MSG is moving forward with its plan to split off the company’s sports and live entertainment assets from its regional sports networks.
MSG said in a Securities and Exchange Commission filing that it expects to complete the spinoff this year. The move comes two weeks after Tad Smith stepped down as MSG CEO for the top job at Sotheby’s. It also comes amid mounting speculation that 21st Century Fox may seek to buy MSG’s two regional sports cablers, MSG Network and MSG+.
As part of the spinoff, MSG said it would set long-term TV rights deals for its New York Knicks and New York Rangers teams with the MSG nets.
“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,” MSG said in announcing the filing. “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.”
The sports and entertainment spinoff would encompass the Knicks, Rangers and New York Liberty WNBA team, as well as such notable venues as Madison Square Garden Arena, the Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theater, the newly refurbished Forum in Inglewood, Calif., the Chicago Theater, and the Wang Theater in Boston. MSG’s booking and venue management business would also be included along with its interest in Fuse Media, parent company of NuvoTV and Fuse networks.
In a research note earlier this month, BTIG Research analyst Brandon Ross cited Fox or possibly Comcast as suitors for the MSG sports cablers. MSG’s New York-centric teams would be a good fit with Fox’s interest in the Yankees’ YES network, he noted.
“MSG Networks is much better suited as part of a basket of networks, and even better if grouped with other RSN’s. We believe that putting MSG Networks into a larger cable network portfolio, specifically one with other RSN’s, would unlock value for the nets: Take away nearly all the risk of being dropped in carriage disputes, command higher rates, more opportunity to be a part of new Virtual MVPD bundles,” Ross wrote.
(Pictured: Christina Aguilera performing during the NBA All-Star Game at Madison Square Garden in February)