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Madison Square Garden Entertainment to Acquire MSG Networks in All-Stock Deal

The move follows MSG Entertainment’s $250 million loss due to pandemic-related closures of venues

Madison Square Garden Entertainment announced Friday that it plans to re-merge with MSG Networks in an all-stock deal.

The acquisition would “capture more of the emerging revenue opportunity related to the potential expansion of legalized sports gaming in its market,” the company said in a statement.

It would also add some much-needed liquidity at a time when the live-entertainment business could sure use the cash.

And then there are the positive tax implications.

For starters, the deal is expected to come tax-free for both of the companies and their shareholders. Plus, MSG Entertainment’s 2020 losses can now be used to offset MSG Networks’ taxable income.

Last year, Madison Square Garden Entertainment reported a net operating loss of $250 million due to pandemic-related closures of its venues such as New York City’s Madison Square Garden and the in-the-works MSG Sphere at The Venetian in Las Vegas.

“MSG Entertainment is actively executing a plan designed to grow the company beyond its established collection of assets into one that is pioneering the next generation of entertainment,” MSG Entertainment President Andrew Lustgarten said in a statement accompanying the news. “We have always believed in the value of live sports and look forward to welcoming MSG Networks back into the fold as part of a transaction that we are confident would enhance our financial flexibility and set the stage for continued growth and value creation.”

“We anticipate significant benefits from rejoining MSG Entertainment, including creating a combined company with greater diversification and resources,” MSG Networks President and CEO Andrea Greenberg added. “This would, in turn, help drive new innovative opportunities across both the entertainment and media businesses, ultimately creating significant value for our collective shareholders.”

Media mogul James Dolan serves as chairman of both companies and as CEO of MSG Entertainment. He’s also the guy that Knicks fans blame for decades of lackluster basketball.