Activist Holder Lauds Madison Square Garden Spin-Off Plan

The Madison Square Garden Co MSG possible spin-off of its entertainment businesses from its professional sports teams, along with a $500 million stock buyback, won the backing Tuesday of 9 percent shareholder JAT Capital Management.

The Greenwich, Connecticut-based hedge fund headed by John Thaler had pushed for the move starting in August. JAT called the measure "a plan to enhance value."

MSG recently traded up more than 11 percent at $73.10 per share.

Thaler also praised the appointment of two new independent board members: Scott M. Sperling, a co-president of the private equity firm Thomas H. Lee Partners and activist investor Nelson Peltz.

MSG said Monday it's been considering the spin-off since July.

MSG, which has reported declining profits and revenue in each of the past three quarters is slated to post recent results on Friday.

Chief Executive Tad Smith said the potential spin-off would result in an entertainment company that would "capitalize on significant opportunities to grow rapidly," while the resulting sports and media company "would enjoy steady growth and high cash flow."

The entertainment business would include MSG's current concerts and event booking business, as well as venue management and MSG's productions, including the Radio City Christmas Spectacular.

The media business would encompass MSG's New York Knicks, the New York Rangers and New York Liberty, along with regional sports networks, MSG Network and MSG+.

MSG was spun out of Cablevision Systems Corporation four years ago and its shares have since gained nearly 275 percent. AMC Entertainment Holdings Inc in turn was spun out of MSG three years ago.

Both Cablevision and MSG are controlled by members of the Dolan family.

Posted In: NewsBuybacksStock SplitJAT Capital
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