MSG Moves Ahead With Split Plans

Files SEC Docs to Cleave Into Sports, Entertainment Businesses

Madison Square Garden is going ahead with plans to split into two separate companies – one focused on sports, the other entertainment – ending what has been about five months of speculation concerning the split.

MSG said back in October that it had authorized its board of directors to explore the split.

The move to go through with the split also silences some speculation that it would be on hold after CEO Tad Smith announced he would leave to become CEO of auction house Sotheby’s at the end of March.   Company executive chairman James Dolan will assume Smith’s duties as it searches for a permanent replacement.

“After review, MSG’s board of directors believes that, 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,” the company said in a statement. “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 split is expected to be completed in 2015 and would be a tax-free spin-off to shareholders. Upon completion of the spin-off, MSG shareholders would own shares in both companies and have the ability to evaluate each company's current business and future prospects in making investment decisions.

The live sports and entertainment company would comprise a portfolio of sports teams and exclusive entertainment productions, including:

• Professional sports franchises: the New York Knicks, the New York Rangers and the New York Liberty, along with development teams: the Hartford Wolf Pack and the Westchester Knicks

• World-class, award-winning venues including Madison Square Garden Arena, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theater, the Forum in Inglewood, CA, The Chicago Theater, and the Wang Theater in Boston

• Live productions, including the Radio City Christmas Spectacular, the nation's #1 live holiday family show featuring the legendary Rockettes, and New York Spring Spectacular, a new large scale theatrical production that officially debuted on March 26

• MSG’s first-class venue management capabilities and industry-leading expertise in bookings, as well as its sponsorship, marketing, ticketing and promotional expertise and platforms
• MSG's strategic entertainment joint ventures

• MSG's interest in Fuse Media, the parent company of NUVOtv and Fuse networks

The media company would continue to distribute exclusive, award-winning sports and entertainment content across multiple platforms, including two of the most successful regional sports and entertainment networks in the country, MSG Network and MSG+. In connection with the separation, the companies expect to enter into long-term media rights agreements that will ensure MSG Network and MSG+ continue to serve as the exclusive local broadcast home of the Knicks and Rangers.

The separation remains subject to various conditions, including completion and effectiveness of the Form 10 registration statement filed today with the Securities and Exchange Commission, receipt of a private letter ruling from the Internal Revenue Service and certain approvals and consents, as well as final MSG Board approval. The initial Form 10 is available in the Investor Relations section on MSG’s website,

J.P. Morgan and LionTree Advisors are acting as financial advisors to MSG for the spin-off and Sullivan & Cromwell LLP is acting as legal advisor.