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Coverage Initiation: Madison Square Garden, Inc.
Madison Square Garden (MSG) has come a long way from its early days as just a famous New York sports and entertainment arena. Following the spinoff from Cablevision (CVC), MSG is now an independent and completely integrated sports, entertainment, and media enterprise that operates through three divisions: MSG Sports, MSG Entertainment, and MSG Media. The now publicly traded company manages several professional sports teams; hosts numerous concerts and entertainment events through ownership and operation of various theaters and venues; and owns and operates a few television networks, radio stations, and Internet media platforms.
Madison Square Garden first opened in 1968 as New York City’s premier sports and entertainment arena. Over the years, the brand has grown into an entity that is synonymous with professional New York-based athletics and major entertainment events. The business had been privately held until February 2010, when it was spun off from cable television giant Cablevision.
The MSG Sports unit owns the New York Knicks and the New York Rangers, among other reputable franchises. The aforementioned teams are now among the better performing in the country. Indeed, they are now reasonable competitors and possible candidates for the playoffs, boasting some of the highest paid players in their respective leagues. Management notes that it intends to leverage the teams’ sizable fan base and popularity by expanding operations through the acquisition of other sports facilities with solid long-standing reputations, as well as, organizing and producing new events that will likely help to increase its revenue base.
The MSG Entertainment segment owns and operates several entertainment venues, including Radio City Music Hall and the Beacon Theater. It also produces “The Christmas Spectacular” and owns the “Rockettes” brands. This division strives to achieve revenue growth by acquiring other popular performance spaces in major markets and developing a network of venues that offer the public high-quality live entertainment. Management also intends to enhance and create new productions at these venues in order increase bookings.
The MSG Media business owns the long-term rights to broadcast live event content for several professional sports franchises. In addition to the Knicks and the Rangers, MSG has the broadcasting rights to the New Jersey Devils, New York Islanders, Buffalo Sabres, and the New York Liberty. The company’s television networks, radio stations, and Online streaming sites broadcast various marquee events to the public. This also includes music through its “FUSE” cable network. Indeed, the company’s established brands offer a competitive edge that attracts athletes, performers, musicians and other icons. These factors ought to support the growth of MSG’s media business, as it continues to obtain quality sports and entertainment content, while offering artists and athletes the opportunity to enhance their respective exposure, brands, and images.
We believe MSG’s integrated approach enables it to use the leverage from each of its individual business segments to support growth strategies across the board and capitalize on opportunities that arise in each market. The end-to-end strategy of providing artists, performers, and athletes with venue, content, and distribution capabilities should help the company to stand out among competitors. Meanwhile, the consistency of sold-out shows at the Garden and successful productions, such as the “Wintuk” collaboration with Cirque De Soliel, combined with increased viewership of both Knicks and Rangers games, among other sporting events, should all help to generate solid revenue growth for the company over the long haul. We will continue to monitor and report on MSG’s performance and prospects in the Value Line Investment Survey.
At the time of this article’s writing, the author did not have any positions in any of the companies mentioned.