Madison Square Garden Co. (MSG) - Get Madison Square Garden Co. Class A Report has agreed to make its first-ever 100% equity acquisition in live entertainment technology and production company Obscura Digital Inc.
Obscura, which is currently working on MSG's 2017 Christmas Spectacular starring the Radio City Rockettes, will become part of MSG Ventures, MSG's technology group.
"Obscura's expertise will enable us to immediately begin to integrate the cutting-edge possibilities of immersive technology across MSG's current portfolio of live offerings, as well as its new endeavors," said David Dibble, chief executive officer of MSG Ventures, in a statement Monday announcing the deal.
The deal comes as the owner of the Radio City Music Hall, Madison Square Garden and the L.A. Forum, tipped off a sale process for the New York Liberty of the Women's National Basketball Association on Nov. 14. and a week after company chairman James Dolan took over as CEO of MSG after David "Doc" O'Connor suddenly exited the entertainment company.
Obscura designs and develops interactive digital art installations and experiences around the world. Other notable projects for Obscura include CNN's election night projections and the Harper's Bazaar 150th anniversary; a YouTube display on the interior and exterior of the Sydney Opera House among others.
The 2017 Radio City Christmas show is the first time the company has worked with Radio City.
MSG declined to comment outside the release. Obscura did not respond to calls seeking comment.
Despite the management shuffle and the reposition of some assets, the Obscura deal fits in with management's previous statement about investment as the company continues on its mission to enhance the entire entertainment experience.
"One of the ways we're more effectively harnessing the strength of our brands is through thoughtful investments that help ensure we're delivering the most innovative live experiences for our customers," said former CEO O'Connor on the company's third quarter conference call Nov. 4. "Today people want—and expect—a more immersive experience, which is why we are focused on employing next-generation technologies that will change the way we engage with our audiences."
Hughes Hubbard & Reed LLP advised MSG on the Obscura deal. Ken Lefkowitz led the team which also included Michael Traube, Andy Braiterman, Shane Stroud, Matt Syrkin, James Dabney and David Gold.
Sidley Austin LLP provided legal advice to Obscura. Hank Barry led the Sidley team that also included Jennifer Fitchen, Matt Johnson, Helen Theung, Courtney Sladic, Lauren Gallagher and Olivia Su.
MSG split its entertainment and media businesses into separate companies in October 2015. There had been talk in recent months of the Dolan family struggling in attempts to sell off the media component, MSG Networks Inc. (MSGN), as cord-cutting continues among video consumers and affects the entire media world.
The deal is the first outright acquisition for MSG.
Madison Square Garden acquired an undisclosed majority stake in Counter Logic Gaming in July for an undisclosed sum to help build out its eSports presence. In January the company acquired a 62.5% stake in restaurant operator TAO Group, for $181 million plus additional earn outs. That followed an August 2016 acquisition of a 12% minority stake in Townsquare Media Inc. from General Electric Capital Corp., for US$23.1 million in cash.
MSG acquired a majority stake in Boston Calling Events LLC for an undisclosed amount in July 2016. The acquisition would allow The Madison Square Garden Co expands its entertainment services.
Hughes Hubbard's Lefkowitz, who led the the legal effort on MSG's Obscura deal also provided legal advice to MSG on its Tao acquisition.
Both MSG and MSG Networks had better-than-expected financial results in their most recent quarters, though it didn't stop some on Wall Street from speculating about the companies' futures and whether the two should re-combine. The Dolans as of Sept. 30 controlled about 71.2% voting power at MSG and 69.6% at MSG Networks, according to Securities and Exchange Commission filings.
"Although since the separation from MSG, MSGN has done quite well (both operationally and financially—at least in our opinion), the reality is the public market clearly seems to feel little love for the RSN operator," FBN Securities Inc. analyst Robert Routh wrote in a note Nov. 6, referring to the regional sports network, just after the two companies reported earnings. "Thus, unless the Dolan family plans to sell MSGN (as many in the mainstream press have reported more than once), we wonder why they wouldn't think about taking advantage of current market conditions and simply recombine MSGN with MSG."
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