James Dolan is reportedly seeking suitors for MSG Networks and Verizon could be a potential bidder.
According to the New York Post, Dolan has only just begun preliminary inquiries and may not end up selling. MSG Networks, which reaches roughly 7 million homes in New York and the surrounding areas, holds the TV rights for teams including the Knicks, the Rangers, the Devils and the Islanders.
As the report points out, MSG Networks demands roughly $5 per subscriber from distributors, making it one of the pricier cable channels around. But many of those deals are coming up for renewal soon and may be difficult to negotiate for higher rates.
Citing unnamed sources, the Post suggests that Verizon, which is on the hunt for content, could be a buyer for MSG Networks. AT&T is another possible buyer but the report notes that, since AT&T is currently working on closing its massive deal for Time Warner Inc., it might be reticent to pursue further M&A.
For the Dolan family, a potential sale of MSG Networks would be another large divestiture after a few years ago completing the sale of Cablevision to European communications company Altice.
Reports of a potential MSG Networks sale comes about two years after the Madison Square Garden Company confirmed plans to spin off its regional sports networks.
The Madison Square Garden arena and theater, Radio City Music Hall, the Beacon Theater, the Forum in Inglewood, Calif., the Chicago Theater and Wang Theater in Boston were all spun off from MSG Network and MSG+, a conglomerate of RSNs.
MSG’s board justified the move by saying that it would increase the long-term value-creation potential of both businesses.
“While the companies would continue to benefit from commercial arrangements between them, the separation would provide each company with increased strategic flexibility to pursue its own distinctive business plan and allow each to have a capital structure and capital return policy that is appropriate for its business,” said the company in a statement.