Barrack, Rodos & Bacine Named Co-Lead Counsel in MSGN/MSGE Merger Case

9/27/2021 - Barrack, Rodos & Bacine and two of its clients, along with three other firms and two other plaintiffs, have been appointed to lead a consolidated stockholder class action brought on behalf of MSG Networks Inc. (MSGN) stockholders challenging the $900 million merger between Madison Square Garden Entertainment Corp. (MSGE) and MSGN.  Chancellor Kathleen S. McCormick of the Delaware Chancery Court signed the order appointing the plaintiffs and the firms to their co-lead plaintiff and co-lead counsel positions.  

The complaint filed by Barrack, Rodos & Bacine on behalf of MSGN stockholders alleges that the merger undervalued MSGN shareholders’ shares and was dominated by the Dolan Family Group, which holds 75% of the voting power in both companies.  The complaint alleges that the Dolan Family Group forced the acquisition of MSGN so that it could use MSGN’s cash flow to fund MSGE’s behemoth “Sphere” projects, which are giant coliseums intended to operate as concert venues.  These “Sphere” projects, the first of which is being built in Las Vegas, have struggled with cost overruns and delays that have been exacerbated by the Covid-19 pandemic.  The complaint alleges that MSGE’s cash flow, which is almost exclusively based on hosting live events, was severely undercut by the Covid-19 pandemic.  The complaint alleges that looking for cash flow to fund these projects, the Dolan Family Group determined to have MSGE acquire MSGN, which had fared much better during the pandemic due to its business emphasis on television rights.  When the merger was announced, the value of MSGN shares sank and many MSGN stockholders expressed outrage.  However, due to the supermajority ownership of the Dolan Family Group in MSGN and the way the merger agreement was structured, the merger closed in July 2021. 

The order appointing co-lead plaintiffs and co-lead counsel allows us to pursue this action on behalf of MSGN stockholders and to seek compensation for a class of MSGN shareholders, excluding the Dolan Family Group and its affiliates.

For more information, please contact BR&B attorneys Jeffrey W. Golan at jgolan@barrack.com or Michael A. Toomey at mtoomey@barrack.com.