Madison Square Garden Entertainment Reaches Class Action Settlement With Shareholders

In a filing with the U.S. Securities and Exchange Commission, the company said it would pay $48.5 million to four shareholder groups filing a class action in Delaware Chancery Court.

The company admitted no liability in the settlement. The plaintiffs allege that MSG Networks’ board and controlling shareholders breached their fiduciary duties in negotiating and approving a cost-saving merger with MSG Entertainment.

Four different shareholder groups commenced proceedings on June 29, 2021, and the case was consolidated on October 29, 2021.

The 17,500-seat MSG Sphere, which has nearly doubled in cost to $2.2 billion since breaking ground in September 2018, is expected to open in September with a performance by U2. Construction on the project was originally expected to be completed in 2021, but was delayed due to the COVID-19 pandemic and supply chain disruptions.

MSG Networks is in dispute with its insurers over whether and to what extent the settlement is covered, according to a filing with the SEC. Unless the parties resolve that insurance dispute, it is expected to be resolved in a pending Delaware insurance lawsuit. During this period, certain of MSG Networks’ insurers have agreed to prepay $20.5 million in settlement and related class notice costs, subject to the final resolution of the parties’ coverage dispute.

The merger between MSG Networks and MSG Entertainment differs from the spin-off announced last month, in which a new company called Sphere Entertainment Co. will be responsible for MSG Sphere, MSG Networks and MSG’s Tao Group Hospitality business.

Contact Richard N. Velotta rvelotta@reviewjournal.com or 702-477-3893.follow @RickVelotta on twitter.