Billionaire James Dolan merges the Madison Square Garden-owned arena company with the cable network that broadcasts the New York Knicks games to local fans, and investors show up at the outings.
Madison Square Garden Entertainment, which in addition to Garden owns Radio City Music Hall and the Tao restaurant and nightclub chain, announced Friday that it will buy MSG Networks for about $ 900 million in stock.
Shares of the companies, controlled by Dolan, who also owns the Knicks and New York Rangers, made headlines, with MSGE closing 9.9 percent at $ 84.67 and MSGN falling 7.6 percent. one hundred to $ 16.06.
This surpasses the sharp falls since the agreement was first reported on March 10th. While MSGE’s takeover bid represents a 4 percent premium to MSG Network shares that day, investors on Friday realized that their combined market values have already plummeted. $ 750 million.
Wall Street is afraid of the link, in part because MSG Entertainment, after losing more than $ 250 million in the pandemic, seems to be moving forward on a controversial plan to build its expensive ball-shaped Sphere arenas across the country. For some, Friday’s deal seems like a sign that MSG Entertainment needs MSG Networks as a source of cash.
“The question for shareholders is whether this is an indicator that there are funding challenges in MSGE,” a shareholder told The Post, who said that during a conference call on Friday, executives “did not address what the two companies could do better together than what they can do separately. “
In a written statement, MSG Entertainment said the new company would be better positioned to consolidate into the expansion of legalized sports gaming. MSG Networks owns two regional sports and entertainment channels, as well as a broadcast service in the New York area.
The new company would also enjoy tax efficiencies and “would have improved financial flexibility to fund current growth initiatives, including its state-of-the-art headquarters planned in Las Vegas, [the] MSG Sphere in Venice, ”MSG Entertainment said.
Dolan was not on Friday’s call and company executives declined to answer several questions about MSGE’s development projects. This included whether the merger would accelerate the timing of the opening of the London sphere. The MSG Las Vegas Sphere is scheduled to open in 2023, the company said.
The merger also disappointed some MSGE shareholders as it changes the basis for buying the shares.
“The thesis about MSGE is that it’s about live entertainment: a reopening of the economy,” the shareholder insisted. “Buying a cable network dilutes this story.”
In 2015, Madison Square Garden separated its sports and entertainment business from its media business, turning MSG Networks into a standalone media company. Last year, Madison Square Garden separated MSG Entertainment from Madison Square Garden Sports, which owns the Knicks and the Rangers.
MSG Entertainment officials declined to comment further Friday.