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Spinoff allows direct investment in MSG properties

Investors will get a chance to bet directly on the fortunes of the New York Knicks and Rangers and their home arena, Madison Square Garden, beginning Tuesday.

Bethpage-based Cablevision Systems Corp. is splitting into two, returning the company to its roots as mainly a provider of subscription TV. The newly separate Madison Square Garden Inc. will include the arena, the NBA and NHL teams, regional sports channels and famed theaters such as Radio City Music Hall.

The move also figures to make it easier for 83-year-old Cablevision founder Charles Dolan or his heirs to eventually sell either company. Members of the Dolan family will own about one-fifth of Madison Square Garden but control 70 percent of the shareholder votes - similar to their stake in Cablevision.

Dolan began Cablevision in 1973, delivering cable television to 1,500 subscribers on Long Island. Since then Cablevision has picked up a slew of assets, including Newsday and cable channels such as AMC, IFC and Sundance.

The Madison Square Garden assets haven't been steadily profitable. They've seesawed with renovations at the arena, a slump in entertainment ticket sales in the recession and the up-and-down fortunes of the Knicks and Rangers.

MSG's operating income was $3.4 million in the first nine months of 2009, after a $23.6 million operating loss in the same period of 2008.

Cablevision's operating income for its TV, Internet, phone and advertising businesses has been rising steadily for years. In the nine months ended Sept. 30, operating income was $975.7 million, up 18 percent from the same period in 2008.

By separating Madison Square Garden, investors who initially bought Cablevision for the steady cash flow of a cable TV company will get what they wanted. Shareholders will get one share of Madison Square Garden for every four Cablevision shares they own.

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