieces..

Your next question comes from David Joyce of International Strategy & Investment Group..

A couple of questions. First, I was wondering if you could provide more color on how much is left to be paid on the Transformation project. You did mention the incurred amounts. And also, on the Forum, how much is left to be paid on that? Then it seemed like there was a $20 million increase in the overall project size there.

And then I'll have another one after that..

So our expectation right now for the Transformation is not to exceed $1,050,000,000. What we've incurred to date is $1,025,000,000. And of that $1,025,000,000 we've paid in cash, $966,000,000 has been paid in cash.

When you turn over to the Forum, what we've incurred to date -- so incurred to date then, meaning, the acquisition costs, the costs of the renovation less our historic tax credit and our expectation for loan forgiveness that, on a year-to-date basis, is $103 million.

And we've paid about $78 million of that, so there's $25 million of the incurred to date left to go. And as we've discussed, our expectation for the acquisition renovation, less our certain credits and loan forgiveness, is approximately $120 million. Dave, let me just clarify. I said year-to-date on $103 million. I meant the whole project to date.

I just want to clarify that point..

Okay. And you did have some better margins than we expected both at media and entertainment. On the media front, I was just wondering if there's a different phasing of Fuse programming expenses we should think about. And on the entertainment side, is it perhaps just an operating leverage starting to show through since your revenue growth was nice..

I'll take the Fuse one. On the Fuse programming expenses, they were up year-on-year in our fiscal second quarter. And as we continue to invest in the network, we expect increased Fuse programming investment for our fiscal '14, as we said in the past..

On the entertainment side, were there any -- I know you mentioned a $5 million cost, onetime cost, a new benefit year-over-year.

But was there just anything else on the expense side that was moderating? Or is it just -- is it operating leverage showing through there?.

I don't -- I've got to think more about it. I don't think I feel prepared to answer that on the call..

Your next question comes from Michael Morris of Guggenheim Securities..

Just a bigger picture question. On your investment for growth, it seems that most of your investment and some of the things you looked to put into work in last year have been focused on the entertainment segment. Can you talk about -- and maybe a little bit in the context for the last question, as well, with the margin expansion in entertainment.

Is this the division, the segment or the type of business that you see yourself most likely investing in going forward? And can you just talk about, maybe a little more specific, about why -- what is your unique expertise with renovating these facilities? And are there scale opportunities going forward to maintain or grow that margin expansion if you're in more geographies or the more opportunities like that?.

Well, I wouldn't say it's correct to think that our focus is primarily in entertainment. We're opportunistically looking for things that make sense for our company. We're looking for things that are strategically advantaged by being associated with our company. And thus far, what we have found entertainment opportunities.

But I don't think, by any means, you should think that we are limiting ourselves to entertainment opportunities. As far as our ability to go find venues in areas that we feel are underserved, there's a lot of demand that we can help bring more supply. We restored Radio City and the Beacon Theatre.

We did the Transformation here at The Garden, and now, the reopening of the Forum.

And I think we have garnered a very unique expertise of being able to take these buildings and to just make them incredibly special and find buildings that might not be operating at the levels that they can operate and go in and go and get it done and create fabulous, fabulous businesses on a cost-effective and efficient basis.

That the scale -- we like to think of ourselves as a content company, and the more venues we have is the more content that we can associate ourselves with. And through the venues, I think there are advantages to scale, as well as just the expertise we have developed in selling tickets and selling sponsorships and the relationships with the artists.

And again, that creation of content that can play in multiple buildings.

So I do think it all fits together, as well as a little bit of technology opportunities that come together from what we are learning from, our use of Wi-Fi and other products and services that can be created and uniquely used and monetized in building that we can then go and own and control..

Christie, we have time for one last caller..

Today's final question comes from David Miller of Topeka Capital Market..

So a lot of the most obvious questions have been taken, so I'll try to stretch it a little bit. On the permit issue that you guys are currently dealing with, I know we're 9 years away before you really have to do anything at all.

But are you -- is this coming up in board meetings? Is this coming up in discussions internally? Do you guys have the option of lobbying some folks on the New York City Council to try to maybe get them to change their mind with regard to a new permit situation.

Anything you're willing to talk about with regard to that angle for shareholders on this call, that would be helpful..

I would just like to emphasize, again, that Madison Square Garden owns Madison Square Garden. Madison Square Garden owns the land that Madison Square Garden's on. The building owns the air rights above it. That Madison Square Garden has been an integral part in its location of New York City since 1968.

As far as city planning goes, Madison Square Garden is sitting above the busiest transportation hub. And the ease of people to come and get here is something that's very advantageous for everybody. And often when new cities are being planned, that's exactly what would occur.

I think, again, the jobs we create, the entertainment that occurs, the commerce that gets created, the vital importance we have to other businesses in the community surrounding us all speak towards the future of Madison Square Garden and what's going to occur here.

And again, we're very confident that Madison Square Garden will continue to make memories and continue to drive commerce and continue to drive tourism for New York for many, many years to come..

Thank you. With that, I will turn the floor over to Ari Danes for any closing remarks..

Thank you for joining us. We look forward to speaking with you on our next earnings call in May. Have a good day..

Thank you. This does conclude today's conference call. You may now disconnect..