United States securities and exchange commission logo
November 23, 2022
David Byrnes
Chief Financial Officer
MSGE Spinco, Inc.
Two Pennsylvania Plaza
New York, NY 10121
Re: MSGE Spinco, Inc.
Draft Registration
Statement on Form 10-12B
Filed October 26,
2022
CIK No. 0001952073
Dear David Byrnes:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Preliminary Information Statement
Cover Page
1. Please revise the
Information Statement cover page to disclose that you will be a
controlled company.
Please disclose the percentage of voting power to be held by
the Dolan Family Group
following the Distribution and, if true, that this stockholder group
will have the ability
to determine all matters requiring approval by stockholders.
2. Please revise the
Information Statement cover page to more clearly detail the company's
dual-class voting
structure. Disclose the voting power difference between the two classes
of shares, quantify the
voting power that the Class B Common Stock will have after the
Distribution due to the
disparate voting rights attached to the two classes of shares and
identify the holder or
holders of such shares.
David Byrnes
MSGE Spinco, Inc.
November 23, 2022
Page 2
Summary
Company Information, page 5
3. Please include a graphic depiction and brief narrative of the
company's corporate structure
after the Distribution that includes the ownership and voting control
of MSGE Spinco,
Inc. Please include the ownership and voting percentages of the public
versus the Dolan
Family Group.
Securities to be Distributed, page 8
4. We note your disclosure that MSG Entertainment will retain
approximately 33% of your
common stock immediately following the Distribution. Please revise to
clarify if those
shares of common stock will be Class A or Class B shares. Please
revise the Information
Statement throughout accordingly.
Questions and Answers About the Distribution, page 14
5. Please revise to add a question and answer regarding the company's
duel-class structure
including the ownership and voting control of the company after the
Distribution. In this
regard, we note that the company will be a controlled company after
the Distribution
controlled by the Dolan Family Group. Please revise to discuss the
implications of
these disparate voting rights and voting control after the
Distribution to include its effect
on public stockholders of the Class A Common Stock.
General Risk Factors, page 20
6. We note your disclosure here and throughout the Information Statement
regarding the
impact of the COVID-19 Pandemic on your Business. Please revise, to
the extent
practicable, to quantify the material impacts COVID-19 has had on the
company's
business and operations. Please include enough detail so that
shareholders can appreciate
the discussed risk. In addition, given your statement on page 71 that
[i]n response
to COVID-19, measures have been taken to ensure that health and safety
protocols are in
place and enforced throughout our offices and our venues, to the
extent
applicable, discuss how management is responding to evolving events,
and how it is
planning for COVID-19-related uncertainties. Please make conforming
changes
throughout the document.
Risk Factors, page 20
FirstName LastNameDavid Byrnes
7. Please revise to add a risk factor to discuss the potential consequences
to public
Comapany NameMSGE
stockholders if theSpinco, Inc.
MSG Entertainment board of directors decides to
cancel the
Distribution
November 23, 2022or otherwise
Page 2 materially amend the terms of the
Distribution.
FirstName LastName
David Byrnes
FirstName LastNameDavid Byrnes
MSGE Spinco, Inc.
Comapany 23,
November NameMSGE
2022 Spinco, Inc.
November
Page 3 23, 2022 Page 3
FirstName LastName
We Have Substantial Indebtedness and Are Highly Leveraged, Which Could
Adversely Affect
Our Business, page 34
8. Please revise to quantify your outstanding indebtedness and your
current debt service
obligations.
The Distribution
Results of the Distribution, page 48
9. Please revise to expand your disclosure and name the agreements you
have, or
will, entered into with MSG Entertainment and MSG Sports in connection
with the
Distribution. In addition, if not already provided, please file these
agreements as exhibits
or tell us why you are not required to do so. Refer to Item 601(b)(10)
of Regulation S-K.
Business
General, page 54
10. We note that the company's business will include two segments,
Entertainment and MSG
Networks. To the extent possible, please quantify the percentage of
revenue and loss that
each contributes to the company for the periods included in this
Information Statement.
Adjusted operating income (loss) ("AOI"), page 89
11. Please tell us your calculation of the non-GAAP adjustment for
non-cash portion of arena
license fees from MSG Sports in fiscal years 2022 and 2021. Please
also tell us how you
determined that this adjustment does not substitute individually
tailored recognition and
measurement methods for those of GAAP. Refer to Question 100.04 of the
Non-GAAP
Financial Measures Compliance and Disclosure Interpretations.
12. Please disclose the nature of the adjustment for other purchase
accounting and explain
why you believe the impact of purchase accounting adjustments related
to business
acquisitions should be excluded from the adjusted operating income
calculation.
Business Segment Results
Entertainment
Restructuring charges, page 102
13. Please revise to include a brief description of the cost savings
initiatives which you state
were implemented in order to streamline operations and preserve
liquidity.
Corporate Governance and Management
Our Directors, page 116
14. Please revise here or in another section to identify the members of
your board and
management who will also hold positions at related entities, such as
MSG Entertainment,
MSG Sports and/or AMC Networks.
David Byrnes
FirstName LastNameDavid Byrnes
MSGE Spinco, Inc.
Comapany 23,
November NameMSGE
2022 Spinco, Inc.
November
Page 4 23, 2022 Page 4
FirstName LastName
Other Arrangements and Agreements with MSG Sports and/or AMC Networks, page 163
15. We note the introduction contemplates the sharing and allocation of
various costs. Please
revise to discuss in greater detail how these costs will be allocated
between the related
companies. Additionally, we note that the descriptions of the various
related-party
agreements are overly vague and do not specifically detail revenue
sharing percentages,
commissions, fees, costs, lump sum payments, dollar amounts involved
in the
transactions, etc. Please revise each summary to specifically detail
the anticipated
relationship between these related-parties following the Distribution.
All revenue sharing,
percentages, commissions, fees, costs, payments, dollar amounts
involved between the
related-parties should be specifically described and quantified. Refer
to Item 404 of
Regulation S-K.
Arena License Agreements, page 164
16. Please revise the third, fourth and fifth paragraphs to specifically
quantify all revenue
sharing percentages. Additionally, we note from the exhibit index that
you intend to
redact certain information from these related-party agreements. Please
note that all
material information to shareholders related to these agreements must
be disclosed
pursuant to Item 404(a) of Regulation S-K. Consequently, we may have
additional
comments upon review of any redactions to any related-party agreements
including the
Arena License Agreements, Sponsorship Sales and Representation
Agreements, etc.
Group Ticket Sales and Service Representation Agreement, page 165
17. Please revise to specifically quantify the commission to be paid to
MSG Sports for any
ticket sales.
Sponsorship Sales and Service Representation Agreements, page 165
18. Please revise to specifically quantify all commissions and fixed
payments under these
agreements.
Team Sponsorship Allocation Agreement, page 165
19. Please revise to specifically quantify and discuss in greater detail
the revenue split
between the two companies and any lump sum payments.
Note 1. Description of Business and Basis of Presentation, page F-12
20. Your disclosure indicates that transfers of cash both to and from
MSG Entertainment are
included as components of MSG Entertainment investment on the combined
statements of
divisional equity , and distributions made by MSG Entertainment
to the Company or to
MSG Entertainment from the Company are recorded as transfers to and
from MSG
Entertainment, and the net amount is presented on the combined
statements of cash flows
David Byrnes
MSGE Spinco, Inc.
November 23, 2022
Page 5
as Net transfers to/from MSG Entertainment and MSG Entertainment s
subsidiaries.
Please tell us how you presented the Net transfers to/from MSG
Entertainment and MSG
Entertainment's subsidiaries in your combined statements of cash flows.
Please reconcile
the amounts reported as Change in MSG Entertainment Investment in
your combined
statements of cash flows to the amounts reported as Net decrease in
MSG Entertainment
Investment in your combined statements of divisional equity for all
fiscal years reported.
Notes to Combined Financial Statements
Note 4. Revenue Recognition, page F-25
21. We note your narrative disclosure that certain revenues are accounted for
under ASC 842.
In your tabular disclosure of disaggregation of revenue, please consider
including an
additional line item (with an additional subtotal, if desired) to include
revenue recognized
under ASC 842 so that the table reconciles to total revenue on your
combined statements
of operations.
You may contact Suying Li at 202-551-3335 or Lyn Shenk at 202-551-3380
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Jennie Beysolow at 202-551-8108 or Donald Field at 202-551-3680 with any other
questions.
Sincerely,
FirstName LastNameDavid Byrnes
Division of
Corporation Finance
Comapany NameMSGE Spinco, Inc.
Office of Trade &
Services
November 23, 2022 Page 5
cc: Robert W. Downes, Esq.
FirstName LastName