MSG Entertainment (NYSE:MSGE)
The stock price of MSG Entertainment (NYSE:MSGE) increased by 5.3% after the market closed on the news that the company’s board of directors approved the exploration of the possibility of a spinoff of the company’s traditional live entertainment businesses.
A spinoff of this nature would include “a diverse collection of performance venues, entertainment and sports bookings, and the production of the Christmas Spectacular,” in addition to the MSG Networks business, which would be separated from the company’s MSG Sphere venue business and the Tao Group Hospitality business.
According to Madison Square Garden Entertainment (NYSE:MSGE), any transaction of this kind would result in a tax-free spinoff for MSGE shareholders if it was ultimately completed. In step one, those shareholders would get a pro rata distribution equal to a two-thirds interest in the live entertainment/media company. The remaining third would be kept by MSG Entertainment and used for a tax-free exchange offer, to raise capital, or for a subsequent spinoff to shareholders.
It is anticipated that the live entertainment and media company will include non-Sphere venues (such as Madison Square Garden and the Hulu Theater at MSG; Radio City Music Hall; the Beacon Theater; and the Chicago Theater); the entertainment and sports booking business; the Radio City Rockettes. It will also include their Christmas Spectacular; long-term arena license deals with the New York Knicks and the New York Rangers (MSGS); and MSG Networks.
(Notably, MSG Networks operated as its own stock until the summer of 2021, when it was subsequently absorbed by MSG Entertainment.)
MSG Entertainment’s “remaining” components would consist of the following: MSG Sphere venues (the first of which is currently being developed in Las Vegas); a majority interest in TAO Group Hospitality; one-third of the entertainment/media firm; and the majority of the cash on hand.
On Wednesday, Madison Square Garden Entertainment (NYSE:MSGE) ended rumors that it will explore the possibility of selling the New York Knicks and New York Rangers.
If the proposed spin-off goes through, MSGE will consist of MSG Sphere, a majority share in TAO Group Hospitality, an approximate one-third stake in the live entertainment and media corporation, and the bulk of MSGE’s cash on hand.
There is no way to know that the proposed spin-off will be carried out in the manner outlined above or even at all.
There is no predetermined end date for this process to be completed.
Featured Image: Megapixl @Rorem
Author Shariq Khan 
