SEC Form DEFM14A filed by MSG Networks Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under §240.14a-12

 

MSG NETWORKS INC.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒		No fee required.
☐		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		(1)		Title of each class of securities to which transaction applies:
		(2)		Aggregate number of securities to which transaction applies:
		(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
		(4)		Proposed maximum aggregate value of transaction:
		(5)		Total fee paid:
☐		Fee paid previously with preliminary materials.
☐		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		(1)		Amount Previously Paid:
		(2)		Form, Schedule or Registration Statement No.:
		(3)		Filing Party:
		(4)		Date Filed:

 

 

 

 

 

June 4, 2021

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders of Madison Square Garden Entertainment Corp. and MSG Networks Inc.:

On March 25, 2021, Madison Square Garden Entertainment Corp (“MSG Entertainment”), MSG Networks Inc. (“MSG Networks”) and Broadway Sub Inc., a direct wholly-owned subsidiary of MSG Entertainment (“Merger Sub”), entered into an Agreement and Plan of Merger (as may be amended from time to time, the “merger agreement”). Pursuant to the terms of and subject to the conditions set forth in the merger agreement, Merger Sub will merge with and into MSG Networks (the “merger”), with MSG Networks surviving the merger as a direct wholly-owned subsidiary of MSG Entertainment. MSG Entertainment and MSG Networks will each hold special meetings of their respective stockholders in connection with the proposed merger.

If the merger is completed, (i) each share of Class A common stock, par value $0.01 per share, of MSG Networks (“MSGN Class A common stock”) issued and outstanding immediately prior to the effective time of the merger (the “effective time”) will be automatically converted into the right to receive a number of shares of Class A common stock, par value $0.01 per share, of MSG Entertainment (“MSGE Class A common stock”) such that each holder of record of shares of MSGN Class A common stock will have the right to receive, in the aggregate, such number of shares of MSGE Class A common stock equal to the total number of shares of MSGN Class A common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share and (ii) each share of Class B common stock, par value $0.01 per share, of MSG Networks (“MSGN Class B common stock” and, together with MSGN Class A common stock, “MSGN common stock”) issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive, in the aggregate, a number of shares of Class B common stock, par value $0.01 per share, of MSG Entertainment (“MSGE Class B common stock” and, together with MSGE Class A common stock, “MSGE common stock”) such that each holder of record of shares of MSGN Class B common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class B common stock equal to the total number of shares of MSGN Class B common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share, in each case except for shares held by MSG Entertainment, Merger Sub or any of the MSG Entertainment subsidiaries (the “MSGE subsidiaries”) or MSG Networks or any of the MSG Networks subsidiaries (the “MSGN subsidiaries”) as treasury stock (in each case not held on behalf of third parties). As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

This exchange ratio of 0.172 is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger. Based on the closing price of MSGE Class A common stock on the New York Stock Exchange (“NYSE”) on March 10, 2021, the last full trading day before a press report speculated on a potential transaction between MSG Entertainment and MSG Networks, the exchange ratio represents approximately $19.95 in value for each share of MSGN common stock, and based on the closing price on March 25, 2021, the last full trading day before the public announcement of the signing of the merger agreement, the exchange ratio represents approximately $16.16 in value for each share of MSGN common stock. Based on the closing price of MSGE Class A common stock on the NYSE on May 26, 2021, the latest practicable date before the date of the enclosed joint proxy statement/prospectus, the exchange ratio represents approximately $15.30 in value of each share of MSGN common stock. MSG Entertainment stockholders will continue to own their existing shares of MSGE common stock. Based on the estimated number of shares of MSGN common stock outstanding on May 26, 2021, MSG Entertainment expects to issue approximately 9,812,332 shares of MSGE common stock to MSG Networks stockholders in connection with the merger, which would result in MSG Entertainment stockholders owning approximately 71.1% of MSGE common stock and former MSG Networks stockholders owning approximately 28.9% of MSGE common stock upon completion of the merger.

MSGE Class A common stock is currently traded on the NYSE under the symbol “MSGE” and MSGN Class A common stock is currently traded on the NYSE under the symbol “MSGN.” We urge you to obtain current market quotations of MSGE Class A common stock and MSGN Class A common stock. MSGE Class B common stock and MSGN Class B common stock are not listed or traded on a national securities exchange.

MSG Entertainment and MSG Networks estimate that, based on the estimated number of shares of MSGN common stock and MSGE common stock outstanding on May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021), certain members of the Dolan family, including trusts for their benefit, that have formed a “group” for purposes of Section 13(d) of the Exchange Act (collectively, the “Dolan family group”), ownership and voting power at MSG Entertainment will increase from approximately 21.3% of the outstanding MSGE common stock and approximately 70.7% of the total voting power prior to the transaction to approximately 23.6% of the outstanding MSGE common stock and approximately 72.7% of the total voting power upon completion of the merger.

After careful consideration, the special committee (“MSGE special committee”) of the MSG Entertainment board of directors (the “MSGE board”) unanimously (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of MSG Entertainment and (2) recommended that the MSGE board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Entertainment stockholders approve the issuance of shares of MSGE common stock as consideration for MSG Networks stockholders in the merger (the “MSGE share issuance”). On March 25, 2021, at a duly convened meeting of the MSGE board, the MSGE board unanimously, in reliance on the recommendation of the MSGE special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment, (2) approved the merger agreement and the transactions contemplated thereby and (3) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share issuance and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders.

At the special meeting of MSG Entertainment stockholders (the “MSGE special meeting”), MSG Entertainment stockholders will be asked to consider and vote on (i) a proposal to authorize the MSGE share issuance (the “MSGE share issuance proposal”) and (ii) a proposal to adjourn the MSGE special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGE share issuance proposal (the “MSGE adjournment proposal”). Approval of the MSGE share issuance proposal requires (i) the affirmative vote of the holders of a majority of the total votes of the shares of MSGE Class A common stock and Class B common stock, voting together as a single class, cast in person or by proxy, and (ii) in connection with the issuance of MSGE Class B common stock, the affirmative vote of the holders of not less than 66 2/3% of the outstanding shares of MSGE Class B common stock, voting separately as a class. Approval of the MSGE adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGE Class A common stock and Class B common stock, voting together as a single class, cast in person or by proxy at the MSGE special meeting. The MSGE board, in reliance on the unanimous recommendation of the MSGE special committee, unanimously recommends that the MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal.

After careful consideration, the special committee (the “MSGN special committee”) of the MSG Networks board of directors (the “MSGN board”) unanimously (1) determined that the merger agreement and the merger are fair to, advisable and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) recommended that the MSGN board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Networks stockholders adopt the merger agreement. On March 25, 2021, at a duly convened meeting of the MSGN board, the MSGN board unanimously, in reliance on the recommendation of the MSGN special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment and the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger

agreement and the transactions contemplated thereby, including the merger, and (3) resolved to recommend that MSG Networks stockholders adopt the merger agreement and directed that the merger agreement be submitted for approval by the MSG Networks stockholders. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

At the special meeting of MSG Networks stockholders (the “MSGN special meeting”), MSG Networks stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement (the “MSGN merger proposal”), (ii) a non-binding advisory proposal to approve certain compensation that may be paid or become payable to MSG Networks’ named executive officers that is based on or otherwise relates to the merger contemplated by the merger agreement (the “non-binding compensation advisory proposal”) and (iii) a proposal to adjourn the MSGN special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGN merger proposal (the “MSGN adjournment proposal”). Approval of the MSGN merger proposal requires the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, entitled to vote on such matter at the MSGN special meeting. Approval of each of the non-binding compensation advisory proposal and the MSGN adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, cast in person or by proxy at the MSGN special meeting. The MSGN board, in reliance on the unanimous recommendation of the MSGN special committee, unanimously recommends that the MSG Networks stockholders vote “FOR” each of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal.

In connection with the merger agreement and as a condition and inducement to MSG Networks’ willingness to enter into the merger agreement, MSG Networks and the holders of all outstanding shares of MSGE Class B common stock (the “principal MSGE stockholders”), representing approximately 70.7% of the aggregate voting power of MSG Entertainment as of May 17, 2021, entered into a voting and support agreement (the “MSGE voting agreement”) to which MSG Entertainment is a third party beneficiary, pursuant to which the principal MSGE stockholders agreed, among other things and subject to the terms and conditions set forth in the MSGE voting agreement, to vote their shares of MSGE common stock in favor of the authorization and approval of the MSGE share issuance.

In connection with the merger agreement and as a condition and inducement to MSG Entertainment’s willingness to enter into the merger agreement, MSG Entertainment and the holders of all outstanding shares of MSGN Class B common stock (the “principal MSGN stockholders”), representing approximately 76.9% of the aggregate voting power of MSG Networks as of May 17, 2021, entered into a voting and support agreement (the “MSGN voting agreement,” and together with the MSGE voting agreement, the “voting agreements”), to which MSG Networks is a third party beneficiary, pursuant to which the principal MSGN stockholders agreed, among other things and subject to the terms and conditions set forth in the MSGN voting agreement, to vote their shares of MSGN common stock in favor of the adoption of the merger agreement.

See the section entitled “The Voting Agreements” beginning on page 154 for a more complete discussion of the terms of the voting agreements.

We cannot complete the merger unless the MSG Entertainment stockholders approve the MSGE share issuance proposal and the MSG Networks stockholders approve the MSGN merger proposal. As a result of the voting agreements, there are sufficient votes committed to approving both the MSGE share issuance proposal and the MSGN merger proposal without the participation of other MSG Entertainment or MSG Networks stockholders, as applicable. Nonetheless, we encourage you to vote regardless of the number of shares you own. Whether or not you or your legal proxy expect to attend your special meeting, please vote your shares as promptly as possible to make sure that your shares are represented and voted at the MSGE special meeting or MSGN special meeting, as applicable.

The obligations of MSG Entertainment and MSG Networks to complete the merger are subject to the satisfaction or waiver of conditions set forth in the merger agreement. More information about MSG Entertainment, MSG Networks and the merger is

contained in the enclosed joint proxy statement/prospectus. MSG Entertainment and MSG Networks encourage you to read the entire enclosed joint proxy statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 34.

Sincerely,

 

James L. Dolan Executive Chairman & Chief Executive Officer Madison Square Garden Entertainment Corp.		Andrea Greenberg President & Chief Executive Officer MSG Networks Inc.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER OR THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER OR MADE AN ASSESSMENT OF THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of the enclosed joint proxy statement/prospectus is June 4, 2021, and it is first being mailed or otherwise delivered to the stockholders of MSG Entertainment and MSG Networks on or about June 4, 2021.

 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

Two Pennsylvania Plaza

New York, NY 10121

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JULY 8, 2021

Dear Stockholders of Madison Square Garden Entertainment Corp.:

We are pleased to invite you to attend the special meeting of stockholders of Madison Square Garden Entertainment Corp., a Delaware corporation (“MSG Entertainment”), which will be held at the J.P. Morgan Club at the Madison Square Garden Arena, located on Seventh Avenue between West 31st Street and West 33rd Street, on July 8, 2021 at 10:00 a.m. Eastern Time (the “MSGE special meeting”), for the following purpose:

 

•

to consider and vote on a proposal to authorize the issuance (the “MSGE share issuance”) of MSGE common stock, par value $0.01 per share (the “MSGE common stock”), as merger consideration pursuant to the Agreement and Plan of Merger, dated as of March 25, 2021, a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice (as may be amended from time to time, the “merger agreement”), among MSG Entertainment, MSG Networks Inc. (“MSG Networks”), and Broadway Sub Inc., a direct wholly-owned subsidiary of MSG Entertainment (“Merger Sub”), pursuant to which Merger Sub will merge with and into MSG Networks (the “merger”), with MSG Networks surviving the merger as a direct wholly-owned subsidiary of MSG Entertainment (the “MSGE share issuance proposal”); and

 

•

to consider and vote on a proposal to adjourn the MSGE special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGE share issuance proposal (the “MSGE adjournment proposal”).

MSG Entertainment will transact no other business at the MSGE special meeting except such business as may properly be brought before the MSGE special meeting or any adjournment or postponement thereof. Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the MSGE special meeting. This is a special meeting of stockholders and not MSG Entertainment’s 2021 annual meeting of stockholders. MSG Entertainment anticipates holding its 2021 annual meeting of stockholders in December 2021.

The MSG Entertainment board of directors (the “MSGE board”) has fixed the close of business on June 14, 2021 as the record date for determination of MSG Entertainment stockholders entitled to receive notice of, and to vote at, the MSGE special meeting or any adjournments thereof (the “record date”). Only holders of record of shares of MSGE common stock at the close of business on the record date are entitled to vote at the MSGE special meeting and any adjournment of the MSGE special meeting.

The MSGE board formed a committee (the “MSGE special committee”) of independent and disinterested directors of MSG Entertainment to evaluate the merger, and the MSGE special committee unanimously (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of MSG Entertainment, and (2) recommended that the MSGE board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Entertainment stockholders approve the share issuance. On March 25, 2021, at a duly convened meeting of the MSGE board, the MSGE board unanimously, in reliance on the recommendation of the MSGE special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment, (2) approved the merger agreement and the transactions contemplated thereby and (3) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share

issuance proposal and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders.

The MSGE board, in reliance on the unanimous recommendation of the MSGE special committee, unanimously recommends that MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal.

Approval of the MSGE share issuance proposal requires (i) the affirmative vote of the holders of a majority of the total votes of the shares of MSGE Class A common stock and Class B common stock, voting together as a single class, cast in person or by proxy at the MSGE special meeting, and (ii) in connection with the issuance of MSGE Class B common stock, the affirmative vote of the holders of not less than 66 2/3% of the outstanding shares of MSGE Class B common stock, voting separately as a class. Approval of the MSGE adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGE Class A common stock and Class B common stock, voting together as a single class, cast in person or by proxy at the MSGE special meeting.

Whether or not you or your legal proxy expect to attend the MSGE special meeting, we urge you to vote your shares as promptly as possible by:

 

(1)

accessing the internet website specified on your proxy card;

 

(2)

calling the toll-free number specified on your proxy card; or

 

(3)

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided,

so that your shares may be represented and voted at the MSGE special meeting. If your shares are held in the name of a broker, bank, trust company or other nominee, please follow the instructions on the voting instruction card furnished by the record holder.

Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

The enclosed joint proxy statement/prospectus provides a detailed description of the merger and the merger agreement. We urge you to read this joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes carefully and in their entirety. If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies or need help voting your shares of MSGE common stock, please contact MSG Entertainment’s proxy solicitor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers, Call Collect: (212) 269-5550

All Others Call Toll Free: (866) 796-7184

Email: [email protected]

By Order of the Board of Directors,

EMMA Y. BARNETT

Secretary

New York, New York

June 4, 2021

 

MSG NETWORKS INC.

11 Pennsylvania Plaza

New York, NY 10001

NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 8, 2021

Dear Stockholders of MSG Networks Inc.:

We are pleased to invite you to attend the special meeting of stockholders of MSG Networks Inc., a Delaware corporation (“MSG Networks”), which will be held at the J.P. Morgan Club at the Madison Square Garden Arena, located on Seventh Avenue between West 31st Street and West 33rd Street on July 8, 2021 at 11:30 a.m. Eastern Time (the “MSGN special meeting”), for the following purpose:

 

•

to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of March 25, 2021, a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice (as may be amended from time to time, the “merger agreement”), among MSG Networks, Madison Square Garden Entertainment Corp. (“MSG Entertainment”) and Broadway Sub Inc., a direct wholly-owned subsidiary of MSG Entertainment (“Merger Sub”), pursuant to which Merger Sub will merge with and into MSG Networks (the “merger”), with MSG Networks surviving the merger as a direct wholly-owned subsidiary of MSG Entertainment (the “MSGN merger proposal”);

 

•

to consider and vote, on an advisory basis, on a non-binding proposal to approve certain compensation that may be paid or become payable to MSG Networks’ named executive officers that is based on or otherwise relates to the merger contemplated by the merger agreement (the “non-binding compensation advisory proposal”); and

 

•

to consider and vote on a proposal to adjourn the MSGN special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGN merger proposal (the “MSGN adjournment proposal”).

MSG Networks will transact no other business at the MSGN special meeting except such business as may properly be brought before the MSGN special meeting or any adjournment or postponement thereof. Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the MSGN special meeting. This is a special meeting of stockholders and not MSG Networks’ annual meeting of stockholders. MSG Networks does not expect it will hold its 2021 annual meeting of stockholders if the merger is completed by the anticipated date of the annual meeting because MSG Networks will become a direct wholly-owned subsidiary of MSG Entertainment, and MSGN Class A common stock will cease to be quoted on the NYSE and will subsequently be deregistered under the Securities Exchange Act of 1934, as amended, upon completion of the merger. If MSG Networks is required to hold an annual meeting, we currently expect it to be held in December 2021.

The MSG Networks board of directors (the “MSGN board”) has fixed the close of business on June 14, 2021 as the record date for determination of MSG Networks stockholders entitled to receive notice of, and to vote at, the MSGN special meeting or any adjournments or postponements thereof (the “record date”). Only holders of record of shares of MSGN common stock at the close of business on the record date are entitled to notice of, and to vote at, the MSGN special meeting and at any adjournment of the meeting.

The MSGN board formed a committee (the “MSGN special committee”) of independent and disinterested directors of MSG Networks to evaluate the merger, and the MSGN special committee unanimously (1) determined that the merger agreement and the merger are fair to, advisable and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment and certain members of the Dolan family, including trusts for their benefit, that have formed a “group” for purposes of Section 13(d) of the Exchange Act (collectively, the “Dolan family group”) and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger and (3) recommended that the MSGN board adopt resolutions approving, adopting and declaring advisable the

merger agreement and transactions contemplated thereby and recommending that the MSG Networks stockholders adopt the merger agreement. On March 25, 2021, at a duly convened meeting of the MSGN board, the MSGN board unanimously, in reliance on the recommendation of the MSGN special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) resolved to recommend that MSG Networks stockholders adopt the merger agreement and directed that the merger agreement be submitted for approval by the MSG Networks stockholders. As of the date of this proxy statement/prospectus, MSG Entertainment does not own any stock of MSG Networks.

The MSGN board, in reliance on the unanimous recommendation of the MSGN special committee, unanimously recommends that MSG Networks stockholders vote “FOR” each of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal.

Approval of the MSGN merger proposal requires the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, entitled to vote on such matter at the MSGN special meeting. Approval of each of the MSGN non-binding compensation advisory proposal and the MSGN adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, cast in person or by proxy at the MSGN special meeting.

Whether or not you or your legal proxy expect to attend the MSGN special meeting, we urge you to vote your shares as promptly as possible by:

 

(1)

accessing the internet website specified on your proxy card;

 

(2)

calling the toll-free number specified on your proxy card; or

 

(3)

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided,

so that your shares may be represented and voted at the MSGN special meeting. If your shares are held in the name of a broker, bank, trust company or other nominee, please follow the instructions on the voting instruction card furnished by the record holder.

Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

The enclosed joint proxy statement/prospectus provides a detailed description of the merger and the merger agreement. We urge you to read this joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes carefully and in their entirety. If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies or need help voting your shares of MSGN common stock, please contact MSG Networks’ proxy solicitor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers, Call Collect: (212) 269-5550

All Others Call Toll Free: (866) 620-2535

Email: [email protected]

By Order of the Board of Directors,

MARK C. CRESITELLO

Secretary

New York, New York

June 4, 2021

ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about MSG Entertainment and MSG Networks from documents that are not included in or delivered with the accompanying joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference into the accompanying joint proxy statement/prospectus (other than certain exhibits or schedules to these documents) by requesting them in writing or by telephone from MSG Entertainment or MSG Networks at the following addresses and telephone numbers:

 

 

In addition, if you have questions about the merger or the accompanying joint proxy statement/prospectus, would like additional copies of the accompanying joint proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, please contact D.F. King & Co., Inc., the proxy solicitor for each of MSG Entertainment and MSG Networks, toll-free at (866) 620-2535.

If you would like to request documents, please do so no later than five business days before the date of the MSGE special meeting (which meeting is to be held on July 8, 2021) or five business days before the date of the MSGN special meeting (which meeting is to be held on July 8, 2021), as applicable.

For a more detailed description of the information incorporated by reference in the accompanying joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 221 of the accompanying joint proxy statement/prospectus.

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by MSG Entertainment (File No. 333-255859), constitutes a prospectus of MSG Entertainment under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of MSGE common stock to be issued to MSG Networks stockholders pursuant to the merger agreement. This joint proxy statement/prospectus also constitutes a joint proxy statement for MSG Entertainment and MSG Networks under Section 14 (a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting of MSG Entertainment stockholders and a notice of meeting with respect to the special meeting of MSG Networks stockholders.

You should rely only on the information contained or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated June 4, 2021, and you should assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate only as of such date. Neither our mailing of this joint proxy statement/prospectus to MSG Entertainment stockholders or MSG Networks stockholders, nor the issuance by MSG Entertainment of MSGE common stock in connection with the merger, will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding MSG Entertainment has been provided by MSG Entertainment, and information contained in this joint proxy statement/prospectus regarding MSG Networks has been provided by MSG Networks.

Neither MSG Entertainment stockholders nor MSG Networks stockholders should construe the contents of this joint proxy statement/prospectus as legal, tax or financial advice. MSG Entertainment stockholders and MSG Networks stockholders should consult with their own legal, tax, financial or other professional advisors. All summaries of, and references to, the agreements governing the terms of the transactions described in this joint proxy statement/prospectus are qualified by the full copies of and complete text of such agreements in the forms attached hereto as annexes, which are available on the Electronic Data Gathering Analysis and Retrieval System of the SEC website at www.sec.gov.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED IF THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			17
Information about the Companies			17
The Merger and the Merger Agreement			18
Structure of the Merger			18
Merger Consideration			18
Treatment of MSG Networks Equity Awards			19
MSG Entertainment’s Reasons for the Merger; Recommendation of the MSGE Special Committee and Board of Directors			20
Opinion of the Financial Advisors to the MSGE Special Committee			20
MSG Networks’ Reasons for the Merger; Recommendation of the MSGN Special Committee and Board of Directors			21
Opinion of the Financial Advisors to the MSGN Special Committee			22
The MSG Entertainment Special Meeting of Stockholders; Required Vote			23
The MSG Networks Special Meeting of Stockholders; Required Vote			24
Interests of MSG Entertainment’s Directors, Officers and Employees in the Merger			24
Interests of MSG Networks’ Directors, Officers and Employees in the Merger			25
Merger-Related Compensation for MSG Networks’ Named Executive Officers			26
Appointment of MSG Networks Director to the MSG Entertainment Board			27
Regulatory Approvals Required for the Merger			27
No Solicitation of Alternative Proposals			27
Changes in Board Recommendations			28
Conditions to the Completion of the Merger			28
Termination of the Merger Agreement			29
Expenses and Termination Fees			30
Voting Agreements			30
No Appraisal Rights			30
Accounting Treatment of the Merger			30
Litigation Relating to the Merger			31
Material U.S. Federal Income Tax Consequences			31
Comparison of the Rights of Holders of MSGE Common Stock and Holders of MSGN Common Stock			32
Listing of MSGE Class  A Common Stock; Delisting and Deregistration of MSGN Class A Common Stock			32
COMPARATIVE PER SHARE MARKET PRICE INFORMATION			33
RISK FACTORS			34
Risks Related to the Merger			34
Risks Related to the Business of MSG Entertainment Following the Merger			39
Other Risk Factors of MSG Entertainment and MSG Networks			41
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			42
THE MSG ENTERTAINMENT SPECIAL MEETING OF STOCKHOLDERS			44
Date, Time and Place of the MSGE Special Meeting of Stockholders			44
Purpose of the MSGE Special Meeting of Stockholders			44
Recommendation of the MSGE Special Committee and Board of Directors			44
MSG Entertainment Record Date; Stockholders Entitled to Vote			44
Quorum			45
Required Vote			45
Abstentions and Broker Non-Votes			46

 

i

Attending the MSGE Special Meeting of Stockholders			46
Voting of Proxies; Incomplete Proxies			47
Shares Held in “Street Name”			48
Revocability of Proxies and Changes to an MSG Entertainment Stockholder’s Vote			48
Solicitation of Proxies			48
Adjournments			48
Assistance			49
THE MSG NETWORKS SPECIAL MEETING OF STOCKHOLDERS			50
Date, Time and Place of the MSGN Special Meeting of Stockholders			50
Purpose of the MSGN Special Meeting of Stockholders			50
Recommendation of the MSGN Special Committee and Board of Directors			50
MSG Networks Record Date; Stockholders Entitled to Vote			50
Quorum			51
Required Vote			51
Abstentions and Broker Non-Votes			52
Attending the MSGN Special Meeting of Stockholders			52
Voting of Proxies; Incomplete Proxies			53
Shares Held in “Street Name”			53
Revocability of Proxies and Changes to an MSG Networks Stockholder’s Vote			54
Solicitation of Proxies			54
Adjournments			54
Assistance			55
INFORMATION ABOUT THE COMPANIES			56
THE MERGER			58
Structure of the Merger			58
Merger Consideration			58
Background of the Merger			59
MSG Entertainment’s Reasons for the Merger; Recommendation of the MSGE Special Committee and Board of Directors			69
Opinion of the Financial Advisors to the MSGE Special Committee			75
MSG Networks’ Reasons for the Merger; Recommendation of the MSGN Special Committee and Board of Directors			95
Opinion of the Financial Advisors to the MSGN Special Committee			100
Unaudited Prospective Financial Information			112
Interests of MSG Entertainment’s Directors, Officers and Employees in the Merger			116
Interests of MSG Networks’ Directors, Officers and Employees in the Merger			120
The Compensation Proposal			126
Governance of MSG Entertainment After the Merger			126
Certain Relationships and Related Party Transactions			127
Indemnification; Directors’ and Officers’ Insurance			130
Regulatory Approvals Required for the Merger			130
Exchange of Shares in the Merger			130
Dividends and Share Repurchases			132
Listing of MSG Entertainment Common Stock			132
De-Listing and Deregistration of MSG Networks Common Stock			132
Accounting Treatment of the Merger			132
Litigation Relating to the Merger			133
THE MERGER AGREEMENT			135
Explanatory Note Regarding the Merger Agreement			135
Structure of the Merger			135

 

ii

Completion of the Merger			136
Merger Consideration			136
Treatment of MSG Networks Equity-Based Awards			136
Exchange of Shares in the Merger			137
Representations and Warranties			138
Survival of Representations and Warranties			142
Conduct of Business			142
Covenants and Agreements			144
Certain Governance Matters			145
No Solicitation of Alternative Proposals			145
Termination Rights in Response to a Superior Proposal; Changes in Board Recommendations			147
Conditions to the Completion of the Merger			148
Termination of the Merger Agreement			149
Expenses and Termination Fees			150
Indemnification; Directors’ and Officers’ Insurance			151
Employee Matters			152
Amendment, Extensions and Waivers			153
No Third Party Beneficiaries			153
Specific Performance			153
THE VOTING AGREEMENTS			154
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES			156
Tax Consequences of the Merger Generally			157
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			158
DESCRIPTION OF MSG ENTERTAINMENT COMMON STOCK			171
General			171
Voting			171
Advance Notification of Stockholder Nominations and Proposals			172
No Stockholder Action by Written Consent			172
Conversions			172
Dividends			172
Liquidation			173
Other Terms			173
Certain Corporate Opportunities and Conflicts			173
Section 203 of the Delaware General Corporation Law			174
Limitation on Personal Liability			175
Registration Rights			175
Transfer Agent and Registrar			176
Listing			176
COMPARISON OF THE RIGHTS OF HOLDERS OF MSGE COMMON STOCK AND HOLDERS OF MSGN COMMON STOCK			177
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF MSG ENTERTAINMENT			193
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF MSG NETWORKS			206
NO APPRAISAL RIGHTS			219
LEGAL MATTERS			219
EXPERTS			219
FUTURE STOCKHOLDER PROPOSALS			220

 

iii

OTHER MATTERS			221
HOUSEHOLDING OF PROXY MATERIALS			221
WHERE YOU CAN FIND MORE INFORMATION			221

ANNEX A—Agreement and Plan of Merger

ANNEX B—MSGE Voting & Support Agreement

ANNEX C—MSGN Voting & Support Agreement

ANNEX D—Opinion of Moelis & Company LLC

ANNEX E—Opinion of Raine Securities LLC

ANNEX F—Opinion of LionTree Advisors LLC

ANNEX G—Opinion of Morgan Stanley & Co. LLC

 

iv

QUESTIONS AND ANSWERS

The following section provides brief answers to certain questions that you may have regarding the merger agreement and the proposed merger. Please note that this section does not address all issues that may be important to you as an MSG Entertainment or MSG Networks stockholder, as applicable. Accordingly, you should carefully read this entire joint proxy statement/prospectus, including each of the annexes and the documents that have been incorporated by reference into this joint proxy statement/prospectus.

 

Q:	Why am I receiving this joint proxy statement/prospectus?

 

A:

You are receiving this joint proxy statement/prospectus because you were a stockholder of record of Madison Square Garden Entertainment Corp., a Delaware corporation (“MSG Entertainment”) or MSG Networks Inc., a Delaware corporation (“MSG Networks”), as of the close of business on June 14, 2021, the record date for the special meeting of MSG Entertainment stockholders (the “MSGE special meeting”) or the special meeting of MSG Networks stockholders (the “MSGN special meeting”), as applicable (the “record date”). MSG Entertainment and MSG Networks have agreed to the combination of MSG Entertainment and MSG Networks pursuant to an Agreement and Plan of Merger, dated as of March 25, 2021 (as it may be amended from time to time, the “merger agreement”), among MSG Entertainment, MSG Networks and Broadway Sub Inc., a Delaware corporation and direct wholly-owned subsidiary of MSG Entertainment (“Merger Sub”), pursuant to which Merger Sub will be merged with and into MSG Networks (the “merger”), with MSG Networks surviving the merger as a direct wholly-owned subsidiary of MSG Entertainment. See the section entitled “The Merger Agreement” beginning on page 135 for more information. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A and incorporated herein by reference.

Pursuant to the merger agreement, at the effective time of the merger (the “effective time”), (i) each share of Class A common stock, par value $0.01 per share, of MSG Networks (“MSGN Class A common stock”) issued and outstanding immediately prior to the effective time will be automatically converted into a number of shares of Class A common stock, par value $0.01 per share, of MSG Entertainment (“MSGE Class A common stock”) such that each holder of record of shares of MSGN Class A common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class A common stock equal to the total number of shares of MSGN Class A common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share and (ii) each share of Class B common stock, par value $0.01 per share, of MSG Networks (“MSGN Class B common stock” and, together with MSGN Class A common stock, “MSGN common stock”) issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive a number of shares of Class B common stock, par value $0.01 per share, of MSG Entertainment (“MSGE Class B common stock” and, together with MSGE Class A common stock, “MSGE common stock”) such that each holder of record of shares of MSGN Class B common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class B common stock equal to the total number of shares of MSGN Class B common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share, in each case except for shares held by MSG Entertainment, Merger Sub or any of the subsidiaries of MSG Entertainment (the “MSGE subsidiaries”) or MSG Networks or any of the subsidiaries of MSG Networks (the “MSGN subsidiaries”) as treasury stock (in each case not held on behalf of third parties), which we refer to as the “merger consideration.” MSG Entertainment stockholders will continue to own their existing shares of MSGE common stock. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

This joint proxy statement/prospectus serves as the proxy statement through which MSG Entertainment and MSG Networks will provide their respective stockholders with important information regarding their respective special meetings, the merger and the other transactions contemplated by the merger agreement and solicit proxies to obtain the necessary stockholder approvals for the issuance of MSGE common stock

 

1

(in the case of MSG Entertainment) and the adoption of the merger agreement (in the case of MSG Networks). It also serves as the prospectus by which MSG Entertainment will offer and issue shares of its common stock as merger consideration.

The merger cannot be completed unless, among other things, MSG Entertainment stockholders and MSG Networks stockholders approve the respective proposals to authorize the issuance of MSGE common stock as merger consideration, in the case of MSG Entertainment, and to adopt the merger agreement, in the case of MSG Networks.

MSG Entertainment and MSG Networks will hold separate special meetings to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the special meetings of the stockholders of MSG Entertainment and MSG Networks, and you should read it carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending your respective special meeting. Your vote is important. We encourage you to vote as soon as possible.

 

Q:	Why did the MSGE board and the MSGN board form special committees of independent directors?

 

A:

Certain of MSG Entertainment’s and MSG Networks’ directors, officers and employees have interests in the merger that are different from, or in addition to, the interests of the MSG Entertainment stockholders and MSG Networks stockholders, respectively. MSG Entertainment and MSG Networks are under common control by certain members of the Dolan family, including trusts for their benefit, that have formed a “group” for purposes of Section 13(d) of the Exchange Act (collectively, the “Dolan family group”), who own all of the outstanding MSGE Class B common stock and MSGN Class B common stock, which account for approximately 70.7% of the total voting power of MSG Entertainment and approximately 76.9% of the voting power of MSG Networks, respectively, as of May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021). Certain of MSG Entertainment’s and MSG Networks’ directors and officers are members of the Dolan family group, including members of the Dolan family committee, which has authority with respect to voting matters for the Dolan family group. In addition, certain individuals serve as directors and/or officers of both MSG Entertainment and MSG Networks—including, with respect to the directors, those elected by both the holders of Class A common stock and Class B common stock.

The board of directors of MSG Entertainment (the “MSGE board”) established a special committee, consisting solely of independent and disinterested directors of MSG Entertainment (the “MSGE special committee”), to evaluate and negotiate the terms of the combination on behalf of the unaffiliated stockholders of MSG Entertainment, with the assistance of its independent legal and financial advisors. The board of directors of MSG Networks (the “MSGN board”) also established a special committee, consisting solely of independent and disinterested directors of MSG Networks (the “MSGN special committee”), to evaluate and negotiate the terms of the combination on behalf of the unaffiliated stockholders of MSG Networks, with the assistance of its independent legal and financial advisors.

As described more fully in the section entitled “The Merger—Background of the Merger,” the MSGE board and the MSGN board each agreed that any potential business combination transaction between MSG Entertainment and MSG Networks would be subject to the evaluation and negotiation by, and approval and recommendation of, the MSGE special committee and the MSGN special committee.

 

Q:	What is the strategic rationale for combining MSG Entertainment and MSG Networks at this time?

 

A:

The MSGE special committee and the MSGN special committee both believe that, based on the current and prospective economic climate, combining MSG Entertainment and MSG Networks creates a leading entertainment and media company that, because of the strategic fit of the businesses, would be well positioned to create long-term stockholder value.

In evaluating the proposed merger, the MSGE special committee and the MSGN special committee considered additional factors that weighed in favor of the merger, as well as risks and other potentially

 

2

negative factors concerning the merger. See the sections entitled “The Merger—MSG Entertainment’s Reasons for the Merger; Recommendation of the MSGE Special Committee and Board of Directors” and “The Merger—MSG Networks’ Reasons for the Merger; Recommendation of the MSGN Special Committee and Board of Directors,” beginning on pages 69 and 95, respectively, for more information.

 

Q:	What will MSG Networks stockholders receive in the merger?

 

A:

If the merger is completed, (i) each share of MSGN Class A common stock issued and outstanding immediately prior to the effective time will be automatically converted into a number of shares of MSGE Class A common stock such that each holder of record of shares of MSGN Class A common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class A common stock equal to the number of shares of MSGN Class A common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share and (ii) each share of MSGN Class B common stock issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive a number of shares of MSGE Class B common stock such that each holder of record of shares of MSGN Class B common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class B common stock equal to the total number of shares of MSGN Class B common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share, in each case except for shares held by MSG Entertainment, Merger Sub or any of the MSGE subsidiaries or MSG Networks or any of the MSGN subsidiaries as treasury stock (in each case not held on behalf of third parties). Because the aggregate number of shares of MSGE common stock that each MSG Networks stockholder of record will receive as merger consideration will be rounded up to the next whole number, MSG Networks stockholders of record will not receive any fractional shares of MSGE common stock in the merger. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

 

Q:	What will happen to outstanding MSG Networks equity awards in the merger?

 

A:

Stock Options. Each outstanding and unexercised stock option to purchase MSGN Class A common stock (a “MSGN stock option”), whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time will, as of the effective time, be assumed by MSG Entertainment and converted into a stock option to purchase MSGE common stock (a “MSGE stock option”), to purchase (i) such number of shares of MSGE common stock (rounded down to the nearest whole share) equal to the product obtained by multiplying (A) the total number of shares of MSGN Class A common stock subject to such MSGN stock option immediately prior to the effective time by (B) the exchange ratio of 0.172, (ii) at a per-share exercise price (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (A) the exercise price per share of MSGN Class A common stock at which such MSGN stock option was exercisable immediately prior to the effective time by (B) the exchange ratio of 0.172; provided that for each such MSGN stock option subject to performance vesting conditions that is outstanding on the date of the merger agreement and that remains outstanding at the effective time, (x) the number of shares of MSGN Class A common stock used in clause (i) (A) of this sentence shall be equal to the number of shares of MSGN Class A common stock that would be subject to such MSGN stock option assuming the performance conditions applicable thereto were achieved at 100% of target and (y) each such MSGN stock option shall convert to an MSGE stock option with time-based vesting conditions for the remainder of the applicable performance period. Except as set forth in this paragraph, each MSGE stock option will otherwise remain subject to the same terms, conditions and vesting requirements as were applicable to the MSGN stock option immediately prior to the effective time. For a full description of the treatment of MSGN stock options, see the section entitled “The Merger—Interests of MSG Networks’ Directors, Officers and Employees in the Merger—Treatment of MSG Networks Equity Awards.”

Restricted Stock Unit Awards. Each restricted stock unit award corresponding to shares of MSGN Class A common stock, which award is subject to restrictions on vesting or settlement based on performance and/or continuing service (a “MSGN RSU”), whether vested or unvested, that is outstanding immediately prior to

 

3

the effective time will, as of the effective time, be assumed by MSG Entertainment and converted into a restricted stock unit award corresponding to shares of MSGE common stock, which award is subject to restrictions on vesting or settlement based on performance and/or continuing service (a “MSGE RSU”). The number of MSGE RSUs received in exchange for each MSGN RSU will be determined by multiplying (i) the total number of shares of MSGN Class A common stock subject to such MSGN RSU immediately prior to the effective time by (ii) 0.172; provided that for each MSGN RSU subject to performance vesting conditions that is outstanding on the date of the merger agreement and that remains outstanding at the effective time, (x) the number of shares of MSGN Class A common stock used in clause (i) of this sentence shall be equal to the number of shares of MSGN Class A common stock that would be subject to such MSGN RSU award assuming the performance conditions applicable thereto were achieved at 100% of target and (y) each such MSGN RSU shall convert to an MSGE RSU with time-based vesting conditions for the remainder of the applicable performance period. Except as set forth in this paragraph, each MSGE RSU will otherwise remain subject to the same terms, conditions and vesting requirements as were applicable to the MSGN RSU immediately prior to the effective time. For a full description of the treatment of MSGN RSUs, see the section entitled “The Merger—Interests of MSG Networks’ Directors, Officers and Employees in the Merger—Treatment of MSG Networks Equity Awards.”

 

Q:	If I am an MSG Networks stockholder, how will I receive the merger consideration to which I am entitled?

 

A:

As promptly as practicable after the effective time of the merger, the exchange agent will send to you or your brokerage firm, bank, broker-dealer or other similar organization a letter of transmittal and instructions relating to your receipt of the merger consideration. After receiving proper documentation from you or your brokerage firm, bank, broker-dealer or other similar organization, the exchange agent will send the MSGE common stock that you are entitled to receive pursuant to the merger agreement (in either certificated or book-entry form, as applicable), along with a check in an amount equal to the cash payable, if any, for any dividends and other distributions on the shares of MSGN common stock issuable to you in respect of your shares, without interest.

For additional information about the exchange of shares of MSGN common stock for shares of MSGE common stock, see the section entitled “The Merger—Exchange of Shares in the Merger” beginning on page 130.

 

Q:	What is the value of the merger consideration?

 

A:

The value of the merger consideration may fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value of MSGE Class A common stock. In the merger, MSG Networks stockholders of record will receive the fixed amount of shares of MSGE Class A common stock or MSGE Class B common stock, as applicable, equal to such number of shares of MSGN Class A common stock or MSGN Class B common stock, respectively, held immediately prior to the effective time, multiplied by 0.172, with such number rounded up to the next whole share of MSGE common stock. Any fluctuation in the market price of MSGE Class A common stock after the date of this joint proxy statement/prospectus will change the value of the shares of MSGE common stock that MSG Networks stockholders will receive at the effective time.

Based on the closing price of MSGE Class A common stock on the New York Stock Exchange (“NYSE”) on March 10, 2021, the last full trading day before a press report speculated on a potential transaction between MSG Entertainment and MSG Networks, the exchange ratio represents approximately $19.95 in value for each share of MSGN common stock, and based on the closing price on March 25, 2021, the last full trading day before the public announcement of the signing of the merger agreement, the exchange ratio represents approximately $16.16 in value for each share of MSGN common stock. Based on the closing price of MSGE common stock on the NYSE on May 26, 2021, the latest practicable date before the date of this joint proxy statement/prospectus, the 0.172 exchange ratio represented approximately $15.30 in value for each share of MSGN common stock. We urge you to obtain current market quotations of MSGE common stock and MSGN common stock.

 

4

Q:	What will happen to MSGE common stock in the merger?

 

A:	MSG Entertainment stockholders will not receive any merger consideration as a result of the merger and will continue to own their existing shares of MSGE common stock.

 

Q:	What percentage of MSG Entertainment’s common stock will MSG Networks stockholders own following the merger?

 

A:	Based on the estimated number of shares of MSGN common stock and MSGE common stock outstanding on May 26, 2021, MSG Entertainment and MSG Networks estimate that, upon completion of the merger, former MSG Networks stockholders will own approximately 28.9% of outstanding MSGE common stock.

 

MSG Entertainment and MSG Networks estimate that, based on the estimated number of shares of MSGN common stock and MSGE common stock outstanding on May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021), the Dolan family group’s ownership and voting power at MSG Entertainment will increase from approximately 21.3% of the outstanding MSGE common stock and approximately 70.7% of the total voting power prior to the transaction to approximately 23.6% of the outstanding MSGE common stock and approximately 72.7% of the total voting power upon completion of the merger.

 

Q:	When and where will the special meetings be held?

 

A:

The MSGE special meeting will be held at the J.P. Morgan Club at the Madison Square Garden Arena, located on Seventh Avenue between West 31st Street and West 33rd Street on July 8, 2021 at 10:00 a.m. Eastern Time. The MSGN special meeting will be held at the J.P. Morgan Club at the Madison Square Garden Arena, located on Seventh Avenue between West 31st Street and West 33rd Street on July 8, 2021 at 11:30 a.m. Eastern Time.

 

Q:	Who is entitled to vote at the special meetings?

 

A:

Only stockholders of record of MSGE common stock at the close of business on June 14, 2021 are entitled to vote at the MSGE special meeting and any adjournment or postponement of the MSGE special meeting. Only stockholders of record of MSGN common stock at the close of business on June 14, 2021 are entitled to vote at the MSGN special meeting and any adjournment or postponement of the MSGN special meeting.

 

Q:	How can I attend the special meetings?

 

A:

Admission Ticket. An admission ticket is required if you plan to attend the MSGE special meeting or the MSGN special meeting in person. To be admitted to the MSGE special meeting or MSGN special meeting, you must have been a stockholder of record at the close of business on the record date of June 14, 2021 or be the legal proxy holder or qualified representative of such stockholder of MSG Entertainment or MSG Networks, respectively. You must bring your admission ticket and a valid government-issued photo ID (federal, state or local), such as a driver’s license or passport. Persons without an admission ticket and proper identification will not be permitted to attend the special meetings. Registration will begin at 9:00 a.m. Eastern Time on the date of the special meetings for the MSGE special meeting and 10:30 a.m. Eastern Time for the MSGN special meeting. We encourage you to arrive early to ensure plenty of time to complete the registration process before the applicable meeting begins.

Your proxy card or a legal proxy is not an admission ticket. To obtain an admission ticket, go to www.proxyvote.com or call 1-844-318-0137 (toll-free) or 925-331-6070 (international). You will need to enter your 16-digit control number, which can be found on your voting instruction form or proxy card. You may also request an admission ticket by calling the telephone number on your voting instruction form or proxy card. The deadline to obtain an admission ticket is 5:00 p.m. Eastern Time on July 2, 2021. If you have questions about admission to the MSGE special meeting or MSGN special meeting, please call 1-844-318-0137 (toll-free) or 925-331-6070 (international).

 

5

If you plan to attend both special meetings, you must obtain an admission ticket for each of the MSGE special meeting and the MSGN special meeting. Your admission ticket to the MSGE special meeting will not admit you to the MSGN special meeting, and vice versa.

Please note that you will need your admission ticket to be admitted to the MSGE special meeting and MSGN special meeting whether or not you vote before or at the meeting, and regardless of whether or not you are a registered or beneficial stockholder. If you are attending the meeting as a proxy or qualified representative for a stockholder, you will need to bring your legal proxy or authorization letter in addition to your admission ticket and government-issued photo ID.

COVID-19 safety protocols. In order to attend the MSGE special meeting and/or the MSGN special meeting, you will need to present one of three options for entry: proof of full COVID-19 vaccination at least 14 days prior to the special meetings, a negative antigen COVID-19 test taken within 6 hours of the applicable special meeting, or a negative PCR COVID-19 test taken within 72 hours of the applicable special meeting, in each case with a government-issued photo ID matching the name on your documentation and the name on your admission ticket. Upon arrival, in addition to providing the foregoing documentation, you will complete a health screening that includes a contactless temperature check that must register below 100.4 degrees. Guests that do not provide proof of full vaccination are required to maintain at least a six-foot distance from other attendees and wear a face covering while attending the MSGE special meeting and/or the MSGN special meeting. We are following evolving guidance and protocols issued by Centers for Disease Control, New York State and New York City for COVID-19 safety, which may change between the date of this joint proxy statement/prospectus and the actual date of the MSGE special meeting and/or MSGN special meeting. Whichever protocols are required on the date of the special meetings will be followed, which may be different than the protocols stated herein. Any updates will be posted to MSG Entertainment’s website at http://www.investor.msgentertainment.com and MSG Networks’ website at http://www.investor.msgnetworks.com.

Legal proxy. Stockholders must provide advance written notice to MSG Entertainment or MSG Networks, as applicable, if they intend to have a legal proxy (other than the persons appointed as proxies on the MSG Entertainment and MSG Networks proxy cards) or a qualified representative attend the MSGE special meeting or MSGN special meeting on their behalf. The notice must include the name and address of the legal proxy or qualified representative and must be received by 5:00 p.m. Eastern Time on June 30, 2021 in order to allow enough time for the issuance of an admission ticket to such person. Notices for the MSGE special meeting should be directed to Madison Square Garden Entertainment Corp., Attention: Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121 and notices for the MSGN special meeting should be directed to MSG Networks Inc., Attention: Corporate Secretary, 11 Pennsylvania Plaza, New York, NY 10001.

Security. Please note that cameras, video and audio recording equipment and other similar electronic devices, as well as large bags (including backpacks, handbags and briefcases) and packages, will need to be checked at the door. Additionally, MSG Entertainment and/or MSG Networks may impose additional restrictions on items that must be checked at the door as well as on the conduct of the meeting. To enhance the safety of all persons, attendees and bags will be subject to screening, including the use of x-ray screening where available, and may also be subject to additional security inspections.

 

Q:	What proposals will be considered at the special meetings?

 

A:

At the MSGE special meeting, the MSG Entertainment stockholders will be asked to consider and vote on (i) a proposal to approve the issuance of MSGE common stock (the “MSGE share issuance”) as consideration in the merger (the “MSGE share issuance proposal”) and (ii) a proposal to adjourn the MSGE special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGE share issuance proposal (the “MSGE adjournment proposal”). MSG Entertainment will transact no other business at the MSGE special meeting except such business as may properly be brought before the MSGE special meeting or any adjournment or postponement thereof.

 

6

At the MSGN special meeting, MSG Networks stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement (the “MSGN merger proposal”), (ii) a non-binding advisory proposal to approve certain compensation that may be paid or become payable to MSG Networks’ named executive officers that is based on or otherwise relates to the merger contemplated by the merger agreement (the “non-binding compensation advisory proposal”) and (iii) a proposal to adjourn the MSGN special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGN merger proposal (the “MSGN adjournment proposal”). MSG Networks will transact no other business at the MSGN special meeting except such business as may properly be brought before the MSGN special meeting or any adjournment or postponement thereof.

 

Q:	How does the MSGE board of directors recommend that I vote?

 

A:

After careful consideration, the MSGE special committee, consisting solely of independent and disinterested directors of MSG Entertainment, unanimously (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of MSG Entertainment and (2) recommended that the MSGE board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Entertainment stockholders approve the share issuance. On March 25, 2021, at a duly convened meeting of the MSGE board, the MSGE board unanimously, in reliance on the recommendation of the MSGE special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment, (2) approved the merger agreement and the transactions contemplated thereby and (3) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share issuance and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders.

The MSGE board, in reliance on the unanimous recommendation of the MSGE special committee, unanimously recommends that MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal.

 

Q:	How does the MSGN board of directors recommend that I vote?

 

A:

After careful consideration, the MSGN special committee, consisting solely of independent and disinterested directors of MSG Networks unanimously (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) recommended that the MSGN board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Networks stockholders adopt the merger agreement. On March 25, 2021, at a duly convened meeting of the MSGN board, the MSGN board unanimously, in reliance on the recommendation of the MSGN special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) resolved to recommend that MSG Networks stockholders adopt the merger agreement and directed that the merger agreement be submitted for approval by the MSG Networks stockholders. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

The MSGN board, in reliance on the unanimous recommendation of the MSGN special committee, unanimously recommends that MSG Networks stockholders vote “FOR” each of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal.

 

7

Q:	Are any MSG Entertainment stockholders already committed to vote in favor of the proposals?

 

A:

Yes. In connection with the execution of the merger agreement, the holders of all outstanding shares of MSGE Class B common stock entered into a voting and support agreement with MSG Networks (the “MSGE voting agreement”), a copy of which is attached as Annex B to this joint proxy statement/prospectus, whereby such stockholders will be obligated to vote in favor of the MSGE share issuance proposal and the MSGE adjournment proposal, among other things. See the section entitled “The Voting Agreements” beginning on page 154. The holders of all outstanding shares of MSGE Class B common stock (the “principal MSGE stockholders”), who are all members of the Dolan family group, collectively own 70.7% of the total voting power of the outstanding MSGE common stock as of May 17, 2021. Even though a special meeting is required to be held and all MSG Entertainment stockholders of record on the record date have a right to vote on the proposals presented at the MSGE special meeting, the principal MSGE stockholders’ shares of MSGE common stock to be voted in favor of the MSGE share issuance proposal and the MSGE adjournment proposal will be sufficient to approve the proposals.

 

Q:	Are any MSG Networks stockholders already committed to vote in favor of the proposals?

 

A:

Yes. In connection with the execution of the merger agreement, the holders of all outstanding shares of MSGN Class B common stock entered into a voting and support agreement with MSG Entertainment (the “MSGN voting agreement,” and together with the MSGE voting agreement, the “voting agreements”), a copy of which is attached as Annex C to this joint proxy statement/prospectus, whereby such stockholders will be obligated to vote in favor of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal, among other things. See the section entitled “The Voting Agreements” beginning on page 154. The holders of all outstanding shares of MSGN Class B common stock (the “principal MSGN stockholders”), who are all members of the Dolan family group, collectively own 76.9% of the total voting power of the outstanding MSGN common stock as of May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021). Even though a special meeting is required to be held and all MSG Networks stockholders of record on the record date have a right to vote on the proposals presented at the MSGN special meeting, the principal MSGN stockholders’ shares of MSGN common stock to be voted in favor of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal will be sufficient to approve the proposals.

 

Q:	How do I vote?

 

A:

If you are a stockholder of record of MSG Entertainment as of the close of business on the record date for the MSGE special meeting or a stockholder of record of MSG Networks as of the close of business on the record date for the MSGN special meeting, you may vote at the meeting or by legal proxy at the special meeting or, to ensure your shares are represented at the meeting, you may vote in advance of the MSGE special meeting by:

 

•

accessing the internet website specified on your proxy card;

 

•

calling the toll-free number specified on your proxy card; or

 

•

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If you hold shares of MSGE common stock or shares of MSGN common stock in the name of a bank or broker, please follow the voting instructions provided by your bank or broker to ensure that your shares are represented at your special meeting. Even if you plan to attend the MSGE special meeting or MSGN special meeting, as applicable, you are strongly recommended to vote your shares in advance so that your vote will be counted if you later decide not to attend the meeting.

 

Q:	What constitutes a quorum?

 

A:	MSG Entertainment stockholders. The presence, in person or by proxy, of the holders of a majority of the votes represented by the outstanding shares of MSGE common stock entitled to vote at the MSGE special

 

8

meeting will constitute a quorum for the transaction of business at the MSGE special meeting. In addition, a majority of the votes represented by the outstanding shares of MSGE Class B common stock will constitute a quorum for the authorization of the issuance of MSGE Class B common stock in connection with the separate, additional vote on the MSGE share issuance proposal.

Shares of MSGE common stock represented at the MSGE meeting and entitled to vote but not voted, including shares for which a stockholder directs an “abstention” from voting and broker non-votes (shares held by banks, brokerage firms or nominees that are present in person or by proxy at the MSGE special meeting but with respect to which the broker or other stockholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will be counted as present for purposes of establishing a quorum.

Shares of MSGE common stock held in treasury will not be included in the calculation of the number of votes represented by the shares of MSGE common stock entitled to vote at the meeting for purposes of determining whether a quorum is present. Pursuant to the MSGE voting agreement, all holders of MSGE Class B common stock are obligated to cause all of the shares that they are entitled to vote to be counted as present at the MSGE special meeting for purposes of calculating a quorum. Such shares are sufficient to constitute a quorum.

MSG Networks stockholders. The presence, in person or by proxy, of the holders of a majority of the votes represented by the outstanding shares of MSGN common stock entitled to vote at the MSGN special meeting will constitute a quorum for the transaction of business at the MSGN special meeting.

Shares of MSGN common stock represented at the MSGN special meeting but not voted, including shares for which a stockholder directs an “abstention” from voting and broker non-votes (shares held by banks, brokerage firms or nominees that are present in person or by proxy at the MSGN special meeting but with respect to which the broker or other stockholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will be counted as present for purposes of establishing a quorum.

Shares of MSGN common stock held in treasury will not be included in the calculation of the number of votes represented by the shares of MSGN common stock entitled to vote at the meeting for purposes of determining whether a quorum is present. Pursuant to the MSGN voting agreement, all holders of MSGN Class B common stock are obligated to cause all of the shares that they are entitled to vote to be counted as present at the MSGN special meeting for purposes of calculating a quorum. Such shares are sufficient to constitute a quorum.

 

Q:	What vote is required to approve each proposal?

 

A:

MSG Entertainment stockholders. Approval of the MSGE share issuance proposal requires (i) the affirmative vote of the holders of a majority of the total votes of the shares of MSGE Class A common stock and MSGE Class B common stock, voting together as a single class, cast in person or by proxy, at the MSGE special meeting to approve the share issuance pursuant to Article I, Section 6 of the Amended By-Laws of MSG Entertainment (the “MSGE bylaws”) and as required by Section 312.03 of the NYSE Listed Company Manual, and (ii) in connection with the issuance of MSGE Class B common stock, the affirmative vote of the holders of not less than 66 2/3% of the outstanding shares of MSGE Class B common stock, voting separately as a class, pursuant to Article Fourth, Section A.III (a) of the Amended and Restated Certificate of Incorporation of MSG Entertainment (the “MSGE charter”). Approval of the MSGE adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGE Class A common stock and MSGE Class B common stock, voting together as a single class, cast in person or by proxy, at the MSGE special meeting pursuant to Article I, Section 6 of the MSGE bylaws.

MSG Networks stockholders. Approval of the MSGN merger proposal requires the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of MSGN Class A common stock

 

9

and MSGN Class B common stock, voting together as a single class, entitled to vote on such matter, at the MSGN special meeting pursuant to Section 251(c) of the General Corporation Law of the State of Delaware (the “DGCL”). Approval of each of the non-binding compensation advisory proposal and the MSGN adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, cast in person or by proxy, at the MSGN special meeting pursuant to Article I, Section 6 of the Amended By-Laws of MSG Networks (the “MSGN bylaws”).

 

Q:	How many votes do I have?

 

A:

MSG Entertainment stockholders. You are entitled to one vote for each share of MSGE Class A common stock and ten votes for each shares of MSGE Class B common stock that you owned as of the close of business on the record date. As of the close of business on June 3, 2021 (the latest practicable date prior to the record date), there were 19,618,324 shares of MSGE Class A common stock and 4,529,517 shares of MSGE Class B common stock outstanding and entitled to vote at the MSGE special meeting.

MSG Networks stockholders. You are entitled to one vote for each share of MSGN Class A common stock and ten votes for each share of MSGN Class B common stock that you owned as of the close of business on the record date. As of the close of business on June 3, 2021 (the latest practicable date prior to the record date), there were 43,459,880 shares of MSGN Class A common stock and 13,588,555 shares of MSGN Class B common stock outstanding and entitled to vote at the MSGN special meeting.

 

Q:	What will happen if I fail to vote or abstain from voting?

 

A:

MSG Entertainment stockholders. If you are a holder of MSGE Class A common stock and fail to vote or fail to instruct your broker or nominee to vote, or abstain from voting, it will have no effect on the outcome of the MSGE share issuance proposal, assuming a quorum is present, as a failure to vote or a vote to abstain are not considered votes cast. If you are a holder of MSGE Class B common stock and fail to vote, or abstain from voting, it will have (i) no effect on the outcome of the vote of the holders of a majority of the total votes of shares of MSGE common stock cast, voting together as a single class, with respect to the MSGE share issuance proposal, assuming a quorum is present, and (ii) the same effect as a vote against the MSGE share issuance proposal in the separate and additional vote of MSGE Class B common stock holders. If you are a holder of MSGE common stock and fail to vote or fail to instruct your broker or nominee to vote, or abstain from voting, it will have no effect on the outcome of the MSGE adjournment proposal, assuming a quorum is present, as a failure to vote or a vote to abstain are not considered votes cast. Even though a special meeting is required to be held and all MSG Entertainment stockholders of record on the record date have a right to vote on the proposals presented at the MSGE special meeting, the principal MSGE stockholders’ shares of MSGE common stock to be voted in favor of the MSGE share issuance proposal and the MSGE adjournment proposal pursuant to the MSGE voting agreement will be sufficient to approve the proposals.

MSG Networks stockholders. If you are an MSG Networks stockholder and fail to vote or fail to instruct your broker or nominee to vote, or abstain from voting, (i) it will have the same effect as a vote against the MSGN merger proposal pursuant to Delaware law, which requires that the MSGN merger proposal be approved by a majority of the voting power of the outstanding shares of MSGN common stock entitled to vote, and (ii) it will have no effect on the outcome of the MSGN adjournment proposal or the non-binding compensation advisory proposal, assuming a quorum is present, as a failure to vote or a vote to abstain are not considered votes cast. Even though a special meeting is required to be held and all MSG Networks stockholders of record on the record date have a right to vote on the proposals presented at the MSGN special meeting, the principal MSGN stockholders’ shares of MSGN common stock to be voted in favor of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal pursuant to the MSGN voting agreement will be sufficient to approve the proposals.

 

10

Q:	If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?

 

A:

No. If you hold your shares in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are a beneficial owner of shares held in “street name,” and your brokerage firm, bank, broker-dealer or other similar organization cannot vote your shares on any proposal on which it does not have discretionary authority to vote.

If you are a beneficial owner whose shares are held of record by a brokerage firm, bank, broker-dealer or other similar organization, you must instruct them how to vote your shares. Please use the voting instruction form provided to you by your brokerage firm, bank, broker-dealer or other similar organization to direct them how to vote your shares. If you do not provide voting instructions, your shares will not be voted on—and will have no effect on— (i) at the MSGE special meeting, the MSGE share issuance proposal or the MSGE adjournment proposal and (ii) at the MSGN special meeting, the non-binding compensation advisory proposal or the MSGN adjournment proposal. This is called a “broker non-vote.” Any broker non-vote with respect to the MSGN merger proposal will have the same effect as a vote AGAINST the MSGN merger proposal. In the event of a “broker non-vote,” the brokerage firm, bank, broker-dealer or other similar organization can register your shares as being present at the special meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under applicable rules.

Please note that you may not vote shares held in street name by returning a proxy card directly to MSG Entertainment or MSG Networks or by voting in person at your special meeting unless you provide a “legal proxy,” which you must obtain from your brokerage firm, bank, broker-dealer or other similar organization, who is considered the stockholder of record for purposes of voting at your special meeting.

 

Q:	What will happen if I return my proxy card without indicating how to vote?

 

A:	If you sign and return your proxy card without indicating how to vote on any particular proposal, the MSGE common stock or MSGN common stock represented by your proxy card will be voted as the MSGE board or MSGN board, as applicable, recommends, which is:

 

•

In connection with the MSGE special meeting:

 

•

FOR the MSGE share issuance proposal; and

 

•

FOR the MSGE adjournment proposal;

 

•

In connection with the MSGN special meeting:

 

•

FOR the MSGN merger proposal;

 

•

FOR the non-binding compensation advisory proposal; and

 

•

FOR the MSGN adjournment proposal.

 

Q:	What does it mean if I receive multiple proxy cards?

 

A:

Your shares may be registered in more than one account, such as brokerage accounts and 401 (k) accounts. It is important that you complete, sign, date and return each proxy card or voting instruction form you receive or vote using the telephone or the internet as described in the instructions included with your proxy card(s) or voting instruction form(s).

 

Q:	Can I change my vote after having returned a proxy or voting instruction card?

 

A:	Yes. You can change your vote at any time before your proxy is voted at the applicable special meeting in one of three ways:

 

•

re-voting your shares by internet or by telephone by following the instructions on the proxy card (only your latest internet or telephone proxy submitted prior to the annual meeting will be counted);

 

11

•

signing and returning a valid proxy card or voting instruction form with a later date;

 

•

delivering a written notice of revocation; or

 

•

if you are a holder of record, you can attend your special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.

If you choose to deliver a written notice of revocation, you must submit your notice of revocation or your new proxy to the Corporate Secretary of MSG Entertainment (the “MSGE Corporate Secretary”) or Corporate Secretary of MSG Networks (the “MSGN Corporate Secretary”), as applicable. If your shares are held in street name by your brokerage firm, bank, broker-dealer or other similar organization, you should contact such organization to change your vote or revoke your proxy.

 

Q:	Should MSG Networks stockholders send in stock certificates or other evidence of ownership now?

 

A:

No. After the merger is completed, you will be sent a letter of transmittal with detailed written instructions for exchanging your shares of MSGN common stock for the merger consideration. If your shares of MSGN common stock are held in “street name” by your brokerage firm, bank, broker-dealer or other similar organization, you may receive instructions from such organization as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the merger consideration. Do not send in your certificates now.

 

Q:	What happens if I transfer my shares of MSGE or MSGN common stock before the special meeting?

 

A:

The record dates for the MSGE and MSGN special meetings are earlier than both the date of the special meetings and the date that the merger is expected to be completed. If you transfer your shares of MSGE common stock or MSGN common stock after the applicable record date but before the applicable special meeting, you will retain your right to vote at the applicable special meeting. However, if you are an MSG Networks stockholder, you will have transferred the right to receive the merger consideration in the merger. In order to receive the merger consideration, you must hold your shares through the effective date of the merger.

 

Q:	What if I hold shares in both MSG Entertainment and MSG Networks?

 

A:

If you are a stockholder of both MSG Entertainment and MSG Networks, you will receive two separate packages of proxy materials. A vote cast as an MSG Entertainment stockholder will not count as a vote cast as an MSG Networks stockholder, and a vote cast as an MSG Networks stockholder will not count as a vote cast as an MSG Entertainment stockholder. Therefore, please separately submit a proxy for your shares of MSGE common stock and for your shares of MSGN common stock. If you plan to attend both special meetings, you must obtain an admission ticket for each of the MSGE special meeting and the MSGN special meeting. Your admission ticket to the MSGE special meeting will not admit you to the MSGN special meeting, and vice versa.

 

Q:	Who is the inspector of election?

 

A:

The MSGE board has appointed a representative of Broadridge Financial Solutions, Inc. to act as the inspector of election at the MSGE special meeting. The MSGN board has also appointed a representative of Broadridge Financial Solutions, Inc. to act as the inspector of election at the MSGN special meeting.

 

Q:	Where can I find the voting results of the special meeting?

 

A:	The preliminary voting results will be announced at the MSGE special meeting and the MSGN special meeting, respectively, if available at such time. In addition, within four business days following certification

 

12

of the final voting results, each of MSG Entertainment and MSG Networks will file the final voting results of its special meeting with the SEC set forth in a current report on Form 8-K.

 

Q:	What will happen if all of the proposals to be considered at the special meeting are not approved?

 

A:	Approval of the MSGE share issuance proposal by the MSG Entertainment stockholders and approval of the MSGN merger proposal by the MSG Networks stockholders are each conditions to the completion of the merger. As a result, if such approval is not obtained, the merger will not be completed.

The non-binding compensation advisory proposal is advisory and non-binding, and the merger is not conditioned or dependent upon the approval of the non-binding compensation advisory proposal. However, MSG Entertainment and MSG Networks value the opinions of MSG Networks stockholders and MSG Entertainment expects to consider the outcome of the vote, along with other relevant factors, when considering future executive compensation, assuming the merger is completed. The merger is not conditioned or dependent on approval of the MSGE adjournment proposal or the MSGN adjournment proposal.

Even though a special meeting is required to be held and all MSG Entertainment stockholders and MSG Networks stockholders of record on the record date have a right to vote on the proposals presented at the MSGE special meeting and MSGN special meeting, respectively, (i) the principal MSGE stockholders’ shares of MSGE common stock to be voted in favor of the MSGE share issuance proposal and the MSGE adjournment proposal will be sufficient to approve the proposals and (ii) the principal MSGN stockholders’ shares of MSGN common stock to be voted in favor of the MSGN merger proposal and the MSGN adjournment proposal will be sufficient to approve the proposals.

 

Q:	Are MSG Entertainment or MSG Networks stockholders entitled to appraisal rights?

 

A:

No.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as the merger, and to demand payment of the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Appraisal rights are not available in all circumstances, and exceptions to these rights are provided under the DGCL. Appraisal rights under the DGCL are described in further detail in “No Appraisal Rights” beginning on page 219.

MSG Entertainment stockholders. Under the DGCL, the holders of MSGE common stock are not entitled to any dissenters’ or appraisal rights in connection with the MSGE share issuance proposal. MSG Entertainment stockholders may vote against the MSGE share issuance proposal if they do not favor the merger.

MSG Networks stockholders. Under the DGCL, the holders of MSGN Class A common stock are not entitled to any dissenters’ or appraisal rights in connection with the merger. This is because the shares of MSGN Class A common stock are listed on the NYSE and the holders of shares of MSGN Class A common stock will receive in the merger only shares of MSGE Class A common stock, which will be listed on the NYSE.

Shares of MSGN Class B common stock are not listed on a national securities exchange, and holders of shares of MSGN Class B common stock will receive in the merger only shares of MSGE Class B common stock, which are also not listed on a national securities exchange or held of record by more than 2,000 holders. As a result, holders of MSGN Class B common stock are entitled to seek appraisal of their shares under the DGCL. However, for purposes of the merger, each holder of shares of MSGN Class B common stock has irrevocably and unconditionally waived, and agreed not to exercise, any rights of appraisal (including under Section 262 of the DGCL) or rights to dissent relating to the merger that such holder of shares of MSGN Class B common stock may directly or indirectly have by virtue of the ownership of shares

 

13

of MSGN Class B common stock, to the full extent permitted by law pursuant to the voting and support agreement as described in “The Voting Agreements” beginning on page 154.

 

Q:	What are the material U.S. federal income tax consequences of the merger to U.S. holders of MSGN common stock?

 

A:

For U.S. federal income tax purposes, the merger is intended to be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). As described further in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 148, each party’s obligation to effect the merger is conditioned on the receipt by such party from the other party of a required tax representation letter, although this condition would nevertheless not be satisfied if such receiving party’s counsel, due to a change in law, is unable to deliver an opinion based on such representation letters to the effect that for U.S. federal income tax purposes the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and such receiving party is unable to obtain such an opinion from an alternative tax counsel pursuant to the merger agreement. In addition, MSG Entertainment and MSG Networks expect to receive opinions from legal counsel that the merger will qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code at or prior to the time of the consummation of the merger. Generally, for U.S. federal income tax purposes, if you are a U.S. holder (as defined in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 156) of MSGN common stock, you will not recognize gain or loss.

Please carefully review the information set forth in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 156 for a more complete description of the material U.S. federal income tax consequences of the merger. The tax consequences to you of the merger will depend on your particular facts and circumstances. Please consult your own tax advisors as to the specific tax consequences to you of the merger.

 

Q:	What are the conditions to completion of the merger?

 

A:

In addition to the approval of the MSGE share issuance proposal by the MSG Entertainment stockholders and the approval of the MSGN merger proposal by the MSG Networks stockholders as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including regulatory clearance. For additional information on the regulatory clearance required to complete the merger, see the section entitled “The Merger—Regulatory Approvals Required for the Merger” beginning on page 130. For additional information on the conditions to completion of the merger, see the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 150.

 

Q:	What happens if the merger is not completed?

 

A:

If the merger is not completed, MSG Networks stockholders will not receive any consideration for their shares. Instead, MSG Networks will remain an independent public company, and shares of MSGN Class A common stock will continue to be independently listed and traded on the NYSE. Under certain circumstances, MSG Entertainment or MSG Networks may be required to pay the other party a termination fee in accordance with the merger agreement. The termination fees are described in more detail in the section entitled “The Merger Agreement—Expenses and Termination Fees” beginning on page 147.

 

Q:	Will I be paid any dividends in respect of my shares of MSGE common stock or MSGN common stock prior to the merger?

 

A:

Neither MSG Entertainment nor MSG Networks has historically paid dividends to its stockholders, and neither anticipates doing so in the foreseeable future. The merger agreement prohibits MSG Networks from declaring, setting aside or paying any dividends in respect of its capital stock without MSG Entertainment’s prior written consent before the earlier of the closing of the merger and the termination of the merger agreement in accordance with its terms.

 

14

Q:	When do you expect the merger to be completed?

 

A:

MSG Entertainment and MSG Networks are working to complete the merger as soon as reasonably practicable and expect to complete the merger in the third quarter of calendar year 2021. However, the merger is subject to regulatory clearances and other conditions, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. We cannot presently determine the length of time between the MSGE special meeting and the MSGN special meeting and the completion of the merger. If the merger is not completed by December 20, 2021, then either MSG Entertainment or MSG Networks may choose not to proceed with the merger by terminating the merger agreement.

 

Q:	What should I do now?

 

A:	Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes.

If you are a holder of record, for your shares to be represented at your special meeting:

 

•

you can attend the applicable special meeting in person;

 

•

you can vote through the internet or by telephone by following the instructions included in your proxy card; or

 

•

you can indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage-paid envelope.

If you hold your shares in street name, in order for your shares to be represented at your special meeting, you should instruct your brokerage firm, bank, broker-dealer or other similar organization as to how to vote your shares, following the directions from such organization provided to you.

 

Q:	Do I need to do anything with my shares of MSGN common stock now?

 

A:

If you are an MSG Networks stockholder, after the merger is completed, your shares of MSGN common stock will be converted into shares of MSGE common stock. You will receive instructions at that time regarding exchanging your shares for shares of MSGE common stock. You do not need to take any action at this time. Please do not send your MSG Networks stock certificates with your proxy card.

If you are an MSG Entertainment stockholder, you are not required to take any action with respect to your MSG Entertainment stock certificates. You will continue to hold your shares of MSGE common stock.

 

Q:	Are there any risks in the merger or MSGE share issuance that I should consider?

 

A:	Yes. There are risks associated with all business combinations, including the merger and the related MSGE share issuance. These risks are discussed in more detail in the section entitled “Risk Factors” beginning on page 34.

 

Q:	Who will solicit and pay the cost of soliciting proxies?

 

A:

MSG Entertainment has retained D.F. King & Co., Inc. (which we refer to as “D.F. King”) to assist in the solicitation process for a fee estimated not to exceed $20,000, as well as reasonable and documented out-of-pocket expenses. In addition, MSG Entertainment will reimburse brokers and other nominees for their expenses in forwarding solicitation material to beneficial owners. MSG Entertainment also has agreed to indemnify D.F. King against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).

 

15

MSG Networks has also retained D.F. King to assist in the solicitation process for a fee estimated not to exceed $20,000, as well as reasonable and documented out-of-pocket expenses. In addition, MSG Networks will reimburse brokers and other nominees for their expenses in forwarding solicitation material to beneficial owners. MSG Networks also has agreed to indemnify D.F. King against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).

 

Q:	What is householding and how does it affect me?

 

A:

The SEC permits companies to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if the applicable company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of MSGE common stock or MSGN common stock held through brokerage firms. If your family has multiple accounts holding MSGE common stock or MSGN common stock, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

Q:	Who can help answer my questions?

 

A:	MSG Entertainment or MSG Networks stockholders who have questions about the merger, the MSGE share issuance or the other matters to be voted on at the special meetings or desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:

 

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

26

 

27

 

28

 

29

 

30

 

31

 

32

 

33

RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 42 of this joint proxy statement/prospectus, MSG Entertainment stockholders should carefully consider the following risks in deciding whether to vote for the approval of the proposals, and MSG Networks stockholders should carefully consider the following risk factors in deciding whether to vote for the proposals. In addition, stockholders of MSG Entertainment and stockholders of MSG Networks should read and consider the risks associated with each of the businesses of MSG Entertainment and MSG Networks because these risks will relate to MSG Entertainment following the merger. These risks can be found in MSG Entertainment’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020, which is incorporated by reference into this joint proxy statement/prospectus, and MSG Networks’ Annual Report on Form 10-K for the fiscal year ended June 30, 2020, which is incorporated by reference into this joint proxy statement/prospectus. You should carefully read this entire joint proxy statement/prospectus and its annexes and the other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 221 of this joint proxy statement/prospectus.

Risks Related to the Merger

MSG Entertainment and MSG Networks May Fail to Consummate the Merger, and Uncertainties Related to the Consummation of the Merger May Have a Material Adverse Effect on Their Respective Businesses, Results of Operations and Financial Conditions and Negatively Impact the Price of Their Common Stock.

As previously discussed, the consummation of the merger is subject to certain conditions, including, without limitation: (i) adoption of the merger agreement by the holders of MSGN common stock; (ii) approval of the MSGE share issuance by the holders of MSGE common stock; and (iii) receipt of certain governmental and other approvals, including the expiration or termination of the waiting period under the HSR Act. The merger agreement also contains certain customary termination rights for MSG Entertainment and MSG Networks, including, without limitation, if the merger is not consummated on or before December 20, 2021.

The merger is expected to be completed during the third quarter of calendar year 2021, however, there is no assurance that the merger and the other transactions contemplated by the merger agreement will occur on the terms and timeline currently contemplated, or at all. If the proposed merger is not completed or the merger agreement is terminated, our respective ongoing businesses may be adversely affected and, without realizing any of the benefits of having completed the transaction, we would be subject to a number of risks, including the impact of: (i) adverse reactions from the financial markets, including negative impacts on the stock prices of MSGE Class A common stock and MSGN Class A common stock; (ii) negative reactions from our respective customers or other stakeholders; (iii) the payment of certain costs relating to the merger, whether or not the merger is completed; (iv) matters relating to completion of the merger, which will require substantial commitments of time and resources by our respective management that would otherwise have been devoted to day-to-day operations; and (v) litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against us to perform our obligations under the merger agreement. If the merger is not completed or is delayed, the risks described above may materialize and may adversely affect our businesses, results of operations and financial condition, financial results and stock price.

While the Merger Is Pending, MSG Entertainment and MSG Networks Will Be Subject to Business Uncertainties as Well as Contractual Restrictions Under the Merger Agreement That May Have an Adverse Effect on Their Respective Businesses.

The merger will occur only if stated conditions are met, many of which are outside of our control. In addition, each of MSG Entertainment and MSG Networks have rights to terminate the merger agreement under specified circumstances. Accordingly, there may be uncertainty regarding the completion of the merger. Uncertainty about

 

34

the effect of the transaction on our employees and business relationships may have an adverse effect on our business and, consequently, on MSG Entertainment following the completion of the merger. These uncertainties may impair our ability to retain and motivate key personnel until and after the completion of the merger.

In addition, the merger agreement contains customary covenants which restrict each of MSG Entertainment and MSG Networks, without the consent of the other party, from taking certain specified actions until the transaction closes or the merger agreement terminates. These restrictions may prevent MSG Entertainment and MSG Networks from pursuing otherwise attractive business opportunities that may arise prior to the completion of the merger or termination of the merger agreement.

MSG Entertainment and MSG Networks Will Incur Significant Transaction Costs in Connection With the Merger, Even if the Merger Is Not Consummated.

MSG Entertainment and MSG Networks expect to pay significant transaction costs in connection with the merger. These transaction costs include legal, accounting, tax and financial advisory expenses, SEC filing fees, printing expenses, mailing costs and other related charges. A portion of the transaction costs will be incurred regardless of whether the transaction is completed. In accordance with the merger agreement, each of MSG Entertainment and MSG Networks will generally pay their own costs and expenses in connection with the merger, whether or not the merger is completed. If the merger is not completed, MSG Entertainment and MSG Networks will have incurred substantial expenses for which no ultimate benefit will have been received by either company. In addition, the merger agreement contains certain termination rights for MSG Entertainment and MSG Networks, and under certain circumstances, MSG Entertainment may be required to pay a termination fee to MSG Networks of $21.2 million, or MSG Networks may be required to pay a termination fee to MSG Entertainment of $18.9 million.

MSG Entertainment and MSG Networks Are Subject to Lawsuits Relating to the Merger, and May Be Subject to Additional Lawsuits in the Future, Which May Impact the Timing of the Closing and Our Ability to Close the Merger and May Adversely Impact Our Businesses.

MSG Entertainment and MSG Networks and their directors, officers and controlling stockholders are, and may be subject to in the future, lawsuits relating to the merger. Litigation is very common in connection with the sale of public companies, regardless of whether the claims have any merit. One of the conditions to consummating the merger is that no order preventing or otherwise prohibiting the consummation of the merger shall have been issued by any court. Consequently, if any lawsuit challenging the merger is successful in obtaining an order preventing the consummation of the merger, that order may delay or prevent the merger from being completed. As of the filing of this joint proxy statement/prospectus on June 4, 2021, three complaints have been filed in connection with the merger by purported stockholders of MSG Networks in the U.S. District Court for the Southern District of New York. On May 7, 2021, a purported stockholder filed a complaint captioned Shiva Stein v. MSG Networks Inc. et al., 21-cv-04126. On May 21, 2021, another purported stockholder filed a complaint captioned Jiaming Wang v. MSG Networks Inc. et al., 21-cv-04578. On May 30, 2021, a third purported stockholder filed a complaint captioned Marc Waterman v. MSG Networks Inc., et al., 21-cv-04814. All three complaints are similar. Each complaint names MSG Networks and the MSGN board members as defendants and alleges, among other things, that the registration statement on Form S-4 filed by MSG Entertainment on May 7, 2021 in connection with the merger is materially incomplete and misleading in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaints seek, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose material information allegedly omitted from the registration statement, rescission of the merger agreement to the extent already implemented (or awarding of rescissory damages), damages, and an award of attorneys’ and experts’ fees.

On May 27, 2021, a complaint captioned Hollywood Firefighters’ Pension Fund et al. v. James Dolan, et al., was filed by purported stockholders of MSG Entertainment in the Delaware Court of Chancery against MSG Entertainment, the MSGE board, certain Dolan family stockholders and MSG Networks. The complaint purports to allege derivative claims on behalf of MSG Entertainment and claims on behalf of a putative class of MSG Entertainment stockholders concerning the proposed merger. Plaintiffs allege, among other things, that the

 

35

merger is a business combination with an interested stockholder that is not allowed under Section 203 of the DGCL, that the MSG Entertainment board members and majority stockholders violated their fiduciary duties in agreeing to the proposed merger, and that the disclosures herein relating to the merger are misleading or incomplete. Plaintiffs seek, among other relief, declaratory and injunctive relief enjoining the stockholder vote and consummation of the merger, and an award of damages in the event the transaction is consummated and plaintiffs’ attorneys’ fees.

Each of MSG Entertainment and MSG Networks believes that the allegations in the complaints are without merit. MSG Entertainment and MSG Networks have each also received books and records demands from purported stockholders. Additional lawsuits arising out of the merger may also be filed in the future. See the section entitled “The Merger—Litigation Relating to the Merger” for more information about litigation related to the merger that has been commenced prior to the date of this joint proxy statement/prospectus. The time and costs of defending against litigation relating to the merger, and the outcomes thereof, may adversely affect our businesses.

Holders of MSGN Common Stock Cannot Be Sure of the Value of the Merger Consideration They Will Receive in the Merger; the Market Value of MSGN Class A Common Stock and MSGE Class A Common Stock May Vary Significantly Prior to the Merger Due to a Variety of Factors.

Pursuant to the merger agreement, (i) each share of MSGN Class A common stock issued and outstanding immediately prior to the effective time will be automatically converted into a number of shares of MSGE Class A common stock such that each holder of record of shares of MSGN Class A common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class A common stock equal to the number of shares of MSGN Class A common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share and (ii) each share of MSGN Class B common stock issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive a number of shares of MSGE Class B common stock such that each holder of record of shares of MSGN Class B common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class B common stock equal to the total number of shares of MSGN Class B common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share. The market value of MSGN Class A common stock and MSGE Class A common stock at the time of the closing of the merger may vary significantly from the market value of such stock on March 10, 2021 (the last full trading day before a press report speculated on a potential transaction between MSG Entertainment and MSG Networks), the date the merger agreement was executed or the date of this joint proxy statement/prospectus. Because the 0.172 exchange ratio will not be adjusted to reflect any changes in the market price of MSGE Class A common stock or MSGN Class A common stock, the market value of MSGE Class A common stock issued to MSG Networks stockholders in the merger and the market value of MSGN Class A common stock surrendered in the merger may each be higher or lower than the values of those shares on earlier dates. Accordingly, at any time prior to the completion of the merger, the MSG Networks stockholders will not know or be able to determine the value of MSGE Class A common stock they will receive as consideration upon completion of the merger. Similarly, MSG Entertainment will not know or be able to determine the value of the MSGE common stock that will be paid to MSG Networks stockholders as consideration upon completion of the merger.

Changes in the market price of MSGE Class A common stock and MSGN Class A common stock may result from a variety of factors that are beyond our control, including changes in our businesses, operations and prospects, governmental actions, legal proceedings and developments and other matters generally affecting the securities market. Market assessments of the benefits of the merger, the likelihood that the merger will be completed and general and industry-specific market and economic conditions may also have an effect on the market price of MSGE Class A common stock and MSGN Class A common stock. Neither MSG Entertainment nor MSG Networks is permitted to terminate the merger agreement solely because of changes in the market prices of MSGE Class A common stock or MSGN Class A common stock. You are urged to obtain up-to-date prices for MSGE Class A common stock and MSGN Class A common stock.

 

36

The Market Price of MSGE Class A Common Stock Will Continue to Fluctuate After the Merger.

Upon completion of the merger, holders of MSGN common stock will become holders of MSGE common stock. The market price of MSGE Class A common stock may fluctuate significantly following completion of the merger (including potentially for reasons related to the merger), and holders of MSGN common stock could lose some or all of the value of their investment in MSGE common stock. In addition, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the MSGE Class A common stock, regardless of MSG Entertainment’s actual operating performance.

Certain Directors, Officers and Employees of MSG Entertainment and MSG Networks Have Interests in the Merger That May Be Different From, or in Addition to, the Interests of MSG Entertainment Stockholders and MSG Networks Stockholders Generally.

The MSGE special committee and the MSGE board, in reliance upon the recommendation of the MSGE special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment, (2) approved the merger agreement and the transactions contemplated thereby and (3) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share issuance and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders. The MSGN special committee and the MSGN board, in reliance upon the recommendation of the MSGN special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) resolved to recommend that MSG Networks stockholders adopt the merger agreement and directed that the merger agreement be submitted for approval by the MSG Networks stockholders. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

MSG Entertainment and MSG Networks are under common control by the Dolan family group, which owns all of the outstanding MSGE Class B common stock and MSGN Class B common stock and holds approximately 70.7% of the total voting power of MSG Entertainment and approximately 76.9% of the total voting power of MSG Networks, respectively, as of May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021), and has representatives on the boards of MSG Entertainment and MSG Networks.

In considering these facts and the other information contained in this joint proxy statement/prospectus, you should be aware that certain of MSG Entertainment’s directors, officers and employees and certain of MSG Networks’ directors, officers and employees have interests in the merger that may be different from, or in addition to, the interests of MSG Entertainment’s stockholders or MSG Networks’ stockholders. These interests include, among others, positions as directors, officers or employees of both MSG Entertainment and MSG Networks and equity holdings in both MSG Entertainment and MSG Networks. These interests are discussed in more detail in the section entitled “The Merger—Interests of MSG Entertainment’s Directors, Officers and Employees in the Merger” beginning on page 116 and “The Merger—Interests of MSG Networks’ Directors, Officers and Employees in the Merger” beginning on page 120.

MSG Entertainment Stockholders and MSG Networks Stockholders Will Not Be Entitled to Dissenters’ or Appraisal Rights in the Merger.

Dissenters’ or appraisal rights are statutory rights that, if applicable under law, enable stockholders of a corporation to dissent from an extraordinary transaction, such as a merger, and to demand that such corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Under the DGCL, stockholders do not have appraisal rights if the shares of stock they hold, at the record date for determination of

 

37

stockholders entitled to vote at the meeting of stockholders to act upon the merger or consolidation, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash instead of fractional shares or (d) any combination of clauses (a)-(c).

Under the DGCL, the holders of MSGE common stock are not entitled to any dissenters’ or appraisal rights in connection with the MSGE share issuance proposal. MSG Entertainment stockholders may vote against the MSGE share issuance proposal if they do not favor the merger. Under the DGCL, the holders of MSGN Class A common stock are not entitled to any dissenters’ or appraisal rights in connection with the merger. This is because the shares of MSGN Class A common stock are listed on the NYSE and the holders of shares of MSGN Class A common stock will receive in the merger only shares of MSGE Class A common stock, which will be listed on the NYSE.

Shares of MSGN Class B common stock are not listed on a national securities exchange or held of record by more than 2,000 holders, and holders of shares of MSGN Class B common stock will receive in the merger only shares of MSGE Class B common stock, which are also not listed on a national securities exchange or held of record by more than 2,000 holders. As a result, holders of MSGN Class B common stock are entitled to seek appraisal of their shares under the DGCL. However, for purposes of the merger, each holder of shares of MSGN Class B common stock has irrevocably and unconditionally waived, and agreed not to exercise, any rights of appraisal (including under Section 262 of the DGCL) or rights to dissent relating to the merger that such holder of shares of MSGN Class B common stock may directly or indirectly have by virtue of the ownership of shares of MSGN Class B common stock, to the full extent permitted by law pursuant to the voting and support agreement as described in “The Voting Agreements” beginning on page 154.

The Merger Agreement and Voting Agreements Could Discourage a Third Party from Pursuing an Alternative Transaction Involving MSG Entertainment or MSG Networks.

The merger agreement contains provisions that may discourage a third party from submitting an MSG Entertainment competing proposal or an MSG Networks competing proposal that might result in greater value to MSG Entertainment’s or MSG Networks’ respective stockholders than the merger, such as a general prohibition on MSG Entertainment or MSG Networks from soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by the MSGE board or the MSGN board, entering into discussions with any third party regarding any MSG Entertainment or MSG Networks competing proposal or offer for a competing transaction.

In connection with the merger agreement and as a condition and inducement to MSG Networks’ willingness to enter into the merger agreement, MSG Networks and the principal MSGE stockholders entered into the MSGE voting agreement, to which MSG Entertainment is a third party beneficiary, pursuant to which the principal MSGE stockholders agreed, among other things and subject to the terms and conditions set forth in the MSGE voting agreement, to vote their shares of MSGE common stock in favor of the authorization and approval of the MSGE share issuance. The principal MSGE stockholders represent approximately 70.7% of the aggregate voting power of MSGE common stock as of May 17, 2021.

In connection with the merger agreement and as a condition and inducement to MSG Entertainment’s willingness to enter into the merger agreement, MSG Entertainment and the principal MSGN stockholders entered into the MSGN voting agreement, to which MSG Networks is a third party beneficiary, pursuant to which the principal MSGN stockholders agreed, among other things and subject to the terms and conditions set forth in the MSGN voting agreement, to vote their shares of MSGN common stock in favor of MSGN merger proposal. The principal MSGN stockholders represent approximately 76.9% of the aggregate voting power of MSGN common stock as of May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021).

 

38

The existence of these agreements could discourage a third party from pursuing an alternative transaction involving MSG Entertainment or MSG Networks because the principal MSGE stockholders’ shares of MSGE common stock to be voted in favor of the MSGE share issuance proposal and the principal MSGN stockholders’ shares of MSGN common stock to be voted in favor of the MSGN merger proposal will be sufficient to approve the proposals.

The Opinions of the MSGE Special Committee’s and the MSGN Special Committee’s Respective Financial Advisors Will Not Reflect Changes in Circumstances Between the Signing of the Merger Agreement and the Completion of the Merger.

The MSGE special committee and the MSGN special committee have received opinions from their respective financial advisors in connection with the signing of the merger agreement, but have not obtained updated opinions from their respective financial advisors as of the date of this joint proxy statement/prospectus. Changes in the operations and prospects of MSG Entertainment or MSG Networks, general market and economic conditions and other factors that may be beyond the control of MSG Entertainment or MSG Networks, and on which the MSGE special committee and the MSGN special committee financial advisors’ opinions were based, may significantly alter the value of MSG Entertainment or MSG Networks or the prices of the shares of MSGE Class A common stock or of the shares of MSGN Class A common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the date of such opinions. Because MSG Entertainment or MSG Networks do not currently anticipate asking their respective financial advisors to update their opinions, the opinions will not address the fairness of the merger consideration or the exchange ratio, as applicable, from a financial point of view at the time the merger is completed. The MSGE board’s recommendation that MSG Entertainment’s stockholders vote “FOR” approval of the share issuance proposal and the MSGN board’s recommendation that MSG Networks stockholders vote “FOR” approval of the merger proposal, however, is made as of the date of this joint proxy statement/prospectus. For a description of the opinions that the MSGE special committee and the MSGN special committee received from their respective financial advisors, see the sections entitled “The Merger—Opinion of the Financial Advisors to the MSGE Special Committee,” and “The Merger—Opinion of the Financial Advisors to the MSGN Special Committee.” Copies of the opinions of Moelis and Raine, the MSGE special committee’s financial advisors, are attached as Annexes D and E, respectively, to this joint proxy statement/prospectus, and copies of the opinions of LionTree and Morgan Stanley, the MSGN special committee’s financial advisors, are attached as Annexes F and G, respectively, to this joint proxy statement/prospectus and each is incorporated by reference herein in its entirety.

Risks Related to the Business of MSG Entertainment Following the Merger

Following the Merger, MSG Entertainment May Not Be Able to Integrate the Businesses of MSG Entertainment and MSG Networks as Successfully as Anticipated and Realize the Anticipated Benefits of the Merger.

The merger involves the combination of two companies which, although under common control and subject to existing commercial relationships, currently operate as independent public companies. Following the merger, MSG Entertainment will be required to devote management attention and resources to integrating its business practices and operations. MSG Entertainment may also fail to realize some or all of the anticipated benefits of the merger.

If the efforts and actions required of MSG Entertainment and MSG Networks in order to consummate the merger and the other transactions contemplated by the merger agreement are more difficult, costly or time consuming than expected, such efforts and actions could result in the diversion of management’s attention and resources at each company or the disruption or interruption of, or the loss of momentum in, each company’s ongoing businesses, which could adversely affect the business and financial results of MSG Entertainment or MSG Networks, as applicable.

 

39

The Unaudited Pro Forma Condensed Combined Financial Data for MSG Entertainment and Unaudited Prospective Financial Information Included in this Joint Proxy Statement/Prospectus Is Presented for Illustrative Purposes Only, and MSG Entertainment’s Actual Financial Position and Operations After the Merger May Differ Materially From the Unaudited Pro Forma Financial Data Included in this Joint Proxy Statement/Prospectus.

The unaudited condensed combined pro forma financial data for MSG Entertainment and the unaudited prospective financial information included in this joint proxy statement/prospectus are presented for illustrative purposes only and do not necessarily reflect the operating results or financial position that would have occurred if the merger had been consummated on the dates indicated, nor are they necessarily indicative of the results of operations or financial condition that may be expected for any future period or date. Specifically, the preparation of the pro forma financial information includes transaction accounting adjustments that are based on the estimates and assumptions. These transaction accounting adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed, and have been made solely for the purpose of providing unaudited pro forma condensed combined financial statements. Differences between these preliminary estimates and the final merger accounting, expected to be completed after the closing of the merger, will occur and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and MSG Entertainment’s future results of operations and financial position. MSG Entertainment has elected not to present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur and has only presented transaction accounting adjustments in the pro forma financial statements. Therefore, the pro forma financial statements do not reflect any cost savings or associated costs to achieve such savings from operating efficiencies, synergies or other restructuring that may result from the merger. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity.

The actual financial positions and results of operations of MSG Entertainment and MSG Networks prior to the merger and that of MSG Entertainment following the merger may be different, possibly materially, from the unaudited pro forma combined financial statements or unaudited prospective financial information included in this joint proxy statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma combined financial statements and projected financial information included in this joint proxy statement/prospectus may not prove to be accurate and may be affected by other factors. For more information see the sections entitled “The Merger—Unaudited Prospective Financial Information” and “Unaudited Pro Forma Condensed Combined Financial Information” beginning on pages 112 and 158, respectively.

MSG Entertainment’s Stock Price May Be Negatively Impacted by Risks and Conditions That Are Different from Those That Historically Have Affected MSG Entertainment’s or MSG Networks’ Stock Prices.

Upon completion of the merger, MSG Networks stockholders will become holders of MSGE common stock. The businesses of MSG Entertainment and its subsidiaries are different from those of MSG Networks and its subsidiaries. There is a risk that various factors, conditions and developments that would not historically affect the price of MSGN Class A common stock or MSGE Class A common stock could negatively affect the price of MSGE Class A common stock after the merger. Please see MSG Entertainment’s and MSG Networks’ Annual Reports on Form 10-K for the fiscal year ended June 30, 2020, and Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020, December 31, 2020 and March 31, 2021 as updated by any subsequent Current Reports on Form 8-K filed with the SEC, respectively, all of which are incorporated by reference in this joint proxy statement/prospectus, and the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 42 for a summary of some of the key factors that might affect MSG Entertainment and the prices at which MSGE Class A common stock may trade from time to time.

 

40

MSG Entertainment and MSG Networks Each Currently Has Significant Indebtedness, and MSG Entertainment Will Be More Leveraged With Debt Following the Merger, Which Could Adversely Affect its Business and Financial Condition After the Completion of the Merger.

As of March 31, 2021, MSG Entertainment had consolidated debt of approximately $693 million, and MSG Networks had consolidated debt of approximately $1.1 billion in principal amount. After giving effect to the combination, MSG Entertainment and its subsidiaries will have consolidated debt of approximately $1.8 billion on a combined basis.

As a result of this significant indebtedness, MSG Entertainment may:

 

•

experience increased vulnerability to general adverse economic and industry conditions;

 

•

be required to dedicate a substantial portion of its cash flow from operations to principal and interest payments on its indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, strategic acquisitions and investments and other general corporate purposes; and

 

•

be exposed to the risk of increased interest rates with respect to any variable rate portion of its indebtedness.

In addition, it is possible that MSG Entertainment may choose or need to incur additional indebtedness in the future. If new debt is added to the pro forma debt levels, the risks described above could intensify. The impact of any of these potential adverse consequences could have a material adverse effect on MSG Entertainment’s results of operations, financial condition, and liquidity following the completion of the combination.

Other Risk Factors of MSG Entertainment and MSG Networks

MSG Entertainment’s and MSG Networks’ businesses are and will be subject to the risks described above. In addition, MSG Entertainment and MSG Networks are, and will continue to be, subject to the risks described in MSG Entertainment’s and MSG Networks’ respective Annual Reports on Form 10-K for the fiscal year ended June 30, 2020 and Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020, December 31, 2020 and March 31, 2021, as, in each case, updated by any subsequent Current Reports on Form 8-K, all of which are filed with the SEC and are incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 221 for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

41

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events and anticipated results of operations and business strategies, statements regarding the merger, including the anticipated benefits of the merger, the anticipated impact of the merger on MSG Entertainment’s business and future financial and operating results, the expected amount and timing of synergies from the merger, and the anticipated closing date for the proposed transaction and other aspects of operations or operating results. All statements, other than statements of historical fact, included in this joint proxy statement/prospectus that address activities, events or developments that MSG Entertainment or MSG Networks expects, believes or anticipates will or may occur in the future are forward-looking statements. Words and phrases such as “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and other similar words can be used to identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Where, in any forward-looking statement, MSG Entertainment or MSG Networks expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future performance and involve certain risks, uncertainties and other factors beyond MSG Entertainment’s and MSG Networks’ control. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in the forward-looking statements. In addition to the risk factors described herein under the heading “Risk Factors,” the following important factors and uncertainties, among others, could cause actual results or events to differ materially from those included in this joint proxy statement/prospectus:

 

•

the failure to satisfy the conditions to consummate the merger;

 

•

the occurrence of any event, change or other circumstances that could give rise to a delay in the consummation of the merger or the termination of the merger agreement;

 

•

risks related to the disruption of management time from ongoing business operations due to the merger and the restrictions imposed on MSG Entertainment’s and/or MSG Networks’ operations under the terms of the merger agreement;

 

•

the possibility that MSG Entertainment and/or MSG Networks will incur significant transaction and other costs in connection with the merger, which may be in excess of those anticipated by MSG Entertainment and/or MSG Networks;

 

•

the outcome of any litigation initiated in connection with the merger;

 

•

the risk that MSG Entertainment may fail to realize, or take longer than expected to realize, the benefits and synergies expected from the merger;

 

•

effects of the pendency of the merger on relationships with employees, customers and other business partners;

 

•

the risk that the transaction may not qualify as a “reorganization” under the Code;

 

•

uncertainty as to the long-term value of MSGE Class A common stock;

 

•

MSG Entertainment’s and/or MSG Networks’ ability to maintain and grow their relationships with their respective customers;

 

•

MSG Entertainment’s and/or MSG Networks’ ability to implement their respective business strategies and the risks to their operating results and businesses generally;

 

•

the impact of public health crises, including pandemics (such as the COVID-19 or SARS-CoV-2 virus (or any mutation or variation thereof), “COVID-19”) and epidemics and any related company,

 

42

government or league policies or actions on the businesses of MSG Entertainment and/or MSG Networks; and

 

•

general economic and market conditions and other developments in the markets in which MSG Entertainment and/or MSG Networks operate, as well as management’s response to any of the aforementioned factors.

The parties undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. In the event that a party does update any forward-looking statement, no inference should be made that the parties will make additional updates with respect to that statement, related matters or any other forward-looking statements.

 

43

THE MSG ENTERTAINMENT SPECIAL MEETING OF STOCKHOLDERS

Date, Time and Place of the MSGE Special Meeting of Stockholders

The special meeting of MSG Entertainment stockholders will be held at the J.P. Morgan Club at the Madison Square Garden Arena, located on Seventh Avenue between West 31st Street and West 33rd Street on July 8, 2021 at 10:00 a.m. Eastern Time.

Purpose of the MSGE Special Meeting of Stockholders

At the MSGE special meeting, MSG Entertainment stockholders will be asked to consider and vote on the following:

 

•

a proposal to authorize the issuance of MSGE common stock, as merger consideration pursuant to the merger agreement; and

 

•

a proposal to adjourn the MSGE special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGE share issuance proposal.

Recommendation of the MSGE Special Committee and Board of Directors

The MSGE special committee unanimously (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable, and in the best interests of MSG Entertainment, and (2) recommended that the Board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Entertainment stockholders approve the share issuance.

On March 25, 2021, at a duly convened meeting of the MSGE board, the MSGE board unanimously, in reliance on the recommendation of the MSGE special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment, (2) approved the merger agreement and the transactions contemplated thereby and (3) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share issuance and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders.

Accordingly, the MSGE board, acting in reliance upon the unanimous recommendation of the MSGE special committee, unanimously recommends that the MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal.

MSG Entertainment Record Date; Stockholders Entitled to Vote

Only holders of record of shares of MSGE common stock at the close of business on June 14, 2021, the record date for the MSGE special meeting, will be entitled to notice of, and to vote at, the MSGE special meeting or any adjournments or postponements thereof. For a period of at least ten days prior to the special meeting, a complete list of stockholders entitled to vote during the MSGE special meeting will be open to the examination of any stockholder during ordinary business hours at our corporate headquarters located at Two Pennsylvania Plaza, New York, NY 10121, or through an alternative method publicly disclosed in advance. In the event you are interested in viewing the list, please send an email to [email protected] at least two business days in advance to schedule your visit.

As of the close of business on June 3, 2021 (the latest practicable date prior to the record date), there were outstanding a total of 19,618,324 shares of MSGE Class A common stock and 4,529,517 shares of MSGE Class B common stock entitled to vote at the MSGE special meeting. Each holder is entitled to one vote for each share of MSGE Class A common stock and ten votes for each share of MSGE Class B common stock owned by such holder as of the close of business on the record date.

 

44

In connection with the execution of the merger agreement, the holders of all outstanding shares of MSGE Class B common stock entered into a voting agreement with MSG Networks whereby such stockholders will be obligated to vote in favor of the MSGE share issuance proposal and the MSGE adjournment proposal, among other things. See the section entitled “The Voting Agreements” beginning on page 154. The Dolan family group, which owns all of the outstanding shares of MSGE Class B common stock, owns 70.7% of the total voting power of the MSGE common stock, as of May 17, 2021. Even though a special meeting is required to be held and all MSG Entertainment stockholders of record on the record date have a right to vote, the Dolan family group’s shares of MSGE common stock to be voted in favor of the MSGE share issuance proposal and the MSGE adjournment proposal will be sufficient to approve the proposals.

Quorum

The presence, in person or by proxy, of the holders of a majority of the votes represented by the outstanding shares of MSGE common stock entitled to vote at the MSGE special meeting will constitute a quorum for the transaction of business at the MSGE special meeting. In addition, a majority of the votes represented by the outstanding shares of MSGE Class B common stock will constitute a quorum for the authorization of the issuance of MSGE Class B common stock in connection with the separate, additional vote on the MSGE share issuance proposal.

Shares of MSGE common stock represented at the MSGE special meeting and entitled to vote but not voted, including shares for which a stockholder directs an “abstention” from voting and broker non-votes (shares held by banks, brokerage firms or nominees that are present in person or by proxy at the MSGE special meeting but with respect to which the broker or other stockholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will be counted as present for purposes of establishing a quorum.

Shares of MSGE common stock held in treasury will not be included in the calculation of the number of votes represented by the shares of MSGE common stock entitled to vote at the meeting for purposes of determining whether a quorum is present.

Pursuant to the MSGE voting agreement, all holders of MSGE Class B common stock are obligated to cause all of the shares that they are entitled to vote to be counted as present at the MSGE special meeting for purposes of calculating a quorum.

Required Vote

Approval of the MSGE share issuance proposal requires (i) the affirmative vote of the holders of a majority of the total votes of the shares of MSGE Class A common stock and Class B common stock, voting together as a single class, cast in person or by proxy, at the MSGE special meeting to approve the share issuance pursuant to Article I, Section 6 of the MSGE bylaws and as required by Section 312.03 of the NYSE Listed Company Manual, and (ii) in connection with the issuance of MSGE Class B common stock, the affirmative vote of the holders of not less than 66 2/3% of the outstanding shares of MSGE Class B common stock, voting separately as a class, pursuant to Article Fourth, Section A.III (a) of the MSGE charter. Approval of the MSGE adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGE Class A common stock and MSGE Class B common stock, voting together as a single class, cast in person or by proxy, at the MSGE special meeting pursuant to Article I, Section 6 of the MSGE bylaws.

The MSGE board, acting in reliance on the unanimous recommendation of the MSGE special committee, unanimously recommends that MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal, and your properly signed and dated proxy will be so voted unless you specify otherwise.

 

45

Abstentions and Broker Non-Votes

If you are a holder of MSGE Class A common stock and fail to vote or fail to instruct your broker or nominee to vote, or vote to abstain from voting, your shares will not be voted on, and will have no effect on, the outcome of the MSGE share issuance proposal, assuming a quorum is present, as a failure to vote or a vote to abstain are not considered votes cast. If you are a holder of MSGE Class B common stock and fail to vote or fail to instruct your broker or nominee to vote, or vote to abstain from voting, it will have (i) no effect on the outcome of the vote of the holders of a majority of the total votes of shares of MSGE common stock cast, voting together as a single class, with respect to the MSGE share issuance proposal, assuming a quorum is present, and (ii) the same effect as a vote against the MSGE share issuance proposal in the separate and additional vote of MSGE Class B common stock holders. If you are a holder of MSGE common stock and fail to vote or fail to instruct your broker or nominee to vote, or vote to abstain from voting, it will have no effect on the outcome of the MSGE adjournment proposal, assuming a quorum is present, as a failure to vote or a vote to abstain are not considered votes cast.

Attending the MSGE Special Meeting of Stockholders

If you plan to attend the MSGE special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” and you wish to vote at the MSGE special meeting, you must bring to the special meeting a “legal proxy” executed in your favor from the record holder (your brokerage firm, bank, broker-dealer or other similar organization) of the shares authorizing you to vote at the MSGE special meeting.

Admission Ticket. An admission ticket is required if you plan to attend the MSGE special meeting in person. To be admitted to the MSGE special meeting, you must have been a stockholder of record at the close of business on the record date of June 14, 2021 or be the legal proxy holder or qualified representative of such stockholder of MSG Entertainment. You must bring with you your admission ticket and a valid government-issued photo ID (federal, state or local), such as a driver’s license or passport.

Your proxy card or a legal proxy is not an admission ticket. To obtain an admission ticket, go to www.proxyvote.com or call 1-844-318-0137 (toll-free) or 925-331-6070 (international). You will need to enter your 16 digit control number, which can be found on your voting instruction form or proxy card. You may also request an admission ticket by calling the telephone number on your voting instruction form or proxy card. The deadline to obtain an admission ticket is 5:00 p.m. Eastern Time on July 2, 2021. If you have questions about admission to the MSGE special meeting, please call 1-844-318-0137 (toll-free) or 925-331-6070 (international).

If you plan to attend both special meetings, you must obtain an admission ticket for each of the MSGE special meeting and the MSGN special meeting. Your admission ticket to the MSGE special meeting will not admit you to the MSGN special meeting, and vice versa.

Please note that you will need your admission ticket to be admitted to the MSGE special meeting whether or not you vote before or at the meeting, and regardless of whether or not you are a registered or beneficial stockholder. If you are attending the meeting as a proxy or qualified representative for a stockholder, you will need to bring your legal proxy or authorization letter in addition to your admission ticket and government-issued photo ID.

COVID-19 safety protocols. In order to attend the MSGE special meeting, you will need to present one of three options for entry: proof of full COVID-19 vaccination at least 14 days prior to the special meetings, a negative antigen COVID-19 test taken within 6 hours of the applicable special meeting, or a negative PCR COVID-19 test taken within 72 hours of the applicable special meeting, in each case with a government-issued photo ID matching the name on your documentation and the name on your admission ticket. Upon arrival, in addition to providing the foregoing documentation, you will complete a health screening that includes a contactless temperature check that must register below 100.4 degrees. Guests that do not provide proof of full vaccination

 

46

are required to maintain at least a six-foot distance from other attendees and wear a face covering while attending the MSGE special meeting. We are following evolving guidance and protocols issued by Centers for Disease Control, New York State and New York City for COVID-19 safety, which may change between the date of this joint proxy statement/prospectus and the actual date of the MSGE special meeting. Whichever protocols are required on the date of the special meetings will be followed, which may be different than the protocols stated herein. Any updates will be posted to MSG Entertainment’s website at http://www.investor.msgentertainment.com.

Legal Proxy. Stockholders must provide advance written notice to MSG Entertainment if they intend to have a legal proxy (other than the persons appointed as proxies on MSG Entertainment’s proxy card) or a qualified representative attend the MSGE special meeting on their behalf. The notice must include the name and address of the legal proxy or qualified representative and must be received by 5:00 p.m. Eastern Time on June 30, 2021 in order to allow enough time for the issuance of an admission ticket to such person. Notices for the MSGE special meeting should be directed to Madison Square Garden Entertainment Corp., Attention: Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121.

Security. Please note that cameras, video and audio recording equipment and other similar electronic devices, as well as large bags (including backpacks, handbags and briefcases) and packages, will need to be checked at the door. Additionally, MSG Entertainment may impose additional restrictions on items that must be checked at the door as well as on the conduct of the meeting. To enhance the safety of all persons, attendees and bags will be subject to screening, including the use of x-ray screening where available, and may also be subject to additional security inspections.

Voting of Proxies; Incomplete Proxies

If you are a stockholder of record of MSG Entertainment as of the close of business on the record date for the MSGE special meeting, you may vote at the meeting or by legal proxy at the special meeting or, to ensure your shares are represented at the meeting, you may vote in advance of the MSGE special meeting. A proxy card is enclosed for your use. MSG Entertainment requests that you follow the instructions contained on the proxy card and by:

 

•

accessing the internet website specified on your proxy card;

 

•

calling the toll-free number specified on your proxy card; or

 

•

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If you hold MSG Entertainment shares in the name of a bank or broker, please follow the voting instructions provided by your bank or broker to ensure that your shares are represented at your special meeting. Even if you plan to attend the MSGE special meeting, you are strongly recommended to vote your shares in advance so that your vote will be counted if you later decide not to attend the meeting.

When the accompanying proxy is returned properly executed, the shares of MSGE common stock represented by it will be voted at the MSGE special meeting or any adjournments or postponements thereof in accordance with the instructions contained in the proxy. If a proxy is signed and returned without an indication as to how the shares of MSGE common stock represented are to be voted with regard to a particular proposal, the MSGE common stock represented by the proxy will be voted as the MSGE board recommends, which, in reliance on the unanimous recommendation of the MSGE special committee, is in favor of each of the MSGE share issuance proposal and the MSGE adjournment proposal. At the date hereof, management has no knowledge of any business that will be presented for consideration at the special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related MSGE proxy card other than the matters set forth in MSG Entertainment’s notice of special meeting of stockholders. If any other matter is properly presented at the MSGE special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

 

47

Please vote today following the instructions contained on the enclosed proxy card whether or not you or your legal proxy plan to attend the MSGE special meeting in person.

Shares Held in “Street Name”

If you hold your shares in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are a beneficial owner of shares held in “street name,” and your brokerage firm, bank, broker-dealer or other similar organization cannot vote your shares on any proposal on which it does not have discretionary authority to vote. Please use the voting instruction form provided to you by your brokerage firm, bank, broker-dealer or other similar organization to direct them how to vote your shares. If you do not provide voting instructions, your shares will not be voted on—and will have no effect on—the MSGE share issuance proposal or the MSGE adjournment proposal.

Please note that you may not vote shares held in street name by returning a proxy card directly to MSG Entertainment or by voting in person at the MSGE special meeting unless you provide a “legal proxy,” which you must obtain from your brokerage firm, bank, broker-dealer or other similar organization.

Revocability of Proxies and Changes to an MSG Entertainment Stockholder’s Vote

You have the power to revoke your proxy at any time before your proxy is voted at the MSGE special meeting. You can revoke your proxy in one of three ways:

 

•

you can send a signed notice of revocation;

 

•

you can grant a new, valid proxy bearing a later date (including by telephone or through the internet); or

 

•

if you are a holder of record, you can attend the MSGE special meeting and vote in person, which will automatically cancel any proxy previously given, or you can revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.

If you choose either of the first two methods, your notice of revocation or your new proxy must be received by the MSGE Corporate Secretary at Two Pennsylvania Plaza, New York, NY 10121, no later than the beginning of the MSGE special meeting. If your shares are held in “street name” by your brokerage firm, bank, broker-dealer or other similar organization, you should contact such organization to change your vote or revoke your proxy.

Solicitation of Proxies

In accordance with the merger agreement, the cost of proxy solicitation for the MSGE special meeting will be borne by MSG Entertainment. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of MSG Entertainment, some of whom may be considered participants in the solicitation, without additional remuneration, by personal interview, telephone, facsimile or otherwise. MSG Entertainment will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. MSG Entertainment has retained D.F. King to assist in its solicitation of proxies and has agreed to pay them a fee of up to $20,000, plus reasonable expenses, for these services.

Adjournments

If a quorum is not present or represented, the MSG Entertainment stockholders present in person or represented by proxy shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. If a quorum is present at the MSGE special meeting but

 

48

there are not sufficient votes at the time of the special meeting to approve the MSGE share issuance proposal, then MSG Entertainment stockholders may be asked to vote on the MSGE adjournment proposal. No notices of an adjourned meeting need be given unless the adjournment is for more than 30 days, announcement of the adjourned time and/or place is not made at the meeting or, if after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. At any subsequent reconvening of the special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the same manner as they would have been voted at the original convening of the special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance in completing your proxy card or have questions regarding the MSGE special meeting, please contact D.F. King, MSG Entertainment’s proxy advisor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers, Call Collect: (212) 269-5550

All Others Call Toll Free: (866) 796-7184

Email: [email protected]

 

49

THE MSG NETWORKS SPECIAL MEETING OF STOCKHOLDERS

Date, Time and Place of the MSGN Special Meeting of Stockholders

The special meeting of MSG Networks stockholders will be held at the J.P. Morgan Club at the Madison Square Garden Arena, located on Seventh Avenue between West 31st Street and West 33rd Street on July 8, 2021 at 11:30 a.m. Eastern Time.

Purpose of the MSGN Special Meeting of Stockholders

At the MSGN special meeting, MSG Networks stockholders will be asked to consider and vote on the following:

 

•

a proposal to adopt the merger agreement;

 

•

a non-binding proposal to approve certain compensation that may be paid or become payable to MSG Networks’ named executive officers that is based on or otherwise relates to the merger contemplated by the merger agreement, on an advisory basis; and

 

•

a proposal to adjourn the MSGN special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the MSGN merger proposal.

Recommendation of the MSGN Special Committee and Board of Directors

The MSGN special committee unanimously (1) determined that the merger agreement and the merger are fair to, advisable and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) recommended that the MSGN board adopt resolutions approving, adopting and declaring advisable the merger agreement and transactions contemplated thereby and recommending that the MSG Networks stockholders adopt the merger agreement. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

On March 25, 2021, at a duly convened meeting of the MSGN board, the MSGN board unanimously, in reliance on the recommendation of the MSGN special committee, (1) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and (3) resolved to recommend that MSG Networks stockholders adopt the merger agreement and directed that the merger agreement be submitted for approval by the MSG Networks stockholders.

Accordingly, the MSGN board, acting in reliance upon the unanimous recommendation of the MSGN special committee, unanimously recommends that the stockholders of MSG Networks vote “FOR” each of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal.

MSG Networks Record Date; Stockholders Entitled to Vote

Only holders of record of shares of MSGN common stock at the close of business on June 14, 2021, the record date for the MSGN special meeting, will be entitled to notice of, and to vote at, the MSGN special meeting and at any adjournment of the meeting. For a period of at least ten days prior to the special meetings, a complete list of stockholders entitled to vote during the MSGN special meeting will be open to the examination of any stockholder during ordinary business hours at our corporate headquarters located at 11 Pennsylvania Plaza, New York, NY 10001, or through an alternative method publicly disclosed in advance. In the event you are interested in viewing the list, please send an email to [email protected] at least two business days in advance to schedule your visit.

As of the close of business on June 3, 2021 (the latest practicable date prior to the record date), there were outstanding a total of 43,459,880 shares of MSGN Class A common stock and 13,588,555 shares of MSGN

 

50

Class B common stock entitled to vote at the MSGN special meeting. Each holder is entitled to one vote for each share of MSGN Class A common stock and ten votes for each shares of MSGN Class B common stock owned by such holder as of the close of business on the record date.

In connection with the execution of the merger agreement, the holders of all outstanding shares of MSGN Class B common stock entered into a voting and support agreement with MSG Entertainment whereby such stockholders will be obligated to vote in favor of the MSGN merger proposal and the MSGN adjournment proposal, among other things. See the section entitled “The Voting Agreements” beginning on page 154. The Dolan family group, which owns all of the outstanding shares of MSGN Class B common stock, owns 76.9% of the total voting power of the MSGN common stock, as of May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021). Even though a special meeting is required to be held and all MSG Networks stockholders of record on the record date have a right to vote, the Dolan family group’s shares of MSGN common stock to be voted in favor of the MSGN merger proposal and the MSGN adjournment proposal will be sufficient to approve the proposals.

Quorum

The presence, in person or by proxy, of the holders of a majority of the votes represented by the outstanding shares of MSGN common stock entitled to vote at the MSGN special meeting will constitute a quorum for the transaction of business at the MSGN special meeting.

Shares of MSGN common stock represented at the MSGN special meeting but not voted, including shares for which a stockholder directs an “abstention” from voting and broker non-votes (shares held by banks, brokerage firms or nominees that are present in person or by proxy at the MSGN special meeting but with respect to which the broker or other stockholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will be counted as present for purposes of establishing a quorum.

Shares of MSGN common stock held in treasury will not be included in the calculation of the number of votes represented by the shares of MSGN common stock entitled to vote at the meeting for purposes of determining whether a quorum is present.

Pursuant to the MSGN voting agreement, all holders of MSGN Class B common stock are obligated to cause all of the shares that they are entitled to vote to be counted as present at the MSGN special meeting for purposes of calculating a quorum.

Required Vote

Approval of the MSGN merger proposal requires the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, entitled to vote on such matter, at the MSGN special meeting pursuant to Section 251(c) of the DGCL. Approval of each of the non-binding compensation advisory proposal and the MSGN adjournment proposal requires the affirmative vote of the holders of a majority of the total votes of shares of MSGN Class A common stock and MSGN Class B common stock, voting together as a single class, cast in person or by proxy, at the MSGN special meeting pursuant to Article I, Section 6 of the MSGN bylaws.

The MSGN board, acting in reliance on the unanimous recommendation of the MSGN special committee, unanimously recommends that MSG Networks stockholders vote “FOR” each of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal, and your properly signed and dated proxy will be so voted unless you specify otherwise.

 

51

Abstentions and Broker Non-Votes

If you are an MSG Networks stockholder and fail to vote or fail to instruct your broker or nominee to vote, or vote to abstain from voting, (i) it will have the same effect as a vote AGAINST the MSGN merger proposal pursuant to Delaware law, which requires that the MSGN merger proposal be approved by a majority of the voting power of the outstanding shares of MSGN common stock entitled to vote, and (ii) it will have no effect on the outcome of the non-binding compensation advisory proposal or the MSGN adjournment proposal, assuming a quorum is present, as a failure to vote or a vote to abstain are not considered votes cast.

Attending the MSGN Special Meeting of Stockholders

If you plan to attend the MSGN special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” and you wish to vote at the MSGN special meeting, you must bring to the special meeting a “legal proxy” executed in your favor from the record holder (your brokerage firm, bank, broker-dealer or other similar organization) of the shares authorizing you to vote at the MSGN special meeting.

Admission Ticket. An admission ticket is required if you plan to attend the MSGN special meeting in person. To be admitted to the MSGE special meeting, you must have been a stockholder of record at the close of business on the record date of June 14, 2021 or be the legal proxy holder or qualified representative of such stockholder of MSG Networks. You must bring with you your admission ticket and a valid government-issued photo ID (federal, state or local), such as a driver’s license or passport.

Your proxy card or a legal proxy is not an admission ticket. To obtain an admission ticket, go to www.proxyvote.com or call 1-844-318-0137 (toll-free) or 925-331-6070 (international). You will need to enter your 16-digit control number, which can be found on your voting instruction form or proxy card. You may also request an admission ticket by calling the telephone number on your voting instruction form or proxy card. The deadline to obtain an admission ticket is 5:00 p.m. Eastern Time on July 2, 2021. If you have questions about admission to the MSGN special meeting, please call 1-844-318-0137 (toll-free) or 925-331-6070 (international).

If you plan to attend both special meetings, you must obtain an admission ticket for each of the MSGE special meeting and the MSGN special meeting. Your admission ticket to the MSGE special meeting will not admit you to the MSGN special meeting, and vice versa.

Please note that you will need your admission ticket to be admitted to the MSGN special meeting whether or not you vote before or at the meeting, and regardless of whether or not you are a registered or beneficial stockholder. If you are attending the meeting as a proxy or qualified representative for a stockholder, you will need to bring your legal proxy or authorization letter in addition to your admission ticket and government-issued photo ID.

COVID-19 safety protocols. In order to attend the MSGN special meeting, you will need to present one of three options for entry: proof of full COVID-19 vaccination at least 14 days prior to the special meetings, a negative antigen COVID-19 test taken within 6 hours of the applicable special meeting, or a negative PCR COVID-19 test taken within 72 hours of the applicable special meeting, in each case with a government-issued photo ID matching the name on your documentation and the name on your admission ticket. Upon arrival, in addition to providing the foregoing documentation, you will complete a health screening that includes a contactless temperature check that must register below 100.4 degrees. Guests that do not provide proof of full vaccination are required to maintain at least a six-foot distance from other attendees and wear a face covering while attending the MSGN special meeting. We are following evolving guidance and protocols issued by Centers for Disease Control, New York State and New York City for COVID-19 safety, which may change between the date of this joint proxy statement/prospectus and the actual date of the MSGN special meeting. Whichever protocols are required on the date of the special meetings will be followed, which may be different than the protocols stated herein. Any updates will be posted to MSG Networks’ website at http://www.investor.msgnetworks.com.

 

52

Legal proxy. Stockholders must provide advance written notice to MSG Networks if they intend to have a legal proxy (other than the persons appointed as proxies on MSG Networks’ proxy card) or a qualified representative attend the MSGN special meeting on their behalf. The notice must include the name and address of the legal proxy or qualified representative and must be received by 5:00 p.m. Eastern Time on June 30, 2021 in order to allow enough time for the issuance of an admission ticket to such person. Notices for the MSGN special meeting should be directed to MSG Networks Inc., Attention: Corporate Secretary, 11 Pennsylvania Plaza, New York, NY 10001.

Security. Please note that cameras, video and audio recording equipment and other similar electronic devices, as well as large bags (including backpacks, handbags and briefcases) and packages, will need to be checked at the door. Additionally, MSG Networks may impose additional restrictions on items that must be checked at the door as well as on the conduct of the meeting. To enhance the safety of all persons, attendees and bags will be subject to screening, including the use of x-ray screening where available, and may also be subject to additional security inspections.

Voting of Proxies; Incomplete Proxies

If you are a stockholder of record of MSG Networks as of the close of business on the record date for the MSGN special meeting, you may vote at the meeting or by legal proxy at the special meeting or, to ensure your shares are represented at the meeting, you may vote in advance of the MSGN special meeting. A proxy card is enclosed for your use. MSG Networks requests that you follow the instructions contained on the proxy card and by:

 

•

accessing the internet website specified on your proxy card;

 

•

calling the toll-free number specified on your proxy card; or

 

•

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If you hold MSG Networks shares in the name of a bank or broker, please follow the voting instructions provided by your bank or broker to ensure that your shares are represented at your special meeting. Even if you plan to attend the MSGN special meeting, you are strongly recommended to vote your shares in advance so that your vote will be counted if you later decide not to attend the meeting.

When the accompanying proxy is returned properly executed, the shares of MSGN common stock represented by it will be voted at the MSGN special meeting or any adjournments or postponements thereof in accordance with the instructions contained in the proxy. If a proxy is signed and returned without an indication as to how the shares of MSGN common stock represented are to be voted with regard to a particular proposal, the MSGN common stock represented by the proxy will be voted as the MSGN board recommends, which, in reliance on the unanimous recommendation of the MSGN special committee, is in favor of each of the MSGN merger proposal, the non-binding compensation advisory proposal and the MSGN adjournment proposal. At the date hereof, management has no knowledge of any business that will be presented for consideration at the special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related MSGN proxy card other than the matters set forth in MSG Networks’ notice of special meeting of stockholders. If any other matter is properly presented at the MSGN special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

Please vote today following the instructions contained on the enclosed proxy card whether or not you or your legal proxy plan to attend the MSGN special meeting in person.

Shares Held in “Street Name”

If you hold your shares in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are a beneficial owner of shares held in “street name,” and your brokerage firm, bank, broker-dealer or other

 

53

similar organization cannot vote your shares on any proposal on which it does not have discretionary authority to vote. Please use the voting instruction form provided to you by your brokerage firm, bank, broker-dealer or other similar organization to direct them how to vote your shares. If you do not provide voting instructions, your shares will not be voted on—and will have no effect on—the MSGN merger proposal, MSGN adjournment proposal or non-binding compensation advisory proposal.

Please note that you may not vote shares held in street name by returning a proxy card directly to MSG Networks or by voting in person at the MSGN special meeting unless you provide a “legal proxy,” which you must obtain from your brokerage firm, bank, broker-dealer or other similar organization.

Revocability of Proxies and Changes to an MSG Networks Stockholder’s Vote

You have the power to revoke your proxy at any time before your proxy is voted at the MSGN special meeting. You can revoke your proxy in one of three ways:

 

•

you can send a signed notice of revocation;

 

•

you can grant a new, valid proxy bearing a later date (including by telephone or through the internet); or

 

•

if you are a holder of record, you can attend the MSGN special meeting and vote in person, which will automatically cancel any proxy previously given, or you can revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.

If you choose either of the first two methods, your notice of revocation or your new proxy must be received by the MSGN Corporate Secretary at MSG Networks Inc., 11 Pennsylvania Plaza, New York, NY 10001 no later than the beginning of the MSGN special meeting. If your shares are held in “street name” by your brokerage firm, bank, broker-dealer or other similar organization, you should contact such organization to change your vote or revoke your proxy.

Solicitation of Proxies

In accordance with the merger agreement, the cost of proxy solicitation for the MSGN special meeting will be borne by MSG Networks. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of MSG Networks, some of whom may be considered participants in the solicitation, without additional remuneration, by personal interview, telephone, facsimile or otherwise. MSG Networks will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. MSG Networks has retained D.F. King to assist in its solicitation of proxies and has agreed to pay them a fee of up to $20,000, plus reasonable expenses, for these services.

Adjournments

If a quorum is not present or represented, the MSG Networks stockholders present in person or represented by proxy shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. If a quorum is present at the MSGN special meeting but there are not sufficient votes at the time of the special meeting to approve the MSGN merger proposal, then MSG Networks stockholders may be asked to vote on the MSGN adjournment proposal. No notices of an adjourned meeting need be given unless the adjournment is for more than 30 days, announcement of the adjourned time and/or place is not made at the meeting or, if after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. At any subsequent reconvening of the special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted

 

54

in the same manner as they would have been voted at the original convening of the special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance in completing your proxy card or have questions regarding the MSGN special meeting, please contact D.F. King, MSG Networks’ proxy advisor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers, Call Collect: (212) 269-5550

All Others Call Toll Free: (866) 620-2535

Email: [email protected]

 

55

INFORMATION ABOUT THE COMPANIES

MSG Entertainment

Madison Square Garden Entertainment Corp.

Two Pennsylvania Plaza

New York, NY 10121

Phone: (212) 465-6000

Madison Square Garden Entertainment Corp. is a leader in live entertainment experiences. MSG Entertainment presents or hosts a broad array of events in its diverse collection of venues: New York’s Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre and The Chicago Theatre. MSG Entertainment is also building a new state-of-the-art venue in Las Vegas, the MSG Sphere, and has announced plans to build a second MSG Sphere in London, pending necessary approvals. In addition, MSG Entertainment features the original production—the Christmas Spectacular Starring the Radio City Rockettes—and through Boston Calling Events, produces the Boston Calling Music Festival. Also under the MSG Entertainment umbrella is Tao Group Hospitality, with entertainment, dining and nightlife brands including Tao, Marquee, Lavo, Beauty & Essex, Cathédrale, Hakkasan and Omnia.

MSGE Class A common stock is listed on the NYSE under the symbol “MSGE.”

Additional information about MSG Entertainment and its subsidiaries is included in the documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 221.

MSG Networks

MSG Networks Inc.

11 Pennsylvania Plaza

New York, NY 10001

Phone: (212) 465-6400

MSG Networks Inc., a pioneer in sports media, owns and operates two award-winning regional sports and entertainment networks and a companion streaming service that serve the nation’s number one media market, the New York DMA, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania. The networks feature a wide range of compelling sports content, including exclusive live local games and other programming of the New York Knicks, New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres, as well as significant coverage of the New York Giants and Buffalo Bills. This content, in addition to a diverse array of other sporting events and critically acclaimed original programming, has established MSG Networks as the gold standard in regional sports.

MSGN Class A common stock is listed on the NYSE under the symbol “MSGN.”

Additional information about MSG Networks and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 221.

Merger Sub

Broadway Sub Inc.

c/o Madison Square Garden Entertainment Corp.

Two Pennsylvania Plaza

New York, NY 10121

Phone: (212) 465-6000

 

56

Broadway Sub Inc., a direct wholly-owned subsidiary of MSG Entertainment, is a Delaware corporation that was formed on March 24, 2021 for the purpose of effecting the merger. Upon completion of the merger, Merger Sub will be merged with and into MSG Networks, with MSG Networks surviving as a direct wholly-owned subsidiary of MSG Entertainment. Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the merger.

 

57

THE MERGER

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this joint proxy statement/prospectus as Annex A and is incorporated by reference into this joint proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger that is important to you. You should read the entire merger agreement carefully as it is the legal document that governs the merger. This section is not intended to provide you with any factual information about MSG Entertainment or MSG Networks. Such information can be found elsewhere in this joint proxy statement/prospectus and in the public filings MSG Entertainment or MSG Networks make with the SEC that are incorporated by reference into this joint proxy statement/prospectus, as described in the section entitled “Where You Can Find More Information” beginning on page 221 of this joint proxy statement/prospectus.

Structure of the Merger

At the effective time, Merger Sub, a direct wholly-owned subsidiary of MSG Entertainment formed to effect the merger, will merge with and into MSG Networks. MSG Networks will be the surviving corporation in the merger and will thereby become a direct wholly-owned subsidiary of MSG Entertainment.

Merger Consideration

In the merger, (i) each share of MSGN Class A common stock issued and outstanding immediately prior to the effective time will be automatically converted into a number of shares of MSGE Class A common stock such that each holder of record of shares of MSGN Class A common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class A common stock equal to the total number of shares of MSGN Class A common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share and (ii) each share of MSGN Class B common stock issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive a number of shares of MSGE Class B common stock such that each holder of record of shares of MSGN Class B common stock will have the right to receive, in the aggregate, a number of shares of MSGE Class B common stock equal to the total number of shares of MSGN Class B common stock held of record immediately prior to the effective time multiplied by 0.172, with such product rounded up to the next whole share, in each case except for shares held by MSG Entertainment, Merger Sub or any of the MSGE subsidiaries or MSG Networks or any of the MSGN subsidiaries as treasury stock (in each case not held on behalf of third parties). Because the aggregate number of shares of MSGE common stock that each MSG Networks stockholder of record will receive as merger consideration will be rounded up to the next whole number, MSG Networks stockholders of record will not receive any fractional shares of MSGE common stock in the merger. As of the date of this joint proxy statement/prospectus, neither MSG Entertainment nor any MSGE subsidiary owns any stock of MSG Networks.

The 0.172 exchange ratio is fixed and will not be adjusted for changes in the market value of the common stock of MSG Entertainment or MSG Networks. Because of this, the implied value of the consideration to MSG Networks stockholders may fluctuate between now and the completion of the merger. Based on the closing price of MSGE common stock on the NYSE on March 10, 2021, the last full trading day before a press report speculated on a potential transaction between MSG Entertainment and MSG Networks, the exchange ratio represents approximately $19.95 in value for each share of MSGN common stock, and based on the closing price on March 25, 2021, the last full trading day before the public announcement of the signing of the merger agreement, the exchange ratio represents approximately $16.16 in value for each share of MSGN common stock. Based on the closing price of MSGE common stock on the NYSE on May 26, 2021, the latest practicable date before the date of this joint proxy statement/prospectus, the 0.172 exchange ratio represented approximately $15.30 in value for each share of MSGN common stock.

 

58

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. The following chronology does not purport to catalogue every conversation among the MSGN board, MSGE board, their respective special committees or the representatives of each company, their respective advisors or any other persons.

The management and boards of directors of MSG Entertainment and MSG Networks regularly review the performance, strategy, competitive position, opportunities and prospects of their respective companies in light of the then-current business and economic environments, as well as developments in the industries in which the companies operate, and the opportunities and challenges facing participants in those industries. These reviews have included consideration of, and discussions with other companies from time to time regarding, industry developments and potential strategic alternatives, including business combinations and other strategic transactions.

In 2019, a special committee of the MSGN board (the “2019 special committee”) considered a potential transaction with The Madison Square Garden Company (“TMSGC”). At such time, TMSGC owned and operated the businesses currently owned and operated by MSG Entertainment and Madison Square Garden Sports Corp. While the 2019 special committee entered into negotiations with TMSGC concerning a strategic transaction, which included exchanges of draft documentation, agreement was not reached with respect to a transaction and discussions terminated in August 2019.

MSG Entertainment was incorporated on November 21, 2019 as a direct, wholly-owned subsidiary of TMSGC. On March 31, 2020, TMSGC’s and MSG Entertainment’s boards of directors approved the spin-off of MSG Entertainment through a distribution of all the outstanding common stock of MSG Entertainment to TMSGC’s stockholders, which occurred on April 17, 2020. Effective upon the spin-off, TMSGC changed its name from The Madison Square Garden Company to Madison Square Garden Sports Corp.

As part of their ongoing review of strategic alternatives, in December 2020, members of MSG Entertainment and MSG Networks management considered whether it was appropriate to explore the potential strategic and financial benefits of a business combination transaction between MSG Entertainment and MSG Networks in light of the business and market environments in which the two companies were operating. Management of each company thought it could potentially be beneficial and in the best interests of their respective stockholders to consider a transaction. As a result of the potential conflicts of interest created by the Dolan family group’s position as the controlling stockholder of both MSG Entertainment and MSG Networks, each company scheduled a board meeting to seek authorization for its respective board of directors to form a special committee of independent and disinterested directors to consider a potential transaction.

On January 6, 2021, the MSGE board held a board meeting. Representatives of Sullivan & Cromwell LLP, regular counsel to MSG Entertainment (“Sullivan & Cromwell”), and members of MSG Entertainment’s management participated in the meeting. Sullivan & Cromwell reviewed with the MSGE board certain legal matters including the directors’ fiduciary duties in connection with their consideration of a potential strategic transaction with MSG Networks, the potential conflicts of interest created by the fact that the Dolan family group is a controlling stockholder of both MSG Entertainment and MSG Networks and the need for MSG Entertainment to form a fully empowered special committee comprised solely of independent and disinterested directors in order to consider a potential transaction with MSG Networks. Following discussion, the MSGE board approved resolutions authorizing the creation of the MSGE special committee, and vested it with the full power and authority of the MSGE board to evaluate and determine whether or not MSG Entertainment should pursue a potential strategic transaction with MSG Networks and, if the MSGE special committee determined to so pursue a transaction, or in connection with its evaluation of whether or not to pursue a transaction, to among other things, (i) investigate the appropriate relative valuations of MSG Entertainment and MSG Networks; (ii) evaluate and determine the possible terms of a potential transaction, including with respect to transaction structure and

 

59

price; (iii) interact with representatives of MSG Networks regarding a potential transaction at such time and on such terms as the MSGE special committee deemed appropriate; (iv) establish, approve, modify, monitor and direct the process and procedures related to the evaluation and negotiation of a potential transaction by MSG Entertainment; (v) negotiate with MSG Networks and its representatives and advisors all elements of a potential transaction, including the transaction structure, price, terms and conditions (including the terms and conditions of any definitive agreements with respect thereto); (vi) to the extent the MSGE special committee deemed it appropriate, report to the MSGE board its recommendations and determinations with respect to a potential transaction, including whether such potential transaction should be approved by the MSGE board; and (vii) determine to not pursue a potential transaction and to terminate any and all discussions and negotiations by MSG Networks concerning a potential transaction. The MSGE board also resolved (i) not to recommend or approve any such transaction without a prior favorable recommendation from the MSGE special committee and (ii) to empower the MSGE special committee to select and retain legal counsel, financial advisors, accountants and other advisors as the MSGE special committee deems necessary to assist in discharging its responsibilities. The MSGE board appointed Matthew C. Blank and Frederic V. Salerno to serve as the members of the MSGE special committee, each of whom was determined by the MSGE board to (i) be independent directors for purposes of the New York Stock Exchange corporate governance standards, (ii) not be affiliated with MSG Networks or the Dolan family group and (iii) not have an interest in a potential transaction that is different from, or in addition to, the interests of MSG Entertainment’s stockholders generally.

Also on January 6, 2021, the MSGE special committee held an organizational meeting. Representatives of Sullivan & Cromwell and the General Counsel of MSG Entertainment participated in the meeting. The MSGE special committee discussed the retention of sophisticated and independent legal counsel and financial advisors.

Following careful consideration and review, the MSGE special committee retained Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”) as its legal counsel on January 8, 2021, after determining that Wachtell Lipton was capable of providing the MSGE special committee with independent advice in connection with its responsibilities.

On January 7, 2021, the MSGN board held a board meeting. Representatives of Sullivan & Cromwell, regular counsel to MSG Networks, and members of MSG Networks’ management participated in the meeting. Sullivan & Cromwell reviewed with the MSGN board certain legal matters including the directors’ fiduciary duties in connection with their consideration of a potential strategic transaction with MSG Entertainment, the potential conflicts of interest created by the fact that the Dolan family group is a controlling stockholder of both MSG Entertainment and MSG Networks and the need for MSG Networks to form a fully empowered special committee comprised solely of independent and disinterested directors in order to consider a potential transaction with MSG Entertainment. Following discussion, the MSGN board approved resolutions authorizing the creation of the MSGN special committee, and vested it with the full power and authority of the MSGN board to evaluate and determine whether or not MSG Networks should pursue a potential strategic transaction with MSG Entertainment and, if the MSGN special committee determined to so pursue a transaction, or in connection with its evaluation of whether or not to pursue a transaction, to, among other things, (i) investigate the appropriate relative valuations of MSG Networks and MSG Entertainment; (ii) evaluate and determine the possible terms of a potential transaction, including with respect to transaction structure and price; (iii) interact with representatives of MSG Entertainment regarding a potential transaction at such time and on such terms as the MSGN special committee deemed appropriate; (iv) establish, approve, modify, monitor and direct the process and procedures related to the evaluation and negotiation of a potential transaction by MSG Networks; (v) negotiate with MSG Entertainment and its representatives and advisors all elements of a potential transaction, including the transaction structure, price, terms and conditions (including the terms and conditions of any definitive agreements with respect thereto); (vi) to the extent the MSGN special committee deemed it appropriate, report to the MSGN board its recommendations and determinations with respect to a potential transaction, including whether such potential transaction should be approved by the MSGN board; and (vii) determine to not pursue a potential transaction and to terminate any and all discussions and negotiations by MSG Entertainment concerning a potential transaction. The MSGN board also resolved (i) not to recommend or approve any such transaction

 

60

without a prior favorable recommendation from the MSGN special committee and (ii) to empower the MSGN special committee to select and retain legal counsel, financial advisors, accountants and other advisors as the MSGN special committee deems necessary to assist in discharging its responsibilities. The MSGN board appointed Joel M. Litvin, who had previously been a member of the 2019 special committee, and Joseph M. Cohen to serve as the members of the MSGN special committee, each of whom was determined by the MSGN board to (i) be independent directors for purposes of the New York Stock Exchange corporate governance standards, (ii) not be affiliated with MSG Entertainment or the Dolan family group and (iii) not have an interest in a potential transaction that is different from, or in addition to, the interests of MSG Networks’ stockholders generally.

In advance of the MSG Entertainment and MSG Networks board meetings, Debevoise & Plimpton LLP (“Debevoise”), counsel to the Dolan family group, communicated to Sullivan & Cromwell that the Dolan family group would not take any position with respect to a potential transaction at that time and that the views of the Dolan family group with respect to a potential transaction would depend upon the outcome of the special committee process.

Also on January 7, 2021, the MSGN special committee held an organizational meeting. Representatives of Sullivan & Cromwell, the General Counsel of MSG Networks and the Corporate Secretary of MSG Networks participated in the meeting. The MSGN special committee discussed the retention of legal counsel. The following week, the MSGN special committee determined to retain Davis Polk & Wardwell LLP (“Davis Polk”) to serve as its legal counsel based upon, among other things, the favorable work Davis Polk had performed as legal counsel to the 2019 special committee. In advance of retaining Davis Polk, the MSGN special committee confirmed that Davis Polk remained capable of providing the MSGN special committee with independent advice in connection with its responsibilities.

On January 15 and 18, 2021, the MSGE special committee interviewed financial advisors. Later on January 18, 2021, the MSGE special committee met together with Wachtell Lipton and determined that it was in the best interest of MSG Entertainment for the MSGE special committee to retain Moelis and Raine as independent financial advisors to the MSGE special committee. The MSGE special committee determined that Moelis and Raine were capable of providing the MSGE special committee with independent advice in connection with its responsibilities, and discussed the benefits of retaining two financial advisors in order to gain from experience and expertise of both. Thereafter, the MSGE special committee engaged in fee discussions with Moelis and Raine and executed engagement letters with Moelis and Raine on February 4, 2021.

On January 21, 2021, the MSGN special committee held a meeting and determined to appoint LionTree and Morgan Stanley to serve as its independent financial advisors. LionTree and Morgan Stanley had served as financial advisors to the 2019 special committee and the MSGN special committee confirmed that each of Lion Tree and Morgan Stanley remained capable of providing the MSGN special committee with independent advice in connection with its responsibilities. The MSGN special committee noted as significant that the 2019 special committee had formed a highly positive view of the qualifications and performance of LionTree and Morgan Stanley and the familiarity of LionTree and Morgan Stanley with both MSGN and the 2019 discussions regarding a potential transaction with TMSGC. The MSGN special committee believed that these factors would be beneficial to the MSGN special committee and MSG Networks’ stockholders. The MSGN special committee also discussed the benefits of retaining two financial advisors, which would allow the MSGN special committee to benefit from the experience and expertise of both LionTree and Morgan Stanley. Thereafter, the MSGN special committee engaged in fee discussions with LionTree and Morgan Stanley and executed engagement letters with LionTree on February 12, 2021 and with Morgan Stanley on February 26, 2021.

Also on January 21, 2021, the MSGE special committee indicated to the MSGN special committee that it would like to have an introductory meeting.

 

61

On January 25, 2021, the MSGN special committee held a meeting. Representatives of Davis Polk participated in the meeting. The MSGN special committee and the representatives of Davis Polk discussed, among other things, the proposed introductory meeting between the MSGN special committee and the MSGE special committee.

On January 25, 26 and 29, 2021, the MSGE special committee held meetings with Wachtell Lipton to discuss the terms of Moelis and Raine’s retention as financial advisors to the MSGE special committee, the terms of the proposed confidentiality agreement with respect to the potential transaction and other matters.    

On January 28, 2021, the MSGN special committee and the MSGE special committee held an introductory meeting during which the parties confirmed interest in exploring a potential transaction. Terms for a potential transaction were not discussed. The MSGN special committee and the MSGE special committee agreed to remain in touch and, to that end, to hold bi-weekly conference calls. Later on January 28, 2021, the MSGN special committee held a meeting. Representatives of Davis Polk participated in the meeting. The MSGN special committee discussed its prior meeting with the MSGE special committee, noting in particular that although terms for a potential transaction between MSG Networks and MSG Entertainment were not discussed, the MSGE special committee appeared prepared to commence work and engage in discussions to explore a potential transaction between MSG Networks and MSG Entertainment.

Also during January 2021, following an inbound inquiry members of MSG Networks management conducted due diligence on a potential strategic opportunity and determined that it would not lead to a viable transaction for MSG Networks. The MSGN special committee was informed of the potential opportunity and the conclusions of MSGN management.

On February 5, 2021, the MSGE special committee held a meeting with Wachtell Lipton to further discuss the terms of the proposed confidentiality agreement with respect to the potential transaction and other matters.    

On February 5, 2021, MSG Networks and MSG Entertainment entered into a mutual non-disclosure and confidentiality agreement regarding information to be disclosed in connection with a possible transaction.

On February 8, 2021, the MSGN special committee held a meeting. Representatives of LionTree, Morgan Stanley and Davis Polk participated in the meeting. The MSGN special committee discussed with its advisors, among other things, potential process, timing and due diligence in connection with a possible transaction with MSG Entertainment.

On February 9, 2021, the MSGE special committee met with members of MSG Entertainment’s management who were not also employees of MSG Networks (“MSGE management”). MSGE management presented the MSGE special committee with a business overview of MSG Entertainment, its strategy and approach to the market, the potential strategic and financial benefits of a transaction and MSG Entertainment’s perspective on the strengths of its organization and business.

On February 11, 2021, the MSGE special committee met with Moelis, Raine and Wachtell Lipton to discuss the potential timetable and process for determining whether to pursue a transaction with MSG Networks.

On February 17, 2021, as previously agreed between the two committees, the MSGN special committee and the MSGE special committee held a bi-weekly meeting. The parties expressed a mutual desire to continue discussions and conduct the process in a diligent and efficient manner. Terms for a potential transaction were not discussed.

On February 18, 2021, the MSGE special committee held a meeting with Moelis, Raine and Wachtell Lipton and discussed the meeting the previous day with the MSGN special committee, the mutual desire to continue discussions and timing and process matters.

 

62

PJT Partners LP (“PJT Partners”) has provided financial advisory services to MSG Entertainment from time to time and assisted MSGE’s management in its review of financial, market and industry information in preparation for MSGE management’s due diligence of MSG Networks.

On February 24, 2021, MSGE management provided a presentation regarding MSG Entertainment’s business to the MSGN special committee, members of MSG Networks’ management who were not also employees of MSG Entertainment (“MSGN management”), LionTree, Morgan Stanley and Davis Polk. Also in attendance were the MSGE special committee, Moelis, Raine and Wachtell Lipton.

On February 26, 2021, MSGN management provided a presentation regarding MSG Networks’ business to the MSGE special committee, MSGE management, Moelis, Raine and Wachtell Lipton. Also in attendance were the MSGN special committee, LionTree, Morgan Stanley and Davis Polk.

On March 2, 2021, MSG Entertainment provided access to a virtual data room to the MSGN special committee’s advisors and MSGN management to perform due diligence.

On March 3, 2021, as previously agreed between the two committees, the MSGN special committee and the MSGE special committee held a bi-weekly meeting. The committees discussed the process of exploring a potential transaction and terms for a potential transaction were not discussed.

On March 4, 2021, the MSGE special committee held a meeting with Moelis, Raine and Wachtell Lipton. Moelis and Raine updated the MSGE special committee on their discussions with LionTree and Morgan Stanley, during which LionTree and Morgan Stanley had communicated to Moelis and Raine that the MSGN special committee would not be making a transaction proposal and the MSGN special committee and its advisors were working to be in a position to evaluate any proposal that the MSGE special committee might choose to make. The MSGE special committee and its advisors then discussed the possibility of making such a proposal.

Also on March 4, 2021, MSG Networks provided access to a virtual data room to the MSGE special committee’s advisors and MSGE management to perform due diligence.

Thereafter, a number of discussions occurred with respect to MSG Networks’ financial projections and various due diligence topics. The participants in these discussions included MSGE management, MSGN management and the respective advisors to the MSGN special committee and the MSGE special committee and, in some cases, the MSGE special committee and the MSGN special committee.

On March 10, 2021, an article published on bloomberg.com (the “Bloomberg article”) reported that MSG Networks and MSG Entertainment were in the early stages of deliberations regarding a potential sale of MSG Networks to MSG Entertainment. On March 11, 2021, the MSGE special committee held a meeting with Moelis, Raine and Wachtell Lipton, during which Moelis and Raine reported that LionTree and Morgan Stanley confirmed that the MSGN special committee and its advisors were prepared to receive a proposal from the MSGE special committee. The MSGE special committee and its advisors discussed the materials prepared by the advisors and determined to make a proposal to the MSGN special committee. The MSGE special committee discussed with Wachtell Lipton, Moelis and Raine that a combination of MSG Entertainment and MSG Networks would not constitute a change of control of either company and determined to make a proposal for an “at market” transaction based on the 60-day weighted average stock prices of the companies.

On March 11, 2021, the MSGN special committee held a meeting. MSGN management, LionTree, Morgan Stanley and Davis Polk also participated in the meeting. After providing an update on the process and timing relating to a possible transaction, LionTree and Morgan Stanley reviewed their preliminary findings and provided research analyst valuation perspectives with respect to both MSG Entertainment and MSG Networks. The MSGN special committee also discussed with its advisors the potential benefits and drawbacks to MSG Networks’ stockholders of a business combination transaction with MSG Entertainment, including the potential benefits to

 

63

MSG Networks’ stockholders of concluding a transaction quickly in light of the relative recent stock performance of the two companies and the potential future benefit to MSG Entertainment’s stock performance from the anticipated easing of COVID-19 pandemic restrictions on live performance events.

On March 12, 2021, at the request of the MSGE special committee, the MSGN special committee had a meeting with the MSGE special committee. During the meeting, the MSGE special committee informed the MSGN special committee that a written proposal for MSG Entertainment to acquire MSG Networks for a fixed exchange ratio of 0.163 shares of MSG Entertainment for each share of MSG Networks would shortly be sent to the MSGN special committee and its advisors. The MSGE special committee explained that this exchange ratio represented an “at market” transaction based on the volume weighted average price (“VWAP”) of the two companies’ stock prices for the 60 days preceding the Bloomberg article.

Later on March 12, 2021, Wachtell Lipton delivered to Davis Polk the MSGE special committee’s written proposal and an initial draft of the merger agreement. Wachtell Lipton subsequently delivered to Davis Polk initial drafts of the voting agreements that it was proposed the Dolan family group would enter into with respect to the proposed transaction. Thereafter, Davis Polk and Wachtell Lipton were in regular communication regarding the merger agreement, the voting agreements and other transaction documentation. During those communications, Wachtell Lipton confirmed to Davis Polk that the MSGE special committee was unwilling to consider any transaction that was contingent upon the approval of the holders of a majority of the MSG Networks shares not held by the Dolan family group.

On March 17, 2021, the MSGN special committee held a meeting. MSGN management, LionTree, Morgan Stanley and Davis Polk also participated in the meeting. The participants discussed the proposal that had been received from the MSGE special committee, including that the proposal contemplated an “at market” transaction based on the 60-day VWAP of the two companies’ stock prices preceding the Bloomberg article. Davis Polk reviewed the principal issues raised by the draft merger agreement, including the fact that the draft merger agreement did not contemplate a member of the MSGN board joining the MSGE board upon the closing of the potential transaction, and LionTree and Morgan Stanley provided their initial perspectives with respect to the MSGE special committee’s proposal. The participants at the meeting also discussed again the potential benefits and drawbacks of a transaction with MSG Entertainment, including the timing of a potential transaction, the terms proposed, the respective impacts of the COVID-19 pandemic on the two companies and the importance of an independent MSGN board member joining the MSGE board upon closing given the significant ownership that MSGN’s existing stockholders would have in the combined entity. The MSGN special committee then considered with its advisors the pros and cons of potential responses to the MSGE special committee’s proposal. After discussion, the MSGN special committee instructed LionTree and Morgan Stanley to discuss the proposal with Moelis and Raine, including the rationale, from the MSGE special committee’s perspective, for selecting the 60-day VWAP as the basis for its proposal.

Later on March 17, 2021, LionTree and Morgan Stanley had a meeting with Moelis and Raine during which they discussed the MSGE special committee’s proposal and the rationale for using a 60-day VWAP relative to other, shorter time periods as the appropriate benchmark.

On March 18, 2021, the MSGN special committee held a meeting. MSGN management, LionTree, Morgan Stanley and Davis Polk also participated in the meeting. LionTree and Morgan Stanley updated the MSGN special committee on their discussions with Moelis and Raine and reviewed their financial analysis of the MSGE special committee’s proposal, and the MSGN special committee then discussed again with its advisors the pros and cons of various potential responses to the proposal. Following discussion, the MSGN special committee determined to provide a written response to the MSGE special committee explaining the MSGN special committee’s view that the MSGE special committee’s proposal did not reflect the right measuring period for assessing the relative trading values of the two companies and did not otherwise adequately give MSG Networks credit for the substantial tax and other financial benefits MSG Networks would bring to a combination of the two companies, and that the exchange ratio should be 0.180 shares of MSGE common stock for each share of MSGN

 

64

common stock instead of 0.163. The MSGN special committee also concluded that the written response should express that, in light of the significant ownership that MSG Networks’ existing stockholders would have in the combined entity, the MSGN special committee would also require the expansion of MSGE’s board by one member and the appointment of one of MSG Networks’ existing independent directors to MSGE’s board. Later on March 18, 2021, Davis Polk delivered to Wachtell Lipton a letter from the MSGN special committee to the MSGE special committee to this effect.

On March 18 and 19, 2021, the MSGE special committee held meetings with Moelis, Raine and Wachtell Lipton to review the MSGN special committee’s proposal. Raine and Moelis reviewed the proposal in light of the financial and related analysis provided by Raine and Moelis over the past two months. Moelis and Raine reviewed “at market” exchange ratios and the MSGE special committee determined it was prepared to propose an exchange ratio based on a 30-day VWAP of the two companies’ stock prices.    

Also on March 19, 2021, Wachtell Lipton, Sullivan & Cromwell and Davis Polk spoke about the timing and mechanics of obtaining voting agreements from the Dolan family group. Wachtell Lipton and Davis Polk agreed and informed Sullivan & Cromwell that there would continue to be no discussion with the Dolan family group or Debevoise concerning the details of any transaction unless and until there was an exchange ratio agreed between the respective special committees.

At the request of the MSGE special committee, the MSGN special committee and the MSGE special committee scheduled a meeting for the afternoon of March 21, 2021 in order to discuss the MSGN special committee’s counterproposal. Prior to that meeting, the MSGN special committee held a meeting with MSGN management, LionTree, Morgan Stanley and Davis Polk in attendance. The MSGN special committee discussed with its advisors potential negotiating points and tactics for its upcoming meeting with the MSGE special committee, potential positions that the MSGE special committee might take and potential responses to those positions, as well as the remaining open issues in the merger agreement.

The MSGN special committee met with the MSGE special committee late in the afternoon of March 21, 2021. During that meeting, the MSGE special committee indicated that it was prepared to recommend an “at market” transaction based on the 30-day VWAP of the two companies’ stock prices, which translated to an exchange ratio of 0.1685 shares of MSGE common stock for each share of MSGN common stock. The MSGE special committee further noted that it believed the performance of the two companies’ stock following the Bloomberg article should be disregarded, and expressed a strong desire to conclude negotiations promptly. The MSGE special committee also indicated it was prepared to accept the MSGN special committee’s position that the MSGE board be expanded to include a MSG Networks director upon completion of the transaction.    

Immediately following its meeting with the MSGE special committee, the MSGN special committee reconvened its meeting with MSGN management, LionTree, Morgan Stanley and Davis Polk. The MSGN special committee discussed with its advisors the MSGE special committee’s revised proposal and potential responses to it. The MSGN special committee then reconvened its meeting with the MSGE special committee, expressed its disappointment with the MSGE special committee’s revised proposal and countered with an exchange ratio of 0.176. The MSGE special committee indicated that although it was prepared to provide the MSG Networks stockholders with more credit for the anticipated synergies of a transaction, it would not likely be able to recommend an exchange ratio above a range of 0.1685 to 0.1715. The MSGN special committee countered that it might be prepared to recommend, after a discussion with its advisors, an exchange ratio of 0.172 if the MSGE special committee were willing to recommend a transaction at that exchange ratio. After further discussion, the MSGE special committee confirmed that it would be prepared to recommend an exchange ratio of 0.172, which was within the range of exchange ratios that had been discussed with its financial advisors.

After concluding its meeting with the MSGE special committee, the MSGN special committee again reconvened its meeting with MSGN management, LionTree, Morgan Stanley and Davis Polk. Following discussion with its advisors, the MSGN special committee determined to inform the MSGE special committee (and, after conclusion

 

65

of its meeting, did inform the MSGE special committee) that it was prepared to recommend a transaction with an exchange ratio of 0.172, subject to finalization of documentation.

On March 22, 2021, Davis Polk and Wachtell Lipton had a meeting with Debevoise to inform Debevoise, as counsel to the Dolan family group, that the MSGE special committee and the MSGN special committee had reached a tentative agreement on the terms of a transaction and request that the Dolan family group agree to enter into voting agreements with each of MSG Networks and MSG Entertainment. In a separate meeting, Davis Polk explored with Debevoise whether the Dolan family group would support any strategic transaction involving MSG Networks at this time other than a transaction with MSG Entertainment. Debevoise subsequently indicated that the Dolan family group would not.

From March 22, 2021 to March 25, 2021, the members of the Dolan family group discussed the merits of the potential transaction.

Also on March 22, 2021, Davis Polk, on behalf of the MSGN special committee, sent Wachtell Lipton a revised draft of the merger agreement, which provided that the MSGE board would expand by one member to be chosen by the MSGN board from among MSG Networks’ directors.

On the evening of March 23, 2021, the MSGN special committee held a meeting. MSGN management, LionTree, Morgan Stanley and Davis Polk also participated in the meeting. The MSGN special committee discussed with its advisors movement in the MSG Entertainment and MSG Networks stock prices since the MSGN special committee’s March 21 meeting with the MSGE special committee. The MSGN special committee and its advisors discussed that, despite the movement in the stock prices, the fundamentals underlying the transaction were unchanged and that the 0.172 exchange ratio still represented a 4.3% premium to the implied exchange ratio based on the closing prices of MSG Networks and MSG Entertainment on March 10, 2021, the last trading day prior to the Bloomberg article. The MSGN special committee and its advisors also discussed that they believed the timing of the transaction was generally favorable to MSG Networks, given the increase in MSG Networks’ stock price in recent months. Davis Polk then discussed with the MSGN special committee the remaining open issues in the merger agreement.

On March 24, 2021, the MSGE special committee held a meeting with Moelis, Raine and Wachtell Lipton. Wachtell Lipton provided an overview of the merger agreement, and Raine and Moelis reviewed the transaction process, negotiating history and their independent financial analysis of the merger consideration. After each presentation, each of Raine and Moelis rendered to the MSGE special committee an oral opinion, which was subsequently confirmed by delivery of a written opinion dated March 24, 2021, that as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations, the merger consideration provided for in the merger agreement was fair, from a financial point of view, to MSG Entertainment. After discussion, the MSGE special committee unanimously (1) determined that the merger agreement, the MSGN voting agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of MSG Entertainment, and (2) recommended that the MSGE board adopt resolutions approving, adopting and declaring advisable the merger agreement, the MSGN voting agreement and transactions contemplated thereby, including the merger, and recommending that the MSG Entertainment stockholders approve the MSGE share issuance.

Also on March 24, 2021, the MSGN special committee held a meeting. MSGN management, LionTree, Morgan Stanley and Davis Polk also participated in the meeting. LionTree and Morgan Stanley reviewed with the MSGN special committee that day’s movement in the trading prices of MSG Networks’ and MSG Entertainment’s stock, and the MSGN special committee discussed with its advisors the process and timing to conclude a transaction.

On March 25, 2021, after the markets were closed, the MSGN special committee held a meeting for the purpose of considering the potential transaction with MSG Entertainment, with LionTree, Morgan Stanley and Davis Polk in attendance. Davis Polk led a discussion with the MSGN special committee regarding the fiduciary duties of

 

66

the MSGN special committee members in connection with the proposed transaction. LionTree and Morgan Stanley then reviewed with the MSGN special committee the proposed transaction. Representatives of Morgan Stanley rendered to the MSGN special committee an oral opinion, which was subsequently confirmed by delivery of a written opinion dated March 25, 2021 addressed to the MSGN special committee and the MSGN board, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley set forth therein, the merger consideration to be received by the holders of the MSGN Class A common stock and the MSGN Class B common stock, taken in the aggregate, pursuant to the merger agreement was fair, from a financial point of view, to such holders (other than MSG Entertainment, the Dolan family group and their respective affiliates). For a detailed discussion of Morgan Stanley’s opinion, please see “—Opinion of Financial Advisors to the MSGN Special Committee—Opinion of Morgan Stanley & Co. LLC.” LionTree rendered to the MSGN special committee an oral opinion, which was subsequently confirmed by delivery of a written opinion dated March 25, 2021 addressed to the MSGN special committee and the MSGN board, that, as of such date, and subject to the assumptions, limitations, qualifications and conditions set forth therein, the consideration to be received in the merger by the holders of the MSGN Class A common stock and the MSGN Class B common stock, taken in the aggregate, pursuant to the merger agreement is fair, from a financial point of view, to such holders (other than MSG Entertainment, the Dolan family group and their respective affiliates). For a detailed discussion of LionTree’s opinion, please see “—Opinion of Financial Advisors to the MSGN Special Committee—Opinion of LionTree Advisors LLC.” Davis Polk provided the MSGN special committee with a summary of the key terms and conditions of the merger agreement and the voting agreements. After discussion, the MSGN special committee unanimously recommended, among other things, that the MSG Networks board (i) determine that the merger agreement, the MSGE voting agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (ii) approve, adopt and declare advisable the merger agreement, the MSGE voting agreement and the transactions contemplated thereby, including the merger, (iii) resolve to recommend that the stockholders of MSG Networks adopt the merger agreement and (iv) direct that the merger agreement be submitted to the stockholders of MSG Networks for adoption.

On March 25, 2021, the MSGE board held a meeting with MSGE management and representatives of Raine, Moelis, Wachtell Lipton and Sullivan & Cromwell in attendance. Sullivan & Cromwell led a discussion with the MSGE board regarding the fiduciary duties of the MSGE board members in connection with the proposed transaction. Representatives of Moelis and Raine each reviewed with the MSGE board the financial analysis of the proposed merger that it had provided to the MSGE special committee, and each stated that on March 24, 2021 it had delivered its opinion to the MSGE special committee (which at the request if the MSGE special committee was also addressed to the MSGE board) that as of the date of such opinion, and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in its written opinion, the merger consideration provided for in the merger agreement was fair, from a financial point of view, to MSG Entertainment. Representatives of Wachtell Lipton then summarized the key terms and conditions of the merger agreement and the voting agreements. Representatives of Wachtell Lipton then reviewed with the MSGE board the proposed corporate approvals for the transaction. Following these presentations and discussions, and other discussions by the MSGE board, concerning, among other things, the matters described below under “—MSG Entertainment’s Reasons for the Merger; Recommendation of the MSGE Special Committee and Board of Directors,” in reliance on the recommendation of the MSGE special committee, the MSGE board, by unanimous vote of all directors (i) determined and declared that the merger agreement, the MSGN voting agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment and (ii) approved the merger agreement, the MSGN voting agreement, and the transactions contemplated thereby, including the merger, and (iii) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share issuance and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders.

On March 25, 2021, following the meeting of the MSGN special committee, the MSGN board held a meeting with MSGN management and representatives of LionTree, Morgan Stanley, Davis Polk and Sullivan &

 

67

Cromwell in attendance. Sullivan & Cromwell led a discussion with the MSGN board regarding the fiduciary duties of the MSGN board members in connection with the proposed transaction. LionTree and Morgan Stanley then reviewed with the MSGN board the proposed transaction. Representatives of Morgan Stanley rendered to the MSGN board an oral opinion, which was subsequently confirmed by delivery of a written opinion dated March 25, 2021 addressed to the MSGN special committee and the MSGN board, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley set forth therein, the merger consideration to be received by the holders of the MSGN Class A common stock and the MSGN Class B common stock, taken in the aggregate, pursuant to the merger agreement was fair, from a financial point of view, to such holders (other than MSG Entertainment, the Dolan family group and their respective affiliates). For a detailed discussion of Morgan Stanley’s opinion, please see “—Opinion of Financial Advisors to the MSGN Special Committee—Opinion of Morgan Stanley & Co. LLC.” LionTree rendered to the MSGN board an oral opinion, which was subsequently confirmed by delivery of a written opinion dated March 25, 2021 addressed to the MSGN special committee and the MSGN board, that, as of such date, and subject to the assumptions, limitations, qualifications and conditions set forth therein, the consideration to be received in the merger by the holders of the MSGN Class A common stock and the MSGN Class B common stock, taken in the aggregate, pursuant to the merger agreement is fair, from a financial point of view, to such holders (other than MSG Entertainment, the Dolan family group and their respective affiliates). For a detailed discussion of LionTree’s opinion, please see “—Opinion of Financial Advisors to the MSGN Special Committee—Opinion of LionTree Advisors LLC.” Davis Polk provided the MSGN board with a summary of the key terms and conditions of the merger agreement and the voting agreements. In reliance on the recommendation of the MSGN special committee, the MSGN board unanimously (i) determined that the merger agreement, the MSGE voting agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of MSG Networks and its stockholders (other than MSG Entertainment, the Dolan family group and their respective affiliates), (ii) approved, adopted and declared advisable, the merger agreement, the MSGE voting agreement and the transactions contemplated thereby, including the merger, (iii) resolved to recommend that the stockholders of MSG Networks adopt the merger agreement and (iv) resolved to direct that the merger agreement be submitted to the stockholders of MSG Networks for adoption.

Also on March 25, 2021, the Dolan family committee, which has authority with respect to voting matters for the Dolan family group, approved of the Dolan family group supporting the potential transaction.

Later that night, the transaction documentation was finalized and merger agreement was executed and delivered by MSG Networks, Merger Sub and MSG Entertainment and the voting agreements were executed and delivered by the Dolan family group, MSG Networks and MSG Entertainment, as applicable.

On March 26, 2021, before the markets opened, MSG Networks and MSG Entertainment announced that they had entered into the merger agreement and the voting agreements.

Representatives of PJT Partners, Goldman Sachs and J.P. Morgan provided advice to MSG Entertainment in connection with the preparation of investor materials, stockholder engagement and related matters. In April 2021, MSG Entertainment executed engagement letters with PJT Partners, Goldman Sachs and J.P. Morgan relating to such services, as well as, with respect to PJT Partners, the earlier financial advisory services, provided to MSGE management. None of PJT Partners, Goldman Sachs or J.P. Morgan were retained to, and none of them did, advise, prepare materials for, present to or meet with the MSGE special committee or the MSGE board in connection with the proposed transaction or opine as to the fairness of the proposed transaction.

On May 6, 2021, MSG Networks retained and entered into an engagement letter with Guggenheim Securities, LLC (“Guggenheim Securities”) to provide financial advice to MSG Networks in connection with the preparation of investor materials, shareholder engagement and related matters. Guggenheim Securities was not retained to, and did not, advise, prepare materials for, present to or meet with the MSGN special committee or the MSGN board in connection with the proposed transaction or opine as to the fairness of the proposed

 

68

transaction. Alan Schwartz, the Executive Chairman of Guggenheim Securities, serves as a director of Madison Square Garden Sports Corp.

MSG Entertainment’s Reasons for the Merger; Recommendation of the MSGE Special Committee and Board of Directors

On January 6, 2021, at a duly convened meeting of the MSGE board, the MSGE board adopted resolutions establishing the MSGE special committee, consisting of independent directors Matthew C. Blank and Frederic V. Salerno, each of whom is unaffiliated with the Dolan family group. Pursuant to the resolutions, the MSGE special committee was delegated the full power and authority of the MSGE board to the fullest extent permitted by law to, among other things, consider, review and evaluate and, if appropriate, negotiate the terms of a possible merger or business combination between MSG Entertainment and MSG Networks and to make recommendations to the MSGE board with respect thereto.

On March 24, 2021, the MSGE special committee unanimously (1) determined that the merger agreement, the MSGE voting agreement and the transactions contemplated thereby, including the merger, are fair to, advisable, and in the best interests of MSG Entertainment, and (2) recommended that the MSGE board adopt resolutions approving, adopting and declaring advisable the merger agreement, the MSGE voting agreement and transactions contemplated thereby and recommending that the MSG Entertainment stockholders approve the share issuance.

On March 25, 2021, at a duly convened meeting of the MSGE board, the MSGE board unanimously, in reliance on the recommendation of the MSGE special committee, (1) determined that the merger agreement, the MSGE voting agreement and the transactions contemplated thereby, including the merger, are fair to, advisable and in the best interests of MSG Entertainment, (2) approved the merger agreement, the MSGE voting agreement and the transactions contemplated thereby and (3) resolved to recommend that the MSG Entertainment stockholders vote in favor of the authorization of the MSGE share issuance and directed that the MSGE share issuance be submitted for approval by the MSG Entertainment stockholders.

Accordingly, the MSGE board, acting in reliance upon and accepting the unanimous recommendation of the MSGE special committee, unanimously recommends that MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal.

In arriving at its determinations and recommendations, the MSGE special committee reviewed and discussed a significant amount of information and consulted with members of MSGE management and the MSGE special committee’s independent legal advisors and financial advisors. The following are some of the significant factors that supported the MSGE special committee’s recommendation that the MSGE board approve the merger agreement (which are presented below in no particular order and which were neither ranked nor weighted in any manner by the MSGE special committee):

 

•

the MSGE special committee’s knowledge and understanding of MSG Entertainment’s business, operations, assets and liabilities, financial condition, earnings, strategy and future prospects, and of MSG Networks’ business, strategy and future prospects;

 

•

the MSGE special committee’s belief that the overall potential long-term stockholder value creation proposition to MSG Entertainment stockholders of a merger with MSG Networks would exceed the value of MSG Entertainment as a standalone company, given, among other things, the strategic fit of the MSG Entertainment business with the MSG Networks business and the financial benefits, including synergies, to be realized from the combination of the two companies;

 

•

the MSGE special committee’s assessment of the current and prospective economic climate generally and competitive developments in MSG Entertainment’s industry, including MSG Entertainment’s development of the MSG Sphere in Las Vegas and potential long-term effects of COVID-19 on the entertainment and live events industry;

 

69

•

the potential synergies to be realized from the merger, including increased cash flow and liquidity and enhanced access to capital markets to fund the combined company’s growth initiatives;

 

•

the presentations provided, respectively, by MSGE management and MSGN management to the committees, at the request and invitation of each committee, outlining the value creation options that a combination would create for the stockholders of MSG Entertainment following the merger and, in the case of the MSGE management presentation, shared cultural and business objectives;

 

•

the results of the due diligence review of MSG Networks conducted by the MSGE special committee and its advisors;

 

•

the MSGE special committee’s determination that the proposed merger is fair to, advisable, and in the best interests of MSG Entertainment, which determination was based upon, among other things, the financial analyses, reports and other information prepared by Moelis and Raine, and each of Moelis’ and Raine’s opinion that, as of March 24, 2021, and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in their respective opinions, the merger consideration provided for pursuant to the merger agreement is fair, from a financial point of view, to MSG Entertainment;

 

•

the historical trading price of the MSGE Class A common stock and the MSGN Class A common stock;

 

•

the fact that the terms of the merger provide for MSG Networks stockholders to receive 0.172 shares of MSGE Class A common stock and MSGE Class B common stock for each share of MSGN Class A common stock and MSGN Class B common stock, respectively, and for all MSG Entertainment stockholders to retain their MSGE common stock, and that, upon completion of the merger, MSG Entertainment stockholders will own approximately 71.1% of the common stock of MSG Entertainment (based on the outstanding shares of MSGE common stock and MSGN common stock as of the date of the merger agreement), which will provide MSG Entertainment stockholders with an opportunity to participate, proportionate to their ownership of MSG Entertainment, in the future equity value of MSG Entertainment and the expected synergies resulting from the merger;

 

•

the MSGE special committee’s belief that the combined company would be a leading entertainment and live events business in which MSG Networks’ business could benefit from MSG Entertainment’s strong projected future growth, while MSG Networks’ steady cash flow could be invested in higher return projects at MSG Entertainment;

 

•

the potential incremental benefits of combining MSG Entertainment’s and MSG Networks’ assets to maximize sports betting upside;

 

•

the potential for further alignment between MSG Entertainment and MSG Networks around sponsorship and advertising bundling opportunities;

 

•

the potential for incremental MSG Networks programming opportunities utilizing MSG Entertainment venues and live events;

 

•

the potential for corporate, public company, interest expense and other significant cost synergies;

 

•

the potential financial efficiencies realized through MSG Entertainment’s net operating losses from the temporary shutdown of its venues as a result of COVID-19 and future accelerated depreciation of significant components of its capital investment for the MSG Sphere in Las Vegas, offset by MSG Networks’ taxable income;

 

•

the likelihood of a streamlined integration resulting from overlapping ownership, governance and services already in place;

 

•

the terms of the proposed merger agreement with MSG Networks, including deal protection provisions that the MSGE special committee, on the advice of counsel, viewed as reasonable and that enable the MSGE special committee and the MSGE board to continue to exercise their fiduciary duties as required by applicable law;

 

70

•

the MSGE special committee’s assessment of the likelihood that the proposed merger would be completed without undue delay based on, among other factors and after consulting with counsel, the timeline to obtain required regulatory approvals and satisfy the other conditions to closing;

 

•

the benefits that MSG Entertainment was able to obtain as a result of the MSGE special committee’s negotiations with the MSGN special committee and the belief of the MSGE special committee that this was the best-achievable exchange ratio to which the MSGN special committee would be willing to agree;

 

•

the risks associated with deferring or ceasing engagement with MSG Networks;

 

•

the procedural safeguards and process implemented to enable the MSGE special committee to determine the fairness of the proposed merger, including:

 

•

the independence of the MSGE special committee members and its delegated power and responsibilities;

 

•

the confidential deliberations of the MSGE special committee;

 

•

the MSGE board’s resolution that it would not approve a merger with MSG Networks unless the MSGE special committee recommended it;

 

•

the MSGE special committee’s ability to reject a transaction with MSG Networks if the MSGE special committee determined to do so in its sole discretion;

 

•

the MSGE special committee’s independent, experienced, and qualified legal and financial advisors;

 

•

the receipt of an opinion from each of Moelis and Raine with respect to the fairness from a financial point of view to MSG Entertainment of the merger consideration provided for pursuant to the merger agreement;

 

•

the MSGE special committee’s extensive deliberations, access to information and participation in connection with its consideration, evaluation, and negotiation of the proposed transaction;

 

•

the terms and conditions of the merger agreement, which were determined through arm’s-length negotiation between the MSGE special committee and the MSGN special committee and their respective representatives and advisors; and

 

•

the fact that the compensation of the members of the MSGE special committee is in no way contingent on their approval of any transaction;

 

•

the frequency and extent of the MSGE special committee’s deliberations, and its access to MSG Entertainment’s management and advisors in connection with its evaluation of the proposed transaction;

 

•

the financial advice provided by Moelis and Raine and the financial presentation and analysis of Moelis and Raine, dated March 24, 2021, provided to the MSGE special committee in connection with the rendering of their respective opinions, as more fully described below in the section entitled “—Opinion of the Financial Advisors to the MSGE Special Committee”;

 

•

the opinions of Moelis and Raine rendered to the MSGE special committee on March 24, 2021, which were subsequently confirmed by delivery of separate written opinions, dated as of such date and delivered to the MSGE special committee and the MSGE board, which opinions are included in this joint consent solicitation statement/prospectus as Annexes D and E, respectively, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Moelis and Raine in preparing their opinions, the merger consideration provided for pursuant to the merger agreement was fair, from a financial point of view, to MSG Entertainment, as more fully described in the section entitled “—Opinion of the Financial Advisors to the MSGE Special Committee”;

 

71

•

the fact that the Dolan family group, which collectively owns approximately 70.7% of the total voting power of MSG Entertainment and approximately 76.9% of the total voting power of MSG Networks, respectively, as of May 17, 2021 (inclusive of options exercisable within 60 days of May 17, 2021) will vote in favor of the merger, pursuant to the terms and conditions of voting agreements entered into with MSG Entertainment and MSG Networks respectively, as more fully described in the section entitled “The Voting Agreements”;

 

•

the fact that if MSG Entertainment were to receive an acquisition proposal and the MSGE special committee or the MSGE board determined that the acquisition proposal constituted a superior proposal, the MSGE special committee or the MSGE board would be able, subject to certain conditions, to consider the superior proposal, change or withdraw its recommendation that MSG Entertainment stockholders vote in favor of the merger and/or terminate the merger agreement in order to enter into a definitive agreement providing for a superior proposal, in each case, subject to certain conditions, including the payment of a termination fee described in the section entitled “The Merger Agreement—Expenses and Termination Fees”;

 

•

the ability under the merger agreement for the MSGE special committee or the MSGE board, subject to certain conditions, to change or withdraw its recommendation if the MSGE special committee or the MSGE board determines that the failure to change or withdraw its recommendation would be inconsistent with the directors’ fiduciary duties under applicable law, which would lead to the requirement, subject to certain conditions, that MSG Entertainment pay MSG Networks a termination fee of $21.2 million;

 

•

the restrictions in the merger agreement on MSG Networks’ ability to respond to and negotiate certain acquisition proposals from third parties and the requirement that MSG Networks pay MSG Entertainment a termination fee of $18.9 million in the event the merger agreement is terminated under certain specified circumstances, described in the section entitled “The Merger Agreement—Expenses and Termination Fees”;

 

•

the fact that for United States federal income tax purposes, the merger has been structured to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code, and the expectation that MSG Entertainment and U.S. holders of MSGE common stock generally will not recognize any gain or loss; and

 

•

the MSGE special committee’s determination that the potential benefits (including potential synergies) that it anticipates MSG Entertainment and MSG Entertainment stockholders could achieve as a result of the merger outweigh the uncertainties, risks and potentially negative factors relevant to the merger considered by the MSGE special committee (as described below).

These beliefs and expectations are based in part on the following factors that the MSGE special committee considered (which are presented below in no particular order and which were neither ranked nor weighted in any manner by the MSGE special committee):

 

•

the MSGE special committee’s knowledge and understanding of MSG Entertainment’s business, operations, assets and liabilities, financial condition, earnings, strategy and future prospects;

 

•

information and discussions with MSGE management, in consultation with the MSGE special committee’s advisors, regarding MSG Networks’ business, operations, assets and liabilities, financial condition, earnings, strategy and future prospects, and the results of the MSGE special committee’s due diligence review of MSG Networks;

 

•

the historical and then-current trading prices and volumes of the MSGE Class A common stock and the MSGN Class A common stock;

 

•

The decline in MSG Entertainment stock price coupled with the increase in the MSG Networks stock price following the Bloomberg article;

 

•

publicly available financial and stock market data of certain other publicly traded companies in the media and entertainment industries that the MSGE special committee, in consultation with the MSGE special committee’s advisors, considered to be comparable to each of MSG Entertainment and MSG Networks;

 

72

•

the fact that at the effective time, MSG Entertainment will increase the size of the MSGE board by one director, and one director of MSG Networks selected by the holders of MSGN Class A common stock, to be designated by the MSGN board, will be appointed to the MSGE board as a director to be elected by the holders of MSGE Class A common stock;

 

•

the MSGE special committee’s assessment that, even in the event that MSGE management’s financial plan could be realized, the combined company would be equally if not more capable of realizing those improvements for the benefit of MSG Entertainment through its position of greater scale and stability;

 

•

the MSGE special committee’s determination that, after taking into consideration the above and other factors, the prospects of the combined company were more favorable than the standalone prospects for MSG Entertainment;

 

•

the fixed exchange ratio in the merger agreement, which will not be reduced or increased in the event of a change in the trading price of MSGE Class A common stock or MSGN Class A common stock or the performance of each of MSG Entertainment and MSG Networks independently and relative to one another; and

 

•

the likelihood that the merger would be completed based on, among other things, the conditions to closing and the assessment of the MSGE special committee, after consulting with counsel, of the likelihood of obtaining all required regulatory approvals, and of the termination and remedy provisions under the merger agreement in the event that the merger is not completed due to the failure to obtain required regulatory approvals or otherwise.

The MSGE special committee weighed these factors against a number of uncertainties, risks and potentially negative factors relevant to the merger, including the following (which are presented below in no particular order and which were neither ranked nor weighted in any manner by the MSGE special committee):

 

•

the MSGE special committee’s assessment of the likelihood that the most recent internal financial forecasts developed by MSG Entertainment would be realized;

 

•

the challenges inherent in the combination of two business enterprises of the size and scope of MSG Entertainment and MSG Networks, including the possibility that anticipated synergies and other anticipated benefits of the transaction might not be achieved in the time frame contemplated or at all;

 

•

the other numerous risks and uncertainties that could adversely affect MSG Entertainment’s operating performance and financial results;

 

•

the consumer trend away from traditional distribution channels and the resulting decline in pay-TV subscribers across the industry;

 

•

the risk that the merger may not be completed, and the risk that announcing the transaction or the failure to complete the transaction could lead to negative effects on the business, financial results and stock price of MSG Entertainment, or to negative perceptions of MSG Entertainment among investors, customers, employees and other stakeholders;

 

•

the fact that changes in the regulatory landscape or new industry developments, including changes in consumer preferences, may adversely affect the business benefits anticipated to result from the merger;

 

•

the adverse impact that business uncertainty prior to the closing and during the post-closing integration period could have on the ability of both MSG Entertainment and MSG Networks prior to the closing, and MSG Entertainment following the closing, to attract, retain and motivate key personnel, retain customers and maintain business relationships;

 

•

the significant costs involved in connection with completing the contemplated transactions and the risk that the contemplated transactions may divert management focus and resources from operating MSG Entertainment’s business, as well as other strategic opportunities, and that combining and integrating MSG Entertainment and MSG Networks may result in potential disruption;

 

73

•

the risk that the unaudited prospective financial information of MSG Entertainment and MSG Networks, and the estimated synergies, as further described in the section entitled “—Unaudited Prospective Financial Information,” may not be achieved in the amounts or at the times anticipated;

 

•

the fact that the separate opinions of each of Moelis and Raine to the MSGE special committee as to the fairness to MSG Entertainment, from a financial point of view, of the merger consideration pursuant to the merger agreement speak only as of the date of their respective fairness opinions and do not take into account events occurring, or information that has become available, after such date, including any changes in the operations and prospects of MSG Entertainment and MSG Networks, general market and economic conditions and other factors which may be beyond the control of MSG Entertainment and MSG Networks and on which the fairness opinions were based, any of which may be material;

 

•

the restrictions in the merger agreement on the conduct of MSG Entertainment’s business during the period between execution of the merger agreement and consummation of the merger;

 

•

the fact that pursuant to the terms of the merger agreement, prior to the earlier of the effective time and the termination of the merger agreement, MSG Entertainment is restricted from soliciting, initiating or knowingly facilitating or encouraging the submission of an acquisition proposal with respect to MSG Entertainment;

 

•

the fact that the MSG Entertainment stockholders are not entitled to appraisal rights under the merger agreement or the DGCL;

 

•

the interests, including financial interests, of the Dolan family group with respect to the contemplated transactions that are in addition to, or that may be different from, the interests of the MSG Entertainment stockholders unaffiliated with the Dolan family group;

 

•

the interests, including financial interests, of MSGE’s directors, officers and employees with respect to the contemplated transactions that may be in addition to, or that may be different from, their interests as MSG Entertainment stockholders;

 

•

the risk that MSG Entertainment may incur significant expenses in connection with the contemplated transactions and may become obligated to reimburse certain of MSG Networks’ expenses and/or, under specified circumstances, pay a termination fee of $21.2 million in the event the merger agreement is terminated (as more fully described in the section entitled “The Merger Agreement—Expenses and Termination Fees”) and the effect this could have on MSG Entertainment, including the possibility that the existence of the termination fee obligation could discourage other potential parties from making a competing proposal, although the MSGE special committee believed that the termination fee was reasonable in amount and would not unduly deter any other party that might be interested in making a competing proposal; and

 

•

the risks of the type and nature described in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

The MSGE special committee concluded that the uncertainties, risks and potentially negative factors relevant to the transaction were outweighed by the potential benefits that it expected MSG Entertainment and MSG Entertainment stockholders would achieve as a result of the merger.

In considering the recommendations of the MSGE special committee and the MSGE board, MSG Entertainment stockholders should be aware that certain of MSG Entertainment’s directors, officers and employees have interests in the merger that are different from, or in addition to, the interests of MSG Entertainment stockholders generally. See the section entitled “—Interests of MSG Entertainment’s Directors, Officers and Employees in the Merger.”

 

74

This discussion of the information and factors considered by the MSGE special committee includes the principal positive and negative factors considered by the MSGE special committee, but is not intended to be exhaustive and may not include all of the factors considered. In view of the wide variety of factors considered in connection with its evaluation of the contemplated transactions, and the complexity of these matters, the MSGE special committee did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that the MSGE special committee considered in reaching its determinations to approve the merger agreement, and the contemplated transactions, and to make its recommendations to the MSGE board (and, in turn, the MSGE board’s recommendation to the MSGE stockholders). Rather, the MSGE special committee viewed its decision to recommend the transaction as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the MSGE special committee may have given differing weights to different factors. It should be noted that this explanation of the reasoning of the MSGE special committee and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Accordingly, the MSGE board, acting in reliance upon the unanimous recommendation of the MSGE special committee, unanimously recommends that MSG Entertainment stockholders vote “FOR” each of the MSGE share issuance proposal and the MSGE adjournment proposal.

Opinion of the Financial Advisors to the MSGE Special Committee

Opinion of Moelis & Company LLC

At the meeting of the MSGE special committee on March 24, 2021, to consider the merger agreement and the transactions contemplated thereby, Moelis delivered an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated March 24, 2021, to the effect that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion, the merger consideration (which for purposes of Moelis’ opinion was defined as the Class A merger consideration together with the Class B merger consideration) pursuant to the merger agreement was fair, from a financial point of view, to MSG Entertainment.

The full text of Moelis’ written opinion dated March 24, 2021, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D to this joint proxy statement/prospectus and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the MSGE special committee (solely in its capacity as such), in its evaluation of the merger. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the merger consideration to MSG Entertainment, and does not address MSG Entertainment’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available to MSG Entertainment. Moelis’ opinion does not constitute a recommendation as to how any holder of securities or any other person should vote or act with respect to the merger or any other matter. At the request of the MSGE special committee, Moelis’ opinion was also addressed to the MSGE board and provided for the use and benefit of the MSGE board (solely in its capacity as such) in its evaluation of the merger.

In arriving at its opinion, Moelis, among other things:

 

•

reviewed certain publicly available business and financial information relating to MSG Networks and MSG Entertainment;

 

•

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of MSG Networks furnished to Moelis by MSG Networks, including financial forecasts provided to or discussed with Moelis by MSGN management (described on page 113 of this joint

 

75

proxy statement/prospectus under the caption “—Unaudited Prospective Financial Information—MSG Networks Unaudited Prospective Financial Information” and referred to in this section as the MSG Networks projections);

 

•

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of MSG Entertainment furnished to Moelis by MSG Entertainment, including financial forecasts provided to or discussed with Moelis by MSGE management (described on page 112 of this joint proxy statement/prospectus under the caption “—Unaudited Prospective Financial Information—MSG Entertainment Unaudited Prospective Financial Information” and referred to in this section as the MSGE projections);

 

•

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of MSG Networks furnished to Moelis by MSG Networks, including financial forecasts, as modified and revised by MSGE management and approved by the MSGE special committee (described on page 114 of this joint proxy statement/prospectus under the caption “—Unaudited Prospective Financial Information—MSG Networks Unaudited Prospective Financial Information—Summary of MSG Entertainment’s Adjustments to the MSG Networks Projections” and referred to in this section as the adjusted MSG Networks projections);

 

•

reviewed certain internal information relating to cost savings, synergies and related expenses expected to result from the merger and certain other pro forma financial effects of the transaction (the “expected synergies”) furnished to Moelis by MSG Entertainment, referred to in this section as the expected synergies;

 

•

reviewed certain information relating to the capitalization of MSG Entertainment and MSG Networks provided by MSG Entertainment and MSG Networks, respectively;

 

•

conducted discussions with members of senior management and representatives of both MSG Entertainment and MSG Networks concerning the information described in the foregoing six bullets, as well as the businesses and prospects of MSG Networks and MSG Entertainment generally;

 

•

reviewed publicly available financial and stock market data of certain other companies in lines of business that Moelis deemed relevant;

 

•

reviewed the financial terms of certain other transactions that Moelis deemed relevant;

 

•

reviewed a draft, dated March 12, 2021, of the merger agreement;

 

•

participated in certain discussions among representatives of MSG Entertainment and MSG Networks and their respective advisors; and

 

•

conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.

In connection with its review, and with the consent of the MSGE special committee, Moelis relied on the information supplied to, discussed with or reviewed by it for purposes of its opinion being complete and accurate in all material respects. Moelis did not assume any responsibility for independent verification of (and did not independently verify) any of such information. With the consent of the MSGE special committee, Moelis relied upon, without independent verification, the assessment of MSG Entertainment and its legal, tax, regulatory and accounting advisors with respect to legal, tax, regulatory and accounting matters. With respect to the MSGE projections, the adjusted MSGN projections, the other information relating to MSG Entertainment and MSG Networks and the expected synergies, Moelis assumed, at the direction of the MSGE special committee, that they have been reasonably prepared on a basis reflecting the best then available estimates and judgments of MSGE management as to the future performance of MSG Entertainment and MSG Networks and such expected synergies (including the amount, timing and achievability thereof). Moelis also assumed, at the direction of the MSGE special committee, that the future financial results (including the expected synergies) reflected in such forecasts would be achieved at the times and in the amounts projected. Moelis did not express any views as to the

 

76

reasonableness of any financial forecasts, the expected synergies or the assumptions on which they were based. In addition, with the consent of the MSGE special committee, Moelis did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of MSG Entertainment or MSG Networks, nor was Moelis furnished with any such evaluation or appraisal.

With the consent of the MSGE special committee, Moelis assumed for purposes of its analysis and opinion that the economic rights of the MSGN Class A common stock and MSGN Class B common stock are identical to each other, and that the economic rights of the MSGE Class A common stock and MSGE Class B common stock are identical to each other, except, in each case, as could not be material to Moelis’ analysis or opinion. Moelis’ analysis and opinion did not address the non-economic rights of any such shares (including voting rights), and, at the direction of the MSGE special committee, Moelis did not attempt to place any financial value on any such non-economic rights. Further, Moelis’ opinion did not address the allocation of shares of MSGE Class A common stock and MSGE Class B common stock to be issued pursuant to the transaction among the holders of MSGN Class A common stock and MSGN Class B common stock. For purposes of its analysis and opinion, Moelis was directed by the MSGE special committee not to differentiate between the classes of MSGN common stock, in relation to each other, and the classes of MSGE common stock, in relation to each other. With the consent of the special committee, Moelis also assumed that the aggregate number of shares of MSGE Class A common stock and MSGE Class B common stock to be issued by MSG Entertainment as a result of the rounding convention reflected in the merger consideration would not be material to its analysis or opinion.

Moelis’ opinion did not address MSG Entertainment’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available to MSG Entertainment and did not address any legal, regulatory, tax or accounting matters. At the direction of the MSGE special committee, Moelis was not asked to, and Moelis did not, offer any opinion as to any terms of the merger agreement or any aspect or implication of the merger, except for the fairness of the merger consideration from a financial point of view to MSG Entertainment. With the consent of the MSGE special committee, Moelis did not express any opinion as to what the value of MSGE common stock actually would be when issued pursuant to the merger or the prices at which MSGE Class A common stock or MSGN Class A common stock might trade at any time. In rendering its opinion, Moelis assumed, with the consent of the MSGE special committee, that the final executed form of the merger agreement would not differ in any material respect from the draft that Moelis had reviewed, that the merger would be consummated in accordance with its terms without any waiver or modification that could be material to its analysis, and that the parties to the merger agreement would comply with all the material terms of the merger agreement. Moelis assumed, with the consent of the MSGE special committee, that all governmental, regulatory or other consents and approvals necessary for the completion of the merger would be obtained except to the extent that could not be material to its analysis. In addition, representatives of MSG Entertainment advised Moelis, and Moelis assumed, with the consent of the MSGE special committee, that the merger would qualify as a tax-free reorganization for federal tax purposes. In connection with Moelis’ engagement, it was not authorized to, and it did not, solicit indications of interest from third parties regarding a potential transaction with MSG Entertainment.

Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of the opinion, and Moelis assumed no responsibility to update its opinion for developments after the date of the opinion.

Moelis’ opinion was for the use and benefit of the MSGE special committee (solely in its capacity as such) in its evaluation of the merger. Moelis’ opinion does not constitute a recommendation as to how any holder of securities or other person should vote or act with respect to the merger or any other matter. Moelis’ opinion did not address the fairness of the merger or any aspect or implication thereof to, or any other consideration of or relating to, the holders of any class of securities, creditors or other constituencies of MSG Entertainment or MSG Networks. In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the merger, or any class of such persons, whether relative to the merger consideration or otherwise. Moelis’ opinion was approved by a Moelis fairness opinion committee.

 

77

Summary of Financial Analyses

The following is a summary of the material financial analyses presented by Moelis to the MSGE special committee at its meeting held on March 24, 2021, in connection with its opinion. At the request and direction of the MSGE special committee, Moelis also presented the financial analyses summarized below to the MSGE board at a meeting of the MSGE board held on March 25, 2021. This summary describes the material analysis underlying Moelis’ opinion but does not purport to be a complete description of the analyses performed by Moelis in connection with its opinion.

Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.

For the purposes of Moelis’ analysis:

 

•

“Total enterprise value,” which is referred to as “TEV,” was generally calculated as the market value of the relevant company’s fully diluted common equity based on its closing stock price as of March 22, 2021, which is referred to as the “equity value,” (i) plus preferred stock, if any, (ii) plus debt, and (iii) less cash and cash equivalents (in each of the foregoing cases (i) through (iii), as of the relevant company’s most recently reported quarter end).

 

•

“EBITDA” was generally calculated as the relevant company’s earnings before interest, taxes, depreciation and amortization, including the burden of stock-based compensation expense (“SBC”) adjusted to exclude (i) one-time charges and benefits and (ii) EBITDA associated with non-controlling interests because book value of non-controlling interests was excluded from TEV.

 

•

Based on information provided by MSGE management and MSGN management, as applicable, per share calculations assumed (i) basic outstanding MSGE common shares and shares of MSGN common stock as disclosed in the merger agreement, and (ii) conversion of outstanding options and other equity-based awards as disclosed in the merger agreement, using the treasury stock method, with strike prices as provided by MSGE management or MSGN management, as applicable.

 

•

“Adjusted operating income” (“AOI”) was generally calculated as the relevant company’s EBITDA, as defined above, adjusted to exclude the burden of SBC. EBITDA was assumed to be a proxy for AOI (less SBC) and TEV/EBITDA multiples included herein have been applied to AOI (less SBC) for MSG Entertainment and MSG Networks.

Discounted Cash Flow Analysis

Moelis performed discounted cash flow, which is referred to as DCF, analyses of both MSG Entertainment and MSG Networks to calculate the present value of the estimated future unlevered after-tax free cash flows projected by MSGE management to be generated by MSG Entertainment and MSG Networks and an estimate of the present value of the terminal value of each of MSG Entertainment and MSG Networks. For purposes of the DCF analysis, Moelis treated estimates for stock-based compensation as a cash expense.

MSG Entertainment

Moelis calculated cash flow (utilizing the MSGE projections) as AOI, less SBC and tax depreciation and amortization, to calculate EBIT and EBIT less taxes, capital expenditures and change in net working capital plus depreciation and amortization to estimate unlevered free cash flow. For purposes of its analysis, Moelis assumed with the MSGE special committee’s and MSGE management’s consent that MSG Entertainment’s terminal year depreciation and amortization were equal to the terminal year capital expenditures estimates provided by MSGE management.

 

78

Moelis utilized a range of discount rates of 8.50% to 10.50% based on an estimated range of MSG Entertainment’s weighted average cost of capital, which is referred to as the WACC. The WACC range reflected a derived cost of equity using (i) a risk-free rate based on 20-year U.S. government bonds, (ii) a selected range of unlevered betas and debt to total capitalization ratios informed by the MSG Entertainment selected companies described below, (iii) an equity risk premium and (iv) a size premium. Moelis used the foregoing range of discount rates to calculate estimated present values of MSG Entertainment as of December 31, 2020 of (i) estimated after-tax unlevered free cash flows of MSG Entertainment for the second half of the fiscal year ending June 30, 2021 through the fiscal year ending June 30, 2025 (in each case, discounted using a mid-year discounting convention) and (ii) estimated terminal values derived using the perpetuity growth method and assuming a range of perpetuity growth rates of 2.0% to 3.5%. The perpetuity growth rate took into account the long-term contracted revenue from the New York Knicks and New York Rangers which reflects a significant portion of MSG Entertainment’s revenue and grows 3.0% annually. Moelis utilized a cash tax rate of 29% during this same period, per the MSGE projections.

In calculating the implied equity value range of MSG Entertainment, Moelis separately valued MSG Entertainment’s net operating losses, which is referred to as NOLs, based on projected usage as provided by MSGE management and discounted to December 31, 2020 using the same discount rate range derived from the WACC calculation, and based on aggregate taxes saved through utilization of maximum of 80% of taxable income in a given year.

The stand-alone implied equity value ranges and implied per share price ranges for the MSGE common shares derived from the DCF analysis are presented below:

 

		Implied Equity Value ($ in millions)		Implied Per Share Price
Including NOLs(1)		$1,652 - $3,032		$65.65 - 120.27

 

(1)	NOLs contribute $127mm - $143mm of implied enterprise value ($5.05 - $5.69 per share).

Moelis noted that the implied terminal value represented approximately 178% of total implied DCF net present value for MSG Entertainment. Moelis noted that the foregoing ranges resulted in a range of implied AOI (less SBC) terminal multiples of 7.4x – 12.8x.

MSG Networks

Moelis calculated MSG Networks’ unlevered free cash flow (utilizing the adjusted MSGN projections) as AOI, less SBC, depreciation and amortization, to calculate EBIT and EBIT less taxes, capital expenditures, change in net working capital, pension contributions, and other cash flow items plus depreciation and amortization to estimate unlevered free cash flow. For purposes of its analysis, Moelis assumed MSG Networks’ terminal year depreciation and amortization was equal to the terminal year capital expenditures, which is assumed to be equal to MSG Networks’ projected FY2025 capital expenditures provided by MSG Networks.

Moelis utilized a range of discount rates of 6.00% to 8.25% based on an estimated range of MSG Networks’ WACC. The WACC range reflected a derived cost of equity using (i) a risk-free rate based on 20-year U.S. government bonds, (ii) a selected range of unlevered betas and debt to total capitalization ratios informed by the MSG Networks selected companies described below, (iii) an equity risk premium and (iv) a size premium. Moelis used the foregoing range of discount rates to calculate estimated present values of MSG Networks as of December 31, 2020 of (i) estimated after-tax unlevered free cash flows of MSG Networks for the second half of the calendar year ending December 31, 2021 through the calendar year ending December 31, 2025 (in each case, discounted using a mid-year discounting convention) and (ii) estimated terminal values derived using the perpetuity growth method and assuming a range of perpetuity growth rates of (1.0%) to 0.0%. Moelis also assumed an applicable cash tax rate of 33% during this same period, per MSGE management’s guidance.

 

79

The stand-alone implied equity value ranges and implied per share price ranges for the MSGN common stock that were derived from the DCF analysis are presented below:

 

Implied Equity Value ($ in million)		Implied Per Share Price
$697 - $1,408		$11.63 - $23.23

Moelis noted that the implied terminal value represented approximately 70% of total implied DCF net present value for MSG Networks. Moelis noted that the foregoing ranges resulted in a range of implied AOI (less SBC) terminal multiples of 7.0x – 10.9x.

For purposes of the foregoing analysis, Moelis utilized the adjusted MSGN projections. However, for the information of the MSGE special committee, Moelis noted that based on the MSG Networks projections, the foregoing implied per share price would be $14.20 to $27.04 per share of MSGN common stock.

DCF-Based Exchange Ratio and Ownership Percentage

Based on the stand-alone implied equity value ranges and implied share price ranges for MSG Entertainment and MSG Networks presented in the DCF analysis above, Moelis calculated implied ranges of the exchange ratio and the pro forma MSG Entertainment ownership percentage, which are presented below:

 

		Implied Exchange Ratio(1)				Implied Pro Forma MSG Entertainment Ownership  Percentage(2)
DCF Analysis			0.097x - 0.354x			54.0% - 81.3%

 

(1)

The low end of the range of the implied exchange ratio represents the high end of the range of implied value per MSGE common share versus the low end of the range of implied value per share of MSGN common stock. The high end of the range of the implied exchange ratio represents the low end of the range of implied value per MSGE common share versus the high end of the range of implied value per share of MSGN common stock.

(2)

The high end of the range of the implied pro forma MSGE ownership percentage represents the high end of the implied equity value range of MSG Entertainment versus the low end of the implied equity value range of MSG Networks. The low end of the range of the implied pro forma MSGE ownership percentage represents the low end of the implied equity value range of MSG Entertainment versus the high end of the implied equity value range of MSG Networks.

Moelis compared the implied ranges of the exchange ratio above to the exchange ratio of 0.172x in the merger and the implied ranges of pro forma MSGE ownership percentage above to the implied pro forma MSGE ownership percentage of approximately 70.9% at the exchange ratio of 0.172x.

Selected Publicly Traded Companies Analysis

Moelis performed a selected publicly traded companies analysis of each of MSG Entertainment and MSG Networks. Financial data for the selected publicly traded companies was based on public filings and other publicly available information available as of March 22, 2021.

MSG Entertainment

In the case of MSG Entertainment, Moelis reviewed and analyzed, among other things, TEV/EBITDA multiples based on actual figures for FY2019A and Wall Street estimates for FY2023E (Moelis did not consider FY2020A—FY2022E due to the material impact from the COVID-19 pandemic). Moelis utilized a sum-of-the-parts approach to this analysis given the lack of meaningful publicly traded companies comparable to

 

80

MSG Entertainment as a whole or for publicly traded companies comparable to each segment of MSG Entertainment. Accordingly, Moelis analyzed companies to develop separate reference ranges for the Entertainment (excluding MSG Sphere overhead costs) and Tao segments, given the different characteristics of each segment. Corporate costs were assumed at the weighted average Entertainment and Tao multiple. The MSG Sphere was included at its budgeted cost of $1.66 billion. Other investments and land were included at their respective balance sheet carrying cost or mark-to-market value. For the purposes of its analysis, Moelis selected publicly traded live events and venue companies and restaurant/hospitality groups which, Moelis believed, based on its experience and professional judgment, were generally relevant in certain respects to the Entertainment and Tao segments of MSG Entertainment, which are referred to as the MSG Entertainment selected companies:

MSG Entertainment Selected Companies

Live Events/Venue Companies:

 

•

Live Nation Entertainment, Inc.

 

•

CTS Eventim AG & Co. KGaA

Restaurants/Hospitality:

 

•

The ONE Group Hospitality, Inc.

Although no MSG Entertainment selected company is directly comparable to MSG Entertainment’s Entertainment and Tao segments, Moelis focused on these companies because, among other things, they have one or more similar operating and financial characteristics with MSG Entertainment’s Entertainment and Tao segments.

For the information of the MSGE special committee and for reference only, Moelis also looked at the following businesses (which are referred to as the “reference only companies”), which in Moelis’ view, were similar to MSG Entertainment in limited aspects. Moelis did not utilize these companies in its selected publicly traded companies analysis because Moelis viewed these companies as less comparable to MSG Entertainment in certain respects such as (i) revenue mix weighted towards media rights and/or gaming-related activities, and/or (ii) the lack of differentiated, marquee assets:

 

•

Liberty Media Corporation Formula One Group

 

•

Churchill Downs Incorporated

 

•

Six Flags Entertainment Corporation

 

•

SeaWorld Entertainment, Inc.

 

•

Cedar Fair, L.P. (d.b.a. Cedar Fair Entertainment Company)

 

•

Madison Square Garden Sports Corp.

 

•

World Wrestling Entertainment, Inc.

 

•

Manchester United plc

 

•

Liberty Media Corporation Braves Group

 

81

The following table summarizes the results of the selected publicly traded companies analysis for the MSG Entertainment selected companies:

 

TEV ($ in billions)

TEV/ FY 2019A EBITDA(1)

TEV/ FY 2023E EBITDA(1)

MSG Entertainment selected companies

Live Nation Entertainment, Inc.

$

22.4

26.7x

19.5x

CTS Eventim AG & Co. KGaA

$

5.8

19.1x

17.6x

The ONE Group Hospitality Inc. (2)

$

0.3

24.5x

11.1x

Reference only companies

Liberty Media Corporation Formula One Group

$

12.4

31.9x

21.3x

Churchill Downs Incorporated

$

10.2

28.2x

14.8x

Six Flags Entertainment Corporation

$

7.2

12.9x

14.5x

SeaWorld Entertainment, Inc.

$

5.9

14.3x

11.2x

Cedar Fair, L.P.

$

5.4

11.4x

9.1x

World Wrestling Entertainment, Inc.

$

5.1

32.5x

15.6x

Madison Square Garden Sports Corp.

$

5.0

NM

NM

Manchester United plc

$

3.4

13.3x

12.9x

Liberty Media Corporation Braves Group

$

2.3

NM

32.6x

MSG Entertainment

Consensus

$

1.5

39.1x

15.9x

Management

$

1.5

39.1x

45.4x

 

(1)	Projections for the selected companies have been calendarized to MSG Entertainment’s fiscal year end of June 30.

(2)	Figure in FY2023E column represents CY2022E multiple due to lack of FY2023E estimates.

In light of the foregoing review and based on its professional judgment and experience, Moelis applied ranges of selected multiples derived from the MSG Entertainment selected companies of (i) 16.5x to 18.5x to the adjusted MSGE projections’ FY2023E AOI (less SBC) for the Entertainment segment (excluding MSG Sphere) and (ii) 9.0x to 11.0x to MSG Entertainment’s projected CY2022E AOI for the Tao segment. As described above, with the consent of the MSGE special committee, Moelis assumed a value for the MSG Sphere at its budgeted cost of $1.66 billion (cash was adjusted for the remaining cost of MSG Sphere, or $1.015 billion to arrive at a pro forma cash figure of $463 million; pro forma cash was then netted against MSG Entertainment’s $715 million of total debt to arrive at an adjusted net debt figure of $253 million), NOLs were valued separately based on present value of projected tax saving through FY2031E, and MSG Sphere overhead costs were not included. Other investments and land included in the valuation consisted of equity method investments at December 31, 2020 book value, cost method investments at December 31, 2020 book value, London land recognized at cost on day of purchase and investments in Townsquare and DraftKings at public market prices. In total, the above selected publicly traded companies analysis derived an implied equity value range for MSG Entertainment of $130.49-139.70 per share of MSGE common stock.

MSG Networks

In the case of MSG Networks, Moelis reviewed and analyzed TEV/EBITDA multiples based on Wall Street estimates for FY2021E and FY2022E, the adjusted MSGN projections, and certain other financial information and market trading data related to the following selected publicly traded companies whose operations Moelis believed, based on its experience and professional judgment, were generally relevant in certain respects to MSG Networks, which are referred to as the MSG Networks selected companies:

 

82

Television Networks:

 

•

ViacomCBS Inc.

 

•

Discovery, Inc.

 

•

AMC Networks Inc.

Television Broadcast:

 

•

FOX Corporation

 

•

Sinclair Broadcast Group, Inc.

 

•

Nexstar Media Group, Inc.

 

•

Tegna Inc.

 

•

The E.W. Scripps Company

 

•

Gray Television, Inc.

Although no MSG Networks selected company is directly comparable to MSG Networks, Moelis focused on these companies because, among other things, they have one or more similar operating and financial characteristics with MSG Networks.

The following table summarizes the results of the selected publicly traded companies’ analysis for the MSG Networks selected companies:

 

TEV ($ in billion)

TEV/ FY 2021E EBITDA(1)

TEV/ FY 2022E EBITDA(1)

MSG Networks Selected Companies

Broadcasters

The E.W. Scripps Company

$

5.9

9.1x

8.4x

Sinclair Broadcast Group, Inc.

$

13.3

8.8x

10.3x

Tegna Inc.

$

8.1

8.5x

7.9x

Nexstar Media Group, Inc.

$

13.8

7.5x

7.3x

Gray Television, Inc.

$

5.8

7.2x

7.2x

Diversified Media/Cable Networks

ViacomCBS Inc.

$

80.9

17.2x

17.7x

Discovery, Inc.

$

61.2

16.0x

16.4x

FOX Corporation

$

29.0

10.7x

10.6x

AMC Networks Inc.

$

5.2

7.5x

8.0x

All MSG Networks Selected Companies

Broadcaster Average

$

—

8.2x

8.2x

Diversified Media/Cable Networks Average

$

—

12.6x

13.2x

MSG Networks

Research

$

2.0

7.4x

9.6x

MSGE Adjusted Undisturbed(2)

$

—

7.4x

9.4x

MSGE Adjusted(3)

$

2.0

7.6x

9.6x

 

(1)	Projections for the selected companies have been calendarized to MSG Entertainment’s fiscal year-end, June 30.

(2)	Uses market pricing as of March 10, 2021 and adjusted MSGN projections.

(3)	Uses adjusted MSGN projections.

 

83

In light of the foregoing review and based on its professional judgment and experience, for MSG Networks, Moelis applied a range of selected multiples derived from the MSG Networks direct selected companies of 8.0x to 10.0x to the adjusted MSGN projections’ FY 2022E AOI (less SBC) of $210.1 million to calculate implied equity value ranges for MSG Networks of $14.43 to $21.26 per share of MSGN common stock. For purposes of the foregoing analysis, Moelis utilized the adjusted MSGN projections. However, Moelis noted that based on the MSG Networks projections, the foregoing value range would be $15.05 to $22.02 per share of MSGN common stock.

Selected Publicly Traded Companies-Based Implied Exchange Ratio Analysis

Based on the implied equity value ranges and the implied per share price ranges presented above, Moelis calculated implied ranges of the exchange ratio and pro forma ownership percentage of the pre-merger holders of MSGE common shares in the combined company after giving effect to the merger, which is referred to as the pro forma MSGE ownership percentage, which are presented below:

 

		Implied Exchange Ratio(1)				Implied Pro Forma MSGE  Ownership Percentage(2)
Selected Publicly Traded Companies Analysis			0.103x - 0.163x				71.9% - 80.3	%

 

(1)

The low end of the range of the implied exchange ratio represents the high end of the range of implied value per MSGE common share versus the low end of the range of implied value per share of MSGN common stock. The high end of the range of the implied exchange ratio represents the low end of the range of implied value per MSGE common share versus the high end of the range of implied value per share of MSGN common stock.

(2)

The high end of the range of the implied pro forma MSGE ownership percentage represents the high end of the implied equity value range of MSG Entertainment versus the low end of the implied equity value range of MSG Networks. The low end of the range of the implied pro forma MSGE ownership percentage represents the low end of the implied equity value range of MSG Entertainment versus the high end of the implied equity value range of MSG Networks.

Moelis compared the implied ranges of the exchange ratio above to the exchange ratio of 0.172x in the merger and the implied ranges of pro forma MSGE ownership percentage above to the implied pro forma MSGE ownership percentage of approximately 70.9% at the exchange ratio of 0.172x.

Transaction Analysis

DCF-Based Has/Gets Analysis

Moelis performed a DCF-based has/gets analysis to calculate value accretion/dilution to the pre-merger holders of MSGE common shares implied by the merger. The DCF-based has/gets analysis compared the standalone implied DCF equity value of MSG Entertainment with the implied aggregate value of the pro forma equity in the combined company that is owned by the pre-merger holders of MSGE common shares after giving effect to the merger.

To calculate the pro forma DCF value of the combined company after giving effect to the merger, Moelis utilized (i) the implied stand-alone DCF equity value ranges for MSG Entertainment and MSG Networks described above, (ii) the implied present value range of expected cost and tax synergies provided by MSGE management discounted based on a pro forma WACC range of 7.5% - 9.25%, and (iii) expected transaction costs of $45 million as provided by MSGE management.

 

84

The following table summarizes the results of the DCF-based has/gets analysis:

 

		Low				High
Standalone MSG Entertainment per Share Value		$	65.65			$	120.27
Pro Forma MSG Entertainment per Share Value		$	70.04			$	130.44
Increase (%)			6.7	%			8.5	%

Other Information

Moelis also noted for the MSGE special committee certain additional factors that were not considered part of Moelis’ financial analysis with respect to its opinion but were referenced for informational purposes only, including, among other things:

Selected Precedent Transactions Analysis

Moelis performed a selected precedent transactions analysis solely with respect to MSG Networks; with respect to MSG Entertainment, Moelis did not rely on the selected precedent transaction analysis for the following reasons: (i) lack of comparability of the selected transactions to MSG Entertainment and its business units; (ii) any precedent transactions would be calculated based on last twelve months (“LTM”) EBITDA; the LTM period for MSG Entertainment is not comparable as a result of the COVID-19 pandemic and its impact on MSG Entertainment; and (iii) COVID-related changes to the overall market limit comparability between historical transactions and the merger.

For its selected precedent transaction analysis of MSG Networks, Moelis reviewed certain financial information related to transactions that met the following criteria: (i) the target was a regional sports network or cable network with similar business operations to MSG Networks, (ii) minimum transaction value of $200 million; and (iii) transactions dated 2013 or later.

For informational purposes only, Moelis noted, to the extent information was publicly available the implied transaction values of the selected precedent transaction as a multiple of the relevant acquired company’s EBITDA for the LTM period immediately preceding announcement of the relevant transaction. In the case of MSG Networks, Moelis applied the implied multiple range to LTM EBITDA as of December 31, 2020.

The information noted by Moelis with respect to the selected precedent transactions is summarized below:

 

Date Announced

Target

Acquiror

Target Type

Transaction Value ($ in million)

Seller TEV/ LTM EBITDA

Buyer TEV/ LTM EBITDA

12/22/2020

Oprah Winfrey Network

Discovery, Inc.

Diversified Media/Cable Networks

$489.2

5.8x

—

9/24/2020

ION Media Networks. Inc.

The E.W. Scripps Company

Diversified Media/Cable Networks

$2,786.0

8.6x

6.3x

5/3/2019

21 Fox Sports Regional Sports Networks

Sinclair Broadcast Group, Inc.

Regional Sports Network

$10,600.0

7.2x

6.8x

3/22/2018

The Weather Channel

Allen Media Broadcasting

Diversified Media/Cable Networks

$977.1

6.9x

—

7/31/2017

Scripps Networks Interactive, Inc.

Discovery, Inc.

Diversified Media/Cable Networks

$14,321.8

10.0x

8.1x

 

85

Date Announced

Target

Acquiror

Target Type

Transaction Value ($ in million)

Seller TEV/ LTM EBITDA

Buyer TEV/ LTM EBITDA

7/6/2017

HSN

QVC, Inc.

Diversified Media/Cable Networks

$2,594.0

9.6x

7.2x

10/11/2016

CSN Mid-Atlantic

Monumental Sports & Entertainment

Regional Sports Network

$359.9

8.6x

—

6/30/2016

Starz Inc.

Lions Gate Entertainment Corporation

Diversified Media/Cable Networks

$4,815.2

11.9x

—

4/28/2016

Root Sports

John Stanton & Associates

Regional Sports Network

$758.8

13.6x

—

3/9/2016

Crown Media Holdings Inc.

Hallmark Cards, Inc.

Diversified Media/Cable Networks

$2,090.8

10.1x

—

2/25/2016

Travel Channel

Scripps Networks Interactive

Diversified Media/Cable Networks

$1,100.0

—

—

1/27/2016

Tennis Channel

Sinclair Broadcast Group, Inc.

Diversified Media/Cable Networks

$350.0

16.2x

4.3x

Regional Sports Network Mean

$3,906.2

9.8x

6.8x

Regional Sports Network Median

$758.8

8.6x

6.8x

Diversified Media/Cable Networks Mean

$3,280.4

9.9x

6.5x

Diversified Media/Cable Networks Median

$2,090.8

9.8x

6.7x

Moelis noted that if a range of selected multiples of 7.0x to 9.0x were to be applied to the LTM EBITDA of MSG Networks, it would result in an implied price per share of MSGN common stock of $20.99 to $30.41.

52-Week High/Low and Analyst Price Targets

For informational purposes only, Moelis also noted the 52-week highs and lows (for the 52 weeks preceding the date of its opinion), as well as the most recent equity research analyst price targets (since February 2021), for each of MSGE Class A common stock and MSGN Class A common stock. For MSGE Class A common stock, the 52-week high/low range was $58.67-$121.42, and analyst price targets ranged from $85.00-$120.00 per share. For MSGN Class A common stock, the 52-week high/low range was $8.52-$20.90, and analyst price targets ranged from $9.00-$20.00 per share. Moelis noted that the implied exchange ratio range based on the 52-week high/low was 0.070x – 0.356x, while the implied exchange ratio range based on the analyst price targets was 0.075x – 0.235x.

Miscellaneous

This summary of the analyses is not a complete description of Moelis’ opinion or the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex

 

86

analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.

No company used in the analyses described above is identical to MSG Entertainment or MSG Networks. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above (including much of the information used therein) are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither MSG Entertainment nor Moelis or any other person assumes responsibility if future results are materially different from those forecast.

Except as described in this summary, the MSGE special committee imposed no other instructions or limitations on Moelis with respect to the investigations made or procedures followed by Moelis in rendering its opinion. The merger consideration was determined through arm’s-length negotiations between the MSGE special committee, on the one hand, and the MSGN special committee, on the other, and was approved by the MSGE board in reliance upon the recommendation of the MSGE special committee and the MSGN board in reliance upon the recommendation of the MSGN special committee. Moelis did not recommend any specific consideration to MSG Entertainment, the MSGE special committee or the MSGE board, or that any specific amount or type of consideration constituted the only appropriate consideration for the merger.

Moelis acted as financial advisor to the MSGE special committee in connection with the merger and has received or will receive certain fees for its services. Moelis received a retainer fee of $1,500,000, which shall be 100% creditable against its transaction fee. Moelis will also receive a transaction fee of $5,000,000 for its services contingent upon the consummation of the merger. Moelis also became entitled to receive and has received an additional fee of $2,500,000 upon the delivery of Moelis’ opinion, regardless of the conclusion reached by Moelis therein. In addition, MSG Entertainment agreed to indemnify Moelis for certain liabilities, including liabilities under the federal securities laws, arising out of its engagement.

Moelis’ affiliates, employees, officers and partners may at any time own securities (long or short) of MSG Entertainment, MSG Networks or their respective affiliates. In the past two years, Moelis has not provided investment banking services to MSG Entertainment unrelated to the merger, or to MSG Networks or James L. Dolan or, to Moelis’ knowledge, any members of the Dolan family, for which Moelis received or may receive compensation. In the future Moelis may provide such services to MSG Entertainment, MSG Networks or James L. Dolan or members of the Dolan family or their affiliates and may receive compensation for such services.

The MSGE special committee selected Moelis as its financial advisor in connection with the merger because Moelis has substantial experience in similar transactions and familiarity with MSG Entertainment. Moelis is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings, and valuations for corporate and other purposes.

Opinion of Raine Securities LLC

At the meeting of the MSGE special committee on March 24, 2021, Raine rendered its oral opinion to the MSGE special committee to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in its opinion, the merger consideration provided for in the merger agreement was fair, from a financial point of view, to MSG Entertainment. Raine has confirmed its oral opinion by delivering its written opinion, dated March 24, 2021, to the MSGE special committee and, at the

 

87