ITT, Cablevision to Buy Arena, Teams, TV Service
ITT Corp. and Cablevision Systems Inc. will buy Madison Square Garden, two professional sports teams and a regional cable television service from Viacom Inc. for nearly $1.1 billion, sources close to the transaction said Saturday.
ITT and Cablevision will pay cash, sources said. Their bid, which had been raised modestly, beat one from Tele-Communications Inc., the nation’s largest telecommunications operation, which has had protracted and tense dealings with Viacom.
The failure of TCI to win Madison Square Garden may jeopardize one or more other deals that TCI and Viacom were attempting to negotiate, including settlement of Viacom’s antitrust lawsuit against TCI.
The Madison Square Garden deal, which was signed at 4 a.m. EDT Saturday, will be announced today in New York City.
Viacom put the landmark New York arena, the New York Knicks basketball team, the New York Rangers hockey team and the MSG Sports Network on the block shortly after winning control of Paramount Communications Inc. in a costly fight against QVC Inc. The move is part of an effort to cut its debts from the $9.7-billion Paramount takeover.
About three weeks ago, TCI attempted to link its Madison Square Garden bid to several other negotiations under way with Viacom. That effort complicated Viacom’s analysis of the Garden bid. But sources said TCI’s offer remained essentially the same at $1 billion throughout the auction process.
For months, Viacom has discussed the sale of its cable systems serving 1.1 million subscribers to TCI or one of its affiliates. The collapse of the Garden deal may jeopardize that sale, but a Viacom source spoke confidently Saturday night that other buyers may materialize. TCI and Viacom have also discussed merging their pay TV services.
Viacom also appears to be under less pressure to sell assets now that its merger with Blockbuster Entertainment Corp. appears to be on track. Last week, Blockbuster’s board of directors recommended that its shareholders vote for the deal on Sept. 29.
Earlier competitors for the properties, such as Nike Inc. and John Labatt Ltd., the Canadian brewer, dropped out of the auction before an Aug. 15 deadline for final bids.
ITT and Cablevision will keep all the properties and have no plans to sell any of them, sources said.
ITT is flush with cash from the sale of European telephone properties, which brought in more than $1.5 billion.
ITT is already building a massive $750-million hotel and casino in Las Vegas and is eager to expand in the entertainment industry. It seized the Garden and the sports teams as prime entertainment assets.
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