By Josh Beckerman
Madison Square Garden Co. took another step in its spinoff
efforts on Friday with a plan that would create two publicly traded
companies using a different structure than the one it mentioned in
October.
The company filed a registration statement to separate its
sports and entertainment operations from its media business. MSG
said in October that it would explore separating its entertainment
businesses from its media and sports operations.
In December, the company said it would consider other
structures, including a separation of media from sports and
entertainment.
The company's sports business includes the New York Knicks and
Rangers, while the entertainment business presents and hosts live
events such as concerts. The media business includes the MSG
regional sports TV networks.
MSG said Friday that "the separation would provide each company
with increased strategic flexibility to pursue its own distinctive
business plan," while still providing benefits from commercial
arrangements between the companies.
A transaction structured as a tax-free spinoff is expected to
take place during 2015, the company said.
MSG said it expects long-term rights agreements "will ensure MSG
Network and MSG+ continue to serve as the exclusive local broadcast
home of the Knicks and Rangers."
In after-hours trading, MSG shares were up 5.7% to $85.31.
MSG, which was itself spun off from Cablevision Systems Corp. in
2010, said in October that activist investor Nelson Peltz would
join its board, along with Scott Sperling, co-president of
private-equity firm Thomas H. Lee Partners.
Mr. Peltz, who runs Trian Fund Management LP, is known for
pushing to split up companies, a trend that has gained momentum as
investors have called for companies to focus on a few core
businesses and shed other operations. Firms ranging from PepsiCo
Inc. to eBay Inc. have faced such pressure from activists. EBay has
announced breakup plans, while PepsiCo has reiterated that it has
no interest in splitting up the company.
Earlier this month, MSG said Chief Executive Tad Smith resigned
after a year in the post to become CEO of Sotheby's. James Dolan,
who is MSG's chairman and the CEO of Cablevision, is overseeing
MSG's activities as it searches for a new CEO.
In February, MSG said revenue for the December quarter rose 6.5%
to $542.5 million. Its entertainment business posted a 19% revenue
increase, while the sports segment had a 10% increase. Revenue at
MSG Media fell 8%, reflecting the sale of Fuse Media to SiTV Media
and a small increase in MSG Networks affiliation fee revenue.
Write to Josh Beckerman at josh.beckerman@wsj.com
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