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Madison Sq. Backyard Leisure Corp. (NYSE: MSGE) and MSG Networks Inc. (NYSE: MSGN) immediately introduced they’ve reached a definitive settlement for MSG Leisure to accumulate MSG Networks in an all-stock, fastened trade ratio transaction.

The merger is predicted to be tax-free for each MSG Leisure and MSG Networks and their stockholders. Upon the closing of the transaction, MSG Networks stockholders would obtain 0.172 shares of MSG Leisure Class A or Class B widespread inventory for every share of MSG Networks Class A or Class B widespread inventory they personal. The trade ratio is roughly 4% above the ratio of the unaffected closing inventory costs of the 2 corporations on March 10, 2021, the final buying and selling day earlier than a press report speculated on a possible transaction.

This transaction would create a number one leisure and media firm with a extra diversified income base that may be nicely positioned to ship modern experiences throughout all of its belongings. The mixed firm would have a stronger liquidity place to help its reside leisure enterprise, which following the shutdown of its venues because of the pandemic, is now on a path again to regular operations. As well as, the brand new firm would have enhanced monetary flexibility to fund present progress initiatives, together with its deliberate state-of-the-art venue in Las Vegas, MSG Sphere at The Venetian, in addition to future alternatives throughout each leisure and media.

With the acquisition of MSG Networks, MSG Leisure anticipates it could seize extra of the rising income alternative associated to the potential growth of legalized sports activities gaming in its market. The mix of the businesses’ media, digital and venue belongings creates a strong platform for potential sports activities gaming companions, which is predicted to generate vital incremental income within the years forward.

MSG Leisure President Andrew Lustgarten stated: “MSG Leisure is actively executing a plan designed to develop the Firm past its established assortment of belongings into one that’s pioneering the following era of leisure. We’ve got all the time believed within the worth of reside sports activities and look ahead to welcoming MSG Networks again into the fold as a part of a transaction that we’re assured would improve our monetary flexibility and set the stage for continued progress and worth creation.”

MSG Networks President and CEO Andrea Greenberg stated: “We anticipate vital advantages from rejoining MSG Leisure, together with making a mixed firm with higher diversification and sources. This could, in flip, assist drive new modern alternatives throughout each the leisure and media companies, finally creating vital worth for our collective shareholders.”

Along with forming a diversified firm with enhanced monetary flexibility, it’s anticipated that the mixed firm would notice significant tax efficiencies. As of December 31, 2020, MSG Leisure had a federal web working loss (NOL) of roughly $250 million, primarily because of the non permanent shutdown of its venues because of COVID-19. Moreover, MSG Leisure expects to speed up the depreciation of great parts of the capital funding for MSG Sphere in Las Vegas in calendar 2023, which is when the venue is predicted to open. On account of this transaction, the mixed firm would be capable of extra effectively make the most of MSG Leisure’s current NOL, in addition to future bonus depreciation associated to MSG Sphere in Las Vegas, to offset the taxable revenue of all of its companies, together with MSG Networks, which immediately is a full state and federal revenue tax money payer.

MSG Networks is a pacesetter in sports activities content material improvement and distribution that generates vital income, adjusted working revenue, and free money movement.1 For fiscal 12 months 2020, MSG Networks generated income of $685.8 million, working revenue of $295.0 million, adjusted working revenue of $321.4 million, web money offered by working actions of $210.0 million, and free money movement of $207.2 million. The media firm’s two networks, MSG Community and MSG+, function within the nation’s primary media market, the New York DMA, in addition to different parts of New York, New Jersey, Connecticut and Pennsylvania. The networks ship unique reside native video games of the New York Knicks, New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres, in addition to vital protection of the New York Giants and Buffalo Payments.

Whereas MSG Networks continues to function in an evolving media panorama, the Firm reported for its fiscal 2021 second quarter a sequential enchancment in its year-over-year charge of subscriber decline, which has continued to enhance up to now in the course of the fiscal 2021 third quarter.2 And with the 2020-21 NBA and NHL seasons, MSG Networks is at the moment having fun with vital year-over-year will increase in viewership for each its linear networks and MSG GO streaming app, which helps drive the Firm’s promoting income.

MSG Leisure’s portfolio options iconic venues, together with Madison Sq. Backyard; manufacturing belongings such because the Radio Metropolis Rockettes and the Christmas Spectacular and a majority curiosity in Tao Group Hospitality.

MSG Leisure is actively pursuing its imaginative and prescient for MSG Sphere – new, state-of-the-art venues that can reinvent the leisure expertise. Development is nicely underway on MSG Sphere in Las Vegas, and the Firm continues to pursue its plans for a further MSG Sphere in London, pending essential approvals.

The definitive settlement was solely negotiated and unanimously accredited by Particular Committees of MSG Leisure’s and MSG Networks’ boards, each of that are comprised solely of impartial administrators. The settlement was additionally unanimously accredited by the Boards of Administrators of each MSG Leisure and MSG Networks.

The transaction is topic to approval by a majority of the mixed voting energy of the excellent shares of MSG Networks Class A standard inventory and Class B widespread inventory. MSG Leisure’s issuance of its widespread inventory within the transaction is topic to approval by a majority of the mixed voting energy of the votes solid by the holders of shares of MSG Leisure Class A standard inventory and Class B widespread inventory and, individually, the issuance of MSG Leisure Class B shares should be accredited by the holders of not lower than 66 2/3% of the voting energy of the excellent shares of MSG Leisure Class B widespread inventory. The Particular Committee of the Board of Administrators of MSG Networks, and the complete board, based mostly on the advice of the MSG Networks Particular Committee, have every really useful that MSG Networks stockholders undertake the merger settlement. The Particular Committee of the Board of Administrators of MSG Leisure, and the complete Board, based mostly on the advice of the MSG Leisure Particular Committee, have every really useful that MSG Leisure stockholders approve the issuance of MSG Leisure widespread inventory required for the transaction.

The holders of all the excellent shares of MSG Networks Class B widespread inventory and MSG Leisure Class B widespread inventory, who’ve enough votes to approve the transaction, have entered into voting agreements pursuant to which they’ve agreed to vote all the MSG Networks Class B widespread inventory and MSG Leisure Class B widespread inventory in favor of the adoption of the merger settlement and the issuance of MSG Leisure widespread inventory required for the transaction, respectively.

The transaction, which can also be topic to customary closing circumstances, is predicted to be accomplished in the course of the third quarter of calendar 2021. Upon the closing of the transaction, a present director of MSG Networks elected by the holders of its Class A standard inventory could be appointed as a director of MSG Leisure.

Moelis & Firm LLC and The Raine Group are serving as impartial monetary advisors and Wachtell, Lipton, Rosen & Katz is serving as impartial authorized counsel to the Particular Committee of the Board of Administrators of MSG Leisure. LionTree Advisors LLC and Morgan Stanley & Co. LLC are serving as impartial monetary advisors and Davis Polk & Wardwell LLP is serving as impartial authorized counsel to the Particular Committee of the Board of Administrators of MSG Networks. Debevoise & Plimpton LLP is serving as authorized counsel to the Dolan household.

Administration Name on Right now’s Announcement

The administration groups of each MSG Leisure and MSG Networks will host a convention name to debate this announcement immediately, Friday March 26, 2021, at 9:00 a.m. ET. Members of the media are invited to hear in.

To take part through phone, please dial 888-421-7163 with the convention ID quantity 5186687 roughly 10 minutes previous to the decision. The decision will even be accessible through webcast at investor.msgentertainment.com or investor.msgnetworks.com underneath the heading “Occasions.”

For many who are unable to take part on the convention name, you might entry a recording of the decision by dialing 855-859-2056 (convention ID quantity 5186687). The decision replay might be accessible from 12:00 p.m. Japanese Time, Friday, March 26, 2021 till 11:59 p.m. Japanese Time on Friday, April 2, 2021. The webcast replay might be accessible on the web site till Friday, April 2, 2021.

MSG Networks’ Non-GAAP Monetary Measures

MSG Networks Non-GAAP Monetary Measures

MSG Networks defines adjusted working revenue, which is a non-GAAP monetary measure, as working revenue earlier than 1) depreciation, amortization and impairments of property and tools and intangible belongings, 2) share-based compensation expense or profit, 3) restructuring costs or credit and 4) beneficial properties or losses on gross sales or inclinations of companies. As a result of it’s based mostly upon working revenue, adjusted working revenue additionally excludes curiosity expense (together with money curiosity expense) and different non-operating revenue and expense gadgets. MSG Networks believes that the exclusion of share-based compensation expense or profit permits buyers to raised monitor the efficiency of MSG Networks with out regard to the settlement of an obligation that isn’t anticipated to be made in money.

MSG Networks believes that adjusted working revenue is an applicable measure for evaluating the working efficiency of MSG Networks. Adjusted working revenue and comparable measures with comparable titles are widespread efficiency measures utilized by buyers and analysts to investigate MSG Networks’ efficiency. Internally, MSG Networks makes use of revenues and adjusted working revenue measures as crucial indicators of its enterprise efficiency, and consider administration’s effectiveness with particular reference to those indicators. Adjusted working revenue ought to be considered as a complement to and never an alternative to working revenue, web revenue, money flows from working actions, and different measures of efficiency and/or liquidity introduced in accordance with U.S. usually accepted accounting ideas (“GAAP”). Since adjusted working revenue just isn’t a measure of efficiency calculated in accordance with GAAP, this measure might not be corresponding to comparable measures with comparable titles utilized by different corporations. For a reconciliation of working revenue to adjusted working revenue, please see web page 4 of this press launch.

MSG Networks defines free money movement, which is a non-GAAP monetary measure, as web money offered by working actions much less capital expenditures. MSG Networks believes probably the most comparable GAAP monetary measure is web money offered by working actions. MSG Networks believes that free money movement is beneficial as an indicator of its total skill to generate liquidity, as the quantity of free money movement generated in any interval is consultant of money that’s generated for debt compensation, funding, and different discretionary and non-discretionary money makes use of. MSG Networks additionally believes that free money movement is one in every of a number of benchmarks utilized by analysts and buyers for comparability of MSG Networks’ era of liquidity with different corporations within the business, though MSG Networks’ measure of free money movement might not be straight corresponding to comparable measures reported by different corporations. For a reconciliation of free money movement to web money offered by working actions, please see web page 4 of this press launch.

Changes to Reconcile Working Revenue to Adjusted Working Revenue

The next is an outline of the changes to working revenue in arriving at adjusted working revenue as described on this launch:

• Share-based compensation expense. This adjustment eliminates the compensation expense regarding restricted inventory items and inventory choices granted underneath MSG Networks’ worker inventory plan and non-employee director inventory plan in all intervals.
• Depreciation and amortization. This adjustment eliminates depreciation, amortization and impairments of property and tools and intangible belongings in all intervals.

About Madison Sq. Backyard Leisure Corp.

Madison Sq. Backyard Leisure Corp. (“MSG Leisure”) is a pacesetter in reside leisure experiences. The Firm presents or hosts a broad array of occasions in its numerous assortment of venues: New York’s Madison Sq. Backyard, Hulu Theater at Madison Sq. Backyard, Radio Metropolis Music Corridor and Beacon Theatre; and The Chicago Theatre. MSG Leisure can also be constructing a brand new state-of-the-art venue in Las Vegas, MSG Sphere at The Venetian, and has introduced plans to construct a second MSG Sphere in London, pending essential approvals. As well as, the Firm options the unique manufacturing – the Christmas Spectacular Starring the Radio Metropolis Rockettes – and thru Boston Calling Occasions, produces the Boston Calling Music Pageant. Additionally underneath the MSG Leisure umbrella is Tao Group Hospitality, with leisure eating and nightlife manufacturers together with Tao, Marquee, Lavo, Avenue, Magnificence & Essex and Cathédrale. Extra data is obtainable at www.msgentertainment.com.

About MSG Networks Inc.

MSG Networks Inc., a pioneer in sports activities media, owns and operates two award-winning regional sports activities and leisure networks and a companion streaming service that serve the nation’s primary media market, the New York DMA, in addition to different parts of New York, New Jersey, Connecticut and Pennsylvania. The networks function a variety of compelling sports activities content material, together with unique reside native video games and different programming of the New York Knicks, New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres, in addition to vital protection of the New York Giants and Buffalo Payments. This content material, along with a various array of different sporting occasions and critically acclaimed authentic programming, has established MSG Networks because the gold commonplace in regional sports activities.

Further Data and The place to Discover It

This press launch could also be deemed to be solicitation materials in respect of the proposed transaction between MSG Leisure and MSG Networks. In reference to the proposed transaction, MSG Leisure and MSG Networks intend to file with the Securities and Trade Fee (“SEC”) a registration assertion on Type S-4 that can embrace a joint proxy assertion of MSG Leisure and MSG Networks that additionally constitutes a prospectus of MSG Leisure. MSG Leisure and MSG Networks may additionally file different paperwork with the SEC concerning the proposed transaction. This doc just isn’t an alternative to the joint proxy assertion/prospectus, Type S-4 or some other doc which MSG Leisure or MSG Networks might file with the SEC. INVESTORS AND SECURITY HOLDERS OF MSG ENTERTAINMENT AND MSG NETWORKS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Traders and safety holders might acquire free copies of the Type S-4 and the joint proxy assertion/prospectus (when accessible) and different paperwork filed with the SEC by MSG Leisure and MSG Networks from the SEC’s web site at www.sec.gov. Copies of paperwork filed with the SEC by MSG Leisure might be made accessible freed from cost on MSG Leisure’s investor relations web site at http://investor.msgentertainment.com. Copies of paperwork filed with the SEC by MSG Networks might be made accessible freed from cost on MSG Networks’ investor relations web site at http://investor.msgnetworks.com.

No Supply or Solicitation

This communication is for informational functions solely and isn’t supposed to and doesn’t represent a suggestion to promote, or the solicitation of a suggestion to subscribe for or purchase, or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or switch of securities in any jurisdiction by which such supply, sale or solicitation could be illegal, previous to registration or qualification underneath the securities legal guidelines of any such jurisdiction. No supply of securities shall be made besides via a prospectus assembly the necessities of Part 10 of the Securities Act of 1933, as amended, and in any other case in accordance with relevant legislation.

Individuals within the Solicitation

MSG Leisure, MSG Networks and sure of their respective administrators and govt officers could also be deemed to be contributors within the solicitation of proxies from the holders of MSG Leisure and MSG Networks securities in respect of the proposed transaction underneath the principles of the SEC. Sure data concerning these administrators and govt officers and an outline of their direct and oblique pursuits, by safety holdings or in any other case, might be included within the Type S-4 and joint proxy assertion/prospectus concerning the proposed transaction (when accessible) and different related supplies to be filed with the SEC by MSG Leisure and MSG Networks. Data concerning MSG Leisure’s administrators and govt officers is obtainable in MSG Leisure’s proxy assertion regarding its 2020 annual assembly of stockholders filed with the SEC on October 27, 2020. Data concerning MSG Networks’ administrators and govt officers is obtainable in MSG Networks’ proxy assertion regarding its 2020 annual assembly of stockholders filed with the SEC on October 21, 2020. These paperwork might be accessible freed from cost from the sources indicated above.