Cablevision spinning off MSG


The board of directors at cable MSO Cablevision has given the thumbs-up for a spin-off of the company’s Madison Square Garden (MSG) businesses to shareholders as a separate, publicly traded company. The split will leave non-sports networks at Cablevision, while the MSG networks go with the pro sports teams, MSG and Radio City Music Hall. 

Cablevision’s stock rose on the news, along with the company’s report that Q2 revenues were up 9.8% to $1.88 billion. Consolidate adjusted operating cash flow increased 6.8% to $636.3 million.

The separation into two companies is expected to be completed before the end of this year. “Once the spin-off is complete, Cablevision shareholders would own shares in both Cablevision and the new MSG, which would allow shareholders to more clearly evaluate each of the separate company’s assets and future potential,” the company said. The Dolan family will still hold controlling stakes in both companies. Following the spin-off, James Dolan would become Executive Chairman of the new, public Madison Square Garden and would continue in his present role as President and CEO of Cablevision. Hank Ratner would be President and CEO of Madison Square Garden, and would remain Cablevision’s Vice Chairman. Charles Dolan would continue in his role as Cablevision’s Chairman.

“This spin-off will create two distinct companies, each with enhanced strategic flexibility, its own defined business focus and clear investment characteristics. The new MSG will be an attractive combination of sports, entertainment and programming properties, while Cablevision will continue to house a portfolio that includes industry-leading telecommunications services and popular programming networks. We believe that the combined value of these assets has not been fully realized, and that this transaction will be beneficial to shareholders as both Cablevision and MSG freely pursue their own individual business plans,” said Cablevision President and CEO James Dolan.

The assets to be spun-off into the new MSG will be the MSG media properties, including the MSG, MSG Plus and Fuse networks, as well as MSG Interactive’s collection of online assets; Cablevision’s sports teams, including the NBA NY Knicks, NHL NY Rangers, WNBA NY Liberty and AHL Hartford Wolf Pack franchises; the entertainment venues, including Madison Square Garden, Radio City Music Hall, The Theater at Madison Square Garden, The Beacon Theater, The Chicago Theater, and The Wang Theater in Boston; the concerts and events of MSG Entertainment, including the Radio City Rockettes, Radio City Christmas Spectacular, Wintuk, concerts, family shows and special events.

The cable/broadband/phone business would, of course, remain with Cablevision. Also staying are the Rainbow Media assets, including AMC, WE tv, IFC, IFC Entertainment, Sundance Channel and the News12 Networks, along with the associated ad sales and technical services. Cablevision would also keep Newsday and, amNewYork and, and Star Community Publishing. It would also retain the Clearview Cinemas chain in New Jersey.

“Management did not provide much more color on the spin-off of MSG,” Wells Fargo Securities analyst Marci Ryvicker reported after the company’s quarterly conference call. “Management did mention, however, that renovations for MSG will be materially higher than the original $500 million expectation, but no updated figure was provided.  The timing of these renovations is still on track to be completed by 2011-2012 for the lower bowl and 2012-2013 for the upper bowl,” she noted.

RBR/TVBR observation: This cleans up the portfolio of businesses somewhat. Even so, Newsday is still an odd-ball asset for Cablevision. Also, the Clearview Cinemas chain is staying with Cablevision, while all of the other physical entertainment venues are going into the spin-off company.