SiTV Media agreed to pay $226M — and give MSG a 15% stake — the entities disclosed this morning. The total value of the cash plus equity comes to about $275M, Stifel analyst Benjamin Mogil estimates. In any event, the company where Jennifer Lopez is a shareholder and Chief Creative Officer outbid an offer from Sean Combs said to be around $200M. Fuse reaches 73M pay TV subscribers, and should boost SiTV and NuvoTV — a Latin American entertainment network that reaches about 34M homes. With Fuse “we’ll have the ability to deliver a broad array of terrific content both from a Latino perspective and across multiple genres, including music, to a broader audience,” Lopez says. “The acquisition of Fuse means we now own two wonderful assets. It’s a phenomenal time for our company and we look forward to growing both networks in the years ahead.” SiTV CEO Michael Schwimmer adds that the deal “enhances our distribution relationships, dramatically expands our aggregate subscriber base, provides substantial economies of scale, affords unique opportunities for programming and cross-promotion and should be extremely appealing to the advertising community as we roll out our plans for both NuvoTV and Fuse.”
UPDATE, 3:25PM: Madison Square Garden Company is buying a 50% stake in Tribeca Enterprises at $45 million, both companies have confirmed. CEO and co-founder Jane Rosenthal will continue to lead Tribeca along with President and COO Jon Patricof. For MSG, the upside is Tribeca’s content, not to mention an entry into the film festival business, while Tribeca will benefit from MSG’s marketing and promotional expertise and platforms. It also puts Tribeca in a position to expand its film festival brand and programs in New York and nationally. In the future, MSG will have the opportunity to up its share in Tribeca.
PREVIOUS BREAKING, SATURDAY 2:41PM: Madison Square Garden Company is making a strategic investment in Tribeca Enterprises — which includes Tribeca Film Festival. MSG is taking a substantial position in Tribeca. We are told MSG’s investment is at least $20 million-plus, upwards of $45 million. MSG and Tribeca are two of the best-known Gotham-based entertainment brands. The Tribeca Film Festival attracted 450,000 attendees last year at $550 a pop for top tier passes and $350 for second tier tickets. The fest is said to generate $750 million in economic activity for New York City. We are told that Tribeca Productions, which was founded by Robert De Niro and Jane Rosenthal in 1989, is not part of the deal.
Loud noises on both coasts — hosannas in New York, wails of despair in Los Angeles — are coming from basketball fans today after Phil Jackson was hired as president of the New York Knicks. But the move isn’t just about games. Investors wonder whether the Zen master, coach of 11 NBA champions, star player on two others, will help not just the Knicks but also its parent the Madison Square Garden Company?
Executive Chairman Jim Dolan, whose family controls MSG as well as Cablevision and AMC Networks, introduced his new team president at a news conference this morning at the Garden. He says his pal Irving Azoff — the longtime personal manager (Eagles, Steely Dan, Christina Aguilera) and CEO of recently launched partnership Azoff MSG Entertainment – introduced him to Jackson in December at a party at his house.
The performer who now just calls himself Diddy would use the music channel to boost distribution for his Revolt TV, another music service that launched in October, Bloomberg reports citing “three people with knowledge of the situation.” Comcast helped to launch Revolt to fulfill its agreement, in return for government support for its 2011 acquisition of NBCUniversal, to add minority-owned networks. But it’s been hard to secure distribution: Revolt only reaches about 22.8M homes, while Fuse is in 74M. Madison Square Garden put Fuse on the block in September retaining JP Morgan to “explore all strategic alternatives.” Distributors pay an average of 8 cents per month for each home Fuse reaches. Stifel analyst Benjamin Mogil noted at the time that Fuse could command a healthy price because its deals with distributors enable a buyer to reprogram the network to offer “anything other than live sports.” Many MSG shareholders are eager to see the company return cash to them, possibly by repurchasing shares. The stock has stagnated in recent months. In a call with analysts in February, Vice Chairman Hank Ratner — who was CEO at the time — declined to discuss MSG’s progress with the Fuse sale. Tad Smith, a former exec at Cablevision, took the top job at MSG last month. Cablevision CEO James Dolan is MSG’s executive chairman; his family controls about 69% …
This should relieve investors who feared that Madison Square Garden Executive Chairman Jim Dolan‘s decision to invest $125M in an entertainment partnership with music manager Irving Azoff would leave the sports and entertainment company strapped for cash. MSG says that it has been “approached by certain parties expressing interest in Fuse and [has] retained JP Morgan to explore all strategic alternatives” — which usually means a sale. The music channel reaches 73M pay TV homes, and distributors pay an average of 8 cents per month for each home. Fuse could sell for about $300M, Credit Suisse analyst Michael Senno figures following Al Jazeera’s agreement to pay $500M for Current TV which collected about 11 cents per sub from distributors. That would “more than offset capital used in recent investments” including the Azoff deal and a $25M investment in Brooklyn Bowl Las Vegas. Stifel analyst Benjamin Mogil also notes that Fuse could command a healthy price because its deals with distributors would enable a buyer to reprogram the network to offer “anything other than live sports.” Many MSG shareholders are eager to see the company return cash to them, possibly by repurchasing shares.
The longtime music manager will be CEO of Azoff MSG Entertainment, which vows to develop “artist-friendly and, as a result, fan-friendly projects” in music, TV, and digital media. Irving Azoff will own 50% by folding in Azoff Music Management, where he’ll continue to handle clients including the Eagles, Steely Dan, Van Halen, and Christina Aguilera. Madison Square Garden will kick in $125M for its 50% and will provide as much as $50M in revolving credit loans. Outside of music management, Azoff and MSG Executive Chairman Jim Dolan see themselves largely as a source of venture capital. “We don’t know what the next big thing is going to be, but we want our phone to ring so we get a chance to help find it and nurture it,” Azoff tells me. “This was a dream we had to have a place where we could move quickly.”
MSG says that the Forum, which it bought in 2012, will reopen January 15, 2014 with a performance by The Eagles following the upgrade. “Since we first explored the opportunity to acquire the Forum and expand The Madison Square Garden Company’s presence on the West Coast, our vision has been clear: return the venue to its celebrated position as one of the most beloved and well-known venues in the country for the benefit of the community, fans and performers for generations to come,” says MSG Executive Chairman James Dolan. He thanked his pal Irving Azoff for bringing the Forum to his attention and says that the long time manager of groups including The Eagles and Steely Dan “will play an important role in helping us meet our ambitious goals.” Azoff called the Forum “an iconic Southern California landmark” that is “sure to become the world’s quintessential music-focused venue.” BBB Architects, which worked on the renovation of Madison Square Garden, will direct the work on the Forum. The company says it will be “inspired by the venue’s original 1967 design, and includes upgrades to the entire venue site.” It will be given flexible seating to accommodate up to 17,500. The exterior paint job will keep its 1960′s “California sunset red.” Chase bank was named the Presenting Partner. The City of Inglewood will lend $18M for the renovation and has included “a number of forgiveness options,” says Stifel analyst Benjamin Mogil.
This isn’t a complete surprise following the announcement late last month that Madison Square Garden Executive Chairman Jim Dolan resigned from the Live Nation board. MSG had 3.9M Live Nation shares — about 2% of the total — and says this morning that it sold all of the stock for $44 million. That comes to about $11.28 a share, below yesterday’s closing price of $11.63. The sale follows the surprise year-end resignation of Irving Azoff, who was Live Nation’s executive chairman. He’s close to Dolan and manages the guitar-playing cable exec’s blues band, JD And The Straight Shot. MSG said it wouldn’t comment on the transaction. Live Nation shares are down 1.9% in early trading.
I guess we’ll have to wait for the company’s conference call with analysts to find out how it’s been impacted by the NHL lockout, Dish Network’s new agreement to carry its Fuse music channel — or Hurricane Sandy. No mention of these subjects in the earnings press release. Still, the numbers should please investors. MSG reported net income of $20.6M, -3.2% vs the same period last year, on revenues of $204.2M, +14.9%. The revenue figure slightly beat forecasts for $203.9M. And earnings per share at 26 cents were way ahead of the consensus projection of 18 cents. The MSG Media unit, which includes the company’s regional sports networks and Fuse, generated revenues of $159.5M (+15%) with operating income of $71.0M (+24%) due to higher payments it received from cable and satellite distributors. No word about ad sales. At MSG Entertainment — with venues including The Garden, the Beacon Theater, and The Chicago Theater — revenues came in at $30.8M (+12%). It had an operating loss of $16M (a 7% improvement) due to rising expenses. And MSG Sports, which includes the New York Knicks and Rangers, had revenues of 31.6M (+10%) with an operating loss of $2.1M (a 49% improvement). The company says that it was able to charge higher prices for suites and signage but here, too, that was offset by higher costs. “We delivered robust first quarter results while also continuing to invest in our businesses to drive long-term …
Wall Street is bullish on the New York Knicks owner today as shares of the Madison Square Garden Company rose 9% in pre-market trading. Profits for the fourth quarter tripled to $28.6M or 37c a share, beating Wall Street estimates. Fiscal 2012 revenues grew 8% to $1.3B, lifted primarily by the group’s MSG Sports and MSG Media units. The Sports arm owns The Knicks and The New York Rangers. MSG Media’s properties include the MSG TV networks and music channel Fuse. In the MSG Entertainment branch, which produces live shows including the Radio City Music Hall Christmas Spectacular, revenues were up 41%. But for the fiscal year, revenues in the division were down 10% with operating cash flow and operating loss both improved.