Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

The New York Knicks and New York Rangers are about to begin their seasons, which could play out as flops, fairy tales or anywhere between. For their broadcaster, MSG Networks, the future may be brightening.

The $1.3 billion company remains a logical, but dormant, takeover target. In the meantime, shareholders can take comfort that its chairman Jim Dolan is bulking up his stake. According to Tuesday filings, Dolan snapped up his brother Patrick's shares in both MSG Networks and Madison Square Garden Co., the owner of sporting teams and its namesake arena. 

Split Fortunes
Since splitting, the company that owns MSG's namesake venue and sports franchises has outperformed the one that owns regional sports television networks
Source: Bloomberg

Dolan's vote of confidence offers some reassurance for MSG Networks investors, who have witnessed the stock's 19 percent decline since its split from MSG roughly a year ago.

The shares have stumbled in part due to growing concern that "over-the-top" content providers like Netflix, Amazon and Hulu will continue to lure away pay-TV subscribers. Still, MSG Network could stand to benefit if  its inclusion in the less-expensive "skinny bundles" offered by the likes of Verizon bears fruit, and if it can effectively package its content for cord-cutters.

Fraying Cord
U.S. cable, satellite and telephone companies have been losing customers -- albeit slowly -- for their television services.
Source: MoffettNathanson
Customer additions are for traditional TV service providers such as Comcast, DirecTV and Verizon Fios. *4Q 2015 figures include preliminary estimates for some companies.

Right now, its live-streaming and on-demand service MSG Go is only available to folks that already subscribe to MSG Networks through their cable-TV providers. If it can obtain the relevant media rights, the company could lock in new revenue by following the footsteps of Time Warner's HBO Go and allow fans to pay for anything from seasonal to single-game access. If that takes off, advertising revenue -- which could already be marginally higher thanks to the addition of Derrick Rose to the Knicks -- would in turn get a lift.

There's also always the chance that larger media conglomerates like Twenty-First Century Fox and Comcast will want to add new programming to their stables and could seek out acquisitions of smaller, independent content providers like MSG Networks. That probably won't happen too soon, though: Fox co-chairman Lachlan Murdoch said at a conference Wednesday that the company wasn't planning any M&A in the "short-to-medium" term, while Comcast has been busy with its Dreamworks Animation purchase, which closed last month. 

As for the $4.2 billion Madison Square Garden Co., a Dolan-backed buyout may beckon. Such a transaction is perhaps even more likely now that its chairman can block the sale of the company to any unwelcome third party -- his increased stake now give him two of six votes on the Dolan Family Committee.  

These are good reasons for shareholders of both companies to stay tuned. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. A sale would require five of six votes.

To contact the author of this story:
Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at