MSG Entertainment Eyeing Spinoff Of Assets Including Networks, Madison Square Garden, Other Venues

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The board of Madison Square Garden Entertainment said today that it is considering a spinoff of its live entertainment business that would include MSG Network and NYC’s Madison Square Garden, Radio City Music Hall and Beacon Theatre, among other assets.

A deal would separate the live entertainment and MSG Networks businesses from MSG Sphere and Tao Group Hospitality to create two public companies, MSG said. No timetable for a potential transaction was set.

Shares in Madison Square Garden Entertainment jumped 6% in after-hours trading on the news.

The Dolan family, which controls MSG, previously oversaw a split of its entertainment and sports assets in 2020, and MSG Sports and MSG Entertainment have traded separately since. Cable TV was the family’s longtime focus until it sold Cablevision for $17.7 billion to French conglomerate Altice in 2016.

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MSG in 2020 also closed a $400 million deal for Los Angeles Clippers owner and ex-Microsoft CEO Steve Ballmer to buy the Forum in the L.A. suburb of Inglewood. That deal cleared a big hurdle in Ballmer’s plans to build a new arena for his NBA team, which has shared Crypto.com Arena (fka Staples Center) with the Lakers since that building opened in 1999.

“This potential transaction would create two companies, each with a distinct value proposition for investors,” Executive Chairman and CEO James L. Dolan said in a statement on the company’s website. “The live entertainment and media company would include Madison Square Garden, the Christmas Spectacular production and MSG Networks and would generate substantial free cash flow. The second company, comprised of MSG Sphere and Tao Group Hospitality, would be focused on unique shared experiences, innovation and global opportunities for growth.”

The Dolan clan also controls Madison Square Garden’s main tenants: the NBA’s Knicks and NHL’s Rangers. Today’s announcement did not mention either team. Its holdings also include the Radio City Rockettes, Hulu Theater at Madison Square Garden and the Windy City’s Chicago Theatre. The company is building a new venue in Las Vegas — MSG Sphere at The Venetian — and has announced plans to build a second MSG Sphere in London.

Here are the details, per MSG Entertainment:

The live entertainment and media company is expected to include:

  • A diverse collection of venues: Madison Square Garden, The Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre;
  • The Company’s entertainment and sports bookings business, which showcases a broad array of compelling concerts, family shows and special events, as well as a diverse mix of sporting events, for millions of guests annually;
  • The Radio City Rockettes and the Christmas Spectacular production, which has been a holiday tradition for 88 years;
  • Valuable long-term Arena License Agreements with the New York Knicks and New York Rangers, both of which play their home games exclusively at Madison Square Garden; and
  • MSG Networks, which owns two regional sports and entertainment networks, MSG Network and MSG+, as well as a companion streaming app, MSG GO, and features exclusive live local games of 5 NBA and NHL sports franchises.After the proposed spin-off of the live entertainment and media company, MSG Entertainment is expected to include:
  • MSG Sphere – state-of-the-art venues that will combine cutting-edge technology with multi-sensory storytelling to deliver immersive experiences on an unparalleled scale. The first MSG Sphere is currently under construction in Las Vegas and expected to open in the second half of calendar 2023;
  • Majority interest in TAO Group Hospitality, a global entertainment dining and nightlife provider, with over 70 branded locations within 60 venues in more than 20 markets across 5 continents;
  • An approximately one-third economic interest in the live entertainment and media company; and
  • The majority of the Company’s cash on hand.

Dade Hayes contributed to this report.

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