Under Hedge Fund Pressure, Madison Square Garden To Explore Spin-Off

Oct 29 2014 | 12:25pm ET

Madison Square Garden said this week that it would consider separating its entertainment and sports business, two months after an activist hedge fund called for such a split.

MSG owns the New York Knicks basketball team and New York Rangers hockey team, as well as the eponymous arena that they call home. It also puts on live events, such as concerts, in the building.

“Investors favor companies with greater strategic focus on their core businesses,” CEO Tad Smith said.

MSG is controlled by the Dolan family, and was itself spun-out of Cablevision Systems Corp. in 2010. The company is run by James Dolan, the son of Cablevision founder Charles Dolan.

JAT Capital Management in August announced a 6.7% stake in MSG and said it would hold talks with the Dolans to improve “long-term value.” JAT said it was “very pleased” about MSG’s plan to consider a split, as well as the $500 million share buyback it announced.

MSG also said that activist hedge fund manager Nelson Peltz and Thomas H. Lee Partners executive Scott Sperling would join its board. Peltz’s firm, Trian Partners, does not own any MSG shares, but is a longtime associate of Dolan.

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