Market Overview

Your Madison Square Garden Spinoff Cheat Sheet

Your Madison Square Garden Spinoff Cheat Sheet

  • The Madison Square Garden Co (NYSE: MSG) spinoff that takes place at the end of the month will separate the company’s network TV business from the rest of its operations.
  • Gabelli & Company believes that the post-spin Madison Square Garden company is a solid long-term investment.
  • Post-spin MSG Networks could also become a buyout target.
  • Gabelli & Company analyst Brett Harriss recently put together a report on the coming Madison Square Garden spinoff. In the report, Harriss provided a cheat sheet that details the operations of the two post-spinoff companies and discussed Gabelli’s take on Madison Square Garden as an investment.

    What To Expect

    The distribution of Madison Square Garden’s spinoff will take place on September 30, and investors will receive three shares of MSGN and one share of “new” MSG for every three shares of “old" MSG held. The record date for the spinoff was September 21.

    Related Link: Madison Square Garden Stock: No Longer A Slam Dunk

    Madison Square Garden Company

    The company trading under the ticker MSG will be comprised of the sports and entertainment businesses, including the sports teams, the venues, MSG bookings, MSG productions and strategic joint ventures. In addition, the company will be capitalized with $1.45 billion, enough to pursue acquisitions and/or buyback stock.

    MSG Networks

    The company trading under the ticker MSGN will be comprised of the regional sports networks MSG and MSG+. Immediately following the spinoff, MSGN will be levered by about 5.0x, but it should use its stable cash flow to immediately begin de-levering.

    How To Play It

    Even though the record date for the spinoff has passed, Gabelli rates both post-spin entities as Buys. “The Madison Square Garden Company (MSG) owns a collection of truly unique assets, (sports franchises, iconic venues and real estate) that benefit from sustainable barriers to entry and the potential long-term asset growth,” Harriss explained.

    He added that MSG Networks could be a potential buyout target for companies such as Twenty-First Century Fox Inc (NASDAQ: FOX) and Comcast Corporation (NASDAQ: CMCSA).

    Disclosure: The author holds no position in the stocks mentioned.

    Image Credit: By Larry Lerner (This image is from the FEMA Photo Library.) [Public domain], via Wikimedia Commons

    Latest Ratings for MSG

    Apr 2020Morgan StanleyMaintainsEqual-Weight
    Apr 2020Imperial CapitalMaintainsOutperform
    Mar 2020Imperial CapitalMaintainsOutperform

    View More Analyst Ratings for MSG
    View the Latest Analyst Ratings


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