Madison Square Garden to Split Into Two Companies
The firm has been exploring a split and has now made a first regulatory filing to separate its live entertainment and sports from its media businesses.
The Madison Square Garden Co. said Friday that it has filed an initial registration statement with the U.S. Securities and Exchange Commission to go ahead with a split into two companies that it has been considering.
It has been exploring a separation of its businesses into two publicly traded entities. Originally, the focus was on a live entertainment company and a separate firm housing sports teams and networks. On Friday, the company said it has made a regulatory filing to split into one company housing its live entertainment and sports brands and another one operating its media businesses, namely its TV networks.
The planned separation would be structured as a tax-free spin-off of the sports and entertainment business to MSG shareholders on a pro-rata basis, the company said. The transaction is currently expected to be completed during 2015, subject to certain conditions, added the firm, controlled by the Dolan family, who also controls cable operator Cablevision Systems and AMC Networks.
"After review, MSG's board of directors believes that, while MSG has created significant shareholder value since it was established as a public company five years ago, separating MSG's live sports and entertainment businesses from its media business now would further enhance the long-term value-creation potential of both businesses," the company said.
"While the companies would continue to benefit from commercial arrangements between them, the separation would provide each company with increased strategic flexibility to pursue its own distinctive business plan and allow each to have a capital structure and capital return policy that is appropriate for its business," it added. "Upon completion of the spin-off, MSG shareholders would own shares in both companies and have the ability to evaluate each company's current business and future prospects in making investment decisions."
The live sports and entertainment company would include the New York Knicks, the New York Rangers and the New York Liberty sports teams, development teams the Hartford Wolf Pack and the Westchester Knicks and venues Madison Square Garden Arena, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theater, the Forum in Inglewood, Calif., The Chicago Theater, and the Wang Theater in Boston. The company would also include live productions, including the Radio City Christmas Spectacular featuring the Rockettes, the New York Spring Spectacular and MSG's stake in Fuse Media, the parent company of NUVOtv and Fuse.
The other firm would focus on MSG's media businesses, namely regional sports and entertainment networks MSG Network and MSG+. In connection with the separation, the companies "expect to enter into long-term media rights agreements that will ensure MSG Network and MSG+ continue to serve as the exclusive local broadcast home of the Knicks and Rangers," the company said.
The separation remains subject to various conditions, including a ruling from the IRS and final MSG board approval.