Knicks’ Landlord Rejoins With Network That Airs Their Games
(Bloomberg) -- The family that owns Madison Square Garden is recombining it with the cable network that broadcasts the Knicks.
The agreement recombines two parts of an entertainment empire controlled by the Dolan family, which once owned the cable-TV service covering a wide swath of Long Island. Jim Dolan, the current leader, has spent years splitting up his family’s holdings into ever smaller bits to extract more value. AMC Networks Inc., a cable-TV programmer, is another one of their holdings.
The deal will provide tax savings and more financial flexibility to the entertainment business, which was hammered after the pandemic shut down its concert venues. With the vaccines rolling out, that business is “back on a path to normal operations,” MSG Entertainment President Andrew Lustgarten said on an investor call.
The combined company also will be better-positioned to capitalize on the rise of sports gambling, he added. While online sports betting isn’t yet legal in New York, Lustgarten said he was encouraged by its growth in New Jersey. Sports betting could also benefit the MSG sports channel.
“All options are on the table,” MSG Networks President Andrea Greenberg said, citing the potential to license naming rights and create new programming around sports gambling.
“It’s a tremendous opportunity for us as a combined media and entertainment company,” she said.
The deal values MSG Networks at $16.16 a share, or about $921.7 million, based on Thursday’s closing prices. Shares of both were down Friday, with MSG Networks slumping more than 11% to $15.38 and MSG Entertainment falling as low as $84.01.
Holders of MSG Networks stock will receive 0.172 of an MSG Entertainment share for each they now own, the companies said. They described the value as a 4% premium to the closing price on March 10, the last trading day before Bloomberg News first reported the transaction was being discussed, but it’s below where MSG Networks finished Thursday’s session.
Dolan is chairman of both companies and chief executive officer of MSG Entertainment, which owns the iconic Madison Square Garden arena. MSG Entertainment also leases properties including Radio City Music Hall and has a hospitality arm that manages venues in New York City, Los Angeles, Las Vegas and elsewhere.
That business was spun off last year by Madison Square Garden Sports Corp., the publicly traded, family-led company that owns sports teams. The Dolans control all three companies through their ownership of Class B shares that have 10 votes each.
MSG was the first regional sports network in the U.S., debuting in 1969. But like its peers, the channel has struggled as more people cancel their cable-TV subscriptions in favor of streaming services.
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