In spinning off the MSG unit, Cablevision distributed 75.6 million shares of MSG's class A and B common stock to its shareholders. The distribution took place Tuesday, and Wednesday morning MSG stocks were listed on NASDAQ at $17 per share.
In a statement, MSG executive chairman James Dolan, who is also president and CEO of Cablevision, says the spin-off "enables MSG to freely pursue its business plan while providing shareholders with the benefit of being able to more clearly evaluate the company's assets and future potential. This is an important moment for MSG and we are confident about the company's prospects as a standalone company."
According to an information statement from Cablevision, which bought MSG in 1995 for $1 billion, the spinoff was intended to increase the aggregate stock value of the two companies, to improve Cablevision's access to debt markets and to increase MSG's flexibility to pursue its long-term business plan. Since the MSG acquisition 15 years ago, "certain aspects" of both Cablevision's business and MSG's have changed, according to the statement.
MSG's business has expanded over the years to include "multiple entertainment venues and expanded content," while Cablevision has sold off most of the regional sports programming businesses it once owned, aside from MSG Networks. "As a result, the synergies associated with owning the MSG Networks have diminished," according to the statement. Additionally, the planned renovation of the 42-year-old arena between Seventh and Eighth avenues in Manhattan will lead to "significant funding requirements" of a nature that did not exist when Cablevision made its initial acquisition.
Along with the Garden and the Theatre at Madison Square Garden, MSG's holdings include the Knicks and Liberty basketball franchises, the Rangers hockey team and MSG Media, which includes both cable television networks and wireless and online initiatives. Through its MSG Entertainment segment, the company produces concerts at the Garden as well as at Radio City Music Hall and the Beacon Theatre, which it leases but does not own.
MSG's revenues for the first nine months of 2009 were $650.4 million, according to SEC filings. This was up slightly from year-to-date totals in 2008, with net income of $4.3 million for the nine-month period compared to a loss of $16.2 million for the same period the year prior. On Jan. 29, MSG subsidiary Madison Square Garden L.P. closed on a $375-million, five-year, senior secured revolving credit facility.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
