MSG Networks Inc.
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K(Mark One)þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the fiscal year ended June 30, 2017 ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934 [NO FEE REQUIRED]For the transition period from ___________ to _____________Commission FileNumber Registrant; State of Incorporation;Address and Telephone Number IRS EmployerIdentification No.1-34434 MSG NETWORKS INC. 27-0624498Delaware11 Pennsylvania PlazaNew York, NY 10001(212) 465-6400Securities registered pursuant to Section 12(b) of the Act:Title of each class: Name of each Exchange on which Registered:Class A Common Stock New York Stock ExchangeIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No oIndicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes o No þIndicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant has been required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes þ No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files). Yes þ No oIndicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. þIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company"in Rule 12b-2 of the Exchange Act.Large accelerated filer þAccelerated filer oNon-accelerated filer o (Do not check if a smaller reporting company)Smaller reporting company oEmerging growth company oIf an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þTable of ContentsAggregate market value of the voting and non-voting common equity held by non-affiliates of MSG Networks Inc. as of June 30, 2017 computed byreference to the price at which the common equity was last sold on the New York Stock Exchange as of December 31, 2016, the last business day of theregistrant’s most recently completed second fiscal quarter, was approximately: $1,280,192,732.Number of shares of common stock outstanding as of July 31, 2017:Class A Common Stock — 61,497,005Class B Common Stock — 13,588,555Documents incorporated by reference — Certain information required for Part III of this report is incorporated herein by reference to the proxy statement forthe 2017 annual meeting of the Company’s shareholders, expected to be filed within 120 days after the close of our fiscal year. Table of ContentsTABLE OF CONTENTS Page PART I Item 1. Business3 Item 1A. Risk Factors8 Item 1B. Unresolved Staff Comments17 Item 2. Properties17 Item 3. Legal Proceedings17 Item 4. Mine Safety Disclosure17 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities18 Item 6. Selected Financial Data20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk37 Item 8. Financial Statements and Supplementary Data37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure37 Item 9A. Controls and Procedures38 Item 9B. Other Information38 PART III Item 10. Directors, Executive Officers and Corporate Governance39 Item 11. Executive Compensation39 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters39 Item 13. Certain Relationships and Related Transactions, and Director Independence39 Item 14. Principal Accountant Fees and Services39 PART IV Item 15. Exhibits and Financial Statement Schedules40 Item 16. Form 10-K Summary40 Table of ContentsPART IItem 1. BusinessMSG Networks Inc., formerly The Madison Square Garden Company, is a Delaware corporation with our principal executive offices at 11 Pennsylvania Plaza,New York, NY, 10001. Unless the context otherwise requires, all references to “we,” “us,” “our” or the “Company” refer collectively to MSG Networks Inc., aholding company, and its direct and indirect subsidiaries through which substantially all of our operations are conducted. Our telephone number is 212-465-6400, our Internet address is http://www.msgnetworks.com and the investor relations section of our website is http://investor.msgnetworks.com. We makeavailable, free of charge through the investor relations section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q and currentreports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”), as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to,the Securities and Exchange Commission (“SEC”). References to our website in this report are provided as a convenience and the information contained on,or available through, our website is not part of this or any other report we file with or furnish to the SEC.The Company was incorporated on July 29, 2009 as an indirect, wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”). On February9, 2010, Cablevision spun off the Company and the Company thereby acquired the subsidiaries of Cablevision that owned, directly and indirectly, all of thepartnership interests in MSGN Holdings, L.P., formerly MSG Holdings L.P. (“MSGN L.P.”). MSGN L.P. was the indirect, wholly-owned subsidiary ofCablevision through which Cablevision held the Madison Square Garden businesses. MSGN L.P. is now a wholly-owned subsidiary of the Company, throughwhich the Company conducts substantially all of its operations.On September 30, 2015 (the “Distribution Date”), the Company distributed to its stockholders all of the outstanding common stock of The Madison SquareGarden Company (formerly MSG Spinco, Inc., and referred to herein as “MSG”) (the “Distribution”). MSG owns, directly or indirectly, the sports andentertainment businesses previously owned and operated by the Company’s sports and entertainment segments, owns, leases or operates the arenas and othervenues previously owned, leased or operated by the Company and owns the joint venture interests previously owned by the Company. In the Distribution,each holder of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”), of record as of the close of business, New YorkCity time, on September 21, 2015 (the “Record Date”), received one share of MSG Class A common stock, par value $0.01 per share, for every three shares ofthe Company’s Class A Common Stock held on the Record Date. Each holder of the Company’s Class B common stock, par value $0.01 per share (“Class BCommon Stock”), of record as of the Record Date received one share of MSG Class B common stock, par value $0.01 per share, for every three shares of theCompany's Class B Common Stock held on the Record Date. Following the Distribution, the Company no longer consolidates the financial results of MSGfor purposes of its own financial reporting and the historical financial results of MSG have been reflected in the Company's consolidated financial statementsas discontinued operations for all periods presented through the Distribution Date.Our CompanyThe Company, an industry leader in sports production, and content development and distribution, owns and operates two award-winning regional sports andentertainment networks, MSG Network (“MSGN”) and MSG+, collectively “MSG Networks.” For more than 40 years, we have been a pioneer in regionalsports television, setting a standard of excellence, creativity and technological innovation. Today, our exclusive award-winning programming continues tobe a valuable differentiator for our viewers, advertisers and the cable, satellite, telephone and other platforms that distribute our networks (“Distributors”). Ournetworks are widely distributed throughout our territory, which includes all of New York State and significant portions of New Jersey and Connecticut, aswell as parts of Pennsylvania. Our networks are also carried nationally by certain distributors on sports tiers or in similar packages.We continually seek to enhance the value that our networks provide to viewers, advertisers and Distributors by delivering high-quality, best-in-class contentand live viewing experiences utilizing state-of-the-art technology. We operate in the nation’s largest television market, the New York Designated MarketArea (“DMA”), and attract an important and coveted demographic. Our unique position in this major media market, as the provider of exclusive live localgames of top professional sports teams and other significant sports programming, allows us to optimize distribution revenue and partner with marquee brandsto capture advertising sales and explore new content opportunities. We extend the distribution of our content through MSG GO, our live authenticatedstreaming and video on demand offering, and continue to evaluate new distribution avenues for our programming. In addition, we utilize a dedicated website,and social media platforms to promote our brands by teasing content, spotlighting on-air talent, and providing in-depth information on our networks’ teams.3Table of ContentsProgrammingBeginning with the debut of MSGN as the first regional sports network in the country in 1969, we have been at the forefront of the industry, consistentlypushing the boundaries of regional sports coverage. In the process, our networks have become a powerful platform for some of the world’s greatest athletesand entertainers.With our commitment to programming excellence, we have earned a reputation for best-in-class programming, production, marketing and technicalinnovation. Over the past 10 years, we have won 162 New York Emmy Awards (“Emmys”) for live sports and original programming. This includes 140Emmys for MSGN alone — more than any other single station or network in the region over that time frame.The foundation of our programming is our professional sports coverage. MSGN and MSG+ are home to ten professional sports teams. We deliver live gamesof the New York Knicks (the “Knicks”) of the National Basketball Association (“NBA”); the New York Rangers (the “Rangers”), New York Islanders (the“Islanders”), New Jersey Devils (the “Devils”) and Buffalo Sabres (the “Sabres”) of the National Hockey League (“NHL”); the New York Liberty (the“Liberty”) of the Women's National Basketball Association (“WNBA”); the New York Red Bulls (the “Red Bulls”) of Major League Soccer (“MLS”), and theWestchester Knicks of the National Basketball Association Gatorade League (“NBAGL”) (formerly known as the National Basketball AssociationDevelopment League). Additionally, we air programming of the New York Giants (the “Giants”) and Buffalo Bills (the “Bills”) of the National FootballLeague (“NFL”). Our arrangements include long-term media rights agreements with all of our NBA and NHL teams.Each year, MSGN and MSG+ collectively telecast approximately 500 live professional games, along with a comprehensive lineup of other sporting events,including college football and basketball, and other original programming designed to give fans behind-the-scenes access and insight into the teams andplayers they love. This content includes comprehensive pre- and post-game coverage throughout the seasons, along with other team-related programmingthat features coaches, players and more, all of which enable us to capitalize on the extraordinary enthusiasm of our teams’ fans. Distinguishing these showsfurther is our roster of analysts and on-air talent, which includes Mike Breen, Walt Frazier, Sam Rosen, Joe Micheletti, Al Trautwig, and Kenny Albert, amongothers.As the “Official Regional Sports Home” of the Giants NFL franchise, our networks featured content specifically for Giants fans during the 2016-17 NFLseason, including: pre-season game replays, a new official post-game show and live coverage of the head coach’s weekly press conference. Other team-relatedprogramming included “Giants Training Camp Live,” a series of live shows from Giants training camp, and “Giants First & 10,” a weekly one-hour previewshow, as well as a brand new show, “Giants Life,” which takes fans inside the daily lives and routines of the team’s players and coaches. MSG Networks’western New York viewers enjoyed a slate of programming dedicated to the Bills during the 2016-17 NFL season, including “Bills All Access” and “BillsTonight”. We also simulcast two of Buffalo’s most popular weekday sports radio shows — “The John Murphy Show,” featuring the voice of the Bills, and“The Instigators,” which provides Sabres fans with exclusive access to the team.In addition to our live games and team-related programming, we produce a slate of original programming. Notable highlights this past year include:“Beginnings,” which chronicles how athletes and entertainers got their start; and “The MSG Hockey Show,” in which the show’s hosts — Arda Ocal, WillReeve and Anson Carter — highlight the week’s hottest stories in hockey.We also license other sports and entertainment programming, which this past year included live National Collegiate Athletic Association (“NCAA”)basketball and football, the New York Cosmos of the North American Soccer League, Union of European Football Association soccer, Bundesliga soccer, andUltimate Fighting Championship and other mixed martial arts, as well as tennis and boxing programs. In addition, MSG Networks delivered select titles from“30 for 30,” ESPN’s documentary series.In addition to MSGN and MSG+, the Company distributes programming through MSG GO, our TV Everywhere product. With participating Distributors(currently Altice USA, Comcast, Verizon FiOS, Service Electric Broadband Cable and RCN), MSG GO allows subscribers to access live television and videoon demand content using their smartphones, tablets and computers. In February 2017, we reached an agreement with the NHL that allows us to live stream ourlocal Rangers, Islanders, Devils and Sabres telecasts. This enabled us to add our unmatched lineup of live, local NHL games to our existing slate of MSG GOcontent, which includes all live Knicks, Red Bulls and Liberty games appearing on our networks, as well as current and past episodes of our originalprogramming.4Table of ContentsRevenueThe Company generates revenues principally from affiliate fees charged to Distributors for the right to carry our programming networks, as well as from thesale of advertising. The following customers each accounted for more than 10% of consolidated revenues for the year ended June 30, 2017: Altice USA,AT&T, Charter, and Verizon.Affiliation Fee RevenueOur networks are distributed pursuant to carriage agreements that are typically structured as multi-year agreements with staggered expiration dates andgenerally provide for annual contractual rate increases. We primarily earn revenue under these agreements based on the number of each Distributor’ssubscribers or, in some cases, based on a fixed contractual monthly fee. Our affiliation agreements include certain protections relating to the manner in whichour networks are carried and the compensation for such carriage. Examples of such protections include: carriage requirements; penetration minimums (whichmay require that our networks are made available to significant percentages of our Distributors’ basic subscribers); tag-along requirements (which require thatMSGN and MSG+ are carried on the same tier as similar networks); and/or payment minimums (which require us to be compensated based on significantpercentages of our Distributors’ subscribers). Affiliation fee revenue constituted at least 90% of our consolidated revenues for the year ended June 30, 2017.MSGN and MSG+ are widely carried by major Distributors in our region, with an average combined reach of approximately 7.1 million viewing subscribers(as of the most recent available information) in our regional territory, which includes the entire State of New York and significant portions of New Jersey andConnecticut, as well as parts of Pennsylvania. Our networks also enjoy national distribution with certain Distributors on sports tiers or in similar packages.Advertising RevenueThe Company’s programming, distribution territory and viewer demographics make our networks highly attractive to advertisers. Our networks operate in thelargest television market in the country, the New York DMA, and, with our exclusive live game coverage, offer advertisers an increasingly scarce asset intoday’s evolving media landscape - the ability to reach engaged audiences on a live basis. MSG Networks’ viewers, a significant portion of which arebetween the ages of 25-54 with high household incomes, also offer an extremely appealing demographic for advertisers.In addition, we benefit from our advertising sales representation agreement with MSG, which provides for the packaged sale of certain network advertisinginventory as part of team and arena marketing and sponsorship sales.Advertising revenue is based on the price received for available advertising inventory. Substantially all of our advertising revenue is derived from the sale ofinventory in our live professional sports programming. The value of this inventory is dependent upon a number of factors, including team performance,ratings and general economic conditions. Advertising time is sold both in advance and in scatter markets.Garden of Dreams FoundationOur Company has a close association with the Garden of Dreams Foundation (the “Foundation”), a non-profit charity that has brightened the lives of morethan 325,000 children and their families. The Foundation, which started in 2006, works with 28 partner organizations throughout the tristate area, includinghospitals, wish organizations and community-based organizations, to reach children who are facing challenges such as homelessness, extreme poverty, illnessand foster care. The Foundation takes pride in its commitment to truly change lives, hosting more than 500 events and programs each year. In 2007, theCompany and the Foundation launched “MSG Classroom,” an Emmy Award-winning educational program to teach high school students about the mediaindustry. The eight-week program provides a hands-on opportunity for students to develop skills, including broadcasting, script writing and production, andculminates with the students creating their own special television feature. The MSG Classroom program has been recognized with multiple Beacon Awards inthe “Education” category, as well as a New York Emmy Award in the “Community Service” category.RegulationThe Federal Communications Commission (“FCC”) imposes regulations directly on programming networks and also imposes regulations on certaindistributors that affect programming networks indirectly. The rules, regulations, policies and procedures affecting our business are subject to change. Thefollowing paragraphs describe the existing legal and regulatory requirements that are most significant to our business today; they do not purport to describeall present and proposed laws and regulations affecting our business.5Table of ContentsClosed CaptioningOur programming networks must provide closed captioning of video programming for the hearing impaired and meet certain captioning quality standards.The FCC and certain of our affiliation agreements require us to certify compliance with such standards. We are also required to provide closed captioning oncertain video content delivered via the Internet.Commercial LoudnessFCC rules require multichannel video programming distributors (“MVPD”) to ensure that all commercials comply with specified volume standards, andcertain of our affiliation agreements require us to certify compliance with such standards.Advertising Restrictions on Children’s ProgrammingAny programming and associated Internet websites intended primarily for children under 12 years of age that we may offer must comply with certain limits oncommercial content.Obscenity RestrictionsDistributors are prohibited from transmitting obscene programming, and certain of our affiliation agreements require us to refrain from including suchprogramming on our networks.Packaging and PricingThe FCC periodically considers examining whether to adopt rules regulating how programmers package and price their networks, such as whetherprogramming networks require distributors to purchase and carry undesired programming in return for the right to carry desired programming and, if so,whether such arrangements should be prohibited.Effect of “Must-Carry” RequirementsThe FCC’s implementation of the statutory “must-carry” obligations requires cable and satellite distributors to give broadcasters preferential access tochannel space. This may reduce the amount of channel space that is available for carriage of our networks.Website and Mobile Application RequirementsWe maintain various websites and mobile applications that may be subject to third-party application store requirements, as well as a range of federal, stateand local laws such as privacy, accessibility for persons with disabilities, and consumer protection regulations.CompetitionDistribution of Programming NetworksThe business of distributing programming networks is highly competitive. Our programming networks face competition from other programming networksfor the right to be carried by a particular distributor, and for the right to be carried on the service tier that will attract the most subscribers. Once aprogramming network of ours is carried by a distributor, that network competes for viewers not only with the other programming networks available throughthe distributor, but also with pay-per-view programming and video on demand offerings, as well as Internet and online services, mobile applications, radio,print media, motion picture theaters, home video, and other sources of information, sporting events and entertainment. Each of the following competitivefactors are important to our networks: the prices we charge for our programming networks; the quantity, quality and variety of programming offered on ournetworks; and the effectiveness of our networks’ marketing efforts.Our ability to successfully compete with other programming networks for distribution may be hampered because the distributors may be affiliated with otherprogramming networks. In addition, because such affiliated distributors may have a substantial number of subscribers, the ability of such competingprogramming networks to obtain distribution on affiliated distributors may lead to increased subscriber and advertising revenue for such networks because oftheir increased penetration compared to our programming networks. Even if such affiliated distributors carry our programming networks, there is no assurancethat such distributors will not place their affiliated programming network on a more desirable tier, thereby giving the affiliated programming network acompetitive advantage over our own.New or existing programming networks that are owned by or affiliated with broadcast networks such as NBC, ABC, CBS or Fox may also have a competitiveadvantage over our networks in obtaining distribution through the “bundling” of agreements to carry those programming networks with the agreementgiving the distributor the right to carry a broadcast station owned by or affiliated with the network.6Table of ContentsIn addition, content providers (such as certain broadcast and cable networks) and new content developers, distributors and syndicators (such as Amazon andNetflix), are distributing programming directly to consumers on an “over-the-top” (“OTT”) basis. Such direct-to-consumer OTT distribution of content mayfacilitate consumers eliminating or downgrading their pay television subscription, which may result in certain consumers not receiving our programmingnetworks. See “Item 1A. Risk Factors — Our Business Faces Intense and Wide-Ranging Competition Which May Have a Material Negative Effect on Our Business andResults of Operations” and “— We May Not Be Able to Adapt to New Content Distribution Platforms and to Changes in Consumer Behavior Resulting FromEmerging Technologies, Which May Have a Material Negative Effect on Our Business and Results of Operations.” See also “Part II — Item 7. Management’sDiscussion and Analysis of Financial Condition and Results of Operations — Business Overview — Revenue Sources” for a discussion of our customers.Sources of ProgrammingWe also compete with other networks and other distribution outlets to secure desired programming, including sports-related programming. Competition forprogramming increases as the number of programming networks and distribution outlets increases. Other programming networks that are affiliated with orotherwise have larger relationships with programming sources such as sports teams or leagues, movie or television studios, or film libraries may have acompetitive advantage over us in this area.Competition for Sports Programming SourcesBecause the loyalty of the sports viewing audience to a sports programming network is primarily driven by loyalty to a particular team or teams, access toadequate sources of sports programming is particularly critical to our networks. In connection with the Distribution, the Company entered into long-termmedia rights agreements with MSG providing us with the exclusive media rights to Knicks and Rangers games, and the Company has long-term media rightsagreements with the Islanders, Devils and Sabres. Our rights with respect to these professional teams may be limited in certain circumstances due to rulesimposed by the leagues in which they compete. Our programming networks compete for telecast rights for other teams or events principally with national orregional programming networks that specialize in or carry sports programming; local and national commercial broadcast television networks; independentsyndicators that acquire and resell such rights nationally, regionally and locally; and Internet and mobile-based distributors of programming. Some of ourcompetitors may own or control, or are owned or controlled by, sports teams, leagues or sports promoters, which gives them an advantage in obtainingtelecast rights for such teams or sports. Distributors may also contract directly with the sports teams in their local service areas for the right to distribute gameson their systems.The increasing amount of sports programming available on a national basis, including pursuant to national media rights arrangements (e.g., NBA on ABC,ESPN, and TNT and NHL on NBC and NBC Sports Network), as part of league-controlled sports programming networks (e.g., NBA TV and NHL Network),and in out-of-market packages (e.g., NBA League Pass and NHL Center Ice) and league and other websites and mobile applications, may have an adverseimpact on our competitive position as our programming networks compete for distribution and for viewers.Two professional sports teams located in New York have ownership interests in programming networks featuring the games of their teams, which adverselyaffects the competitive position of the Company by denying or limiting our access to those games for our own networks and subjecting our networks tocompetition from these networks.Competition for Advertising RevenueThe level of our advertising revenue depends in part upon unpredictable and volatile factors beyond our control, such as viewer preferences, the quality andappeal of the competing programming and the availability of other entertainment activities. See “Item 1A. Risk Factors — We Derive Substantial RevenuesFrom the Sale of Advertising Time and Those Revenues Are Subject to a Number of Factors, Many of Which Are Beyond Our Control.”EmployeesAs of June 30, 2017 we had approximately 175 full-time union and non-union employees and 613 part-time union and non-union employees. Approximately74% of our employees were represented by unions as of June 30, 2017. Labor relations in general and in the sports and entertainment industry in particularcan be volatile, though we believe that our current relationships with our unions taken as a whole are positive.7Table of ContentsFinancial Information about Segments and Geographic AreasFollowing the Distribution, the Company operates and reports financial information in one segment. Substantially all revenues and assets of the Company areattributed to or located in the United States and are primarily concentrated in the New York City metropolitan area. Financial information for each of theyears ended June 30, 2017, 2016, and 2015 is set forth in “Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” and “Part II — Item 8. Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.Item 1A. Risk FactorsThe Success of Our Business Depends on Affiliation Fees We Receive Under Our Affiliation Agreements, the Loss of Which or Renewal of Which on LessFavorable Terms May Have a Material Negative Effect on Our Business and Results of Operations.Our success is dependent upon the existence and terms of our agreements with Distributors. Existing affiliation agreements of our programming networksexpire at various dates. We cannot provide assurances that we will be able to renew these affiliation agreements or obtain terms as attractive as our existingagreements in the event of a renewal.Affiliation fees constitute a significant majority of our revenues. Changes in affiliation fee revenues result from a combination of changes in rates and/orchanges in subscriber counts. Reductions in the license fees that we receive per subscriber or in the number of subscribers for which we are paid, including asa result of a loss of or reduction in carriage of our programming networks, would adversely affect our affiliation fee revenue. For example, Distributors mayintroduce, market and/or modify tiers of programming networks that could impact the number of subscribers that receive our programming networks,including tiers of programming that may exclude our networks. Any loss or reduction in carriage would also decrease the potential audience for ourprogramming, which may adversely affect our advertising revenues. See “— If the Rate of Decline in the Number of Subscribers to Traditional MVPDServices Increases or These Subscribers Shift to Other Services or Bundles That Do Not Include the Company’s Programming Networks, There May Be aMaterial Negative Effect on the Company’s Affiliation Revenues.”Our affiliation agreements generally require us to meet certain content criteria, such as minimum thresholds for professional event telecasts throughout theyear on our networks. If we were unable to meet these criteria, we could become subject to remedies available to the Distributors, which may include feereductions, rebates or refunds and/or termination of these agreements in some cases.In addition, under certain circumstances, an existing affiliation agreement may expire and the parties may have not finalized negotiations of either a renewalof that agreement or a new agreement for certain periods of time. In certain of these circumstances, Distributors may continue to carry the service(s) until theexecution of definitive renewal or replacement agreements (or until we or the Distributor determine that carriage should cease).Occasionally we may have disputes with Distributors over the terms of our affiliation agreements. If not resolved through business discussions, such disputescould result in litigation or actual or threatened termination of an existing agreement.Our business is dependent upon affiliation relationships with a limited number of Distributors. The loss of any of our significant Distributors, the failure torenew on terms as attractive as our existing agreements (or to do so in a timely manner) or disputes with our counterparties on the interpretation of theiragreements with us could materially negatively affect our business and results of operations. See “— We Depend on a Limited Number of Distributors for aSignificant Portion of Our Revenues and Further Industry Consolidation Could Adversely Affect Our Business and Results of Operations.”Our Business Faces Intense and Wide-Ranging Competition Which May Have a Material Negative Effect on Our Business and Results of Operations.Our business competes, in certain respects and to varying degrees, for viewers and advertisers with other programming networks, pay-per-view, video ondemand, event live streaming, and other content offered by distributors. We also compete for viewers and advertisers with content offered over the Internetand broadband services, mobile media, radio, motion picture, home video and other sources of information and entertainment and advertising services.Important competitive factors are the prices charged for programming, the quantity, quality (in particular, the performance of the sports teams whose mediarights we control) and the variety of the programming offered and the effectiveness of marketing efforts.New or existing programming networks that are owned by or affiliated with broadcast networks such as NBC, ABC, CBS or Fox may have a competitiveadvantage over our networks in obtaining distribution through the “bundling” of agreements to8Table of Contentscarry those programming networks with the agreement giving the distributor the right to carry a broadcast station owned by or affiliated with the network.The competitive environment in which our business operates may also be affected by technological developments. It is difficult to predict the future effect oftechnology on many of the factors affecting our competitive position.With respect to advertising services, factors affecting the degree and extent of competition include prices, reach and audience demographics among others.Some of our competitors are large companies that have greater financial resources available to them than we do which could impact our viewership and theresulting advertising revenues.We May Not Be Able to Adapt to New Content Distribution Platforms and to Changes in Consumer Behavior Resulting From Emerging Technologies,Which May Have a Material Negative Effect on Our Business and Results of Operations.We must successfully adapt to technological advances in our industry, including the emergence of alternative distribution platforms. Our ability to exploitnew distribution platforms and viewing technologies may affect our ability to maintain and/or grow our business. Emerging forms of content distributionmay provide different economic models and compete with current distribution methods in ways that are not entirely predictable. Such competition couldreduce demand for our programming networks or for the offerings of our Distributors, and reduce our revenue from these sources. Content providers (such ascertain broadcast and cable networks) and new content developers, distributors and syndicators (such as Amazon and Netflix), are distributing programmingdirectly to consumers on an OTT basis. Such direct-to-consumer OTT distribution of content may facilitate consumers eliminating or downgrading their paytelevision subscription, which may result in certain consumers not receiving our programming networks. Gaming and other consoles such as Microsoft’sXbox, Sony’s PlayStation, Nintendo’s Wii, Apple TV, and Roku are also establishing themselves as alternative providers of video services. Such changesmay impact the revenues we are able to generate from our traditional distribution methods, by decreasing the viewership of our programming networks oncable and other MVPD systems which are almost entirely directed at television video delivery and/or by making advertising on our programming networksless valuable to advertisers. If we fail to adapt our distribution methods and content to emerging technologies, our appeal to our targeted audiences mightdecline and there could be a material negative effect on our business and results of operations. MSG GO, which is our live streaming and on-demand product,is available to subscribers through several of our Distributors. There can be no assurance that MSG GO will be able to attract a meaningful number of users.In addition, advertising revenues could be significantly impacted by emerging technologies, given that advertising sales are dependent on audiencemeasurement provided by third parties, and the results of audience measurement techniques can vary independent of the size of the audience for a variety ofreasons, including difficulties related to the traditional statistical sampling methods, ability to measure new distribution platforms and viewing technologies,and the shifting of the marketplace to the use of measurement of different viewer behaviors, such as delayed viewing. In addition, multiplatform campaignverification is in its infancy, and viewership on tablets, smart phones and other mobile devices, which continues to grow, is presently not measured by anyone consistently applied method. Moreover, devices that allow users to fast forward or skip programming, including commercials, are causing changes inconsumer behavior that may affect the desirability of our programming networks to advertisers. These variations and changes could have a significant effecton advertising revenues.If the Rate of Decline in the Number of Subscribers to Traditional MVPD Services Increases or These Subscribers Shift to Other Services or Bundles ThatDo Not Include the Company’s Programming Networks, There May Be a Material Negative Effect on the Company’s Affiliation Revenues. During the last few years, the number of subscribers to traditional MVPD services in the U.S. has been declining. In addition, Distributors have introduced,marketed and/or modified tiers or bundles of programming that have impacted the number of subscribers that receive our programming networks, includingtiers or bundles of programming that exclude our programming networks. As a result of these factors, the Company has experienced a decrease in viewingsubscribers during each of our last three fiscal years which has adversely affected our operating results.If traditional MVPD service offerings are not attractive to consumers due to pricing, increased competition from OTT services, increased dissatisfaction withthe quality of traditional MVPD services, poor economic conditions or other factors, more consumers may (i) cancel their traditional MVPD servicesubscriptions or choose not to subscribe to traditional MVPD services, (ii) elect to instead subscribe to OTT services, which in some cases may be offered at alower price-point or (iii) elect to subscribe to smaller bundles of programming which may not include our programming networks. If the rate of decline in thenumber of traditional MVPD service subscribers increases or if subscribers shift to OTT services or smaller bundles of programming that do not include theCompany’s programming networks, this may have a material negative effect on the Company’s affiliate revenue.9Table of ContentsWe Depend on a Limited Number of Distributors for a Significant Portion of Our Revenues and Further Industry Consolidation Could Adversely AffectOur Business and Results of Operations.The pay television industry is highly concentrated, with a relatively small number of distributors serving a significant percentage of pay televisionsubscribers that receive our programming networks, thereby affording the largest distributors significant leverage in their relationship with programmingnetworks, including us. Substantially all of our affiliation fee revenue comes from our top five Distributors. Further consolidation in the industry couldreduce the number of distributors available to distribute our programming networks and increase the negotiating leverage of certain distributors, which couldadversely affect our revenue. In some cases, if a Distributor is acquired, the affiliation agreement of the acquiring Distributor will govern following theacquisition. In those circumstances, the acquisition of a Distributor that is a party to one or more affiliation agreements with us on terms that are morefavorable to us than that of the acquirer could have a material negative impact on our business and results of operations. See Note 18 to the consolidatedfinancial statements included in Item 8 of this Annual Report on Form 10-K.We Derive Substantial Revenues From the Sale of Advertising Time and Those Revenues Are Subject to a Number of Factors, Many of Which Are BeyondOur Control.Advertising revenues depend on a number of factors, many of which are beyond our control, such as: (i) the health of the economy in the markets ourbusinesses serve and in the nation as a whole; (ii) general economic trends in the advertising industry; (iii) the popularity of our programming; (iv) theactivities of our competitors, including increased competition from other forms of advertising-based media (such as Internet, mobile media, otherprogramming networks, radio and newspaper); (v) shifts in consumer viewing patterns, including consumers watching more non-traditional and shorter-formvideo content online, and the increased use of DVRs to skip advertisements; (vi) declining consumer tolerance for commercial interruptions; (vii) anincreasing shift of advertising expenditures to online and mobile offerings; (viii) increasing audience fragmentation caused by increased availability ofalternative forms of leisure and entertainment activities; (ix) consumer budgeting and buying patterns; (x) the extent of distribution; and (xi) teamperformance. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities,which could cause our revenues and operating results to decline significantly in any given period.In addition, the pricing and volume of advertising may be affected by shifts in spending away from more traditional media toward online and mobileofferings or towards new ways of purchasing advertising, such as through automated purchasing, dynamic advertising insertion, third parties selling localadvertising spots and advertising exchanges, some or all of which may not be as advantageous to the Company as current advertising methods.In addition, we cannot ensure that our programming will achieve favorable ratings. Our ratings depend partly upon unpredictable and volatile factors beyondour control, such as viewer preferences, the level of distribution of our programming, team performance, competing programming and the availability of otherentertainment activities. A shift in viewer preferences could cause our advertising revenues to decline as a result of changes to the ratings for ourprogramming and materially negatively affect our business and results of operations. As noted below, MSG has the exclusive right and obligation to sell ouradvertising availabilities on our behalf for a commission and, as a result, our advertising revenues are dependent to a material extent on MSG’s salesperformance, subject to certain termination rights. See “—We Rely on MSG’s Performance Under Various Agreements.”Our Media Rights Agreements With Various Professional Sports Teams Have Varying Durations and Terms and We May Be Unable to Renew ThoseAgreements on Acceptable Terms or Such Rights May Be Lost for Other Reasons.Our business is dependent upon media rights agreements with professional sports teams. Upon expiration, we may seek renewal of these agreements and, if wedo, we may be outbid by competing programming networks or others for these agreements or the renewal costs could substantially exceed our costs under thecurrent agreements. Even if we are able to renew such agreements, the Company’s results could be adversely affected if escalations in sports programmingrights costs are unmatched by increases in affiliation and advertising revenues. In addition, one or more of these teams may seek to establish their ownprogramming network or join a competitor’s network and, in certain circumstances, we may not have an opportunity to bid for the media rights. Moreover,the value of these agreements may also be affected by various league decisions and/or league agreements that we may not be able to control, including adecision to alter the number of games played during a season. The value of these media rights can also be affected, or we could lose such rights entirely, if ateam is liquidated, undergoes reorganization in bankruptcy or relocates to an area where it is not possible or commercially feasible for us to continue todistribute games. Any loss or diminution in the value of rights could impact the extent of the sports coverage offered by us and could materially negativelyaffect our business and results of operations. In addition, our affiliation10Table of Contentsagreements typically include certain remedies in the event our networks fail to meet a minimum number of professional events, and, accordingly, any loss ofrights could materially negatively affect our business and results of operations.The Actions of the Basketball and Hockey Leagues May Have a Material Negative Effect on Our Business and Results of Operations.The governing bodies of the NBA and the NHL have imposed, and may impose in the future, various rules, regulations, guidelines, bulletins, directives,policies and agreements (collectively, “League Rules”), which could have a material negative effect on our business and results of operations. For example,each league imposes rules that define the territories in which we may distribute games of the teams in the applicable league. Changes to these rules or otherLeague Rules, or the adoption of new League Rules, could have a material negative effect on our business and results of operations.Our Business is Substantially Dependent on the Continued Popularity of the NBA and NHL Teams Whose Media Rights We Control.Our business has historically been, and we expect will continue to be, dependent on the popularity of the teams whose media rights we control and, invarying degrees, those teams achieving on-court and on-ice success, which can generate fan enthusiasm, resulting in increased viewership and advertisingrevenues. Furthermore, success in the regular season may qualify a team for participation in the post-season, which generates increased excitement andinterest in the teams, which can improve viewership and advertising revenues. In addition, if a team declines in popularity or fails to generate fan enthusiasm,this may negatively impact the terms on which our affiliate agreements are renewed. There can be no assurance that any sports team will continue to generatefan enthusiasm or compete in post-season play and the failure to do so could result in a material negative effect on our business and results of operations.We May Be Unable to Obtain Programming From Third Parties on Reasonable Terms, Which Could Lead to Higher Costs.We rely on third parties for sports and other programming for our networks. We compete with other providers of programming to acquire the rights todistribute such programming. If we fail to continue to obtain sports and other programming for our networks on reasonable terms for any reason, including asa result of competition, we could be forced to incur additional costs to acquire such programming or look for alternative programming, which may have amaterial negative effect on our business and results of operations.Our Business Depends on the Appeal of Our Programming, Which May Be Unpredictable, and Increased Programming Costs May Have a MaterialNegative Effect on Our Business and Results of Operations.Our business depends in part upon viewer preferences and audience acceptance of the programming on our networks. These factors are often unpredictableand subject to influences that are beyond our control, such as the quality and appeal of competing programming, general economic conditions and theavailability of other entertainment options. We may not be able to successfully predict interest in proposed new programming and viewer preferences couldcause new programming not to be successful or cause our existing programming to decline in popularity. An increase in our costs associated withprogramming, including original programming, may materially negatively affect our business and results of operations.Our Business Has Been Adversely Impacted and May, in the Future, Be Materially Adversely Impacted by an Economic Downturn and FinancialInstability.Our business depends upon the ability and willingness of consumers and businesses to subscribe to a package of programming that includes our networks. Inaddition, our business is dependent upon advertising revenues. As a result, instability and weakness of the U.S. and global economies and the negative effectson consumers’ and businesses’ discretionary spending may materially negatively affect our business and results of operations.Weather or Other Conditions Which Are Outside Our Control May Disrupt Our Programming and May Have a Material Negative Effect on Our Businessand Results of Operations.Weather or other conditions, including natural disasters, acts of terrorism and similar events, which are outside our control may prevent us or our Distributorsfrom providing our programming to customers, may reduce advertising expenditures and may have a material negative effect on our business and results ofoperations.11Table of ContentsWe Are Subject to Governmental Regulation and Our Failure to Comply With These Regulations May Have a Material Negative Effect on Our Businessand Results of Operations.Our business is subject to federal, state and local laws and regulations. Some FCC regulations apply to us directly and other FCC regulations, althoughimposed on distributors, affect programming networks indirectly. See “Item 1. Business — Regulation.” Legislative enactments, court actions, and federalregulatory proceedings could materially affect our programming business by modifying the rates, terms, and conditions under which we offer ourprogramming networks to distributors and the public, or otherwise materially affect the range of our activities or strategic business alternatives. We cannotpredict the likelihood or results of any such legislative, judicial, or regulatory actions. Furthermore, to the extent that regulations and laws, either presently inforce or proposed, hinder or stimulate the growth of distributors, our business could be affected. The U.S. Congress and the FCC currently have underconsideration, and may in the future adopt, amend, or repeal, laws, regulations and policies regarding a wide variety of matters that could, directly orindirectly, affect our business. The regulation of distributors is subject to the political process and has been in constant flux over the past two decades.Further material changes in the law and regulatory requirements must be anticipated. We cannot assure you that our business and our results of operationswill not be materially negatively affected by future legislation, new regulation or deregulation.Our business is, and may in the future be, subject to a variety of other laws and regulations, including licensing requirements; working conditions, labor,immigration and employment laws; and privacy laws.Our failure to comply with applicable governmental laws and regulations, or to maintain necessary permits or licenses, could have a material negative effecton our business and results of operations.We Face Continually Evolving Cybersecurity and Similar Risks, Which Could Result in the Disclosure of Confidential Information, Disruption of OurBusiness, Damage to Our Brands and Reputation, Legal Exposure and Financial Losses.Through our operations, we may collect, and store, including by electronic means, certain personal information that is provided to us, including throughregistration on our websites, mobile applications or otherwise in communication or interaction with us. These activities require the use of online services andcentralized data storage, including through third party service providers. Data maintained in electronic form is subject to the risk of intrusion, tampering ortheft. Our ability to safeguard such personal information and other confidential information, including information regarding the Company and ourDistributors, advertisers and employees, is important to our business. We take these matters seriously and take significant steps to protect our storedinformation. These protections are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measuresbecome more sophisticated. Despite our efforts, the risks of a data breach cannot be entirely eliminated and our information technology and other systemsthat maintain and transmit consumer, Distributor, advertiser, Company, employee and other confidential information may be compromised by a maliciouspenetration of our network security, or that of a third-party service provider, including MSG to which we outsource our information technology support, dueto employee error, computer malware or ransomware, viruses, hacking and phishing attacks, or otherwise. Additionally, outside parties may attempt tofraudulently induce employees or users to disclose sensitive or confidential information in order to gain access to data. As a result, such personal and/orconfidential information may be lost, disclosed, accessed or taken without their consent, and the security of our other confidential information may becompromised. See —“We Rely on MSG’s Performance Under Various Agreements” for a discussion of services MSG performs on our behalf.If our electronically stored data is compromised, our ability to conduct business may be interrupted or impaired, we may lose profitable opportunities or thevalue of those opportunities may be diminished and we may lose revenue as a result of unlicensed use of our intellectual property. Further, a penetration ofour network security or other misappropriation or misuse of personal or confidential information could subject us to business and litigation risk, includingcosts associated with such misappropriation or misuse, and damage our reputation, which could have a material negative effect on our business and results ofoperations.We Have Substantial Indebtedness and Are Highly Leveraged, Which Could Adversely Affect Our Business.Immediately prior to the Distribution we incurred a significant amount of debt, substantially all of the proceeds of which were contributed to MSG. We mayalso continue to incur additional debt in the future. We are highly leveraged and expect to continue to be highly leveraged. As a result, our interest andprincipal payments on our borrowings are significant in relation to our revenues and cash flows. These payments reduce our earnings and cash available forother potential business purposes. This leverage also exposes us to significant risk by limiting our flexibility in planning for, or reacting to, changes in ourbusiness (whether through competitive pressure or otherwise), the cable and telecommunications industries, and the economy at large. Although our cashflows could decrease in these scenarios, our required payments in respect of indebtedness would not decrease.12Table of ContentsIn addition, our ability to make payments on, or repay or refinance, such debt, and to fund our operating and capital expenditures, depends largely upon ourfuture operating performance. Our future operating performance, to a certain extent, is subject to general economic, financial, competitive, regulatory andother factors that are beyond our control. Furthermore, our interest expense could increase if interest rates increase because our indebtedness bears interest atfloating rates or to the extent we have to refinance existing debt with higher cost debt.We May Require Additional Financing to Fund Our Ongoing Operations and Capital Expenditures, the Availability of Which is Highly Uncertain.The capital and credit markets can experience volatility and disruption. Such markets can exert extreme downward pressure on stock prices and upwardpressure on the cost of new debt capital and can severely restrict credit availability for most issuers.Although we have a revolving credit facility (see “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources — Financing Agreements”), our ability to draw on such facility will depend on our ability to meet certain financial testsand other conditions. In addition, there can be no assurance that we will be able to refinance any such facility in the future or raise any required additionalcapital or do so on favorable terms. Depending upon conditions in the financial markets and/or the Company’s financial performance, we may not be able toraise capital on favorable terms, or at all.Organized Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations.Our business is substantially dependent upon the efforts of unionized workers. Any labor disputes, such as strikes or lockouts, with the unions with which wehave collective bargaining agreements, could have a material negative effect on our business and results of operations by impacting our ability to produce orpresent programming.In addition, we may be impacted by union relations of the NBA and the NHL. Both the NBA and the NHL have experienced labor difficulties in the past andmay have labor issues, such as players’ strikes or management lockouts, in the future. For example, the NBA has experienced labor difficulties, includinglockouts during the 1998-99 and 2011-12 seasons, resulting in a shortened regular season in each case. The NHL has also experienced labor difficulties,including lockouts during the 1994-95 and 2012-13 seasons, resulting in a shortened regular season in each case, and a lockout beginning in September2004, which resulted in the cancellation of the entire 2004-05 NHL season.The Unavailability of Satellites, Facilities, Systems and/or Software Upon Which We Rely May Have a Material Negative Effect on Our Business andResults of Operations.We use satellite and other systems to transmit our programming services to Distributors. The distribution facilities include uplinks, communicationssatellites, and downlinks. Notwithstanding certain back-up and redundant systems, transmissions may be disrupted, including as a result of events that impairuplinks, downlinks or transmission facilities or the impairment of satellite or terrestrial facilities. Currently, there are a limited number of communicationssatellites available for the transmission of programming. If a disruption occurs, we may not be able to secure alternate distribution facilities in a timelymanner. In addition, we rely upon various internal and third-party systems or software in the operation of our business, including, with respect to database,inventory, human resource management, and financial systems. From time to time, certain of these arrangements may not be covered by long-termagreements. In addition, such distribution facilities and/or internal or third party services, systems or software could be adversely impacted by unauthorizedbreaches. The failure or unavailability of distribution facilities or these internal and third-party services, systems or software, depending upon its severity andduration, could have a material negative effect on our business and results of operations.We May Become Subject to Infringement or Other Claims Relating to Our Content or Technology.From time to time, third parties may assert against us alleged intellectual property (e.g., copyright, trademark and patent) or other claims relating to ourprogramming, technologies, digital content or other content, some of which may be important to our business. In addition, our programming couldpotentially subject us to claims of defamation or similar types of allegations. Any such claims, regardless of their merit, could cause us to incur significantcosts. In addition, if we are unable to continue use of certain intellectual property rights, our business and results of operations could be materially negativelyimpacted.Theft of Our Intellectual Property May Have a Material Negative Effect on Our Business and Results of Operations.The success of our business depends in part on our ability to maintain and monetize our intellectual property rights to our programming, technologies, digitalcontent and other content that is material to our business. Theft of our intellectual property, including content, could have a material negative effect on ourbusiness and results of operations because it may reduce the revenue that we are able to receive from the legitimate sale and distribution of our content,undermine lawful distribution13Table of Contentschannels, limit our ability to control the marketing of our content and inhibit our ability to recoup or profit from the costs incurred to create such content.Litigation may be necessary to enforce our intellectual property rights or protect our trade secrets. Any litigation of this nature, regardless of the outcome,could cause us to incur significant costs.We May Pursue Acquisitions and Other Strategic Investments to Complement or Expand Our Business That May Not Be Successful.We may explore opportunities to purchase or invest in other businesses or assets that could complement, enhance or expand our current business or thatmight otherwise offer us growth opportunities, including opportunities that may differ from the Company’s current business. Any transactions that we areable to identify and complete may involve risks, including the commitment of significant capital, the incurrence of indebtedness, the payment of advances,the diversion of management’s attention and resources from our existing business to develop and integrate the acquired or combined business, the inabilityto successfully integrate such business or assets into our operations, litigation or other claims in connection with acquisitions or against companies we investin or acquire, our lack of control over joint venture companies and other minority investments, the risk of not achieving the intended results and the exposureto losses if the underlying transactions or ventures are not successful. Any such risks could result in a material negative effect on our business and results ofoperations.We Are Controlled by the Dolan Family. As a Result of Their Control, the Dolan Family Has the Ability to Prevent or Cause a Change in Control orApprove, Prevent or Influence Certain Actions by the Company.We have two classes of common stock:•Class A Common Stock, which is entitled to one vote per share and is entitled collectively to elect 25% of our Board of Directors.•Class B Common Stock, which is entitled to ten votes per share and is entitled collectively to elect the remaining 75% of our Board of Directors.As of July 31, 2017, the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”), collectivelyown all of our Class B Common Stock, approximately 2.4% of our outstanding Class A Common Stock and approximately 69.6% of the total voting power ofall our outstanding common stock. Of this amount, Charles F. Dolan, a director and the father of James L. Dolan, the Executive Chairman, and his spousecontrol approximately 50.5% of our outstanding Class B Common Stock, approximately 1.2% of our outstanding Class A Common Stock and approximately35.2% of the total voting power of all our outstanding common stock. The members of the Dolan Family Group holding Class B Common Stock haveexecuted a voting agreement that has the effect of causing the voting power of the holders of our Class B Common Stock to be cast as a block with respect toall matters to be voted on by holders of Class B Common Stock. Under the Stockholders Agreement, the shares of Class B Common Stock owned by membersof the Dolan Family Group are to be voted on all matters in accordance with the determination of the Dolan Family Committee, except that the decisions ofthe Dolan Family Committee are non-binding with respect to the Class B Common Stock owned by certain Dolan family trusts that collectively own 40.5%of the outstanding Class B Common Stock. The Dolan Family Committee consists of Charles F. Dolan and his six children, James L. Dolan, Thomas C. Dolan,Patrick F. Dolan, Kathleen M. Dolan, Marianne Dolan Weber and Deborah A. Dolan-Sweeney (collectively, the “Dolan Siblings”). The Dolan FamilyCommittee generally acts by vote of a majority of the Dolan Siblings, except that approval of a going-private transaction must be approved by a two-thirdsvote and approval of a change-in-control transaction must be approved by not less than all but one of the Dolan Siblings.The Dolan Family Group is able to prevent a change in control of our Company and no person interested in acquiring us will be able to do so withoutobtaining the consent of the Dolan Family Group. The voting members of the Dolan Family Committee are James L Dolan, Thomas C. Dolan, Kathleen M.Dolan, Deborah A. Dolan-Sweeney and Marianne Dolan Weber, with each member having one vote other than James L. Dolan, who has two votes. BecauseJames L. Dolan has two votes, he has the ability to block Dolan Family Committee approval of any Company change in control transaction. The DolanFamily Group, by virtue of their stock ownership, have the power to elect all of our directors subject to election by holders of Class B Common Stock and areable collectively to control stockholder decisions on matters on which holders of all classes of our common stock vote together as a single class. Thesematters could include the amendment of some provisions of our certificate of incorporation and the approval of fundamental corporate transactions.In addition, the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding shares of the Class B Common Stock, voting separately as aclass, is required to approve:•the authorization or issuance of any additional shares of Class B Common Stock, and14Table of Contents•any amendment, alteration or repeal of any of the provisions of our certificate of incorporation that adversely affects the powers, preferences or rightsof the Class B Common Stock.As a result, the Dolan Family Group also has the power to prevent such issuance or amendment.The Dolan Family Group also controls MSG and AMC Networks Inc. (“AMC Networks”).We Have Elected to Be a “Controlled Company” for New York Stock Exchange Purposes Which Allows Us Not to Comply With Certain of the CorporateGovernance Rules of New York Stock Exchange.Members of the Dolan Family Group have entered into a Stockholders Agreement relating, among other things, to the voting of their shares of our Class BCommon Stock. As a result, we are a “controlled company” under the corporate governance rules of New York Stock Exchange (“NYSE”). Our Board ofDirectors has elected for the Company to be treated as a “controlled company” under NYSE corporate governance rules and not to comply with the NYSErequirement for a majority independent board of directors and for an independent corporate governance and nominating committee because of our status as acontrolled company. Nevertheless, our Board of Directors has elected to comply with the NYSE requirement for an independent compensation committee.Future Stock Sales, Including as a Result of the Exercise of Registration Rights by Certain of Our Stockholders, Could Adversely Affect the Trading Priceof Our Class A Common Stock.Certain parties have registration rights covering a portion of our shares. We have entered into registration rights agreements with Charles F. Dolan, membersof his family, certain Dolan family interests and the Dolan Family Foundation that provide them with “demand” and “piggyback” registration rights withrespect to approximately 15 million shares of Class A Common Stock, including shares issuable upon conversion of shares of Class B Common Stock. Salesof a substantial number of shares of Class A Common Stock could adversely affect the market price of the Class A Common Stock and could impair our futureability to raise capital through an offering of our equity securities.We Share Certain Key Executives and Directors With MSG and/or AMC Networks, Which Means Those Executives Do Not Devote Their Full Time andAttention to Our Affairs and the Overlap May Give Rise to Conflicts.Our Executive Chairman, James L. Dolan, also serves as Executive Chairman of MSG, and our Executive Vice President, General Counsel and Secretary,Lawrence J. Burian, also serves as the Executive Vice President, General Counsel and Secretary of MSG. As a result, not all of our executive officers devotetheir full time and attention to the Company’s affairs. In addition, our Vice Chairman, Gregg G. Seibert, also serves as the Vice Chairman of both MSG andAMC Networks, and one of our directors, Charles F. Dolan, is the Executive Chairman of AMC Networks. Furthermore, five members of our Board ofDirectors are also directors of MSG and five members of our Board of Directors are also directors of AMC Networks concurrently with their service on ourBoard of Directors. The overlapping officers and directors may have actual or apparent conflicts of interest with respect to matters involving or affecting eachcompany. For example, the potential for a conflict of interest exists when we on the one hand, and MSG or AMC Networks on the other hand, look at certainacquisitions and other corporate opportunities that may be suitable for more than one of the companies. Also, conflicts may arise if there are issues or disputesunder the commercial arrangements that exist between MSG or AMC Networks and us. In addition, certain of our directors and officers hold MSG and/orAMC Networks stock, performance stock units, restricted stock units, and/or or cash performance awards. These ownership interests could create actual,apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and MSG orAMC Networks. See “Certain Relationships and Potential Conflicts of Interest” in our Proxy Statement filed with the SEC on October 27, 2016 and “CertainRelationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” in MSG’s registration statement on Form 10 filedwith the SEC on September 11, 2015 for a discussion of certain procedures we instituted to help ameliorate such potential conflicts with MSG and/or AMCNetworks that may arise.Our Overlapping Directors and Executive Officers With MSG and/or AMC Networks May Result in the Diversion of Corporate Opportunities and OtherConflicts to MSG and/or AMC Networks and Provisions in Our Amended and Restated Certificate of Incorporation May Provide Us No Remedy in ThatCircumstance.The Company acknowledges that directors and officers of the Company may also be serving as directors, officers, employees, consultants or agents of MSGand/or AMC Networks and their respective subsidiaries and that the Company may engage in material business transactions with such entities. TheCompany’s Board of Directors has adopted resolutions putting in place policies and arrangements whereby the Company has renounced its rights to certainbusiness opportunities and no director or officer of the Company who is also serving as a director, officer, employee, consultant or agent of MSG and/or AMCNetworks and their subsidiaries will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise15Table of Contentsexist by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in such policies)to MSG and/or AMC Networks or any of their subsidiaries instead of the Company, or does not refer or communicate information regarding such corporateopportunities to the Company.We Could Have Significant Tax Liability as a Result of the Distribution.We have obtained an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the Distribution qualifies as a tax-freedistribution under the Internal Revenue Code, (the “Code”). The opinion is not binding on the Internal Revenue Service (the “IRS”) or the courts.Additionally, we have received a private letter ruling from the IRS concluding that certain limited aspects of the Distribution will not prevent theDistribution from satisfying certain requirements for tax-free treatment under the Code. The opinion and the private letter ruling rely on factualrepresentations and reasonable assumptions, which if incorrect or inaccurate may jeopardize the ability to rely on such opinion and letter ruling.If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, we would be subject to tax as if we had soldthe MSG common stock in a taxable sale for its fair value. MSG stockholders would be subject to tax as if they had received a distribution equal to the fairvalue of MSG common stock that was distributed to them, which generally would be treated first as a taxable dividend to the extent of our earnings andprofits, then as a non-taxable return of capital to the extent of each holder’s tax basis in its MSG common stock, and thereafter as capital gain with respect toany remaining value. It is expected that the amount of any such taxes to MSG stockholders and us would be substantial.The Tax Rules Applicable to the Distribution May Restrict Us From Engaging in Certain Corporate Transactions or Equity Capital Transactions BeyondCertain Thresholds for a Period of Time After the Distribution.To preserve the tax-free treatment of the Distribution to our and MSG’s stockholders, under a tax disaffiliation agreement that was entered into between theCompany and MSG, for the two-year period following the Distribution, we are subject to restrictions with respect to our activities, including restrictionsrelating to certain issuances or repurchases of our common stock, asset sales, mergers and liquidations.These restrictions may limit our ability during that two-year period to pursue strategic transactions of a certain magnitude that involve the issuance oracquisition of our stock or engage in new businesses or other transactions that might increase the value of our business. These restrictions may also limit ourability to raise significant amounts of cash through the issuance of stock, especially if our stock price were to suffer substantial declines, or through the saleof certain of our assets.We Rely on MSG’s Performance Under Various Agreements.In connection with the Distribution, we entered into various agreements with MSG, including a distribution agreement, a tax disaffiliation agreement, atransition services agreement, an employee matters agreement, an advertising sales representation agreement, a trademark license agreement and media rightsagreements, as well as certain other arrangements. These agreements govern our relationship with MSG subsequent to the Distribution and include theallocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to the Distribution. In connection with theDistribution, we agreed to provide MSG with indemnities with respect to liabilities arising out of our businesses and MSG agreed to provide us withindemnities with respect to liabilities arising out of the businesses we transferred to MSG. These agreements also include arrangements with respect totransition services and a number of on-going commercial relationships, including our production and exhibition of Knicks and Rangers games, the sale of ouradvertising inventory by MSG and our use of the “MSG” brand. The advertising sales representation agreement, transition services agreement and trademarklicensing agreement are each subject to potential termination by MSG in the event MSG and the Company are no longer affiliates.MSG provides all or a portion of certain business services that were performed by internal resources prior to the Distribution, such as information technology,accounting, accounts payable, payroll, procurement, tax, legal, human resources, insurance and risk management, investor relations, corporatecommunications, benefit plan administration and reporting, and internal audit functions as transition services. These services include the collection andstorage of certain personal information regarding employees and/or customers as well as information regarding the Company and our Distributors andadvertisers. See also “— We Face Continually Evolving Cybersecurity and Similar Risks, Which Could Result in the Disclosure of Confidential Information,Disruption of Our Business, Damage to Our Brands and Reputation, Legal Exposure and Financial Losses”. The transition services agreement is set to expirein September 2017. The Company anticipates entering into a replacement agreement with MSG covering substantially the same services.The media rights agreements provide us with the exclusive media rights to Knicks and Rangers games. Rights fees under the media rights agreementsamounted to approximately $134.3 million for the year ended June 30, 2017. The rights fees increase16Table of Contentsannually and are subject to adjustments in certain circumstances, including if MSG does not make available a minimum number of games in any year.Our advertising sales representation agreement with MSG, which has a term through June 30, 2022, provides for MSG to act as our advertising salesrepresentative and includes the exclusive right and obligation to sell certain advertising availabilities on our behalf for a commission. All of our advertisingsales personnel were transferred to MSG in connection with the Distribution. As a result of this arrangement, we depend on MSG's performance in the sale ofour advertising and have the right to terminate this agreement if certain sales thresholds are not met unless MSG elects to pay the Company the shortfall.The Company and MSG each rely on the other to perform its obligations under all of these agreements. If MSG were to breach, be unable to satisfy itsmaterial obligations under these agreements, including a failure to satisfy its indemnification or other financial obligations, or these agreements otherwiseterminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesSignificant properties that are leased include approximately 64,000 square feet housing the Company’s administrative and executive offices andapproximately 18,000 square feet of studio space in New York City.Item 3. Legal ProceedingsThe Company is a defendant in various lawsuits. Although the outcome of these matters cannot be predicted with certainty, management does not believethat resolution of these lawsuits will have a material adverse effect on the Company.Item 4. Mine Safety DisclosureNot applicable.17Table of ContentsPART IIItem 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecuritiesOur Class A Common Stock is listed on the NYSE under the symbol “MSGN”.Performance GraphThe following graph compares the cumulative total return of our Class A Common Stock for the last five years with the performance for the same period of theRussell 3000 Index and the Bloomberg Global Entertainment Media Competitive Peer Index. The comparison assumes an investment of $100 on June 30,2012 and reinvestment of dividends. The Distribution is treated as a reinvestment of a special dividend pursuant to SEC rules. The stock price performance inthis graph is not necessarily indicative of future stock performance. BasePeriod6/30/12 06/30/13 06/30/14 06/30/15 06/30/16 06/30/17MSG Networks Inc.$100.00 $158.25 $166.80 $223.00 $153.15 $224.13Russell 3000 Index100.00 121.46 152.10 163.19 166.68 197.53Bloomberg Global Entertainment Media Competitive PeerIndex100.00 147.38 194.88 219.99 177.79 198.90This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any of our filings underthe Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.As of June 30, 2017, there were 1,087 holders of record of our Class A Common Stock. There is no public trading market for our Class B Common Stock. Asof June 30, 2017, there were 14 holders of record of our Class B Common Stock.We did not pay any dividend on our common stock during the 2016 and 2017 fiscal years and do not have any current plans to pay a cash dividend on ourcommon stock for the foreseeable future. Our senior secured credit facilities restrict our ability to18Table of Contentsdeclare dividends in certain situations (see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidityand Capital Resources — Financing Agreements — Senior Secured Credit Facilities”).Price Range of MSG Networks Inc. Class A Common StockThe following tables set forth for the periods indicated the intra-day high and low sales prices per share of our Class A Common Stock as reported on theNYSE (or NASDAQ for stock prices prior to July 30, 2015):Year Ended June 30, 2017High Low For the Quarter ended June 30, 2017$25.30$20.80For the Quarter ended March 31, 201723.9521.15For the Quarter ended December 31, 201622.8518.20For the Quarter ended September 30, 201618.9814.73Year Ended June 30, 2016 For the Quarter ended June 30, 2016$18.12 $15.13For the Quarter ended March 31, 201620.66 15.30For the Quarter ended December 31, 201521.72 16.95For the Quarter ended September 30, 2015(a)84.53 63.50_________________(a) Share prices for the quarter ended September 30, 2015 do not reflect the impact of the Distribution.19Table of ContentsItem 6. Selected Financial DataThe operating and balance sheet data included in the following table has been derived from the consolidated financial statements of the Company and itssubsidiaries and should be read in conjunction with the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K and with“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” For Years Ended June 30, 2017 2016 2015 2014 2013 (in thousands, except per share data)Operating Data: Revenues$675,352 $658,198 $631,010 $714,514 $677,733Direct operating expenses271,751 268,024 217,233 259,434 218,665Selling, general and administrative expenses80,041 102,005 155,003 199,477 171,397Depreciation and amortization (including impairments)10,296 14,583 17,641 20,810 21,176Gain on sale of Fuse— — (186,178) — —Operating income313,264 273,586 427,311 234,793 266,495Other income (expense): Interest income2,782 2,368 2,068 1,918 2,188Interest expense(40,108) (31,683) (4,040) (5,877) (5,715)Miscellaneous expense— (2) (4) (1,441) —Income from continuing operations before income taxes275,938 244,269 425,335 229,393 262,968Income tax expense(108,476) (80,971) (176,905) (86,534) (106,815)Income from continuing operations167,462 163,298 248,430 142,859 $156,153Income (loss) from discontinued operations, net of taxes(120) (155,664) 6,271 (27,791) $(13,771)Net income$167,342 $7,634 $254,701 $115,068 $142,382Earnings (loss) per share: Basic Income from continuing operations$2.23 $2.17 $3.22 $1.85 $2.05Income (loss) from discontinued operations— (2.07) 0.08 (0.36) (0.18)Net income2.22 0.10 3.30 1.49 1.87Diluted Income from continuing operations$2.22 $2.16 $3.20 $1.83 $2.00Income (loss) from discontinued operations— (2.06) 0.08 (0.36) (0.18)Net income2.21 0.10 3.28 1.47 1.83Weighted-average number of common shares outstanding: Basic75,213 75,152 77,138 77,142 76,268Diluted75,560 75,527 77,687 78,167 77,940Balance Sheet Data: Total assets$805,044 $806,542 $3,019,829 $2,925,961 $2,732,214Total long-term debt1,312,845 1,477,759 — — —Capital lease obligations— — — 1,967 2,224Total stockholders’ equity (deficiency)(944,207) (1,119,958) 1,723,522 1,604,444 1,478,93520Table of ContentsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThis Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, may contain forward-looking statements withinthe meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,”“should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and financialperformance and plans identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of futureperformance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-lookingstatements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:•the demand for our programming among cable, satellite, telephone and other platforms (“Distributors”) and the subscribers thereto, and our ability toenter into and renew affiliation agreements with Distributors, as well as the impact of consolidation among Distributors;•the level of our revenues, which depends in part on the popularity and competitiveness of the sports teams whose games are broadcast on ournetworks and the popularity of other content aired on our networks;•the ability of our Distributors to maintain subscriber levels;•the impact of subscribers downgrading their programming packages to levels that do not include our networks;•the security of our program signal and electronic data;•general economic conditions especially in the New York City metropolitan area where we conduct the majority of our operations;•the demand for advertising and sponsorship arrangements and viewer ratings for our networks;•competition, for example, from other regional sports networks;•the relocation or insolvency of professional sports teams with which we have a media rights agreement;•our ability to maintain, obtain or produce content, together with the cost of such content;•our ability to renew or replace our media rights agreements with professional sports teams;•the acquisition or disposition of assets and/or the impact of, and our ability to successfully pursue, acquisitions or other strategic transactions, andthe operating and financial performance thereof (including those that we do not control);•the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured;•the impact of governmental regulations or laws and changes in such regulations or laws;•the impact of league rules, league regulations and/or league agreements and changes thereto;•cybersecurity and similar risks which could result in the disclosure of confidential information, disruption of our business or damage to our brandsand reputation;•our substantial debt and high leverage;•reduced access to capital markets or significant increases in costs to borrow;•financial community perceptions of our business, operations, financial condition and the industry in which we operate;•the tax-free treatment of the Distribution; and•the factors described under “Item 1A. Risk Factors” included in this Annual Report on Form 10-K.21Table of ContentsWe disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securitieslaws.All dollar amounts included in the following MD&A are presented in thousands, except as otherwise noted.IntroductionMD&A is provided as a supplement to, and should be read in conjunction with the audited consolidated financial statements and footnotes thereto includedin this Annual Report on Form 10-K to help provide an understanding of our financial condition, changes in financial condition and results of operations.Unless the context otherwise requires, all references to “we,” “us,” “our” or the “Company” refer collectively to MSG Networks Inc., a holding company, andits direct and indirect subsidiaries through which substantially all of our operations are conducted. The Company owns and operates two regional sports andentertainment networks, MSG Network (“MSGN”) and MSG+, collectively the “MSG Networks.”On September 30, 2015 (the “Distribution Date”), the Company distributed to its stockholders all of the outstanding common stock of The Madison SquareGarden Company (formerly MSG Spinco, Inc., and referred to herein as “MSG”) (the “Distribution”). MSG owns, directly or indirectly, the sports andentertainment businesses previously owned and operated by the Company’s sports and entertainment segments, owns, leases or operates the arenas and othervenues previously owned, leased or operated by the Company and owns the joint venture interests previously owned by the Company. In the Distribution,each holder of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”), of record as of the close of business, New YorkCity time, on September 21, 2015 (the “Record Date”), received one share of MSG Class A common stock, par value $0.01 per share, for every three shares ofthe Company’s Class A Common Stock held on the Record Date. Each holder of the Company’s Class B common stock, par value $0.01 per share (“Class BCommon Stock”), of record as of the Record Date received one share of MSG Class B common stock, par value $0.01 per share, for every three shares of theCompany's Class B Common Stock held on the Record Date. Following the Distribution, the Company no longer consolidates the financial results of MSGfor purposes of its own financial reporting and the historical financial results of MSG have been reflected in the Company's consolidated financial statementsas discontinued operations for all periods presented through the Distribution Date.Following the Distribution, the Company operates and reports financial information in one segment.This MD&A is organized as follows:Business Overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding ourresults of operations and financial condition and in anticipating future trends.Results of Operations. This section provides an analysis of our consolidated results of operations for the years ended June 30, 2017, 2016 and 2015.Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, as well as an analysis of our cash flows for theyears ended June 30, 2017, 2016 and 2015. The discussion of our financial condition and liquidity includes summaries of (i) our primary sources of liquidityand (ii) our contractual obligations that existed at June 30, 2017.Recently Issued Accounting Pronouncements Not Yet Adopted and Critical Accounting Policies. This section includes a discussion of accounting policiesconsidered to be important to our financial condition and results of operations and which require significant judgment and estimates on the part ofmanagement in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are discussed in the notesto our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.22Table of ContentsBusiness OverviewThe Company owns and operates two award-winning regional sports and entertainment networks, MSG Network (“MSGN”) and MSG+, collectively “MSGNetworks.” MSGN and MSG+ are home to ten professional sports teams. We deliver live games of the New York Knicks (the “Knicks”) of the NationalBasketball Association (“NBA”); the New York Rangers (the “Rangers”), New York Islanders (the “Islanders”), New Jersey Devils (the “Devils”) and BuffaloSabres (the “Sabres”) of the National Hockey League (“NHL”); the New York Liberty of the Women’s National Basketball Association; the New York RedBulls of Major League Soccer, and the Westchester Knicks of the National Basketball Association Gatorade League (formerly known as the NationalBasketball Association Development League). Additionally, we air programming of the New York Giants and Buffalo Bills of the National Football League.Revenue SourcesThe Company earns revenues from two primary sources: affiliation fees and advertising.Affiliation Fee RevenueThe Company earns affiliation fee revenue from distributors that carry our programming networks. The fees we receive depend largely on the demand fromsubscribers for our programming. Affiliation fee revenue constituted at least 90% of our consolidated revenues for each of the years ended June 30, 2017,2016 and 2015.Advertising RevenueThe Company primarily earns advertising revenue through the sale of commercial time to advertisers during our programming or through the sale of programsponsorship rights. The Company has an advertising sales representation agreement with MSG, which has a term through June 30, 2022, that provides forMSG to act as our advertising sales representative and includes the exclusive right and obligation to sell certain advertising availabilities on our behalf for acommission. The advertising sales representation agreement is subject to certain termination rights, including MSG’s right to terminate if MSG and theCompany are no longer affiliates and the Company’s right to terminate if certain sales thresholds are not met unless MSG elects to pay the Company theshortfall.Direct Operating ExpensesDirect operating expenses primarily include the cost of professional team rights acquired under media rights agreements to telecast various sporting events onour networks, and other programming and production costs of our networks.The Company has long-term media rights agreements with the Knicks, Rangers, Islanders, Devils and Sabres. The professional team media rights acquiredunder these agreements to telecast various sporting events and other programming for exhibition on our networks are typically expensed on a straight-linebasis over the term of the applicable contract or license period. We negotiate directly with the teams to determine the fee and other provisions of the mediarights agreements. Media rights fees for sports programming are influenced by, among other things, the size and demographics of the geographic area inwhich the programming is distributed, and the popularity and/or the competitiveness of a team. In connection with the Distribution, the Company enteredinto media rights agreements with the Knicks and the Rangers, which provide the Company with exclusive media rights to the teams’ games in their localmarkets. These agreements were effective July 1, 2015. Prior to the Distribution, these rights fees were eliminated in consolidation; however the pre-Distribution Date amounts are now presented as revenues in the loss from discontinued operations line with the offsetting expense in direct operatingexpenses, within continuing operations, in the accompanying consolidated statements of operations for the years ended June 30, 2016 and 2015.Other direct programming and production costs include, but are not limited to, the salaries of our on-air personalities, producers, directors, technicians, writersand other creative staff, as well as expenses associated with location costs, remote facilities and maintaining studios, origination, and transmission facilities.Selling, General and Administrative CostsSelling, general and administrative expenses primarily consist of administrative costs, including employee compensation and related benefits, professionalfees, as well as sales commissions and marketing costs.Selling, general and administrative expenses for periods prior to the Distribution include certain corporate overhead expenses that do not meet the criteria forinclusion in discontinued operations.23Table of ContentsFactors Affecting Operating ResultsThe financial performance of our business is affected by the affiliation agreements we negotiate with Distributors, the number of subscribers of certainDistributors and also by the advertising rates we charge advertisers. Certain of these factors in turn depend on the popularity and/or performance of theprofessional sports teams carried on MSG Networks as well as the cost and the attractiveness of our programming content.Due largely to our long-term media rights agreements with our NBA and NHL teams and the generally recurring nature of our affiliation fee revenue, MSGNetworks has consistently produced operating profits over a number of years. Advertising revenues are less predictable and can vary based upon a number offactors, including general economic conditions and team performance.Our Company’s future performance is also dependent on the U.S. and global economies, the impact of competition, and the relative strength of our currentand future advertising customers. Instability and weakness of the U.S. and global economies and the negative effects on consumers’ and businesses’discretionary spending may materially negatively affect our business and results of operations. See “Part I — Item 1. Business — Regulation” for other factorsthat may affect operating results.OtherOn July 1, 2014, the Company completed its sale of Fuse, a national music television network, to Fuse Media, Inc. for a cash purchase price of $231,995 anda 15% equity interest of approximately $24,000 in Fuse Media, LLC (“Fuse Media”). The Company recorded a pre-tax gain on the sale of Fuse, which isreflected in operating income in the accompanying consolidated statement of operations for the year ended June 30, 2015, of $186,178 (net of transactioncosts of $3,932).The equity interest in Fuse Media was transferred to MSG in connection with the Distribution.24Table of ContentsResults of OperationsComparison of the Year Ended June 30, 2017 versus the Year Ended June 30, 2016The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues. Years Ended June 30, Increase(Decrease)in NetIncome 2017 2016 Amount % of Revenues Amount % of Revenues Revenues$675,352 100 % $658,198 100 % $17,154Direct operating expenses271,751 40 % 268,024 41 % (3,727)Selling, general and administrative expenses80,041 12 % 102,005 15 % 21,964Depreciation and amortization10,296 2 % 14,583 2 % 4,287Operating income313,264 46 % 273,586 42 % 39,678Other income (expense): Interest income2,782 NM 2,368 NM 414Interest expense(40,108) (6)% (31,683) (5)% (8,425)Miscellaneous expense— NM (2) NM 2 (37,326) (6)% (29,317) (4)% (8,009)Income from continuing operations before incometaxes275,938 41 % 244,269 37 % 31,669Income tax expense(108,476) (16)% (80,971) (12)% (27,505)Income from continuing operations167,462 25 % 163,298 25 % 4,164Loss from discontinued operations, net of taxes(120) NM (155,664) (24)% 155,544Net income$167,342 25 % $7,634 1 % $159,708___________________________________NM – Percentage is not meaningfulFor the year ended June 30, 2016, the reported financial results of the Company reflect the fiscal 2016 first quarter results of the sports and entertainmentbusinesses of MSG as discontinued operations. In addition, results from continuing operations for the first quarter of fiscal year 2016 include certaincorporate overhead expenses that the Company did not incur during the year ended June 30, 2017 and does not expect to incur in future periods, but whichdid not meet the criteria for inclusion in discontinued operations.RevenuesRevenues for the year ended June 30, 2017 increased $17,154, or 3%, to $675,352 as compared with the prior year. The net increase was attributable to thefollowing:Increase in affiliation fee revenue$16,745Increase in advertising revenue542Other net decreases(133) $17,154The increase in affiliation fee revenue was primarily due to higher affiliation rates, partially offset by the impact of a low single-digit percentage decrease insubscribers as compared with the prior year and, to a lesser extent, the absence of the impact of a favorable affiliate adjustment recorded in the prior year.The increase in advertising revenue was primarily due to the favorable impact of a net decrease in deferred revenue related to ratings guarantees in the currentyear as compared with a net increase in deferred revenue in the prior year, and other net advertising increases partially offset by fewer live regular seasonprofessional sports telecasts.25Table of ContentsDirect operating expensesDirect operating expenses for the year ended June 30, 2017 increased $3,727, or 1%, to $271,751 as compared with the prior year due to higher rights feesexpense of $7,599, partially offset by the positive impact of the finalization of a matter related to the sale of Fuse, and other programming-related costdecreases, totaling to $3,872.Selling, general and administrative expensesSelling, general and administrative expenses for the year ended June 30, 2017 decreased $21,964, or 22%, to $80,041 as compared with the prior yearprimarily due to the absence of certain corporate overhead expenses included in the results of the prior year period. As noted above, the fiscal year 2016 firstquarter results include certain corporate expenses that the Company did not incur during the year ended June 30, 2017 and does not expect to incur in futureperiods. Partially offsetting this decrease are corporate costs which were incurred during fiscal year 2017 by MSG Networks Inc. as a standalone publiccompany, including higher employee compensation and related benefits.Depreciation and amortizationDepreciation and amortization for the year ended June 30, 2017 decreased $4,287, or 29%, to $10,296 as compared with the prior year primarily due to theabsence of depreciation expense included in the fiscal year 2016 first quarter results on certain corporate property and equipment that was transferred to MSGin connection with the Distribution, but which did not meet the criteria for inclusion in discontinued operations, as well as the impact of certain property andequipment being fully depreciated during fiscal year 2016.Operating incomeOperating income for the year ended June 30, 2017 increased $39,678, or 15%, to $313,264 as compared with the prior year primarily due to (as discussedabove) lower selling, general and administrative expenses (including share-based compensation expense), higher revenues and, to a lesser extent, lowerdepreciation and amortization, partially offset by higher direct operating expenses.Interest expenseInterest expense for the year ended June 30, 2017 increased $8,425, or 27%, to $40,108 as compared with the prior year primarily due to higher interestexpense incurred under the Company’s senior secured credit facilities with a syndicate of lenders (see “Financing Agreements — Senior Secured CreditFacilities”), which were entered into on September 28, 2015 and accordingly did not begin to accrue interest until that date, and other net increases. Theseother net increases primarily reflect higher interest rates in fiscal year 2017 period, partially offset by a lower average principal balance under the Term LoanFacility in fiscal year 2017 and the absence of the write-off of a portion of the deferred financing costs associated with the Company’s former credit facilityrecorded in the prior year.Income taxesIncome tax expense attributable to continuing operations for the year ended June 30, 2017 of $108,476 differs from the income tax expense derived fromapplying the statutory federal rate to pretax income due principally to the impact of state and local income taxes (net of federal benefit) of $19,489, anincrease in state tax rates used to re-measure the Company’s deferred taxes of $85, and other items of $548. These increases were partially offset by the impactof the tax benefits related to the domestic production activities deduction of $7,998, tax return to book provision adjustments in connection with the filing ofthe Company's federal, state and local income tax returns of $208, and a tax benefit related to uncertain tax positions of $18.Income tax expense attributable to continuing operations for the year ended June 30, 2016 of $80,971 differs from the income tax expense derived fromapplying the statutory federal rate to pretax income due principally to a reduction in state tax rates used to re-measure the Company’s deferred taxes of$12,717, tax benefits of the domestic production activities deduction of $6,329, a tax benefit of $3,271 related to a tax return to book provision adjustmentin connection with its anticipated tax return for the tax year ended December 31, 2015. These decreases were partially offset by state and local income taxesof $17,709 (net of federal benefit), and other items of $84.Adjusted operating incomeThe Company evaluates performance based on several factors, of which the key financial measure is adjusted operating income (which we formerly referred toas adjusted operating cash flow). Although the Company has renamed this non-GAAP measure, the components of adjusted operating income are identical tothe components of adjusted operating cash flow. Adjusted operating income is defined as operating income (loss) before (i) depreciation, amortization andimpairments of property and equipment and intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits and (iv)26Table of Contentsgains or losses on sales or dispositions of businesses. The Company has presented the components that reconcile adjusted operating income to operatingincome, a GAAP measure. Years Ended June 30, Increase (Decrease)in AdjustedOperating Income 2017 2016 Operating income$313,264 $273,586 $39,678Share-based compensation9,931 9,266 665Depreciation and amortization10,296 14,583 (4,287)Adjusted operating income$333,491 $297,435 $36,056Adjusted operating income for the year ended June 30, 2017 increased $36,056, or 12%, to $333,491 as compared with the prior year primarily due to (asdiscussed above) lower selling, general and administrative expenses (excluding share-based compensation expense) and higher revenues, partially offset byhigher direct operating expenses.27Table of ContentsComparison of the Year Ended June 30, 2016 versus the Year Ended June 30, 2015The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues. Years Ended June 30, Increase(Decrease)in NetIncome 2016 2015 Amount % of Revenues Amount % of Revenues Revenues$658,198 100 % $631,010 100 % $27,188Direct operating expenses268,024 41 % 217,233 34 % (50,791)Selling, general and administrative expenses102,005 15 % 155,003 25 % 52,998Depreciation and amortization14,583 2 % 17,641 3 % 3,058Gain on sale of Fuse— NM (186,178) (30)% (186,178)Operating income273,586 42 % 427,311 68 % (153,725)Other income (expense): Interest income2,368 NM 2,068 NM 300Interest expense(31,683) (5)% (4,040) (1)% (27,643)Miscellaneous expense(2) NM (4) NM 2 (29,317) (4)% (1,976) NM (27,341)Income from continuing operations before incometaxes244,269 37 % 425,335 67 % (181,066)Income tax expense(80,971) (12)% (176,905) (28)% 95,934Income from continuing operations163,298 25 % 248,430 39 % (85,132)Income (loss) from discontinued operations, net oftaxes(155,664) (24)% 6,271 1 % (161,935)Net income$7,634 1 % $254,701 40 % $(247,067)___________________________________NM – Percentage is not meaningfulFor each quarter of fiscal year 2015, as well as the first quarter of fiscal year 2016, the reported financial results of the Company reflect the results of the sportsand entertainment businesses of MSG as discontinued operations. In addition, results from continuing operations for these periods include certain corporateoverhead expenses that the Company did not incur in the fiscal year 2016 second, third and fourth quarters and does not expect to incur in future periods, butwhich did not meet the criteria for inclusion in discontinued operations. The reported financial results of the Company for the periods after the Distributionreflect the Company’s results on a standalone basis, including the Company’s actual corporate overhead.RevenuesRevenues for the year ended June 30, 2016 increased $27,188, or 4%, to $658,198 as compared with the prior year. The net increase was attributable to thefollowing:Increase in affiliation fee revenue$19,736Increase in advertising revenue7,075Other net increases377 $27,188The increase in affiliation fee revenue was primarily due to higher affiliation rates, partially offset by the impact of a low single digit percentage decrease insubscribers as compared with the prior year.The increase in advertising revenue was primarily driven by higher average per-game sales from the telecast of live professional sports programming.28Table of ContentsOther net increases were primarily attributable to the recognition of certain broadcast revenues, partially offset by the absence of a retroactive royaltypayment recorded in the prior year and lower revenues associated with certain services provided to Fuse Media, Inc.Direct operating expensesDirect operating expenses for the year ended June 30, 2016 increased $50,791, or 23%, to $268,024 as compared with the prior year due to higher rights feesexpense of approximately $52,400, partially offset by other programming-related cost decreases of $1,400. The higher rights fees expense includes a $49,000increase related to the Company’s long-term media rights agreements with the Knicks and Rangers. In connection with the Distribution, the Companyentered into media rights agreements with the Knicks and the Rangers, which provide the Company with exclusive media rights to team games in their localmarkets.Selling, general and administrative expensesSelling, general and administrative expenses for the year ended June 30, 2016 decreased $52,998, or 34%, to $102,005 as compared with the prior yearprimarily due to lower corporate overhead costs. The results for the first quarter of fiscal year 2016 and each quarter of fiscal year 2015 include certaincorporate expenses that the Company did not incur during the second, third, and fourth quarters of fiscal year 2016 and does not expect to incur in futureperiods. Partially offsetting this decrease are corporate costs incurred during the second, third and fourth quarters of fiscal year 2016 by the Company as astandalone public company. Additionally, the Company's results for the second and third quarters of fiscal year 2016 reflect incremental net expensesassociated with commissions incurred by the Company pursuant to an advertising sales representation agreement with MSG as compared to the historicalcosts of the Company’s advertising sales personnel and other associated corporate costs, that the Company no longer incurs as these personnel have beentransferred to MSG.Depreciation and amortizationDepreciation and amortization for the year ended June 30, 2016 decreased $3,058, or 17%, to $14,583 as compared with the prior year primarily driven bylower depreciation expense on certain corporate property and equipment that was transferred to MSG in connection with the Distribution, but which did notmeet the criteria for inclusion in discontinued operations.Gain on sale of FuseGain on sale of Fuse for the year ended June 30, 2015 represents the Company’s gain, net of transaction costs, from the sale which was completed on July 1,2014. See Note 5 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.Operating incomeOperating income for the year ended June 30, 2016 decreased $153,725, or 36%, to $273,586 as compared with the prior year primarily due to (as discussedabove) the gain on sale of Fuse in fiscal year 2015 and, to a lesser extent, higher direct operating expenses. These declines were partially offset by lowerselling, general and administrative expenses (including share-based compensation expense), higher revenues and, to a lesser extent, lower depreciation andamortization.Interest expenseInterest expense for the year ended June 30, 2016 increased $27,643 to $31,683 as compared with the prior year primarily due to interest expense incurredunder the Company’s senior secured credit facilities with a syndicate of lenders (see “Financing Agreements — Senior Secured Credit Facilities”).Income taxesIncome tax expense attributable to continuing operations for the year ended June 30, 2016 of $80,971 differs from the income tax expense derived fromapplying the statutory federal rate to pretax income due principally to a reduction in state tax rates used to re-measure the Company’s deferred taxes of$12,717, tax benefits of the domestic production activities deduction of $6,329, a tax benefit of $3,271 related to a tax return to book provision adjustmentin connection with its anticipated tax return for the tax year ended December 31, 2015. These decreases were partially offset by state and local income taxesof $17,709 (net of federal benefit), and other items of $84.Income tax expense attributable to continuing operations for the year ended June 30, 2015 of $176,905 differs from the income tax expense derived fromapplying the statutory federal rate to pretax income due principally to state and local income taxes of $31,707 (net of federal benefit), an increase in state taxrates used to value deferred taxes due to the sale of Fuse of $8,122 and29Table of Contentsother items of $228. These increases were partially offset by the impact of the tax benefits of the domestic production activities deduction of $11,076, arelease of uncertain tax position liabilities of $894, and a tax return to book provision adjustment in connection with the filing of the Company’s federalincome tax return of $49.Adjusted operating incomeThe Company has presented the components that reconcile adjusted operating income, a non-GAAP measure, to operating income, a GAAP measure. Thefollowing is a reconciliation of operating income to adjusted operating income: Years Ended June 30, Increase (Decrease)in AdjustedOperating Income 2016 2015 Operating income$273,586 $427,311 $(153,725)Share-based compensation9,266 10,211 (945)Depreciation and amortization14,583 17,641 (3,058)Gain on sale of Fuse— (186,178) 186,178Adjusted operating income$297,435 $268,985 $28,450Adjusted operating income for the year ended June 30, 2016 increased $28,450, or 11%, to $297,435 as compared with the prior year primarily due to (asdiscussed above) lower selling, general and administrative expenses (excluding share-based compensation expense) and higher revenues partially offset byhigher direct operating expenses.Liquidity and Capital ResourcesOverviewOur primary sources of liquidity are cash and cash equivalents, cash flows from the operations of our business and available borrowing capacity under our$250,000 revolving credit facility with a syndicate of lenders which was undrawn as of June 30, 2017 (see “Financing Agreements — Senior Secured CreditFacilities” below). Our principal uses of cash include working capital-related items, capital spending, taxes and debt service. The Company’s use of itsavailable liquidity will be based upon the ongoing review of the funding needs of the business, the optimal allocation of cash resources, and the timing ofcash flow generation.We believe we have sufficient liquidity, including approximately $141,000 in cash and cash equivalents, as of June 30, 2017, as well as the availableborrowing capacity under our revolving credit facility and our anticipated operating cash flows, to fund our business operations and service our outstandingterm loan (see “Financing Agreements — Senior Secured Credit Facilities” below) over the next twelve months. However, potential subscriber reductions ofour Distributors, changes in the demand for our programming, advertising revenue declines, our ability to maintain or obtain content, and other factors couldadversely impact our business and results of operations, which might require that we seek alternative sources of funding through the capital and creditmarkets that may or may not be available to us.Financing AgreementsFormer Revolving Credit FacilityOn May 6, 2014, MSGN Holdings, L.P., formerly MSG Holdings, L.P., (“MSGN L.P.”) and certain of its subsidiaries entered into a credit agreement with asyndicate of lenders providing for a senior secured revolving credit facility of $500,000 with a term of five years (the “Former Revolving Credit Facility”). Inconnection with the Distribution, MSGN L.P. terminated the Former Revolving Credit Facility effective on September 28, 2015.30Table of ContentsSenior Secured Credit Facilities On September 28, 2015, MSGN L.P., MSGN Eden, LLC, an indirect subsidiary of the Company and the general partner of MSGN L.P., Regional MSGNHoldings LLC, a direct subsidiary of the Company and the limited partner of MSGN L.P. (collectively with MSGN Eden, LLC, the “Holdings Entities”), andcertain subsidiaries of MSGN L.P. entered into a credit agreement (the “Credit Agreement”) with a syndicate of lenders.The Credit Agreement provides MSGN L.P. with senior secured credit facilities (the “Senior Secured Credit Facilities”) consisting of: (a) an initial $1,550,000term loan facility (the “Term Loan Facility”) and (b) a $250,000 revolving credit facility (the “Revolving Credit Facility”), each with a term of five years. Inconnection with the Distribution, $1,450,000 of the proceeds from the Term Loan Facility was contributed to MSG immediately following the closing of theSenior Secured Credit Facilities. The remainder of the proceeds from the Term Loan Facility were used by MSGN L.P. to pay for certain fees and expensesassociated with the Distribution and the Senior Secured Credit Facilities and the balance was designated for use to fund working capital needs and othergeneral corporate purposes of MSGN L.P. The Revolving Credit Facility was undrawn as of June 30, 2017 and is available to fund working capital needs andother general corporate purposes of MSGN L.P. Up to $35,000 of the Revolving Credit Facility is available for the issuance of letters of credit.The Credit Agreement generally requires the Holding Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis to comply with amaximum total leverage ratio of 6.00:1.00 from the closing date until September 30, 2016 and a maximum total leverage ratio of 5.50:1.00 from and afterOctober 1, 2016 until maturity, subject, in each case, to upward adjustment during the continuance of certain events. In addition, there is a minimum interestcoverage ratio of 2.00:1.00 for the Holdings Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis. As of June 30, 2017, the HoldingEntities and MSGN L.P. and its restricted subsidiaries on a consolidated basis were in compliance with the financial covenants of the Credit Agreement. Allborrowings under the Credit Agreement are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representationsand warranties. As of June 30, 2017, there were no letters of credit issued and outstanding under the Revolving Credit Facility, which provides full borrowingcapacity of $250,000. The Company has made principal payments aggregating $228,750 through June 30, 2017, including voluntary payments aggregating$100,000 made in fiscal year 2017. The Term Loan Facility amortizes quarterly in accordance with its terms through June 30, 2020 with a final maturity dateon September 28, 2020.In addition to the financial covenants discussed above, the Credit Agreement and the related security agreement contain certain customary representationsand warranties, affirmative covenants and events of default. The Credit Agreement contains certain restrictions on the ability of the Holding Entities andMSGN L.P. and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the CreditAgreement, including the following: (i) incurring additional indebtedness and contingent liabilities; (ii) creating liens on certain assets; (iii) makinginvestments, loans or advances in or to other persons; (iv) paying dividends and distributions or repurchasing capital stock; (v) changing their lines ofbusiness; (vi) engaging in certain transactions with affiliates; (vii) amending specified material agreements; (viii) merging or consolidating; (ix) makingcertain dispositions; and (x) entering into agreements that restrict the granting of liens. The Holdings Entities are also subject to customary passive holdingcompany covenants.See Note 8 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on the Credit Agreement.31Table of ContentsContractual ObligationsAs of June 30, 2017, future cash payments required under contracts entered into by the Company in the normal course ofbusiness are as follows: Payments Due by Period Total Year 1 Years 2-3 Years 4-5 More Than5 YearsContractual obligations (a)$4,581,135 $243,617 $495,754 $503,129 $3,338,635Operating lease obligations (b)31,352 5,841 11,522 7,902 6,087Debt repayment (c)1,321,250 75,000 189,375 1,056,875 —Total$5,933,737 $324,458 $696,651 $1,567,906 $3,344,722(a)Contractual obligations not reflected on the balance sheet consist primarily of obligations under our media rights agreements.(b)Operating lease obligations primarily represent future minimum rental payments on various long-term, noncancelable leases for office and studiospace.(c)Consists of principal repayments required under the Company’s Term Loan Facility.Cash Flow DiscussionOperating Activities from continuing operationsNet cash provided by operating activities from continuing operations for the year ended June 30, 2017 increased by $15,310 to $197,158 as compared withthe prior year. This increase was due to higher income from continuing operations before income taxes and, to lesser extent, other net increases, partiallyoffset by higher income taxes paid by continuing operations as compared with the prior year. Net cash used in operating activities of discontinued operationsfor the prior year period includes approximately $120,000 of income taxes paid. See Note 17 to the consolidated financial statements included in Item 8 ofthis Annual Report on Form 10-K.Net cash provided by operating activities from continuing operations for the year ended June 30, 2016 increased by $159,197 to $181,848 as compared withthe prior year. The change is primarily due to lower income taxes paid by continuing operations, including income taxes paid in fiscal year 2015 related tothe sale of Fuse (the cash proceeds related to the sale are included in investing activities). Net cash used in operating activities of discontinued operations forfiscal year 2016 includes approximately $120,000 of income taxes paid. See Note 17 to the consolidated financial statements included in Item 8 of thisAnnual Report on Form 10-K.Investing Activities from continuing operationsNet cash used in investing activities from continuing operations for the year ended June 30, 2017 increased by $1,571 to $4,894 as compared with the prioryear due to higher capital expenditures in the current year.Net cash used in investing activities from continuing operations for the year ended June 30, 2016 was $3,323 as compared with net cash provided byinvesting activities from continuing operations in the prior year of $221,427. This change is primarily due to proceeds received during fiscal year 2015 fromthe sale of Fuse, slightly offset by lower capital expenditures in fiscal year 2016 as compared with the prior year.32Table of ContentsFinancing Activities from Continuing OperationsNet cash used in financing activities from continuing operations for the year ended June 30, 2017 increased by $76,228 to $169,769 as compared with theprior year. The main drivers of this change are higher principal repayments on the Company’s Term Loan Facility, including fiscal year 2017 voluntarypayments of $100,000, as compared with the prior year, partially offset by the absence of the net impact of the following items which occurred in fiscal year2016: (i) cash distributed with MSG in connection with the Distribution, (ii) cash used for repurchases of the Company’s Class A Common Stock under ashare repurchase program which was terminated effective as of the Distribution Date, (iii) cash used for financing costs and (iv) the proceeds received from theTerm Loan Facility.Net cash used in financing activities from continuing operations for the year ended June 30, 2016 improved by $54,715 to $93,541 as compared with theprior year primarily due to the proceeds from the Term Loan Facility received in fiscal year 2016, largely offset by the cash distributed with MSG, as well asthe Company’s principal payments on the Term Loan Facility during fiscal year 2016. This change was also impacted by less cash used in fiscal year 2016for repurchases of the Company’s Class A Common Stock as compared with the prior year.Recently Issued Accounting Pronouncements Not Yet Adopted and Critical Accounting PoliciesRecently Issued Accounting Pronouncements Not Yet AdoptedIn May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts withCustomers (Topic 606), which supersedes the revenue recognition requirements in FASB Accounting Standards Codification (“ASC”) Topic 605, RevenueRecognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflectsthe consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about thenature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgmentsand assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts withCustomers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU No. 2014-09 for all entities by one year. In March 2016,the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which providesclarification on the implementation guidance on principal versus agent considerations outlined in ASU No. 2014-09. In April 2016, the FASB issuedASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which finalized amendments toidentifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASU No. 2016-12, Revenue fromContracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which clarifies assessing collectibility, noncashconsideration, presentation of sales taxes, completed contracts and contract modifications at transition. This standard will be effective for the Companybeginning in the first quarter of fiscal year 2019 using one of two retrospective application methods. The Company is currently evaluating the impact thisstandard will have on its consolidated financial statements.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balancesheet for those leases classified as operating leases under previous GAAP. The amended guidance also requires additional quantitative and qualitativedisclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of anorganization’s leasing activities. This standard will be effective for the Company beginning in the first quarter of fiscal year 2020, with early adoptionpermitted. This standard will be adopted using a modified retrospective approach. The Company is currently evaluating the impact this standard will have onits consolidated financial statements.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,which amends ASC Topic 230, Statement of Cash Flows, to eliminate the diversity in practice related to the classification of certain cash receipts andpayments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. This standard will be effective for the Companybeginning in the first quarter of fiscal year 2019, with early adoption permitted and the retrospective approach required. The adoption of this guidance is notexpected to have a material impact on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies thedefinition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions(or disposals) of assets or businesses, which will effect various areas of accounting including, but not limited to, goodwill and consolidation. This standardwill be effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The standard is to be appliedprospectively. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.33Table of ContentsIn January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, whichsimplifies the measurement of goodwill impairment by eliminating the requirement of performing a hypothetical purchase price allocation. Instead,impairment will be measured using the difference between the carrying amount and fair value of the reporting unit. The amended guidance also eliminatesthe requirement for any reporting unit with a zero or a negative carrying amount to perform a qualitative assessment and will require disclosure of the amountof goodwill allocated to each reporting unit with a zero or a negative carrying amount of net assets. This standard will be effective for the Companybeginning in the first quarter of fiscal year 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates afterJanuary 1, 2017. The standard is to be applied prospectively. Based on the Company's most recent annual goodwill impairment test completed in fiscal year2017, the adoption of this guidance is not expected to have any initial impact on the Company's consolidated financial statements.In March 2017, the FASB issued ASU No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic PensionCost and Net Periodic Postretirement Benefit Cost, which requires: (i) presentation of the service cost component of net periodic benefit cost within the sameline item as other compensation costs arising from services rendered by relevant employees during the period, and (ii) the non-service cost components of netperiodic benefit cost to be presented separately in the income statement from the service cost component and not be included in the subtotal for operatingincome. In addition, only the service cost component is eligible to be capitalized into an asset. This standard will be effective for the Company beginning inthe first quarter of fiscal year 2019, with early adoption permitted at the beginning of an annual period for which financial statements have not been issued.The standard is to be applied retrospectively, except for the change to the capitalization guidelines, which is to be applied prospectively. Although theCompany does not expect the standard to have an impact on its consolidated net income, the Company’s net periodic benefit cost for fiscal year 2017includes approximately $1,600 of expense that will be reclassified from operating income to a line item below operating income upon adoption.In May 2017, the FASB issued ASU No. 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting, which providesguidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entityshould account for the effects of a modification unless all of the following characteristics of the modified award are the same as the original awardimmediately before the original award is modified: (i) the award’s fair value, (ii) the award’s vesting condition, and (iii) the award’s classification as an equityor liability instrument. This standard will be effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. Thestandard is to be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance is not expected to have a materialimpact on the Company's consolidated financial statements.Critical Accounting PoliciesThe preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptionsabout future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assetsand liabilities, and reported amounts of revenues and expenses. Management believes its use of estimates in the consolidated financial statements to bereasonable. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financialresults include the following:Impairment of Long-Lived and Indefinite-Lived AssetsThe Company’s long-lived and indefinite-lived assets accounted for approximately 59% of the Company’s consolidated total assets as of June 30, 2017 andconsist of the following:Goodwill$424,508Amortizable intangible assets, net40,663Property and equipment, net11,828 $476,999In assessing the recoverability of the Company’s long-lived and indefinite-lived assets, the Company must make estimates and assumptions regarding futurecash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whetheran impairment charge is recognized and also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevantinformation. These estimates are subjective in nature and involve significant uncertainties and judgments and, therefore, cannot be determined withprecision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, theCompany may be required to record impairment charges related to its long-lived and/or indefinite-lived assets.34Table of ContentsGoodwillGoodwill is tested annually for impairment as of August 31st and at any time upon the occurrence of certain events or substantive changes in circumstances.The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company cansupport the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not needto perform the two-step impairment test for that reporting unit. If the Company cannot support such a conclusion or the Company does not elect to performthe qualitative assessment then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of areporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwillimpairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fairvalue of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the impliedfair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the samemanner as the amount of goodwill that would be recognized in a business combination. The Company has one reporting unit for evaluating goodwillimpairment. For all periods presented the Company elected to perform the qualitative assessment of impairment for the Company’s goodwill. Theseassessments considered factors such as:•Macroeconomic conditions;•Industry and market considerations; •Cost factors;•Overall financial performance;•Other relevant company-specific factors such as changes in management, strategy or customers; and•Relevant specific events such as changes in the carrying amount of net assets.During the first quarter of fiscal year 2017, the Company performed its annual impairment test of goodwill, and there was no impairment of goodwillidentified.Other Long-Lived AssetsFor other long-lived assets, including intangible assets that are amortized, the Company evaluates assets for recoverability when there is an indication ofpotential impairment. If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fairvalue of the asset group is determined and the carrying value of the asset group is written down to fair value.As of June 30, 2017, the Company’s intangible assets subject to amortization, which were affiliate relationships, have an estimated useful life of 24 years.The useful lives for the affiliate relationships were determined based upon an estimate for renewals of existing agreements the Company had in place with itsmajor customers in April 2005 (the time that purchase accounting was applied). The Company has renewed its major affiliation agreements and maintainedcustomer relationships in the past and believes it will be able to renew its major affiliation agreements and maintain those customer relationships in thefuture. In light of these facts and circumstances, the Company has determined that its estimated useful lives are appropriate. However, it is possible that theCompany will not successfully renew such agreements as they expire or that if it does, the net revenue earned may not equal or exceed the net revenuecurrently being earned, which could have a material negative effect on our business.There have been periods when an existing affiliation agreement has expired and the parties have not finalized negotiations of either a renewal of thatagreement or a new agreement for certain periods of time. In certain of these circumstances, Distributors may continue to carry the service(s) until theexecution of definitive renewal or replacement agreements (or until we or the affiliate determine that carriage should cease). See “Part I — Item 1A. RiskFactors — The Success of Our Business Depends on Affiliation Fees We Receive Under Our Affiliation Agreements, the Loss of Which or Renewal of Whichon Less Favorable Terms May Have a Material Negative Effect on Our Business and Results of Operations.”If a Distributor ceases to carry the service on an other than temporary basis, the Company would record an impairment charge for the then remaining carryingvalue of the affiliate relationship intangible asset associated with that Distributor. If the Company were to renew an affiliation agreement at rates thatproduced materially less net revenue compared to the net revenue produced under the previous agreement, the Company would evaluate the impact on itscash flows and, if necessary, would further evaluate such indication of potential impairment by following the policy described above for the asset or assetgroup containing that intangible asset. The Company also would evaluate whether the remaining useful life of the affiliate relationship remained appropriate.Based on the carrying value of the affiliate relationships recorded as of June 30, 2017, if the estimated life of these affiliate relationships were shortened by10%, the effect on amortization for the year ended June 30, 2017 would be an increase of approximately $384.35Table of ContentsDefined Benefit Pension Plans and Other Postretirement Benefit PlanThe Company utilizes actuarial methods to calculate pension and other postretirement benefit obligations and the related net periodic benefit cost, which arebased on actuarial assumptions. Two key assumptions, the discount rate and the expected long-term rate of return on plan assets, are important elements ofthe plans' expense and liability measurement and we evaluate these key assumptions annually. Other assumptions include demographic factors, such asmortality, retirement age and turnover. The actuarial assumptions used by the Company may differ materially from actual results due to various factors,including, but not limited to, changing economic and market conditions. Differences between actual and expected occurrences could significantly impact theactual amount of net periodic benefit cost and the benefit obligation recorded by the Company. Material changes in the costs of the plans may occur in thefuture due to changes in these assumptions, changes in the number of the plan participants, changes in the level of benefits provided, changes in asset levelsand changes in legislation. Our assumptions reflect our historical experience and our best judgment regarding future expectations.Accumulated and projected benefit obligations reflect the present value of future cash payments for benefits. We use the Willis Towers Watson U.S. RateLink: 40-90 discount rate model (which is developed by examining the yields on selected highly rated corporate bonds) to discount these benefit paymentson a plan by plan basis, to select the rates at which we believe each plan's benefits could be effectively settled. Lower discount rates increase the presentvalue of benefit obligations and will usually increase the subsequent year's net periodic benefit cost. The weighted-average discount rates used to determinebenefit obligations as of June 30, 2017 for the Company's pension plans and postretirement plan were 3.80% and 3.68%, respectively. A 25 basis pointdecrease in these assumed discount rates would increase the projected benefit obligations for the Company's pension plans and postretirement plan atJune 30, 2017 by $1,510 and $105, respectively. The weighted-average discount rates used to determine the service cost and interest cost components of netperiodic benefit cost for the year ended June 30, 2017 for the Company's pension plans were 3.73% and 3.03%, respectively. The weighted-average discountrates used to determine the service cost and interest cost components of net periodic benefit cost for the year ended June 30, 2017 for the Company'spostretirement plan were 3.63% and 2.84%, respectively. A 25 basis point decrease in these assumed discount rates would increase the total net periodicbenefit cost for the Company's pension plans by $100 and decrease net periodic benefit cost for the postretirement plan by $3 for the year ended June 30,2017.The expected long-term return on plan assets is based on a periodic review and modeling of the plans' asset allocation structures over a long-term horizon.Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling, and are based on comprehensivereviews of historical data, forward-looking economic outlook, and economic/financial market theory. The expected long-term rate of return was selected fromwithin the reasonable range of rates determined by (a) historical real returns, net of inflation, for the asset classes covered by the investment policy, and(b) projections of inflation over the long-term period during which benefits are payable to plan participants. The expected long-term rate of return on planassets for the Company's funded pension plans was 3.38% for the year ended June 30, 2017. Performance of the capital markets affects the value of assets thatare held in trust to satisfy future obligations under the Company's funded plans. Adverse market performance in the future could result in lower rates of returnfor these assets than projected by the Company which could increase the Company's funding requirements related to these plans, as well as negatively affectthe Company's operating results by increasing the net periodic benefit cost. A 25 basis point decrease in the long-term return on pension plan assetsassumption would increase net periodic pension benefit cost by $39 for the year ended June 30, 2017.Another important assumption for our postretirement plan is healthcare cost trend rates. We developed our estimate of the healthcare cost trend rates throughexamination of the Company's claims experience and the results of recent healthcare trend surveys.Assumptions for healthcare cost trend rates used to determine the benefit obligation and net periodic benefit cost for our postretirement plan as of and for theyear ended June 30, 2017 are as follows: Net PeriodicBenefit Cost Benefit ObligationHealthcare cost trend rate assumed for next year7.25% 7.25%Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)5.00% 5.00%Year that the rate reaches the ultimate trend rate2026 2027A one percentage point change in assumed healthcare cost trend rates would have the following effects on the benefit obligation for our postretirement planand net periodic postretirement benefit cost as of and for the year ended June 30, 2017: 36Table of Contents Increase(Decrease) onTotal of Serviceand Interest CostComponents Increase(Decrease) onBenefit ObligationOne percentage point increase$24 $448One percentage point decrease(21) (382)Generally accepted accounting principles (“GAAP”) includes mechanisms that serve to limit the volatility in the Company's earnings that otherwise wouldresult from recording changes in the value of plan assets and benefit obligations in our consolidated financial statements in the periods in which thosechanges occur. For example, while the expected long-term rate of return on the plans' assets should, over time, approximate the actual long-term returns,differences between the expected and actual returns could occur in any given year. These differences contribute to the deferred actuarial gains or losses,which are then amortized over time.See Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on our pension plans andother postretirement benefit plan.Item 7A. Quantitative and Qualitative Disclosures About Market RiskFor sensitivity analyses and other information regarding market risks we face in connection with our pension and postretirement plans, see “Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations —Recently Issued Accounting Pronouncements Not Yet Adoptedand Critical Accounting Policies — Critical Accounting Policies — Defined Benefit Pension Plans and Other Postretirement Benefit Plan,” whichinformation is incorporated by reference herein.Our market risk exposure to interest rate risk relates to any borrowing we may incur.Borrowings under the credit agreement, dated September 28, 2015, among MSGN L.P., MSGN Eden, LLC, Regional MSGN Holdings LLC and certainsubsidiaries of MSGN L.P. and a syndicate of lenders (the "Credit Agreement") bear interest, based on our election, at a floating rate based upon LIBOR, theNew York Fed Bank Rate or the U.S. Prime Rate, plus, in each case, an additional rate which is fixed for an initial period of time and thereafter dependentupon our total leverage ratio at the time. Accordingly, we are subject to interest rate risk with respect to the tenor of any borrowings we may incur under theCredit Agreement. The effect of a hypothetical 100 basis point increase in floating interest rates prevailing at June 30, 2017 and continuing for a full yearwould increase interest expense related to the amount outstanding under our $1.550 billion term loan facility provided under the Credit Agreement by$12,683. If appropriate, we may seek to reduce such exposure through the use of interest rate swaps or similar instruments. See “Item 7. Management'sDiscussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financing Agreements” for moreinformation on our Credit Agreement.We have de minimis foreign currency risk exposure as our business operates almost entirely in U.S. Dollars. We do not have any meaningful commodity riskexposures associated with our operations.Item 8. Financial Statements and Supplementary DataThe Financial Statements required by this Item 8 appear beginning on page F-1 of this Annual Report on Form 10-K, and are incorporated by referenceherein.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.37Table of ContentsItem 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresAn evaluation was carried out under the supervision and with the participation of the Company's management, including our Chief Executive Officer andChief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that as of June 30,2017 the Company's disclosure controls and procedures were effective at a reasonable level of assurance in alerting them in a timely manner to materialinformation required to be disclosed in our periodic reports filed with the SEC.Management's Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f)under the Exchange Act. The Company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenanceof records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of theCompany; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company'sassets that could have a material effect on the financial statements.Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internalcontrol over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate.Under the supervision and with the participation of management, including the Company's Chief Executive Officer and Chief Financial Officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, ourmanagement concluded that our internal control over financial reporting was effective as of June 30, 2017.The effectiveness of our internal control over financial reporting as of June 30, 2017 has been audited by KPMG LLP, an independent registered publicaccounting firm, as stated in their report which is included herein.Changes in Internal ControlsThere were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under theExchange Act) during the fiscal quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’sinternal control over financial reporting.Item 9B. Other InformationNone.38Table of ContentsPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceInformation relating to our directors, executive officers and corporate governance will be included in the proxy statement for the 2017 annual meeting of theCompany's stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference.Item 11. Executive CompensationInformation relating to executive compensation will be included in the proxy statement for the 2017 annual meeting of the Company's stockholders, which isexpected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersInformation relating to the beneficial ownership of our common stock will be included in the proxy statement for the 2017 annual meeting of the Company'sstockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference.Item 13. Certain Relationships and Related Transactions, and Director IndependenceInformation relating to certain relationships and related transactions and director independence will be included in the proxy statement for the 2017 annualmeeting of the Company's stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference.Item 14. Principal Accountant Fees and ServicesInformation relating to principal accountant fees and services will be included in the proxy statement for the 2017 annual meeting of the Company'sstockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference.39Table of ContentsPART IVItem 15. Exhibits and Financial Statement Schedules Page No.The following documents are filed as part of this report: 1.The financial statements as indicated in the index set forth on page F-1 2.Financial statement schedule: Schedule supporting consolidated financial statements Schedule II — Valuation and Qualifying Accounts 41Schedules other than that listed above have been omitted, since they are either not applicable, not required or the information is included elsewhere herein.3.The Index to Exhibits is on page 44Item 16. Form 10-K SummaryThe Company has elected not to provide a summary.40Table of ContentsMSG NETWORKS INC.SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS(in thousands) Balance atBeginningof Period (Additions)DeductionsCharged to Costsand Expenses (Additions)Deductions Chargedto Other Accounts Deductions (a) Balanceat End ofPeriodYear Ended June 30, 2017 Allowance fordoubtful accounts$(838) $242 $— $2 $(594)Year Ended June 30, 2016 Allowance fordoubtful accounts$(273) $(791) $(52) $278 $(838)Year Ended June 30, 2015 Allowance fordoubtful accounts$(146) $(244) $— $117 $(273)_____________________________(a) Primarily reflects write-offs of uncollectible amounts.41Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized, on the 16th day of August, 2017.MSG Networks Inc. By: /s/ BRET RICHTER Name:Bret Richter Title:Executive Vice President, Chief FinancialOfficer and Treasurer POWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrea Greenberg and Bret Richter, andeach of them, as such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person in such person'sname, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith,with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every actand thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all thatsaid attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in thecapacities and on the dates indicated.Name Title Date/s/ ANDREA GREENBERG President & Chief Executive Officer (Principal Executive Officer) August 16, 2017Andrea Greenberg /s/ BRET RICHTER Executive Vice President, Chief Financial Officer and Treasurer (PrincipalFinancial Officer) August 16, 2017Bret Richter /s/ DAWN DARINO-GORKSI Senior Vice President, Controller and Principal Accounting Officer August 16, 2017Dawn Darino-Gorski /s/ JAMES L. DOLAN Executive Chairman (Director) August 16, 2017James L. Dolan /s/ WILLIAM J. BELL Director August 16, 2017William J. Bell /s/ CHARLES F. DOLAN Director August 16, 2017Charles F. Dolan /s/ PAUL J. DOLAN Director August 16, 2017Paul J. Dolan /s/ QUENTIN F. DOLAN Director August 16, 2017Quentin F. Dolan /s/ THOMAS C. DOLAN Director August 16, 2017Thomas C. Dolan 42Table of ContentsName Title Date/s/ WILT HILDENBRAND Director August 16, 2017Wilt Hildenbrand /s/ JOSEPH J. LHOTA Director August 16, 2017Joseph J. Lhota /s/ JOEL M. LITVIN Director August 16, 2017Joel M. Litvin /s/ HANK J. RATNER Director August 16, 2017Hank J. Ratner /s/ BRIAN G. SWEENEY Director August 16, 2017Brian G. Sweeney /s/ JOHN L. SYKES Director August 16, 2017John L. Sykes 43Table of ContentsINDEX TO EXHIBITSEXHIBITNO. DESCRIPTION2.1 Distribution Agreement dated September 11, 2015, between MSG Networks Inc. and The Madison Square Garden Company (incorporatedby reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed September 14, 2015).3.1 Amended and Restated Certificate of Incorporation of Madison Square Garden, Inc. (incorporated by reference to Exhibit 99.1 to theCompany's Current Report on Form 8-K filed on February 10, 2010).3.1.A Certificate of Ownership and Merger merging The Madison Square Garden Company with and into Madison Square Garden, Inc.(incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q for the quarter ended March 31, 2011 filed on May 6, 2011).3.1.B Amendment to the Amended and Restated Certificate of Incorporation of MSG Networks Inc., (incorporated by reference to Exhibit 3.1 tothe Company’s Current Report on Form 8-K filed on October 6, 2015).3.2 Amended By-Laws of MSG Networks Inc. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed onOctober 6, 2015).4.1 Registration Rights Agreement by and among MSG Networks Inc. formerly known as The Madison Square Garden Company and theCharles F. Dolan Children Trusts (incorporated by reference to Exhibit 3.5 to Amendment No. 7 to the Company's Registration Statementon Form 10 filed on January 14, 2010).4.2 Registration Rights Agreement by and among MSG Networks Inc. formerly known as The Madison Square Garden Company and the DolanFamily Affiliates (incorporated by reference to Exhibit 3.6 to Amendment No. 7 to the Company's Registration Statement on Form 10 filedon January 14, 2010).4.3 Transfer Consent Agreement with NBA, dated February 9, 2010 (incorporated by reference to Exhibit 3.7 to Amendment No. 6 to theCompany's Registration Statement on Form 10 filed on January 11, 2010).4.4 Transfer Consent Agreement with NHL, dated February 9, 2010 (incorporated by reference to Exhibit 3.8 to Amendment No. 6 to theCompany's Registration Statement on Form 10 filed on January 11, 2010).10.1 Tax Disaffiliation Agreement dated September 11, 2015, between MSG Networks Inc. and The Madison Square Garden Company(incorporated by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K filed on September 14, 2015).10.2 Contribution Agreement, dated as of September 11, 2015, among MSG Networks Inc., MSGN Holdings, L.P. and The Madison SquareGarden Company (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on September 14, 2015).10.3 Transition Services Agreement dated as of September 11, 2015, between MSG Networks Inc. and The Madison Square Garden Company(incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K filed on September 14, 2015).10.4 Employee Matters Agreement dated September 11, 2015, between MSG Networks Inc. and The Madison Square Garden Company(incorporated by reference to Exhibit 99.5 to the Company’s Current Report on Form 8-K filed on September 14, 2015).10.5 MSG Networks Inc. 2010 Employee Stock Plan, as amended (incorporated by reference to Annex A to the Company's DEF 14A filed onOctober 28, 2015).†10.6 MSG Networks Inc. 2010 Cash Incentive Plan, as amended (incorporated by reference to Annex B to the Company's DEF 14A filed onOctober 28, 2015).†10.7 MSG Networks Inc. 2010 Stock Plan for Non-Employee Directors, as amended (incorporated by reference to Annex C to the Company'sDEF 14A filed on October 28, 2016).†10.8 Affiliation Agreement between CSC Holdings, Inc. and MSGN Holdings L.P. formerly known as MSG Holdings, L.P. (incorporated byreference to Exhibit 10.12 to Amendment No. 6 to the Company's Registration Statement on Form 10 filed on January 11, 2010). +10.9 Form of MSG Networks Inc. formerly known as The Madison Square Garden Company Rights Agreement (incorporated by reference toExhibit 10.14 to Amendment No. 6 to the Company's Registration Statement on Form 10 filed on January 11, 2010). †10.10 Form of MSG Networks Inc. Option Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled on September 15, 2016). †10.11 Form of MSG Networks Inc. Performance Option Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton Form 8-K filed on September 15, 2016). †10.12 Form of MSG Networks Inc. formerly known as The Madison Square Garden Company Non-Employee Director Award Agreement(incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter ended December 31, 2012 filed on February 6,2013). †44Table of ContentsEXHIBITNO. DESCRIPTION10.13 Form of MSG Networks Inc. formerly known as The Madison Square Garden Company Restricted Stock Units Agreement (incorporated byreference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on September 10, 2015). †10.14 Form of MSG Networks Inc. formerly known as The Madison Square Garden Company Performance Award Agreement (incorporated byreference to Exhibit 10.33 to the Company's Form 10-K for the fiscal year ended June 30, 2013 filed on August 21, 2013). †10.15 Form of MSG Networks Inc. Performance Stock Units Agreement (incorporated by reference to Exhibit 10.5 to the Company’s CurrentReport on Form 8-K filed on September 10, 2015). †10.16 Employment Agreement dated September 16, 2016 between MSG Networks Inc. and James L. Dolan (incorporated by reference to Exhibit10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2016, filed on February 2, 2017). †10.17 Employment Agreement dated as of September 11, 2015, between MSG Networks Inc. and Andrea Greenberg (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 14, 2015). †10.18 Employment Agreement dated as of September 11, 2015, between MSG Networks Inc. and Bret Richter (incorporated by reference toExhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 14, 2015). †10.19 Employment Agreement dated as of September 11, 2015, between MSG Networks Inc. and Lawrence J. Burian (incorporated by reference toExhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 14, 2015). †10.20 Employment Agreement dated September 11, 2015, between MSG Networks Inc. and Dawn Darino-Gorski (incorporated by reference toExhibit 10.2 to the Company’s Form 10-Q for the quarter ended September 30, 2015 filed on November 5, 2015). †10.21 Credit Agreement dated as of September 28, 2015, by and among MSGN Holdings, L.P., certain subsidiaries of MSGN Holdings, L.P.identified therein, MSGN Eden, LLC, MSGN Regional Holdings LLC and JPMorgan Chase Bank, N.A., as administrative agent, collateralagent and a letter of credit issuer, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Reporton Form 8-K filed on September 28, 2015).10.22 Security Agreement dated as of September 28, 2015, by and among MSGN Holdings, L.P., certain subsidiaries of MSGN Holdings, L.P.identified therein, MSGN Eden, LLC, MSGN Regional Holdings LLC, and JPMorgan Chase Bank, N.A., as collateral agent thereto(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 28, 2015).10.23 MSG Networks Inc. Policy Concerning Certain Matters Relating to The Madison Square Garden Company and AMC Networks Inc.including Responsibilities of Overlapping Directors and Officers (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Qfor the quarter ended September 30, 2015 filed on November 5, 2015).10.24 Form of Indemnification Agreement between MSG Networks Inc. formerly known as The Madison Square Garden Company and itsDirectors and Executive Officers (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March21, 2015). †10.25 Summary of Office Space Arrangement between the Company and the Dolan Family Office (incorporated by reference to Exhibit 10.56 tothe Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 18, 2016).21.1 Subsidiaries of the Registrant.23.1 Consent of KPMG LLP.24.1 Powers of Attorney (included on the signature page to this Annual Report on Form 10-K).31.1 Certification by the President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 Certification by the President and Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS XBRL Instance Document.101.SCH XBRL Taxonomy Extension Schema.45Table of ContentsEXHIBITNO. DESCRIPTION101.CAL XBRL Taxonomy Extension Calculation Linkbase.101.DEF XBRL Taxonomy Extension Definition Linkbase.101.LAB XBRL Taxonomy Extension Label Linkbase.101.PRE XBRL Taxonomy Extension Presentation Linkbase.+Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.†This exhibit is a management contract or a compensatory plan or arrangement.46Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm on the Consolidated Financial StatementsF-2Report of Independent Registered Public Accounting Firm on Internal Control Over Financial ReportingF-3Consolidated Balance Sheets as of June 30, 2017 and 2016F-4Consolidated Statements of Operations for the years ended June 30, 2017, 2016 and 2015F-5Consolidated Statements of Comprehensive Income for the years ended June 30, 2017, 2016 and 2015F-6Consolidated Statements of Cash Flows for the years ended June 30, 2017, 2016 and 2015F-7Consolidated Statements of Stockholders' Equity (Deficiency) for the years ended June 30, 2017, 2016 and 2015F-8Notes to Consolidated Financial StatementsF-9F-1Table of ContentsReport of Independent Registered Public Accounting Firm on the Consolidated Financial StatementsThe Board of Directors and StockholdersMSG Networks Inc.:We have audited the accompanying consolidated balance sheets of MSG Networks Inc. and subsidiaries as of June 30, 2017 and 2016, and the relatedconsolidated statements of operations, comprehensive income, stockholders' equity (deficiency), and cash flows for each of the years in the three-year periodended June 30, 2017. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule,"Schedule II — Valuation and Qualifying Accounts." These consolidated financial statements and the financial statement schedule are the responsibility ofthe Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedulebased on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MSGNetworks Inc. and subsidiaries as of June 30, 2017 and 2016, the consolidated results of its operations and its cash flows for each of the years in the three-yearperiod ended June 30, 2017, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule,when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forththerein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), MSG Networks Inc.’s internalcontrol over financial reporting as of June 30, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committeeof Sponsoring Organizations of the Treadway Commission (COSO), and our report dated August 16, 2017, expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting./s/ KPMG LLPNew York, New YorkAugust 16, 2017F-2Table of ContentsReport of Independent Registered Public Accounting Firm on Internal Control Over Financial ReportingThe Board of Directors and StockholdersMSG Networks Inc.:We have audited MSG Networks Inc.’s internal control over financial reporting as of June 30, 2017, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). MSG Networks Inc.’s managementis responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financialreporting, included in the accompanying “Management’s Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinionon the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, MSG Networks Inc. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2017, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof MSG Networks Inc. as of June 30, 2017 and 2016, and the related consolidated statements of operations, comprehensive income, stockholders’ equity(deficiency), and cash flows for each of the years in the three-year period ended June 30, 2017, and our report dated August 16, 2017, expressed anunqualified opinion on those consolidated financial statements./s/ KPMG LLPNew York, New YorkAugust 16, 2017F-3Table of ContentsMSG NETWORKS INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share data) June 30, 2017 2016ASSETS Current Assets: Cash and cash equivalents$141,087 $119,568Accounts receivable, net105,030 101,427Net related party receivable17,153 15,492Prepaid income taxes14,322 28,384Prepaid expenses6,468 13,188Other current assets2,343 3,053Total current assets286,403 281,112Property and equipment, net11,828 14,154Amortizable intangible assets, net40,663 44,123Goodwill424,508 424,508Other assets41,642 42,645Total assets$805,044 $806,542 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current Liabilities: Accounts payable$1,241 $2,043Net related party payable2,963 4,302Current portion of long-term debt72,414 64,914Income taxes payable11,483 8,662Accrued liabilities: Employee related costs14,238 10,340Other accrued liabilities10,050 15,991Deferred revenue5,071 6,143Total current liabilities117,460 112,395Long-term debt, net of current portion1,240,431 1,412,845Defined benefit and other postretirement obligations29,979 31,827Other employee related costs3,930 5,550Related party payable— 1,710Other liabilities5,597 5,612Deferred tax liability351,854 356,561Total liabilities1,749,251 1,926,500Commitments and contingencies (see Notes 9, 10 and 11) Stockholders' Deficiency: Class A Common Stock, par value $0.01, 360,000 shares authorized; 61,497 and 61,354 shares outstanding as of June 30,2017 and 2016, respectively643 643Class B Common Stock, par value $0.01, 90,000 shares authorized; 13,589 shares outstanding as of June 30, 2017 and 2016136 136Preferred stock, par value $0.01, 45,000 shares authorized; none outstanding— —Additional paid-in capital6,909 —Treasury stock, at cost, 2,762 and 2,905 shares as of June 30, 2017 and 2016, respectively(198,800) (207,796)Accumulated deficit(746,539) (905,352)Accumulated other comprehensive loss(6,556) (7,589)Total stockholders' deficiency(944,207) (1,119,958)Total liabilities and stockholders' deficiency$805,044 $806,542See accompanying notes to consolidated financial statements.F-4Table of ContentsMSG NETWORKS INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data) Years Ended June 30, 2017 2016 2015Revenues (including related party revenues of $0, $162,269 and $168,261, forthe years ended June 30, 2017, 2016, and 2015, respectively)$675,352 $658,198 $631,010 Direct operating expenses (including related party expenses of $142,080,$137,857 and $85,108, for the years ended June 30, 2017, 2016, and 2015,respectively)271,751 268,024 217,233Selling, general and administrative expenses (including related party expenses of$21,732, $28,603 and $6,895, for the years ended June 30, 2017, 2016, and2015, respectively)80,041 102,005 155,003Depreciation and amortization10,296 14,583 17,641Gain on sale of Fuse (see Note 5)— — (186,178)Operating income313,264 273,586 427,311Other income (expense): Interest income2,782 2,368 2,068Interest expense(40,108) (31,683) (4,040)Miscellaneous expense— (2) (4) (37,326) (29,317) (1,976)Income from continuing operations before income taxes275,938 244,269 425,335Income tax expense(108,476) (80,971) (176,905)Income from continuing operations$167,462 $163,298 $248,430Income (loss) from discontinued operations, net of taxes(120) (155,664) 6,271Net income$167,342 $7,634 $254,701Earnings (loss) per share: Basic Income from continuing operations$2.23 $2.17 $3.22Income (loss) from discontinued operations— (2.07) 0.08Net income2.22 0.10 3.30Diluted Income from continuing operations$2.22 $2.16 $3.20Income (loss) from discontinued operations— (2.06) 0.08Net income2.21 0.10 3.28Weighted-average number of common shares outstanding: Basic75,213 75,152 77,138Diluted75,560 75,527 77,687 See accompanying notes to consolidated financial statements.F-5Table of ContentsMSG NETWORKS INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in thousands) Years Ended June 30, 2017 2016 2015Net income $167,342 $7,634 $254,701Other comprehensive income (loss), before income taxes: Pension plans and postretirement plan: Net unamortized gains (losses) arising during the period $1,144 $(3,910) $(7,174)Amounts reclassified from accumulated other comprehensive loss: Amortization of net actuarial loss included in net periodic benefitcost 724 721 2,258Amortization of net prior service credit included in net periodicbenefit cost (24) (57) (112)Settlement gain (71) — —Other comprehensive income (loss), before income taxes 1,773 (3,246) (5,028)Income tax benefit (expense) related to items of other comprehensiveincome (loss) (740) 823 2,167Other comprehensive income (loss) 1,033 (2,423) (2,861)Comprehensive income $168,375 $5,211 $251,840See accompanying notes to consolidated financial statements.F-6Table of ContentsMSG NETWORKS INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Years Ended June 30, 2017 2016 2015Cash flows from operating activities from continuing operations: Net income$167,342 $7,634 $254,701(Income) loss from discontinued operations, net of taxes120 155,664 (6,271)Income from continuing operations167,462 163,298 248,430Adjustments to reconcile net income to net cash provided by operating activities fromcontinuing operations: Depreciation and amortization10,296 14,583 17,641Amortization of deferred financing costs3,004 3,234 1,602Share-based compensation expense9,931 9,266 10,211Excess tax benefit on share-based awards— (4,869) (10,109)Gain on sale of Fuse, before income taxes— — (186,178)Change in deferred income taxes related to the sale of Fuse— — 6,799Provision for doubtful accounts(242) 791 244Change in assets and liabilities: Accounts receivable, net(3,361) (16,608) (1,682)Net related party receivable(1,661) 11,832 (1,159)Prepaid expenses and other assets8,015 8,403 (7,474)Accounts payable(802) (9,316) (903)Net related party payable, including payable to MSG(3,154) 3,796 420Prepaid/payable for income taxes16,883 27,132 (26,826)Accrued and other liabilities(2,694) (12,261) (9,056)Deferred revenue(1,072) 1,172 340Deferred income taxes(5,447) (18,605) (19,649)Net cash provided by operating activities from continuing operations197,158 181,848 22,651Cash flows from investing activities from continuing operations: Capital expenditures(4,894) (3,323) (6,663)Proceeds from sale of property and equipment— — 27Proceeds from sale of Fuse, net of transaction costs (see Note 5)— — 228,063Net cash provided by (used in) investing activities from continuing operations(4,894) (3,323) 221,427Cash flows from financing activities from continuing operations: Proceeds from Term Loan Facility (see Note 8)— 1,550,000 —Principal repayments on Term Loan Facility (see Note 8)(167,500) (61,250) —Cash distributed with MSG— (1,467,093) —Payments for financing costs— (9,860) (84)Proceeds from stock option exercises2 1,010 518Repurchases of common stock— (100,027) (140,717)Taxes paid in lieu of shares issued for equity-based compensation(2,271) (11,190) (18,082)Excess tax benefit on share-based awards— 4,869 10,109Net cash used in financing activities from continuing operations(169,769) (93,541) (148,256)Net cash provided by continuing operations22,495 84,984 95,822Cash flows of discontinued operations Net cash provided by (used in) operating activities(976) (113,691) 131,882Net cash used in investing activities— (70,410) (101,270)Net cash used in financing activities— — —Net cash provided by (used in) discontinued operations(976) (184,101) 30,612Net increase (decrease) in cash and cash equivalents21,519 (99,117) 126,434Cash and cash equivalents at beginning of period, including cash in both continuing operationsand discontinued operations119,568 218,685 92,251Cash and cash equivalents at end of period$141,087 $119,568 $218,685See accompanying notes to consolidated financial statements.F-7Table of ContentsMSG NETWORKS INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)(in thousands) CommonStockIssued AdditionalPaid-In Capital TreasuryStock RetainedEarnings(AccumulatedDeficit) AccumulatedOtherComprehensiveIncome (Loss) TotalBalance as of June 30, 2014$775 $1,081,055 $(7,537) $552,862 $(22,711) $1,604,444Net income— — — 254,701 — 254,701Other comprehensive loss— — — — (2,861) (2,861)Comprehensive income 251,840Exercise of stock options1 (648) 1,138 — — 491Share-based compensation— 15,437 — — — 15,437Tax withholding associated with shares issued forequity-based compensation— (18,082) — — — (18,082)Shares issued upon distribution of Restricted StockUnits3 (3,869) 3,866 — — —Repurchases of common stock— — (140,717)— — (140,717)Excess tax benefit on share-based awards— 10,109 — — — 10,109Balance as of June 30, 2015$779 $1,084,002 $(143,250) $807,563 $(25,572) $1,723,522Net income— — — 7,634 — 7,634Other comprehensive loss— — — — (2,423) (2,423)Comprehensive income 5,211Exercise of stock options— (4,770) 10,345 (4,565) — 1,010Share-based compensation— 10,120 — — — 10,120Tax withholding associated with shares issued forequity-based compensation— (11,190) — — — (11,190)Shares issued upon distribution of Restricted StockUnits— (18,663) 25,136 (6,473) — —Repurchases of common stock— — (100,027) — — (100,027)Excess tax benefit on share-based awards— 8,720 — (3,851) — 4,869Distribution of The Madison Square Garden Company— (1,067,968) — (1,705,189) 20,406 (2,752,751)Adjustments related to the transfer of certain liabilitiesas a result of the Distribution— (251) — (471) — (722)Balance as of June 30, 2016$779 $— $(207,796) $(905,352) $(7,589) $(1,119,958)Net income— — — 167,342 — 167,342Other comprehensive income— — — — 1,033 1,033Comprehensive income 168,375Exercise of stock options— (57) 59 — — 2Share-based compensation— 9,931 — — — 9,931Tax withholding associated with shares issued forequity-based compensation— (1,921) (423) (55) — (2,399)Shares issued upon distribution of Restricted StockUnits— (1,044) 9,360 (8,316) — —Adjustments related to the transfer of certain liabilitiesas a result of the Distribution— — — (158) — (158)Balance as of June 30, 2017$779 $6,909 $(198,800) $(746,539) $(6,556) $(944,207)See accompanying notes to consolidated financial statements.F-8Table of ContentsMSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSAll amounts included in the following Notes to Consolidated Financial Statements are presented in thousands, except per share data or as otherwisenoted.Note 1. Description of Business and Basis of PresentationDescription of BusinessMSG Networks Inc. (together with its subsidiaries, the “Company”) owns and operates two regional sports and entertainment networks, MSG Network(“MSGN”) and MSG+, collectively the “MSG Networks.”The Company was incorporated on July 29, 2009 as an indirect, wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”). On February9, 2010, Cablevision spun off the Company and the Company thereby acquired the subsidiaries of Cablevision that owned, directly and indirectly, all of thepartnership interests in MSGN Holdings, L.P., formerly MSG Holdings L.P. (“MSGN L.P.”). MSGN L.P. was the indirect, wholly-owned subsidiary ofCablevision through which Cablevision held the Madison Square Garden businesses. MSGN L.P. is now a wholly-owned subsidiary of the Company, throughwhich the Company conducts substantially all of its operations.On September 30, 2015 (the “Distribution Date”), the Company distributed to its stockholders all of the outstanding common stock of The Madison SquareGarden Company (formerly MSG Spinco, Inc., and referred to herein as “MSG”) (the “Distribution”). MSG owns, directly or indirectly, the sports andentertainment businesses previously owned and operated by the Company’s sports and entertainment segments, owns, leases or operates the arenas and othervenues previously owned, leased or operated by the Company and owns the joint venture interests previously owned by the Company. In the Distribution,each holder of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”), of record as of the close of business, New YorkCity time, on September 21, 2015 (the “Record Date”), received one share of MSG Class A common stock, par value $0.01 per share, for every three shares ofthe Company’s Class A Common Stock held on the Record Date. Each holder of the Company’s Class B common stock, par value $0.01 per share (“Class BCommon Stock”), of record as of the Record Date received one share of MSG Class B common stock, par value $0.01 per share, for every three shares of theCompany's Class B Common Stock held on the Record Date. Following the Distribution, the Company no longer consolidates the financial results of MSGfor purposes of its own financial reporting and the historical financial results of MSG have been reflected in the Company's consolidated financial statementsas discontinued operations for all periods presented through the Distribution Date. All assets and liabilities related to discontinued operations are excludedfrom the footnotes unless otherwise noted.Following the Distribution, the Company operates and reports financial information in one segment. Substantially all revenues and assets of the Company areattributed to or located in the United States and are primarily concentrated in the New York City metropolitan area.F-9Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 2. Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe consolidated financial statements of the Company include the accounts of MSG Networks Inc. and its subsidiaries. All significant intercompanytransactions and balances have been eliminated in consolidation. See Note 3 for a discussion of rights fees prior to the Distribution Date recognized asrevenues by MSG from the licensing of team-related programming to the Company.Use of EstimatesThe preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) requiresmanagement to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amount of assets andliabilities reported, disclosures about contingent assets and liabilities, and reported amount of revenues and expenses. Such estimates include the valuationof accounts receivable, goodwill, intangible assets, other long-lived assets, tax accruals and other liabilities. In addition, estimates are used in revenuerecognition, income tax expense, performance and share-based compensation, depreciation and amortization, litigation matters and other matters.Management believes its use of estimates in the consolidated financial statements to be reasonable.Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment andactions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involvesignificant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management's best judgment at apoint in time and as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economicenvironment or other factors beyond the Company's control could be material and would be reflected in the Company's financial statements in future periods.Revenue RecognitionThe Company recognizes revenue when the following conditions are satisfied: (a) persuasive evidence of a sales arrangement exists, (b) delivery occurs orservices are rendered, (c) the sales price is fixed or determinable and (d) collectability is reasonably assured.The Company earns affiliation fee revenue from the cable, satellite, telephone and other platforms that carry our programming networks. The Company'sprogramming networks are delivered throughout the term of the agreements and the Company recognizes this revenue in the period that the programmingnetwork is provided.The Company also earns advertising revenue, which is typically recognized when the advertisements are aired. In certain advertising sales arrangements, theCompany guarantees specified viewer ratings for its programming. For these types of transactions, a portion of such revenue is deferred if the guaranteedviewer ratings are not met and is subsequently recognized either when the Company provides the required additional advertising time, the guaranteeobligation contractually expires or additional performance requirements become remote.Gross versus Net Revenue RecognitionThe Company reports revenue on a gross or net basis based on management's assessment of whether the Company acts as a principal or agent in thetransaction. To the extent the Company acts as the principal, revenue is reported on a gross basis. The determination of whether the Company acts as aprincipal or an agent in a transaction is based on an evaluation of several qualitative factors. When the Company acts as an agent, revenue is reported on a netbasis. The Company has an advertising sales representation agreement with MSG that provides for MSG to act as our advertising sales representative andincludes the exclusive right and obligation to sell certain advertising availabilities on our behalf for a commission. Generally, the Company reportsadvertising revenue on a gross basis.Nonmonetary TransactionsThe Company enters into nonmonetary transactions that involve the exchange of goods or services, such as advertising and promotional benefits, for othergoods or services. Such transactions are measured and recorded at the fair value of the goods or services surrendered unless the goods or services receivedhave a more readily determinable fair value. In addition, the Company enters into other monetary transactions in which nonmonetary consideration is alsoincluded and the entire transaction is recorded at fair value. If the fair values cannot be determined for either the asset(s) surrendered or received withinF-10Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)reasonable limits, then the nonmonetary transaction is measured and recorded at the book value of the item(s) surrendered which typically is zero.Direct Operating ExpensesDirect operating expenses primarily represent media rights fees, and other programming and production costs, such as the salaries of our on-air personalities,producers, directors, technicians, writers and other creative staff, as well as expenses associated with location costs, remote facilities and maintaining studios,origination, and transmission facilities.The professional team media rights acquired under media rights agreements to telecast various sporting events and other programming for exhibition on ournetworks are typically expensed on a straight-line basis over the term of the applicable contract or license period.Advertising ExpensesAdvertising costs are typically charged to expense when incurred. Total advertising costs classified in selling, general and administrative expenses were$11,765, $10,540, and $11,010 for the years ended June 30, 2017, 2016 and 2015, respectively.Income TaxesThe Company's provision for income taxes is based on current period income, changes in deferred tax assets and liabilities and changes in estimates withregard to uncertain tax positions. Deferred tax assets are subject to an ongoing assessment of realizability. In assessing the realizability of deferred tax assets,management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company's ability torealize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the realization of its deductible temporarydifferences. If such estimates and related assumptions change in the future, the Company may be required to record valuation allowances against its deferredtax assets, resulting in additional income tax expense in the Company's consolidated statements of operations. The Company measures its deferred taxliability with regard to MSGN L.P. based on the difference between the tax basis and the carrying amount for financial reporting purposes; this is commonlyreferred to as the outside basis difference. Interest and penalties, if any, associated with uncertain tax positions are included in income tax expense. TheCompany accounts for investment tax credits using the “flow-through” method, under which the tax benefit generated from an investment tax credit isrecorded in the period the credit is generated.Share-based CompensationThe Company measures the cost of employee services received in exchange for an award of equity-based instruments based on the grant date fair value of theaward. Share-based compensation cost is recognized in earnings over the period during which an employee is required to provide service in exchange for theaward, except for restricted stock units (“RSUs”) granted to non-employee directors which, unless otherwise provided under the applicable award agreement,are fully vested, and are expensed at the grant date. The Company has elected to recognize share-based compensation cost for graded vesting awards withonly service conditions on a straight-line basis over the requisite service period for the entire award. Effective for the first quarter of fiscal year 2017, theCompany has also elected to account for forfeitures as they occur. See below for “Recently Adopted Accounting Pronouncements.”Cash and Cash EquivalentsThe Company considers the balance of its investment in funds that substantially hold highly liquid securities that mature within three months or less from thedate the fund purchases these securities to be cash equivalents. The carrying amount of cash and cash equivalents either approximates fair value due to theshort-term maturity of these instruments or are at fair value. Checks outstanding in excess of related book balances are included in accounts payable in theaccompanying consolidated balance sheets. The Company presents the change in these book cash overdrafts as cash flows from operating activities.Accounts ReceivableAccounts receivable is recorded at net realizable value. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectiblereceivables. The allowance for doubtful accounts is estimated based on the Company's analysis of receivables aging, specific identification of certainreceivables that are at risk of not being paid, past collection experience and other factors. The Company's allowance for doubtful accounts was $594 and$838 as of June 30, 2017 and 2016, respectively.F-11Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Long-Lived and Indefinite-Lived AssetsThe Company's long-lived and indefinite-lived assets consist of goodwill, amortizable intangible assets, and property and equipment.Goodwill has an indefinite useful life and is not amortized. Identifiable intangible assets with finite useful lives are amortized on a straight-line basis overtheir respective estimated useful lives.Property and equipment is stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets or, with respect toleasehold improvements, amortized over the shorter of the lease term or the asset's estimated useful life. The useful lives of the Company's long-lived assetsare based on estimates of the period over which the Company expects the assets to be of economic benefit to the Company. In estimating the useful lives theCompany considers factors such as, but not limited to, risk of obsolescence, anticipated use, plans of the Company, and applicable laws and permitrequirements.Impairment of Long-Lived and Indefinite-Lived AssetsIn assessing the recoverability of the Company's long-lived and indefinite-lived assets, the Company must make estimates and assumptions regarding futurecash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whetheran impairment charge is recognized and also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevantinformation. These estimates are subjective in nature and involve significant uncertainties and judgments and therefore cannot be determined with precision.Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, the Company may berequired to record impairment charges related to its long-lived and/or indefinite-lived assets.Goodwill is tested annually for impairment as of August 31st and at any time upon the occurrence of certain events or substantive changes in circumstances.The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company cansupport the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not needto perform the two-step impairment test for that reporting unit. If the Company cannot support such a conclusion or the Company does not elect to performthe qualitative assessment then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of areporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwillimpairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fairvalue of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the impliedfair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the samemanner as the amount of goodwill that would be recognized in a business combination. The Company has one reporting unit for evaluating goodwillimpairment.For other long-lived assets, including intangible assets that are amortized, the Company evaluates assets for recoverability when there is an indication ofpotential impairment. If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fairvalue of the asset group is determined and the carrying value of the asset group is written down to fair value.ContingenciesLiabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that aliability has been incurred and the amount of the assessment can be reasonably estimated.Defined Benefit Pension Plans and Other Postretirement Benefit PlanAs more fully described in Note 13, the Company has both funded and unfunded defined benefit plans, as well as a contributory other postretirement benefitplan, covering certain full-time employees and retirees. The expense recognized by the Company is determined using certain assumptions, including theexpected long-term rate of return, discount rate and rate of compensation increases, among others. The Company recognizes the funded status of its definedbenefit pension and other postretirement plans (other than multiemployer plans) as an asset or liability in the consolidated balance sheets and recognizeschanges in the funded status in the year in which the changes occur through other comprehensive income (loss).F-12Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Earnings (Loss) Per Common ShareBasic earnings (loss) per common share (“EPS”) is based upon net income (loss) available to common stockholders divided by the weighted-average numberof common shares outstanding during the period. Diluted EPS reflects the effect of the assumed vesting of RSUs and exercise of stock options (see Note 14)only in the periods in which such effect would have been dilutive.Recently Adopted Accounting PronouncementsIn April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-05, Intangibles-Goodwill andOther-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance tocustomers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, thecustomer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computingarrangement does not include a software license, the customer should account for the arrangement as a service contract and expense the cost as the servicesare received. This standard was adopted by the Company in the first quarter of fiscal year 2017 and will be applied prospectively to all arrangements enteredinto or materially modified after the effective date. There was no impact to the financial statements as a result of this adoption.In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting, which changes several aspects of accounting for share-based payment transactions. This standard was early adopted by the Company in the firstquarter of fiscal year 2017. The adoption of this standard resulted in: (i) all excess tax benefits and tax deficiencies being recognized in the income statement,rather than additional paid-in capital, on a prospective basis (ii) excess tax benefits or tax deficiencies no longer being classified on the ConsolidatedStatement of Cash Flows as a financing activity, on a prospective basis (as such prior period amounts have not been adjusted) and (iii) the Company’selection to account for forfeitures as they occur, rather than estimate expected forfeitures over the course of a vesting period, on a modified retrospectivebasis. There was no material impact to the financial statements as a result of this adoption.Recently Issued Accounting Pronouncements Not Yet AdoptedIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognitionrequirements in FASB Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. This ASU is based on the principle that revenue isrecognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cashflows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain orfulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,which defers the effective date of ASU No. 2014-09 for all entities by one year. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contractswith Customers (Topic 606): Principal versus Agent Considerations, which provides clarification on the implementation guidance on principal versus agentconsiderations outlined in ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606):Identifying Performance Obligations and Licensing, which finalized amendments to identifying performance obligations and accounting for licenses ofintellectual property. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvementsand Practical Expedients, which clarifies assessing collectibility, noncash consideration, presentation of sales taxes, completed contracts and contractmodifications at transition. This standard will be effective for the Company beginning in the first quarter of fiscal year 2019 using one of two retrospectiveapplication methods. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balancesheet for those leases classified as operating leases under previous GAAP. The amended guidance also requires additional quantitative and qualitativedisclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of anorganization’s leasing activities. This standard will be effective for the Company beginning in the first quarter of fiscal year 2020, with early adoptionpermitted. This standard will be adopted using a modified retrospective approach. The Company is currently evaluating the impact this standard will have onits consolidated financial statements.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,which amends ASC Topic 230, Statement of Cash Flows, to eliminate the diversity in practiceF-13Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flowissues. This standard will be effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted and the retrospectiveapproach required. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies thedefinition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions(or disposals) of assets or businesses, which will effect various areas of accounting including, but not limited to, goodwill and consolidation. This standardwill be effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The standard is to be appliedprospectively. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, whichsimplifies the measurement of goodwill impairment by eliminating the requirement of performing a hypothetical purchase price allocation. Instead,impairment will be measured using the difference between the carrying amount and fair value of the reporting unit. The amended guidance also eliminatesthe requirement for any reporting unit with a zero or a negative carrying amount to perform a qualitative assessment and will require disclosure of the amountof goodwill allocated to each reporting unit with a zero or a negative carrying amount of net assets. This standard will be effective for the Companybeginning in the first quarter of fiscal year 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates afterJanuary 1, 2017. The standard is to be applied prospectively. Based on the Company's most recent annual goodwill impairment test completed in fiscal year2017, the adoption of this guidance is not expected to have any initial impact on the Company's consolidated financial statements.In March 2017, the FASB issued ASU No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic PensionCost and Net Periodic Postretirement Benefit Cost, which requires: (i) presentation of the service cost component of net periodic benefit cost within the sameline item as other compensation costs arising from services rendered by relevant employees during the period, and (ii) the non-service cost components of netperiodic benefit cost to be presented separately in the income statement from the service cost component and not be included in the subtotal for operatingincome. In addition, only the service cost component is eligible to be capitalized into an asset. This standard will be effective for the Company beginning inthe first quarter of fiscal year 2019, with early adoption permitted at the beginning of an annual period for which financial statements have not been issued.The standard is to be applied retrospectively, except for the change to the capitalization guidelines, which is to be applied prospectively. Although theCompany does not expect the standard to have an impact on its consolidated net income, the Company’s net periodic benefit cost for fiscal year 2017includes approximately $1,600 of expense that will be reclassified from operating income to a line item below operating income upon adoption.In May 2017, the FASB issued ASU No. 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting, which providesguidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entityshould account for the effects of a modification unless all of the following characteristics of the modified award are the same as the original awardimmediately before the original award is modified: (i) the award’s fair value, (ii) the award’s vesting condition, and (iii) the award’s classification as an equityor liability instrument. This standard will be effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. Thestandard is to be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance is not expected to have a materialimpact on the Company's consolidated financial statements.F-14Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 3. Discontinued OperationsAs a result of the Distribution, the results of the Company’s MSG operations through the Distribution Date, as well as transaction costs related to theDistribution, have been classified in the consolidated statements of operations as discontinued operations for all periods presented. No gain or loss wasrecognized in connection with the Distribution. Operating results of discontinued operations for the years ended June 30, 2017, 2016 and 2015 aresummarized below: Years Ended June 30, 2017 2016 2015Revenues (a) $— $150,381 $1,071,551Direct operating expenses — 71,320 725,172Selling, general and administrative expenses 120 58,283 183,226Depreciation and amortization — 23,772 103,481Operating income (loss) (120) (2,994) 59,672Equity in earnings (loss) of equity-method investments — 2,679 (40,590)Interest income — 635 1,886Interest expense — (540) (2,467)Miscellaneous income — — 2,802Income (loss) from discontinued operations before income taxes (120) (220) 21,303Income tax expense — (155,444) (15,032)Income (loss) from discontinued operations, net of taxes $(120) $(155,664) $6,271(a)Includes rights fees for New York Knicks (“Knicks”) and New York Rangers (“Rangers”) programming prior to the Distribution Date, which werepreviously eliminated in consolidation. However, the pre-Distribution Date amounts are now presented as revenues in the loss from discontinuedoperations line with the offsetting expense in direct operating expenses, within continuing operations, in the accompanying consolidated statements ofoperations for the years ended June 30, 2016 and 2015.Prior to the Distribution, the Company's collections for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and wererecognized as revenues when earned for both accounting and tax purposes. In connection with the reorganization transactions related to the Distribution, thetax recognition on most of these deferred revenues was accelerated to the date of the reorganization. The impact of the acceleration of such deferred revenueis reflected in income tax expense of discontinued operations for the year ended June 30, 2016.Amounts for the year ended June 30, 2015 presented above differ from historically reported results for the Company's sports and entertainment segments dueto certain reclassifications and adjustments made to corporate overhead costs for purposes of discontinued operations reporting.The net impact of the Distribution to the Company's stockholders' equity (deficiency) includes cash distributed with MSG of $1,467,093.Note 4. Computation of Earnings (Loss) per Common ShareThe following table presents a reconciliation of the weighted-average number of shares used in the calculations of basic and diluted EPS: Years Ended June 30, 2017 2016 2015Weighted-average number of shares for basic EPS75,213 75,152 77,138Dilutive effect of shares issuable under share-based compensation plans347 375 549Weighted-average number of shares for diluted EPS75,560 75,527 77,687Anti-dilutive shares162 — 4F-15Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 5. DispositionOn July 1, 2014, the Company completed its sale of Fuse, a national music television network, to Fuse Media, Inc. for a cash purchase price of $231,995 anda 15% equity interest of approximately $24,000 in Fuse Media, LLC (“Fuse Media”). The Company recorded a pre-tax gain on the sale of Fuse, which isreflected in operating income in the accompanying consolidated statement of operations for the year ended June 30, 2015, of $186,178 (net of transactioncosts of $3,932).The equity interest in Fuse Media was transferred to MSG in connection with the Distribution.Note 6. Goodwill and Intangible AssetsDuring the first quarter of fiscal year 2017, the Company performed its annual impairment test of goodwill, and there was no impairment of goodwillidentified.The Company's intangible assets subject to amortization are as follows: June 30, 2017 June 30, 2016Affiliate relationships $83,044 $83,044Less accumulated amortization (42,381) (38,921) $40,663 $44,123Affiliate relationships have an estimated useful life of 24 years. Amortization expense for intangible assets for continuing operations was $3,460 for the yearsended June 30, 2017, 2016 and 2015.The Company expects its aggregate annual amortization expense for existing intangible assets subject to amortization for each fiscal year from 2018 through2022 to be as follows:Fiscal year ending June 30, 2018$3,460Fiscal year ending June 30, 20193,460Fiscal year ending June 30, 20203,460Fiscal year ending June 30, 20213,460Fiscal year ending June 30, 20223,460Note 7. Property and EquipmentAs of June 30, 2017 and 2016, property and equipment consisted of the following assets: June 30, Estimated 2017 2016 Useful LivesEquipment$40,918 $44,508 2 to 10 yearsFurniture and fixtures1,695 1,744 5 to 8 yearsLeasehold improvements19,285 19,561 Shorter of term of lease or life ofimprovementConstruction in progress565 966 62,463 66,779 Less accumulated depreciation and amortization(50,635) (52,625) $11,828 $14,154 Depreciation and amortization expense on property and equipment for continuing operations was $6,836, $11,123, and $14,181 for the years ended June 30,2017, 2016 and 2015, respectively, which for the first quarter of fiscal year 2016 and fiscal year 2015 included depreciation expense on certain corporateproperty and equipment that was transferred to MSG in connection with the Distribution, but which did not qualify for discontinued operations reporting.F-16Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 8. DebtFormer Revolving Credit FacilityOn May 6, 2014, MSGN L.P. and certain of its subsidiaries entered into a credit agreement with a syndicate of lenders providing for a senior securedrevolving credit facility of $500,000 with a term of five years (the “Former Revolving Credit Facility”). In connection with the Distribution, MSGN L.P.terminated the Former Revolving Credit Facility effective on September 28, 2015.Senior Secured Credit FacilitiesOn September 28, 2015, MSGN L.P., MSGN Eden, LLC, an indirect subsidiary of the Company and the general partner of MSGN L.P., Regional MSGNHoldings LLC, a direct subsidiary of the Company and the limited partner of MSGN L.P. (collectively with MSGN Eden, LLC, the “Holdings Entities”), andcertain subsidiaries of MSGN L.P. entered into a credit agreement (the “Credit Agreement”) with a syndicate of lenders.The Credit Agreement provides MSGN L.P. with senior secured credit facilities (the “Senior Secured Credit Facilities”) consisting of: (a) an initial $1,550,000term loan facility (the “Term Loan Facility”) and (b) a $250,000 revolving credit facility (the “Revolving Credit Facility”), each with a term of five years. Inconnection with the Distribution, $1,450,000 of the proceeds from the Term Loan Facility was contributed to MSG immediately following the closing of theSenior Secured Credit Facilities. Up to $35,000 of the Revolving Credit Facility is available for the issuance of letters of credit.Subject to the satisfaction of certain conditions and limitations, the Credit Agreement allows for the addition of incremental term and/or revolving loancommitments and incremental term and/or revolving loans. Borrowings under the Credit Agreement bear interest at a floating rate, which at the option ofMSGN L.P. may be either (a) base rate, representing the higher of: (i) the New York Fed Bank Rate plus 0.50%; (ii) the U.S. Prime Rate; or (iii) the one-monthLondon Interbank Offered Rate, or LIBOR, plus 1.00% (the “Base Rate”), plus an additional rate ranging from 0.50% to 1.25% per annum (determined basedon a total leverage ratio), or (b) a Eurodollar rate (the “Eurodollar Rate”) plus an additional rate ranging from 1.50% to 2.25% per annum (determined basedon a total leverage ratio), provided that for the period until the delivery of the compliance certificate for the period ending March 31, 2016, the additionalrate used in calculating both floating rates was (i) 1.00% per annum for borrowings bearing interest at the Base Rate, and (ii) 2.00% per annum for borrowingsbearing interest at the Eurodollar Rate. Upon a payment default in respect of principal, interest or other amounts due and payable under the Credit Agreementor related loan documents, default interest will accrue on all overdue amounts at an additional rate of 2.00% per annum. The Credit Agreement requiresMSGN L.P. pay a commitment fee of 0.30% in respect of the average daily unused commitments, as well as fronting fees, to banks that issue letters of creditpursuant to the Revolving Credit Facility.The Credit Agreement generally requires the Holding Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis to comply with amaximum total leverage ratio of 6.00:1.00 from the closing date until September 30, 2016 and a maximum total leverage ratio of 5.50:1.00 from and afterOctober 1, 2016 until maturity, subject, in each case, to upward adjustment during the continuance of certain events. In addition, there is a minimum interestcoverage ratio of 2.00:1.00 for the Holdings Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis. As of June 30, 2017, the HoldingEntities and MSGN L.P. and its restricted subsidiaries on a consolidated basis were in compliance with the financial covenants of the Credit Agreement. Allborrowings under the Credit Agreement are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representationsand warranties. As of June 30, 2017, there were no letters of credit issued and outstanding under the Revolving Credit Facility, which provides full borrowingcapacity of $250,000. The Company has made principal payments aggregating $228,750 through June 30, 2017, including voluntary payments aggregating$100,000 made in fiscal year 2017. The Term Loan Facility amortizes quarterly in accordance with its terms through June 30, 2020 with a final maturity dateon September 28, 2020.F-17Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)As of June 30, 2017, the principal repayments required under the Term Loan Facility are as follows:Fiscal year ending June 30, 2018 $75,000Fiscal year ending June 30, 2019 75,000Fiscal year ending June 30, 2020 114,375Fiscal year ending June 30, 2021 1,056,875 $1,321,250All obligations under the Credit Agreement are guaranteed by the Holdings Entities and MSGN L.P.'s existing and future direct and indirect domesticsubsidiaries that are not designated as excluded subsidiaries or unrestricted subsidiaries (the “Subsidiary Guarantors,” and together with the HoldingsEntities, the “Guarantors”). All obligations under the Credit Agreement, including the guarantees of those obligations, are secured by certain assets of MSGNL.P. and each Guarantor (collectively, “Collateral”), including, but not limited to, a pledge of the equity interests in MSGN L.P. held directly by the HoldingsEntities and the equity interests in each Subsidiary Guarantor held directly or indirectly by MSGN L.P. Subject to customary notice and minimum amountconditions, MSGN L.P. may voluntarily prepay outstanding loans under the Credit Agreement at any time, in whole or in part, without premium or penalty(except for customary breakage costs with respect to Eurodollar loans). MSGN L.P. is required to make mandatory prepayments in certain circumstances,including without limitation from the net cash proceeds of certain sales of assets (including Collateral) or casualty insurance and/or condemnation recoveries(subject to certain reinvestment, repair or replacement rights) and the incurrence of certain indebtedness, subject to certain exceptions.In addition to the financial covenants discussed above, the Credit Agreement and the related security agreement contain certain customary representationsand warranties, affirmative covenants and events of default. The Credit Agreement contains certain restrictions on the ability of the Holding Entities andMSGN L.P. and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the CreditAgreement, including the following: (i) incurring additional indebtedness and contingent liabilities; (ii) creating liens on certain assets; (iii) makinginvestments, loans or advances in or to other persons; (iv) paying dividends and distributions or repurchasing capital stock; (v) changing their lines ofbusiness; (vi) engaging in certain transactions with affiliates; (vii) amending specified material agreements; (viii) merging or consolidating; (ix) makingcertain dispositions; and (x) entering into agreements that restrict the granting of liens. The Holdings Entities are also subject to customary passive holdingcompany covenants.The Company is amortizing its deferred financing costs on a straight-line basis over the five-year term of the Senior Secured Credit Facilities whichapproximates the effective interest method. The following table summarizes the presentation of the Term Loan Facility and the related deferred financingcosts in the accompanying consolidated balance sheets as of June 30, 2017 and June 30, 2016: Term Loan Facility Deferred FinancingCosts NetJune 30, 2017 Current portion of long-term debt $75,000 $(2,586) $72,414Long-term debt, net of current portion 1,246,250 (5,819) 1,240,431Total $1,321,250 $(8,405) $1,312,845June 30, 2016 Current portion of long-term debt $67,500 $(2,586) $64,914Long-term debt, net of current portion 1,421,250 (8,405) 1,412,845Total $1,488,750 $(10,991) $1,477,759F-18Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)In addition, the Company has deferred financing costs related to the Revolving Credit Facility recorded in the accompanying consolidated balance sheets assummarized in the following table: June 30,2017 June 30, 2016 Other current assets $417 $417Other assets 938 1,356The Company made interest payments under the Credit Agreement of $37,005 and $27,691 during the years ended June 30, 2017 and 2016, respectively.Note 9. Operating LeasesThe Company has various long-term noncancelable operating lease agreements, primarily for office and studio space expiring at various dates through 2024.The rent expense associated with such operating leases is recognized on a straight-line basis over the initial lease term. The difference between rent expenseand rent paid is recorded as deferred rent. Rent expense under these lease agreements totaled $7,184, $10,393, and $15,177 for the years ended June 30, 2017,2016 and 2015, respectively, which for the first quarter of fiscal year 2016 and for fiscal year 2015 included rent expense on certain operating leases that weretransferred to MSG in connection with the Distribution, but which did not qualify for discontinued operations reporting.As of June 30, 2017, future minimum rental payments under leases having noncancelable initial lease terms in excess of one year are as follows:Fiscal year ending June 30, 2018$5,841Fiscal year ending June 30, 20195,841Fiscal year ending June 30, 20205,681Fiscal year ending June 30, 20214,272Fiscal year ending June 30, 20223,630Thereafter6,087 $31,352During the years ended June 30, 2017, 2016 and 2015, the Company recorded income of $2,531, $2,638 and $2,607, respectively, related to the use ofcertain space of the Company by third parties.Note 10. Commitments and ContingenciesAs of June 30, 2017, future cash payments required under contracts entered into by the Company in the normal course of business are as follows:Fiscal year ending June 30, 2018$243,617Fiscal year ending June 30, 2019245,964Fiscal year ending June 30, 2020249,790Fiscal year ending June 30, 2021254,729Fiscal year ending June 30, 2022248,400Thereafter3,338,635 $4,581,135Contractual obligations above consist primarily of the Company's obligations under media rights agreements.In addition, see Note 8 for the principal repayments required under the Company's Term Loan Facility.F-19Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 11. Legal MattersThe Company is a defendant in various lawsuits. Although the outcome of these matters cannot be predicted with certainty, management does not believethat resolution of these lawsuits will have a material adverse effect on the Company.Note 12. Fair Value MeasurementsThe fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observableinputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that marketparticipants would use when pricing the asset or liability. Unobservable inputs are inputs for which market data is not available and that are developed usingthe best information available about the assumptions that market participants would use when pricing the asset or liability. The fair value hierarchy consistsof the following three levels:•Level I — Quoted prices for identical instruments in active markets.•Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; andmodel-derived valuations whose inputs are observable or whose significant value drivers are observable.•Level III — Instruments whose significant value drivers are unobservable.The following table presents for each of these hierarchy levels, the Company's assets that are measured at fair value on a recurring basis, which include cashequivalents: Level I Level II Level III TotalJune 30, 2017 Assets: Money market accounts$34,128 $— $— $34,128Time deposits106,482 — — 106,482Total assets measured at fair value$140,610 $— $— $140,610June 30, 2016 Assets: Money market accounts$68,591 $— $— $68,591Time deposits50,977 — — 50,977Total assets measured at fair value$119,568 $— $— $119,568Money market accounts and time deposits are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflectquoted prices for identical assets in active markets. The carrying amount of the Company's money market accounts and time deposits approximates fair valuedue to their short-term maturities.Other Financial InstrumentsThe fair value of the Company's long-term debt (see Note 8) was approximately $1,315,000 as of June 30, 2017. The Company's long-term debt is classifiedwithin Level II of the fair value hierarchy as it is valued using quoted prices of such securities for which fair value can be derived from inputs that are readilyobservable.Note 13. Pension Plans and Other Postretirement Benefit PlanCompany Sponsored PlansPrior to the Distribution, the Company sponsored a non-contributory qualified cash balance retirement plan covering its non-union employees (the “MSGCash Balance Pension Plan”) and a non-contributory qualified defined benefit pension plan covering certain of its union employees (the “MSG Union Plan”).Since March 1, 2011, the MSG Cash Balance Pension Plan has also included the assets and liabilities of a frozen (as of December 31, 2007) non-contributoryqualified defined pension plan covering non-union employees hired prior to January 1, 2001. The MSG Cash Balance Pension Plan was amended to freezeparticipation and future benefit accruals effective December 31, 2015. Existing account balances under the MSG Cash Balance Pension Plan will continue tobe credited with monthly interest in accordance with the terms of the plan. The MSG Cash Balance Pension Plan and MSG Union Plan are collectivelyreferred to as the “MSG Pension Plans.”F-20Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)The Company currently sponsors (i) a non-contributory qualified defined benefit pension plan covering certain of its union employees (the “Union Plan”),(ii) an unfunded non-contributory, non-qualified excess cash balance plan covering certain employees who participated in the MSG Cash Balance PensionPlan (the "Excess Cash Balance Plan"), and (iii) an unfunded non-contributory non-qualified defined benefit pension plan for the benefit of certainemployees who participated in an underlying qualified plan, which was merged into the MSG Cash Balance Pension Plan on March 1, 2011 (the “ExcessPlan”). The Union Plan, Excess Cash Balance Plan and Excess Plan are collectively referred to as the “MSG Networks Plans.”As of December 31, 2015, the Excess Cash Balance Plan was amended to freeze participation and future benefit accruals. Therefore, after December 31, 2015,no employee of the Company who was not already a participant may become a participant in the plan and no further annual pay credits will be made for anyfuture year. Existing account balances under the plan will continue to be credited with monthly interest in accordance with the terms of the plan. As ofDecember 31, 2007, the Excess Plan was amended to freeze all benefits earned through December 31, 2007 and to eliminate the ability of participants to earnbenefits for future service under this plan. Benefits payable to retirees under the Union Plan are based upon years of service and participants’ compensation.The Company also sponsors a contributory welfare plan which provides certain postretirement healthcare benefits to certain employees hired prior to January1, 2001 who are eligible to commence receipt of early or normal Retirement Plan benefits under the MSG Cash Balance Pension Plan and their dependents, aswell as certain union employees (“Postretirement Plan”).As of the Distribution Date, the Company and MSG entered into an employee matters agreement (the “Employee Matters Agreement”) which determinedeach company’s obligations after the Distribution with regard to historic liabilities under the Company’s former pension and postretirement plans. Under theEmployee Matters Agreement, the assets and liabilities of the MSG Pension Plans have been transferred to MSG. In addition, the following have beentransferred to MSG: liabilities related to (i) MSG employees as of the Distribution Date who were active participants in the Excess Plan and/or the ExcessCash Balance Plan, (ii) MSG employees as of the Distribution Date who were eligible for participation in the Postretirement Plan, and (iii) former MSGemployees as of the Distribution Date who were retired participants in the Postretirement Plan. The Company has retained liabilities related to (i) its currentand former employees who are active participants in the Excess Plan and/or the Excess Cash Balance Plan, (ii) former MSG employees as of the DistributionDate who were active participants in the Excess Plan and/or the Excess Cash Balance Plan, (iii) its current employees who are eligible for participation in thePostretirement Plan, (iv) its former employees who are retired participants in the Postretirement Plan, and (v) the Union Plan.The following table summarizes the projected benefit obligations, assets, funded status and the amounts recorded on the Company's consolidated balancesheets associated with the MSG Networks Plans, MSG Pension Plans and Postretirement Plan as of June 30, 2017 and 2016 based upon actuarial valuations asof those measurement dates.F-21Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) Pension Plans Postretirement Plan June 30, June 30, 2017 2016 2017 2016Change in benefit obligation: Benefit obligation at beginning of period$43,921 $191,064 $3,537 $8,704Service cost532 1,962 72 112Interest cost1,328 3,418 100 206Actuarial loss (gain)(1,567) 4,534 (16) 425Benefits paid(1,224) (1,906) (70) (235)Transfer due to the Distribution— (155,151) — (5,675)Benefit obligation at end of period42,990 43,921 3,623 3,537Change in plan assets: Fair value of plan assets at beginning of period14,818 112,213 — —Actual return on plan assets(24) 1,433 — —Employer contributions2,035 2,675 — —Benefits paid(1,224) (1,906) — —Transfer due to the Distribution— (99,597) — —Fair value of plan assets at end of period15,605 14,818 — —Funded status at end of period$(27,385) $(29,103) $(3,623) $(3,537)Amounts recognized in the consolidated balance sheets as of June 30, 2017 and 2016 consist of: Pension Plans Postretirement Plan June 30, June 30, 2017 2016 2017 2016Current liabilities (included in accrued employee related costs)$(930) $(730) $(99) $(83)Non-current liabilities (included in defined benefit and other postretirementobligations)(26,455) (28,373) (3,524) (3,454) $(27,385) $(29,103) $(3,623) $(3,537)Accumulated other comprehensive income (loss), before tax, as of June 30, 2017 and 2016 consists of the following amounts that have not yet beenrecognized in net periodic benefit cost: Pension Plans Postretirement Plan June 30, June 30, 2017 2016 2017 2016Actuarial loss$(11,034) $(12,791) $(214) $(254)Prior service credit— — 24 48 $(11,034) $(12,791) $(190) $(206)In connection with the Distribution, the Company transferred to MSG the accumulated other comprehensive income (loss) related to the MSG Pension Plans.Components of net periodic benefit cost for the MSG Networks Plans, MSG Pension Plans, and Postretirement Plan recognized in direct operating expenses,selling, general and administrative expenses, and income (loss) from discontinued operations in the accompanying consolidated statements of operations forthe years ended June 30, 2017, 2016 and 2015 are as follows:F-22Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) Pension Plans Postretirement Plan Years Ended June 30, Years Ended June 30, 2017 2016 2015 2017 2016 2015Service cost$532 $1,962 $6,943 $72 $112 $198Interest cost1,328 3,418 7,915 100 206 331Expected return on plan assets(424) (1,233) (3,663) — — —Recognized actuarial loss (a)700 721 2,258 24 — —Amortization of unrecognized prior service cost (credit) (a)— 14 26 (24) (71) (138)Settlement gain (a)(71) — — — — —Net periodic benefit cost$2,065 $4,882 $13,479 $172 $247 $391(a) Reflects amounts reclassified from accumulated other comprehensive loss.Amounts presented in the table above include net periodic benefit cost related to continuing operations and discontinued operations as noted in thefollowing table: Years Ended June 30, 2017 2016 2015Continuing operations$2,237 $3,166 $5,765Discontinued operations— 1,963 8,105Total Net Periodic Benefit Cost$2,237 $5,129 $13,870Other pre-tax changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended June 30, 2017, 2016 and2015 are as follows: Pension Plans Postretirement Plan Years Ended June 30, Years Ended June 30, 201720162015 2017 2016 2015Actuarial gain (loss)$1,128 $(3,483) $(8,029) $16 $(427) $855Amounts reclassified from accumulated other comprehensiveloss: Recognized actuarial loss700 721 2,258 24 — —Recognized prior service (credit) cost— 14 26 (24) (71) (138)Settlement gain(71) — — — — —Total recognized in other comprehensive income (loss)$1,757 $(2,748) $(5,745) $16 $(498) $717The estimated net loss for the MSG Networks Plans expected to be amortized from accumulated other comprehensive income (loss) and recognized as acomponent of net periodic benefit cost over the next fiscal year is $612. The estimated prior service credit for the Postretirement Plan expected to beamortized from accumulated other comprehensive income (loss) into net periodic benefit credit over the next fiscal year is $13.Funded StatusThe accumulated benefit obligation for the MSG Networks Plans aggregated to $42,190 and $42,977 at June 30, 2017 and 2016, respectively. As of June 30,2017 and 2016 each of the MSG Networks Plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets.F-23Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Pension Plans and Postretirement Plan AssumptionsWeighted-average assumptions used to determine benefit obligations (made at the end of the period) as of June 30, 2017 and 2016 are as follows: Pension Plans Postretirement Plan June 30, June 30, 2017 2016 2017 2016Discount rate3.80% 3.57% 3.68% 3.28%Rate of compensation increase2.00% 2.00% n/a n/aHealthcare cost trend rate assumed for next yearn/a n/a 7.25% 7.25%Rate to which the cost trend rate is assumed to decline (the ultimate trendrate)n/a n/a 5.00% 5.00%Year that the rate reaches the ultimate trend raten/a n/a 2027 2026Weighted-average assumptions used to determine net periodic benefit cost (made at the beginning of the period) for the years ended June 30, 2017, 2016 and2015 are as follows: Pension Plans Postretirement Plan Years Ended June 30, Years Ended June 30, 201720162015 2017 2016 2015Discount raten/a 4.47% 4.32% n/a 4.15% 4.00%Discount rate - service cost3.73% n/a n/a 3.63% n/a n/aDiscount rate - interest cost3.03% n/a n/a 2.84% n/a n/aExpected long-term return on plan assets3.38% 4.06% 4.24% n/a n/a n/aRate of compensation increase2.00% 2.98% 2.98% n/a n/a n/aHealthcare cost trend rate assumed for next yearn/a n/a n/a 7.25% 7.25% 7.25%Rate to which the cost trend rate is assumed to decline (theultimate trend rate)n/a n/a n/a 5.00% 5.00% 5.00%Year that the rate reaches the ultimate trend raten/a n/a n/a 2026 2021 2020The discount rates were determined (based on the expected duration of the benefit payments for the plans) from the Willis Towers Watson U.S. Rate Link: 40-90 Discount Rate Model as of June 30, 2017 and 2016 to select rates at which the Companybelieved the plans’ benefits could be effectively settled. This model was developed by examining the yields on selected highlyrated corporate bonds. Effective in the first quarter of fiscal year 2017, the Company began to utilize a method which calculates service and interest costs byapplying specific spot rates along the yield curve to the plans’ cash flows instead of using a single weighted-average discount rate.The Company's expected long-term return on plan assets is based on a periodic review and modeling of the plans' asset allocation structures over a long-termhorizon. Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling and are based oncomprehensive reviews of historical data, forward-looking economic outlook, and economic/financial market theory. The expected long-term rate of returnwas selected from within the reasonable range of rates determined by (a) historical real returns, net of inflation, for the asset classes covered by the investmentpolicy and (b) projections of inflation over the long-term period during which benefits are payable to plan participants.F-24Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Assumed healthcare cost trend rates are also a key assumption used for the amounts reported for the Postretirement Plan. A one percentage point change inassumed healthcare cost trend rates would have the following effects: Increase (Decrease) in Total of Service and Interest CostComponents for the Increase (Decrease) in BenefitObligation at Years Ended June 30, June 30, 2017 2016 2015 2017 2016One percentage point increase$24 $63 $67 $448 $383One percentage point decrease(21) (55) (58) (382) (373)Plan Assets and Investment PolicyThe weighted-average asset allocation of the pension plan assets at June 30, 2017 and 2016 was as follows: June 30,Asset Classes: (a)2017 2016Fixed income securities79% 78%Cash equivalents21% 22% 100% 100%_____________________(a)The Company's target allocation for pension plan assets is 80% fixed income securities and 20% cash equivalents as of June 30, 2017.Investment allocation decisions are formally made by the Company's Investment and Benefits Committee, which takes into account investment adviceprovided by the Company's external investment consultant. The investment consultant takes into account expected long-term risk, return, correlation, andother prudent investment assumptions when recommending asset classes and investment managers to the Company's Investment and Benefits Committee.The investment consultant also takes into account the plans' liabilities when making investment allocation recommendations. Those decisions are driven byasset/liability studies conducted by the external investment consultant who combines actuarial considerations and strategic investment advice. The majorcategories of the pension plan assets are cash equivalents and long duration bonds which are marked-to-market on a daily basis. Due to the fact that thepension plan assets are significantly made up of long duration bonds, the pension plan assets are subjected to interest-rate risk; specifically, a rising interestrate environment. However, an increase in interest rates would cause a corresponding decrease to the overall liability of the plans, thus creating a hedgeagainst rising interest rates. Additional risks involving the asset/liability framework include earning insufficient returns to cover future liabilities andimperfect hedging of the liability. In addition, a portion of the long duration bond portfolio is invested in non-government securities which are subject tocredit risk of the bond issuer defaulting on interest and/or principal payments.F-25Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Investments at Estimated Fair ValueThe cumulative fair values of the individual plan assets at June 30, 2017 and 2016 by asset class are as follows:Fair Value of Investments at June 30, 2017Level I Level II Level III Total Fixed income securities: U.S. Treasury Securities$3,605 $— $— $3,605U.S. corporate bonds— 7,504 — 7,504Foreign issued corporate bonds— 1,253 — 1,253Municipal bonds— 21 — 21Money market accounts3,222 — — 3,222Total investments measured at fair value$6,827 $8,778 $— $15,605Fair Value of Investments at June 30, 2016 Fixed income securities: U.S. Treasury Securities$3,931 $— $— $3,931U.S. corporate bonds— 6,349 — 6,349Foreign issued corporate bonds— 1,278 — 1,278Municipal bonds— 22 — 22Money market accounts3,238 — — 3,238Total investments measured at fair value$7,169 $7,649 $— $14,818Contributions for Qualified Defined Benefit Pension PlanThe Company expects to contribute approximately $1,300 to the Union Plan in fiscal year 2018.Estimated Future Benefit PaymentsThe following table presents estimated future fiscal year benefit payments for the MSG Networks Plans and Postretirement Plan: PensionPlans Postretirement Plan Fiscal year ending June 30, 2018$1,470 $101Fiscal year ending June 30, 20191,580 134Fiscal year ending June 30, 20201,830 168Fiscal year ending June 30, 20212,080 211Fiscal year ending June 30, 20222,260 245Fiscal years ending June 30, 2023 – 202712,800 1,428Savings PlansIn addition, prior to the Distribution, the Company sponsored the MSG Holdings, L.P. 401(k) Savings Plan (the "MSG Savings Plan") and the MSG Holdings,L.P. Excess Savings Plan ("Excess Savings Plan"). As a result of the Distribution, the MSG Savings Plan was amended to (i) transfer sponsorship of the plan toMSG, and (ii) become a multiple employer plan in which both MSG and the Company will continue to participate. Pursuant to the Employee MattersAgreement, liabilities relating to MSG employees as of the Distribution Date who were active participants in the Company's Excess Savings Plan have beentransferred to MSG. The Excess Savings Plan has been renamed the MSGN Holdings, L.P. Excess Savings Plan (together with the MSG Savings Plan, the"Savings Plans"). Expenses related to the Savings Plans included in the accompanying consolidated statements of operations for the years ended June 30,2017, 2016 and 2015 are as follows:F-26Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) Years Ended June 30, 2017 2016 2015Continuing operations$828 $863 $759Discontinued operations— 652 2,763Total Savings Plan Expense$828 $1,515 $3,522In addition, prior to the Distribution, the Company sponsored the MSG Holdings, L.P. 401(k) Union Plan (the "MSG Union Savings Plan"). As a result of theDistribution, the MSG Union Savings Plan was amended to (i) transfer sponsorship of the plan to MSG and (ii) become a multiple employer plan in whichboth the Company and MSG will continue to participate. For periods subsequent to the Distribution, there were no employer contributions to the MSG UnionPlan. For periods prior to the Distribution, expenses related to the MSG Union Plan, which have been classified in the consolidated statements of operationsas discontinued operations were $18 and $724 for the years ended June 30, 2016 and 2015, respectively.Multiemployer PlansThe Company contributes to a number of multiemployer defined benefit pension plans, multiemployer defined contribution pension plans, andmultiemployer health and welfare plans that provide benefits to retired union-represented employees under the terms of collective bargaining agreements.The multiemployer defined benefit pension plans to which the Company contributes generally provide for retirement and death benefits for eligible union-represented employees based on specific eligibility/participant requirements, vesting periods and benefit formulas. The risks to the Company of participatingin these multiemployer defined benefit pension plans are different from single-employer defined benefit pension plans in the following aspects:•Assets contributed to a multiemployer defined benefit pension plan by one employer may be used to provide benefits to employees of otherparticipating employers.•If a participating employer stops contributing to a multiemployer defined benefit pension plan, the unfunded obligations of the plan may be borneby the remaining participating employers.•If the Company chooses to stop participating in some of these multiemployer defined benefit pension plans, the Company may be required to paythose plans an amount based on the Company's proportion of the underfunded status of the plan, referred to as a withdrawal liability. However,cessation of participation in a multiemployer defined benefit pension plan and subsequent payment of any withdrawal liability is subject to thecollective bargaining process.The Company was not listed in any of the multiemployer plans' Form 5500's as providing more than 5 percent of the total contributions. There were nomultiemployer defined benefit pension plans, to which the Company contributes, that were in the red zone (which are plans that are generally less than 65%funded) for the most recent Pension Protection Act zone status available as of June 30, 2017.The Company contributed $1,328, $1,334, and $3,644 for the years ended June 30, 2017, 2016 and 2015, respectively, to multiemployer plans, primarilymultiemployer defined benefit pension plans.Note 14. Share-based CompensationThe Company has two share-based compensation plans (i) the MSG Networks Inc. 2010 Employee Stock Plan (the “Employee Stock Plan”), which was mostrecently approved by the Company's stockholders on December 15, 2016, and (ii) the MSG Networks Inc. 2010 Stock Plan for Non-Employee Directors (the“Non-Employee Director Plan”), which was most recently approved by the Company's stockholders on December 11, 2015.Under the Employee Stock Plan, the Company is authorized to grant incentive stock options and non-qualified stock options (“options” or "stock options”),restricted shares, RSUs and other equity-based awards. The Company may grant awards for up to 12,500 (inclusive of awards granted prior to the December15, 2016 amendment thereof) shares of the Company's Class A Common Stock (subject to certain adjustments). Options and rights under the Employee StockPlan must be granted with an exercise price of not less than the fair market value of a share of the Company's Class A Common Stock on the date of grant andmust expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder).F-27Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)The terms and conditions of awards granted under the Employee Stock Plan, including vesting and exercisability, are determined by the CompensationCommittee of the Board of Directors (“Compensation Committee”) and may include performance targets. RSUs that were awarded by the Company to itsemployees will settle in shares of the Company's Class A Common Stock (either from treasury or with newly issued shares), or, at the option of theCompensation Committee, in cash.Under the Non-Employee Director Plan, the Company is authorized to grant non-qualified stock options, RSUs and other equity-based awards. The Non-Employee Director Plan provides that the Company may grant awards for up to 300 shares of the Company's Class A Common Stock (subject to certainadjustments). Non-qualified stock options under the Non-Employee Director Plan must be granted with an exercise price of not less than the fair market valueof a share of the Company's Class A Common Stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additionalyear in the case of the death of a holder). The terms and conditions of awards granted under the Non-Employee Director Plan, including vesting andexercisability, are determined by the Compensation Committee. Unless otherwise provided in an applicable award agreement, non-qualified stock optionsgranted under this plan will be fully vested and exercisable, and RSUs granted under this plan will be fully vested, upon the date of grant and will settle inshares of the Company's Class A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash,on the first business day after ninety days from the date the director's service on the Board of Directors ceases or, if earlier, upon the director's death.In connection with the Distribution, each holder of an employee RSU that was granted prior to July 1, 2015 received one MSG RSU in respect of every threeRSUs owned on the Record Date and continues to be entitled to a share of the Company's Class A Common Stock (or cash or other property) for each RSU inaccordance with the existing award agreement. In connection with the Distribution, each employee RSU that was granted on or after July 1, 2015 wasadjusted in accordance with its terms, such that (i) each holder who remained employed by the Company following the Distribution continued to holdCompany RSUs, with the number of RSUs adjusted to reflect the Distribution to maintain the value of the RSUs, and (ii) each holder who MSG employedfollowing the Distribution received MSG RSUs of the same value as the Company RSUs, and the original Company RSUs were canceled. Any holder of RSUsgranted after July 1, 2015 who was employed by both MSG and the Company following the Distribution continues to hold the Company's RSUs, adjusted toreflect the Distribution, and received MSG RSUs in connection with the Distribution, so that the Company's RSUs represent 30% of the value of the originalawards and MSG RSUs represent 70% of the value of the original RSU award.Also in connection with the Distribution, one share of MSG Class A Common Stock was issued under the MSG 2015 Non-Employee Director Plan in respectof every three RSUs outstanding under the Company’s Non-Employee Director Plan.In connection with the Distribution, each option to purchase the Company's Class A Common Stock became two options: one option to acquire MSG Class ACommon Stock and one option to acquire the Company's Class A Common Stock. The existing exercise price was allocated between the existing options andthe new MSG options based upon the volume-weighted average prices of the MSG Class A Common Stock and the Company's Class A Common Stock overthe ten trading days immediately following the Distribution as reported by Bloomberg Business, and the underlying share amount took into account the one-to-three distribution ratio (i.e., one share of MSG Class A Common Stock was issued for every three shares of the Company's Class A Common Stock). Other thanthe split of the options and the allocation of the existing exercise price, there were no additional adjustments to the existing options in connection with theDistribution and the terms of each employee’s applicable option award agreement will continue to govern the Company's options.The Company's RSUs held by MSG employees will not be expensed by the Company; however, such RSUs do have a dilutive effect on earnings (loss) pershare available to the Company's common stockholders.Share-based Compensation ExpenseShare-based compensation expense, presented within selling, general and administrative expenses and direct operating expenses, was $9,931, $9,266 and$10,211 for the years ended June 30, 2017, 2016 and 2015, respectively. Share-based compensation expense for discontinued operations during the yearsended June 30, 2016 and 2015 was $808, and $4,810, respectively.As of June 30, 2017, there was $16,342 of unrecognized compensation cost related to unvested RSUs and stock options, held by Company employees. Thecost is expected to be recognized over a weighted-average period of 2 years for unvested RSUs and stock options. There were no costs related to share-basedcompensation that were capitalized. Tax benefits realized from taxF-28Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)deductions associated with share-based compensation expense for the years ended June 30, 2017, 2016 and 2015 totaled $1,714, $12,206, and $17,552,respectively.Stock Options Award ActivityThe following table summarizes activity relating to holders of the Company's stock options for the year ended June 30, 2017: Number of Weighted-AverageExercisePrice PerShare Weighted-AverageRemainingContractualTerm (In Years) AggregateIntrinsicValue NonperformanceBasedVestingOptions PerformanceBasedVestingOptions Balance as of June 30, 2016 [a]1 — $2.77 0.28 $11Granted535 534 17.81 Exercised(1) — 2.77 Balance as of June 30, 2017535 534 $17.81 6.71 $4,960(a) See above for a discussion of the treatment of options in connection with the Distribution.In September 2016, the Company granted 1,069 stock options, of which 50% are subject to three-year ratable vesting and the remaining 50% are subject tothree-year cliff vesting and the achievement of certain Company performance criteria. These options have an expiration period of 7.5 years. The Companycalculated the fair value of these options on the date of grant using the Black-Scholes option pricing model, which resulted in a grant date fair value of $4.49per option.The following were the key assumptions used to calculate the fair value of this award:Risk-free interest rate1.24%Expected term5.25 years Expected volatility25.1%The Company's computation of expected term was calculated using the simplified method (the average of the vesting period and option term) as prescribed inASC Topic 718-10-S99. The Company's computation of expected volatility was based on historical volatility of its common stock.The aggregate intrinsic value is calculated as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of the Company'sClass A Common Stock for all options outstanding which were all in-the-money at June 30, 2017 and 2016, as applicable. For the years ended June 30, 2017,2016 and 2015, the aggregate intrinsic value of the Company's stock options exercised was $14, $5,100 and $3,207, respectively, determined as of the dateof option exercise.Restricted Share Units Award ActivityThe following table summarizes activity relating to holders (including Company and MSG employees) of the Company's RSUs for the year ended June 30,2017: Number of Weighted-AverageFair Value Per Share AtDate of Grant NonperformanceBasedVestingRSUs PerformanceBasedVestingRSUs Unvested award balance as of June 30, 2016321 431 $38.57 Granted463 284 19.59Vested(207) (103) 39.91Forfeited(33) (15) 38.07Unvested award balance as of June 30, 2017544 597 25.79F-29Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)See above for a discussion of the treatment of RSUs granted after July 1, 2015. Nonperformance based vesting RSUs granted during the year ended June 30,2017 included 404 RSUs that are subject to three-year ratable vesting and 59 RSUs granted under the Non-Employee Director Plan which vested upon date ofgrant. Performance based vesting RSUs granted during the year ended June 30, 2017 included 94 RSUs that are subject to three-year ratable vesting, and 190RSUs subject to three-year cliff vesting. RSUs granted under the Employee Stock Plan and Non-Employee Director Plan will settle in shares of the Company'sClass A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash. RSU's granted under theNon-Employee Director Plan will settle on the first business day after ninety days from the date the director's service on the Board of Directors ceases or, ifearlier, upon the director's death.The fair value of RSUs that vested during the year ended June 30, 2017 was $5,902. Upon delivery, RSUs granted under the Employee Stock Plan were netshare-settled to cover the required statutory tax withholding obligations and the remaining number of shares were issued from the Company's treasury shares.To fulfill the employees' statutory minimum tax withholding obligations for the applicable income and other employment taxes, 130 of these RSUs, with anaggregate value of $2,399 were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statementof cash flows for the year ended June 30, 2017. The fair value of RSUs that vested during the years ended June 30, 2016 and 2015, was $17,330 and $54,544,respectively.The weighted-average fair value per share at date of grant of RSUs granted during the years ended June 30, 2016 and 2015 was $55.23 and $69.57,respectively.Note 15. Stock Repurchase ProgramOn October 27, 2014, the Company's Board of Directors authorized the repurchase of up to $500,000 of the Company's Class A Common Stock. OnSeptember 11, 2015, the Company's Board of Directors terminated the repurchase authorization effective as of the Distribution Date. Under the authorization,shares of Class A Common Stock were able to be purchased from time to time in open market or private transactions in accordance with applicable insidertrading and other securities laws and regulations.For the years ended June 30, 2016 (up until the authorization was terminated) and 2015, the Company repurchased 1,336 and 1,823 shares, respectively,which are determined based on the settlement date of such trades, for a total cost of $100,027 and $140,717 (including commissions and fees), respectively.These acquired shares have been classified as treasury stock.Note 16. Related Party TransactionsAs of June 30, 2017, members of the Dolan family group, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, including trustsfor the benefit of the Dolan family group, collectively beneficially own all of the Company's outstanding Class B Common Stock and own approximately2.4% of the Company's outstanding Class A Common Stock. Such shares of the Company's Class A Common Stock and Class B Common Stock, collectively,represent approximately 69.6% of the aggregate voting power of the Company's outstanding common stock. Members of the Dolan family are also thecontrolling stockholders of MSG and AMC Networks Inc. ("AMC Networks").On June 16, 2016, the Company entered into an arrangement with the Dolan Family Office, LLC (“DFO”), MSG and AMC Networks providing for the sharingof certain expenses associated with executive office space which is available to Charles F. Dolan (a director of the Company and MSG and the ExecutiveChairman and a director of AMC Networks), James L. Dolan (the Executive Chairman and a director of the Company and MSG and a director of AMCNetworks), and the DFO, which is controlled by Charles F. Dolan.Beginning in June 2016, the Company agreed to share certain executive support costs, including office space, executive assistants, security andtransportation costs for (i) the Company's Executive Chairman with MSG and (ii) the Company's Vice Chairman with MSG and AMC Networks.In connection with the Distribution, the Company entered into various agreements with MSG, including media rights agreements covering Knicks andRangers games, an advertising sales representation agreement, a trademark license agreement, a tax disaffiliation agreement, a transition services agreement("TSA") and certain other arrangements. The Company has entered into various agreements with AMC Networks with respect to a number of ongoingcommercial relationships.F-30Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Related party transactions included in continuing operationsRights feesThe Company's media rights agreements with the Knicks and the Rangers, effective as of July 1, 2015, provide the Company with exclusive media rights toteam games in their local markets. Prior to the Distribution, these rights fees were eliminated in consolidation; however the pre-Distribution Date amounts arenow presented as revenues in the loss from discontinued operations line with the offsetting expense in direct operating expenses, within continuingoperations, in the accompanying consolidated statements of operations for the years ended June 30, 2016 and 2015. Rights fees included in theaccompanying consolidated statements of operations for the years ended June 30, 2017, 2016 and 2015 were $135,191, $130,841, and $80,999, respectively.Origination, master control and technical servicesAMC Networks provides certain origination, master control and technical services to the Company. Amounts charged to the Company for the years endedJune 30, 2017, 2016 and 2015 were $6,111, $5,872, and $5,663, respectively.CommissionThe Company's advertising sales representation agreement with MSG, which has a term through June 30, 2022, provides for MSG to act as our advertisingsales representative and includes the exclusive right and obligation to sell certain advertising availabilities on our behalf for a commission. All of theCompany's advertising sales personnel were transferred to MSG in connection with the Distribution. The amount charged to the Company for the years endedJune 30, 2017 and 2016 were $13,585 and $13,763, respectively.Other operating expensesThe Company and its related parties enter into transactions with each other in the ordinary course of business. In addition, pursuant to the TSA, the Companyoutsources certain business functions to MSG. These services include information technology, certain accounting functions, accounts payable, payroll, tax,legal, human resources, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internalaudit. Net amounts charged to the Company pursuant to the TSA, for expenses associated with executive office space and certain support costs, and for otherrelated party transactions amounted to $8,925, $4,934, and $(3,766) for the years ended June 30, 2017, 2016 and 2015, respectively.Related party transactions with Cablevision Systems CorporationPrior to June 21, 2016, members of the Dolan family were also the controlling stockholders of Cablevision Systems Corporation ("Cablevision"). On June 21,2016, Cablevision was acquired by a subsidiary of Altice N.V. and a change in control occurred which resulted in members of the Dolan family no longerbeing controlling stockholders of Cablevision (now known as Altice USA). Accordingly, Altice USA is not a related party of the Company. Revenues(primarily from the distribution of programming networks) that relate to Cablevision prior to its sale, included in continuing operations in the accompanyingconsolidated statements of operations for the years ended June 30, 2016 and 2015 were $161,588 and $167,648, respectively. Operating expenses that relateto Cablevision prior to its sale, included in continuing operations in the accompanying consolidated statements of operations for the years ended June 30,2016 and 2015 were $11,050 and $9,107, respectively.Related party transactions included in discontinued operationsRelated party transactions included in income (loss) from discontinued operations in the accompanying consolidated statements of operations include thefollowing: (i) revenues from related parties of $33,559 and $89,126 for the years ended June 30, 2016 and 2015, respectively, (ii) operating expenses chargedby related parties of $1,367 and $10,194 for the years ended June 30, 2016 and 2015, respectively, (iii) interest income from nonconsolidated affiliates of$635 and $1,886 for the years ended June 30, 2016 and 2015, respectively, and (iv) equity in earnings (loss) of equity-method investments of $2,679 and$(40,590) for the years ended June 30, 2016 and 2015, respectively.F-31Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 17. Income TaxesIncome tax expense attributable to continuing operations is comprised of the following components: Years Ended June 30, 2017 2016 2015Current expense: Federal$81,964 $71,632 $137,455State and other31,977 27,977 53,194 113,941 99,609 190,649Deferred expense (benefit): Federal(4,120) (4,353) (16,558)State and other(1,327) (14,252) 3,708 (5,447) (18,605) (12,850)Tax benefit relating to uncertain tax positions(18) (33) (894)Income tax expense$108,476 $80,971 $176,905The income tax expense attributable to continuing operations differs from the amount derived by applying the statutory federal rate to pre-tax incomeprincipally due to the effect of the following items: Years Ended June 30, 2017 2016 2015Federal tax expense at statutory federal rate$96,578 $85,495 $148,867State and local income taxes, net of federal benefit19,489 17,709 31,707Change in the estimated applicable corporate tax rate used to determine deferredtaxes85 (12,717) 8,122Domestic production activities tax deduction(7,998) (6,329) (11,076)Tax benefit relating to uncertain tax positions(18) (33) (894)Tax return to book provision adjustments(208) (3,271) (49)Nondeductible expenses and other548 117 228Income tax expense$108,476 $80,971 $176,905The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities included in the accompanyingconsolidated balance sheets as of June 30, 2017 and 2016 are as follows: June 30, 2017 2016Deferred tax asset (liability) Investment in MSGN L.P.$(356,064) $(358,725)Compensation and benefit plans4,210 2,164Net noncurrent deferred tax liability$(351,854) $(356,561)Deferred tax assets as of June 30, 2017 have resulted from the Company's future deductible temporary differences. At this time, based on current facts andcircumstances, management believes that it is more likely than not that the Company will realize the benefit for its gross deferred tax assets.The current state tax prepaid asset of $14,322 and $28,384 as of June 30, 2017 and 2016, respectively, and the current federal tax payable of $11,483 and$8,662 as of June 30, 2017 and 2016, respectively, are reflected in the Company's income tax prepaid and payables balances in the accompanyingconsolidated balance sheets.F-32Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits associated with the Company's uncertain tax positions:Balance as of June 30, 2016$32Additions for tax positions related to prior years—Decreases for tax positions related to prior years(18)Balance as of June 30, 2017$14During the year ended June 30, 2017, the Company recorded a $18 tax benefit related to uncertain tax positions (including interest and penalties) due to theexpiration of the applicable statute of limitations. The expense related to uncertain tax positions taken in prior years was comprised of income taxesassociated with a state filing position. The Company recognizes accrued interest and penalties on unrecognized tax positions as a component of income taxexpense. The Company expects its uncertain tax position balance of $14 to be released to income within the next twelve months which will have a negligibleimpact on the Company's effective tax rate.The Company made cash income tax payments (net) of $97,164, $192,315 and $217,316 for years ended June 30, 2017, 2016 and 2015, respectively. Thecash income tax payments for the year ended June 30, 2016 include approximately $120,000 which is reflected in net cash used in operating activities ofdiscontinued operations in the accompanying consolidated statement of cash flows. The income tax payments classified in net cash used in operatingactivities of discontinued operations primarily reflect a one-time payment related to certain historical activities of our former subsidiary, MSG, and otheroffsetting items. Income taxes paid by the Company during the year ended June 30, 2015 include amounts related to the sale of Fuse.During the third quarter of fiscal year 2017, the Internal Revenue Service concluded its fieldwork on the audit of the Company’s federal income tax returns asfiled for the tax year ended December 31, 2013. The Company does not expect the audit to result in material changes to the tax returns as filed.The Company was notified during the third quarter of fiscal year 2017 that the City of New York was commencing an examination of the Company's NewYork City income tax returns as filed for the tax years ended December 31, 2013 and 2014. The Company does not expect the examination, when finalized,to result in material changes to the tax returns as filed.In addition, during the fourth quarter of fiscal year 2017 the Company was notified that the City of New York was also initiating a review of the Company’s2014 and 2015 Unincorporated Business Tax Returns. The Company does not expect the examination, when finalized, to result in material changes to the taxreturns as filed.The Company was notified during the fourth quarter of fiscal year 2017 that the State of New York was commencing an examination of the Company's NewYork State income tax returns as filed for the tax years ended December 31, 2013 and 2014. The Company does not expect the examination, when finalized,to result in material changes to the tax returns as filed.The federal and state statute of limitations are currently open on the Company's 2013, 2014, 2015, and 2016 tax returns.Note 18. Concentrations of RiskFinancial instruments that may potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and accountsreceivable. Cash and cash equivalents are invested in money market funds and bank time deposits. The Company monitors the financial institutions andmoney market funds where it invests its cash and cash equivalents with diversification among counterparties to mitigate exposure to any single financialinstitution. The Company's emphasis is primarily on safety of principal and liquidity and secondarily on maximizing the yield on its investments.Accounts receivable, net on the accompanying consolidated balance sheets as of June 30, 2017 and 2016 include amounts due from the following individualnon-affiliated customers, which accounted for the noted percentages of the gross balance: June 30, 2017 2016Customer A26% 25%Customer B25% 26%Customer C22% 22%Customer D14% 14%F-33Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)Affiliation fee revenue constituted at least 90% of our consolidated revenues for each of the years ended June 30, 2017, 2016 and 2015.Revenues from continuing operations in the accompanying consolidated statements of operations for the years ended June 30, 2017, 2016 and 2015 includeamounts from the following individual customers, which accounted for the noted percentages of the total: Years Ended June 30, 2017 2016 2015Customer 125% 25% 27%Customer 224% 23% 22%Customer 320% 20% 20%Customer 411% 10% 11%The accompanying consolidated balance sheets as of June 30, 2017 and 2016 include the following approximate amounts that are recorded in connectionwith the Company's license agreement with the New Jersey Devils: June 30,Reported in2017 2016Prepaid expenses$3,000 $1,000Other current assets2,000 2,000Other assets41,000 41,000 $46,000 $44,000As of June 30, 2017, approximately 580 full-time and part-time employees, who represent approximately 74% of the Company's workforce, are subject tocollective bargaining agreements (“CBAs”). As of June 30, 2017, approximately 38% of the Company's workforce that are subject to CBAs are covered byCBAs that expire within the next fiscal year.Note 19. Interim Financial Information (Unaudited)The following is a summary of the Company's selected quarterly financial data for the years ended June 30, 2017 and 2016: Three Months Ended Year Ended June30, 2017 September 30, 2016 December 31, 2016 March 31, 2017 June 30,2017 Revenues$153,578 $175,646 $183,247 $162,881 $675,352Operating expenses79,071 95,847 100,193 86,977 362,088Operating income$74,507 $79,799 $83,054 $75,904 $313,264 Income from continuing operations$40,361 $43,255 $44,155 $39,691 $167,462Loss from discontinued operations, net oftaxes(120) — — — (120)Net income$40,241 $43,255 $44,155 $39,691 $167,342 Earnings (loss) per share: Basic Income from continuing operations$0.54 $0.58 $0.59 $0.53 $2.23Loss from discontinued operations— — — — —Net income0.54 0.58 0.59 0.53 2.22Diluted Income from continuing operations$0.54 $0.57 $0.58 $0.52 $2.22Loss from discontinued operations— — — — —Net income0.53 0.57 0.58 0.52 2.21F-34Table of Contents MSG NETWORKS INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) Three Months Ended Year Ended June30, 2016 September 30, 2015 December 31, 2015 March 31, 2016 June 30,2016 Revenues$148,147 $169,931 $179,596 $160,524 $658,198Operating expenses105,899 97,008 95,509 86,196 384,612Operating income$42,248 $72,923 $84,087 $74,328 $273,586 Income from continuing operations$41,331 $34,050 $44,710 $43,207 $163,298Income (loss) from discontinued operations,net of taxes(161,017) (137) (40) 5,530 (155,664)Net income (loss)$(119,686) $33,913 $44,670 $48,737 $7,634Earnings (loss) per share: Basic Income from continuing operations$0.55 $0.45 $0.60 $0.58 $2.17Income (loss) from discontinuedoperations(2.13) — — 0.07 (2.07)Net income (loss)(1.58) 0.45 0.60 0.65 0.10Diluted Income from continuing operations$0.54 $0.45 $0.59 $0.57 $2.16Income (loss) from discontinuedoperations(2.12) — — 0.07 (2.06)Net income (loss)(1.58) 0.45 0.59 0.65 0.10F-35Exhibit 21.1MSG Networks Inc.SubsidiariesENTITY NAMESTATE OF INCORPORATIONPERCENTAGE OWNEDThe 31st Street Company, L.L.C.Delaware100%MSGN Eden, LLCDelaware100%MSGN Holdings, L.P.Delaware100%MSGN Interactive, LLCDelaware100%MSGN Publishing, LLCDelaware100%MSGN Songs, LLCDelaware100%SportsChannel AssociatesNew York100%Rainbow Garden Corp.Delaware100%Regional MSGN Holdings LLCDelaware100%Exhibit 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsMSG Networks Inc.:We consent to the incorporation by reference in the registration statements (Nos. 333-164597, 333-208482 and 333-215869) on Form S-8 of MSG NetworksInc. of our reports dated August 16, 2017, with respect to the consolidated balance sheets of MSG Networks Inc. as of June 30, 2017 and June 30, 2016 andthe related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity (deficiency) for each of the years in the three-year period ended June 30, 2017, and the related consolidated financial statement schedule, and the effectiveness of internal control over financial reportingas of June 30, 2017, which reports appear in the June 30, 2017 annual report on Form 10-K of MSG Networks Inc./s/ KPMG LLPNew York, New YorkAugust 16, 2017Exhibit 31.1CertificationI, Andrea Greenberg, certify that:1.I have reviewed this Annual Report on Form 10-K of MSG Networks Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date: August 16, 2017/s/ Andrea GreenbergAndrea GreenbergPresident and Chief Executive OfficerExhibit 31.2CertificationI, Bret Richter, certify that:1.I have reviewed this Annual Report on Form 10-K of MSG Networks Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date: August 16, 2017/s/ Bret RichterBret RichterExecutive Vice President, Chief Financial Officer and TreasurerExhibit 32.1CertificationPursuant to 18 U.S.C. §1350, the undersigned officer of MSG Networks Inc. (the “Company”), hereby certifies, to such officer's knowledge, that theCompany's Annual Report on Form 10-K for the year ended June 30, 2017 (the “Report”) fully complies with the requirements of §13(a) or §15(d), asapplicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financialcondition and results of operations of the Company.Date: August 16, 2017/s/ Andrea GreenbergAndrea GreenbergPresident and Chief Executive OfficerThe foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosuredocument.Exhibit 32.2CertificationPursuant to 18 U.S.C. §1350, the undersigned officer of MSG Networks Inc. (the “Company”), hereby certifies, to such officer's knowledge, that theCompany's Annual Report on Form 10-K for the year ended June 30, 2017 (the “Report”) fully complies with the requirements of §13(a) or §15(d), asapplicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financialcondition and results of operations of the Company.Date: August 16, 2017/s/ Bret RichterBret RichterExecutive Vice President, Chief Financial Officer and TreasurerThe foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosuredocument.

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