Big & Rich energizes the capacity crowd as the sun sets at 25th Country Jam. Photo credit: Joshua Timmermans / Country Jam
The Madison Square Garden Company (MSG) has acquired a 12 percent common equity stake in Townsquare, Inc., a media, entertainment and digital marketing solutions company for $23.1 million.
"MSG acquired approximately a 12 percent equity stake in Townsquare," said Dhruv Prasad, executive vice president of live entertainment, Townsquare. "They bought the shares directly from GE Capital, which was shareholder, in a block trade. It's approximately 3.2 million shares of common equity interest in Townsquare."
"The genesis of the transaction started with Irving Azoff," said Prasad. "We've worked with him in the past; he's been an informal advisor to us at Townsquare for a number of years."
Also pushing through the deal was the Oak View Group. "We've had a formal business arrangement; a consulting contract, with Tim Leiweke and Irving through the Oak View Group and they were part of the process. Irving also has a separate company with Madison Square Garden [Azoff Madison Square Garden Entertainment], which was also involved. Irving put all the groups together, because of his common relationship with all the companies, and his relationship with Townsquare's CEO, Steven Price, MSG's Doc O'Connor and James Dolan."
Prasad said he expects the transaction to bring opportunities for live music events, family entertainment and other forms of programmed content. "We expect there to be projects in the near future we will be able to collaborate on."
Prasad would not disclose what role MSG will have in the Townsquare operation. "It's not in the public domain, and I don't think I can comment on that," said Prasad. "The best way to say it is that we're going to be actively working on opportunities and projects together. We're going to collaborate with them; there's no formal over-site of Townsquare by MSG."
Townsquare purchased North American Midway Entertainment, LLC (NAME), the largest provider of rides, games and food concessions in North America, for approximately $75.5 million in August 2015, which makes MSG the new partner of that organization as well. However, Prasad said the deal with MSG will not effect the day-to-day business of North American Midway Entertainment in any way.
Brad Paisley feeling the energy of the capacity crowd at the 25th Country Jam. Photo credit: Chad Johnson/ Country Jam
"We continue to look for strategic opportunities to partner with companies who are recognized leaders in their field so that we can bring together the expertise and capabilities of each partner to benefit both companies," said David "Doc" O'Connor, president and CEO of The Madison Square Garden Company in a conference call with investors. "Through the use of its radio stations, digital assets and live events, Townsquare creates compelling content that brings people together and builds communities. We understand and share their belief in the value of exceptional live experiences and believe that this new relationship, which is another opportunity that our partner Irving Azoff brought to our attention, will provide an opportunity for us to work together to drive additional value and growth for both businesses."
O'Connor said that MSG will use its experience in music and live events to explore bookings, sponsorship and marketing opportunities as well as the potential expansion of Townsquare's live offerings. Townsquare also has a portfolio of popular music festivals. "It's part of our larger goal to strengthen and expand our position in the live experience space," said O'Connor.
"We purchased 3.2 million shares, which represents a 12% stake on a fully diluted basis, for $23.1 million," confirmed O'Connor. "As for strategic rationale, we think that this investment makes both strategic and financial sense. We believe in the management team first and foremost, and in many ways we share a strategic perspective with them."
"We like their niche approach to the festival business," explained O'Connor. "We think that Madison Square Garden and Townsquare have a lot of similarities. We have unique assets and expertise. We have deep industry relationships. We have strong connections with diverse and passionate audiences. And we will use each of these to build valuable communities with sports fans, concertgoers, radio listeners, festival attendees and so on."
"We chose an investment as opposed to any other type of relationship because we think it better aligns our businesses, and we can explore our collective strengths and build and drive opportunities for both companies. Those possibilities include block-booking artists across Townsquare festivals, Boston Calling events and Madison Square Garden venues, hosting Townsquare events at MSG venues and working together to create new live content."
"Gaining additional insight into the festival business is important to us," said O'Connor. "We think that they have a lot to offer us in that regard. We will be sharing best practices, and we can use each company's platforms for cross-promotional and marketing opportunities."
O'Connor said MSG has no current plans to increase its stake in Townsquare. "We're comfortable with the current investment," said O'Connor. "Our shared belief in music, live events and creating community is the take-a-way."
Interviewed for this story: Dhruv Prasad, (203) 861-0900; Kim Kerns, (212) 465-6442