Cablevision To Explore Spinoff Of MSG Unit, Including N.Y. Teams
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MSG Chair James Dolan Actively Involved
In Running Knicks, Rangers |
Cablevision Systems Thursday said it will "explore the spinoff" of its MSG unit, which includes the arena, Knicks, Rangers and the MSG Network, according to Ken Belson of the N.Y. TIMES. The news, revealed during the company's Q1 earnings report, "could have a significant impact on the NBA and the NHL, because the two sports franchises are among the most lucrative in their leagues." It also could "influence plans for developing" MSG and the surrounding neighborhood. Company execs declined to provide any more specific information, and Cablevision Exec VP Gregg Seibert asserted, "The operative word here is explore." Some analysts suggest that the Dolan family, which controls 70% of Cablevision's voting rights, "could spin off MSG, selling the cable business and focusing on the sports and entertainment business," meaning the Knicks and Rangers "would remain in the hands of the Dolans." Belson notes without Cablevision's "corporate largesse, the Knicks could be forced to exercise more restraint." MSG Chair James Dolan is "actively involved in running the Knicks and the Rangers and appears eager to continue doing so." Former MSG and MSG Net President Bob Gutkowski said Cablevision Chair Charles Dolan "is not getting younger, so at some point the real valuable asset is selling the cable company." Gutkowski notes James Dolan "has said many times he wants to run these assets for the rest of his life" (N.Y. TIMES, 5/8).
SPIN DOCTOR: Analysts suggested that the MSG assets "could be worth in the neighborhood" of $1.5B. CABLEFAX DAILY notes the possible spinoff is "also huge because it peels away layers" of the Cablevision "onion, making consolidation of the core telecom business much easier down the road" (CABLEFAX DAILY, 5/8). On Long Island, James Bernstein notes it is "considered likely that any spun-off MSG entity would have the same or a similar ownership structure to Cablevision itself, with the Dolan family maintaining a large or controlling interest." Argus Research analyst Joe Bonner said that MSG is a "'distraction' for Cablevision, which may want to focus entirely on its cable television business" (NEWSDAY, 5/8). Bernstein analyst Craig Moffett said a spinoff of MSG "argues well for the possible realization of full value for the MSG set of assets." Moffett: "But perhaps more importantly, a spin-off of MSG raises the tantalizing prospect of a realization of the value of the rest of Cablevision's assets." Pali Research analyst Rich Greenfield said the MSG Unit is "largely a trophy asset with extremely volatile earnings." The HOLLYWOOD REPORTER's Georg Szalai notes this has "made it difficult to value." Miller Tabak analyst David Joyce estimated that MSG could be valued as high as $1.5B, while Moffett last year before the economic downturn suggested a valuation around $4B. Szalai notes MSG also could "sell or merge its live entertainment business, which has become more important and visible." Greenfield alluded to the "possibility of a deal with AEG Live or with another partner should the planned Ticketmaster-Live Nation merger fail" (HOLLYWOOD REPORTER, 5/8). Moffett: "The dream here is that the Dolan family will consolidate their interest into [MSG], putting Cablevision into play" (WALL STREET JOURNAL, 5/8).
CHECK ONE, CHECK TWO: In N.Y., Frank Isola reports if the Knicks were put up for sale, "it is believed" that Blues and MLS Real Salt Lake Owner Dave Checketts, the former President & CEO of MSG, "would attempt to make a bid." Sources indicated that the NBA recently "approached Checketts about the possibility of buying an NBA team believed" to be the Bobcats (N.Y. DAILY NEWS, 5/8).
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