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MSG Gets Unlikely Assists from Combs, Jackson

Stocks in this article: MSG CVC CBS LGF DISH JPM

NEW YORK (The Deal) -- With the New York Knicks suffering through a miserable season, the excitement at Madison Square Garden (MSG) these days comes from the buzz that new CEO Tad Smith may get assists from legendary coach Phil Jackson and rap mogul Sean "P. Diddy" Combs.

Luring Jackson, who played for the Knicks from 1967-78, to the front office would be a clear score for Smith, a Cablevision Systems  (CVC) executive who succeeded Hank Ratner as the company's president and CEO on Feb. 28. Jackson would presumably bring gravitas and playoff success to James Dolan's troubled team.

Meanwhile, Combs' $200 million offer for music network Fuse, as reported by Bloomberg, is more difficult to evaluate. The bid from the rapper's Revolt TV is short of some firms' valuations of Fuse by well more than $100 million, but would contain a silver lining.

"It is positive that someone is interested because that channel has struggled to gain scale," said Sterne Agee analyst Vasily Karasyov.

The reported price would be in line with CBS's (CBS) purchase last year of TV Guide Network and Lions Gate Entertainment's (LGF) purchase and sale of a stake in the target, Karasyov said.

Brett Harriss of Gabelli & Co. projected that the network would fetch $6 for each of its 65 million subscribers, or $380 million.

Combs' bid is "lower than we would have expected," he said, "but when you are dealing with something that is not profitable you're going to have wide variation in valuation."

For a benchmark, Harriss pointed to Al Jazeera Media Network's $500 million payout for Al Gore-backed Current Media LLC, which had fewer subscribers than Fuse. Additionally, Kroenke Sports & Entertainment in February 2013 agreed to pay $265 million for Outdoor Channel Holdings and its 40 million subscribers.

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