Cablevision board approves spin-off


If you are a Cablevision shareholder, you will soon also be a shareholder of a new public company, Madison Square Garden (MSG). Cablevision’s directors have approved the spin-off as a tax-free distribution to shareholders of the MSO.

“We are now one step closer toward our goal of creating two distinct companies for investors, each leaders in their industry with their own defined business focus and clear investment characteristics. MSG joined the Cablevision family of companies nearly 15 years ago and today houses one of the world’s most dynamic collection of sports, entertainment and programming properties. Meanwhile, Cablevision has developed a portfolio of industry-leading telecommunications services, strong programming and content offerings that have made it one of the nation’s leading media and telecommunications companies. We are confident that Cablevision will be able to continue to build on its remarkable record of achievement and that MSG is well positioned for long-term success as a public company,” said Cablevision President and CEO James Dolan.

The Dolan family will continue to control MSG through super-voting Class B shares, just as they do Cablevision.

The distribution will take place on February 9, 2010 to Cablevision shareholders of record at the close of business on January 25, 2010. Each Cablevision Class A stockholder will receive one share of Madison Square Garden Class A common stock for every four shares of Cablevision Class A common stock they hold as of the record date. Fractional shares of MSG will be aggregated and sold in the public market, with the proceeds then paid to the Cablevision shareholders.

As of February 10, the new shares will trade on Nasdaq as “MSG.” From January 25 to February 9 the shares will trade on a “when issued” basis as “MSGNV.”

MSG will be comprised of three business segments: MSG Sports, MSG Entertainment and MSG Media. MSG Sports consists of the New York Knicks (NBA), the New York Rangers (NHL), the New York Liberty (WNBA), and the Hartford Wolf Pack (American Hockey League). MSG Entertainment is a leader in managing and creating concerts and events at Madison Square Garden, Radio City Music Hall, The Theater at Madison Square Garden, the Beacon Theatre, the legendary Chicago Theatre, the Wang Theatre in Boston, and produces the Radio City Christmas Spectacular featuring the Radio City Rockettes. MSG Media is comprised of leading television networks MSG, MSG Plus, MSG HD and MSG Plus HD, as well as MSG Interactive, which oversees all company wireless and online initiatives, and Fuse and Fuse HD, the premier national music television network. The company owns and operates the Madison Square Garden arena complex in NYC.

RBR-TVBR observation:
We’ll defer in this observation to Wells Fargo Securities analyst Marci Ryvicker: “We believe this spin-off is a positive for CVC as it refocuses management’s attention on its core cable business.  Furthermore, it is accretive to FCF and removes the capital expenditure overhang related to the Madison Square Garden renovations.”