Defending MSG & Lin (MSG, TWC)

Gabelli & Co. has a pretty amazing upside call in Madison Square Garden Company (NYSE: MSG).  The firm’s report is after the sports and entertainment operation settled with Time Warner Cable Inc. (NYSE: TWC) on Friday.  While details were not disclosed at all. The firm calls it “clearly a positive for MSG as the blackout was likely costing $10 million to $13 million per month and this likely has improved economics for MSG. 

Gabelli further noted, “Every 10 cent increase translates to $2.6 million in revenue as well as incremental EBITDA.  This should be material to MSG this year and into 2013.”

Of course there is the Lin angle.  ‘Linsanity’ continues and there are three positives:

• 1.) good for high-margin merchandise sales;
• 2.) ratings on MSG network are doing well;
• 3.) playoff run would be very lucrative considering every playoff game is worth ~$3.5mm in incremental ticket sales (plus concessions & additional merchandise sales).

In the call, the rating was reiterated as Buy and the firm has a 2013 private market value of $62 per share versus a $32.85 close on Friday.