Cablevision To Spin Off MSG

Madison Square Garden parent company Cablevision Systems has approved a plan to spin off its MSG businesses, including the famed arena, professional basketball’s Knicks and hockey’s Rangers, its board announced July 30.

The move came as little surprise, as Cablevision officials had already floated the possibility of spinning off the unit to shareholders by the end of the year. Cablevision reported an 8 percent loss in revenue in the second quarter despite climbing revenue.

Also in the assets being spun off are Radio City Music Hall, media properties including the MSG, MSG Plus and Fuse cable networks and MSG Interactive’s online assets, a live entertainment portfolio including the “Radio City Christmas Spectacular,” and family and special events.

Other venues included in the deal include the Theater at Madison Square Garden, the Beacon Theatre, the Chicago Theatre and Boston’s Wang Theatre.

The spinoff of MSG is expected to make it easier for investors because each company will now have distinct businesses, and it leaves the cable operations to concentrate on the core business rather than entertainment.

The transaction will be structured as a tax-free, pro rata spinoff to existing shareholders and is expected to close by year-end, according to the company’s announcement.

Both Cablevision and MSG will continue to be controlled by the Dolan family through their ownership of Class B shares. The company reiterated in its statement that it is not considering the sale of MSG, any of its businesses or any other Cablevision business “at this time.”

With the spinoff, James Dolan is expected to become executive chairman of the the new, public Madison Square Garden and continue in his present role of president/CEO of Cablevision. Hank Ratner will be president/CEO of MSG and remain Cablevision’s vice chairman. Charles Dolan will remain as Cablevision chairman.

“This spin-off will create two distinct companies, each with enhanced strategic flexibility, its own defined business focus and clear investment characteristics,” James Dolan said in a statement. “The new MSG will be an attractive combination of sports, entertainment and programming properties, while Cablevision will continue to house a portfolio that includes industry-leading telecommunications services and popular programming networks.

“We believe that the combined value of these assets has not been fully realized, and that this transaction will be beneficial to shareholders as both Cablevision and MSG freely pursue their own individual business plans.”