MSG Entertainment is considering a spinoff of assets including Madison Square Garden, more – deadline

The board of Madison Square Garden Entertainment said today it is considering spinning off its live entertainment business, which would include MSG Network and New York’s Madison Square Garden, Radio City Music Hall and the Beacon Theatre, among other assets.

The deal will separate the live entertainment business and MSG Networks from MSG Sphere and Tao Group Hospitality to create two public companies, MSG said. No timetable has been set for a potential deal.

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

Radio City Music Hall in midtown Manhattan
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The Dolan family, which controls MSG, previously led the separation of its entertainment and sports assets in 2020, and MSG Sports and MSG Entertainment have since traded separately. Cable television was the family’s longtime focus until it sold Cablevision for $17.7 billion to French conglomerate Altice in 2016.

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

“This potential transaction would create two companies, each with a different 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 will include Madison Square Garden, the Christmas Spectacular production and MSG Networks and will generate significant free cash flow. The second company, composed of MSG Sphere and Tao Group Hospitality, will be focused on unique shared experiences, innovation and global growth opportunities.”

The Dolan clan also controls Madison Square Garden’s primary tenants: the NBA’s Knicks and the NHL’s Rangers. Today’s announcement did not mention either team. His holdings also include the Radio City Rockettes, the 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.

Beacon Theater in Manhattan
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Here are the details according to MSG Entertainment:

The 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 Theater and The Chicago Theatre;
  • The Company’s entertainment and sports booking business, which presents a wide range of exciting concerts, family shows and special events, as well as a diverse mix of sporting events to 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 licensing agreements with the New York Knicks and New York Rangers, both playing 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 local live games of 5 NBA and NHL sports franchises. Following 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 is expected to open in the second half of calendar year 2023;
  • Majority interest in TAO Group Hospitality, a global provider of dining and nightlife, with over 70 branded locations within 60 locations in more than 20 markets on 5 continents;
  • An approximately one-third economic interest in the live entertainment and media company; and
  • Most of the company’s available cash.

Dade Hayes contributed to this report.

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