Madison Square Garden To Explore Spin-off; Approves Share Buyback

(RTTNews) - Madison Square Garden Co. (MSG) said Monday that its board of directors has approved a plan to explore a possible spin-off to separate the company's entertainment businesses from its media and sports businesses, thus creating two distinct publicly traded companies. Shares of the company gained more than 16 percent in extended trades following the announcement.

In addition, the company's board of directors authorized the repurchase of up to $500 million of the company's Class A common stock and nominated activist investor Nelson Peltz as well as Scott Sperling as directors to the board. Peltz runs Trian Fund Management LP, while Sperling is co-president of private equity firm Thomas Lee Partners.

Madison Square Garden or MSG operates in the sports, entertainment, and media businesses. The company owns the New York Knicks and New York Rangers, among other sports teams, and runs venues including Madison Square Garden and the Beacon Theatre.

MSG, which has been considering a spin off since July, noted that if it proceeds with the transaction, it would be structured as a tax-free pro rata spin-off to all of its shareholders. Following the spin-off, MSG shareholders would own shares in both of the new companies.

However, MSG said that it has not set a timetable for completion of the spin-off process. LionTree Advisors is serving as financial advisor to the company on the spin off.

Tad Smith, president and CEO of Madison Square Garden Co., said, "Investors favor companies with greater strategic focus on their core businesses. We are exploring the opportunity to improve upon the excellent shareholder return created since MSG's spin-off over four years ago by separating our business into two companies, each with its own distinct value proposition for investors."

According to MSG, the live entertainment company would be a premier live event and venue management company with expertise in areas such as productions and other entertainment content, marketing, sales, and event operations.

The live entertainment company will include MSG booking; MSG's productions, including the Radio City Christmas Spectacular; venue management capabilities, as well as its sponsorship, marketing, ticketing and promotional expertise and platforms, and MSG's strategic entertainment joint ventures.

The sports and media company would be a company that fields championship caliber sports teams and has the rights to distribute sports content on multiple media platforms.

The sports and media company will include MSG's professional sports franchises - the New York Knicks, the New York Rangers and the New York Liberty, along with its development teams: the Hartford Wolf Pack and the Westchester Knicks; MSG's regional sports networks, MSG Network and MSG+; and MSG's interest in SiTV Media Inc., the parent company of NUVOtv and Fuse networks.

MSG's board of directors has authorized the repurchase of up to $500 million of the Company's Class A common stock that will be purchased from time to time in either open market or private transactions. As of October 24, 2014, the company had about 63.96 million Class A common shares outstanding.

Further, MSG's board announced its director nominations for this year's annual meeting, including two new independent directors for election by the company's Class A shareholders - activist investor Nelson Peltz and Scott Sperling.

Peltz and Sperling will replace Alan Schwartz and Vincent Tese, who have been nominated by the board for election as directors by the company's Class B shareholders. Meanwhile, Richard Parsons was re-appointed as a director on September 29, 2014 and has been nominated for election by the holders of the company's Class A common stock.

MSG closed Monday's trading at $65.78, up $1.02 or 1.58 percent on a volume of 435,009 shares. In after-hours, the stock further gained $10.89 or 16.56 percent to $76.67.