Madison Square Garden Company, which owns US regional pay-television channels MSG Network and MSG Plus, along with major league franchises the New York Knicks and the New York Rangers, has proposed to spin-off its media and sports businesses from its entertainment division.
MSG’s board of directors has unanimously approved a plan to explore a possible spin-off that would create two distinct publicly traded companies.
If the company proceeds with the spin-off transaction, it would be structured as a tax-free pro rata spin-off to all MSG shareholders. Upon completion of the contemplated move, MSG shareholders would own shares in both of the new companies, which the company said will provide shareholders with the ability to more clearly evaluate each company's businesses and prospects.
The proposed separation, which the company has been considering since July, is intended to benefit both new companies by allowing each of them to have a balance sheet, capital structure and capital return policy most appropriate for its business.
Tad Smith, president and chief executive of the Madison Square Garden Company, said: “Investors favour companies with greater strategic focus on their core businesses. We are exploring the opportunity to improve upon the excellent shareholder return created since MSG's spin-off over four years ago by separating our business into two companies, each with its own distinct value proposition for investors.
“The live entertainment company would be a premier live event and venue management company with expertise in areas such as productions and other entertainment content, marketing, sales, and event operations. The sports and media company would be a leading company that fields championship calibre sports teams and has the rights to distribute sports content on multiple media platforms.
“The first company would capitalise on significant opportunities to grow rapidly within the changing entertainment landscape. The second would enjoy steady growth and high cash flow that we expect will result in capital returns to shareholders.”
The sports and media company would include MSG's professional sports franchises – NBA basketball team the New York Knicks, NHL ice hockey franchise the New York Rangers and women’s basketball team the New York Liberty, along with its development teams: the Hartford Wolf Pack and the Westchester Knicks.
Along with MSG Network and MSG Plus, the company’s media portfolio also includes its interest in SiTV Media, the parent company of NUVOtv and Fuse networks.