Court Opinion

ID: 4700987
Source: CourtListenerOpinion
Date Created: 2021-07-02 21:04:21.348425+00
Date Added: 2024-06-11T08:06:14.869531
License: Public Domain

COURT OF CHANCERY
                                            OF THE
                                      STATE OF DELAWARE
KATHALEEN ST. JUDE MCCORMICK                                        LEONARD L. WILLIAMS JUSTICE CENTER
        CHANCELLOR                                                    500 N. KING STREET, SUITE 11400
                                                                     WILMINGTON, DELAWARE 19801-3734

                                           July 2, 2021

     Gregory V. Varallo, Esquire                     Raymond J. DiCamillo, Esquire
     Bernstein Litowitz Berger &                     Kevin M. Gallagher, Esquire
      Grossman LLP                                   Megan O’Connor, Esquire
     500 Delaware Avenue, Suite 901                  Richards, Layton & Finger, P.A.
     Wilmington, DE 19801                            920 North King Street
                                                     Wilmington, DE 19801
     Blake A. Bennett, Esquire
     Dean R. Roland, Esquire                         Kevin M. Coen, Esquire
     Cooch and Taylor P.A.                           Alexandra M. Cumings, Esquire
     The Nemours Building                            Morris, Nichols, Arsht & Tunnell LLP
     1000 N. Orange St., Suite 1120                  1201 North Market Street, Suite 1600
     Wilmington, DE 19801                            Wilmington, DE 19801

     Elena C. Norman, Esquire                        Brian C. Ralston, Esquire
     Alberto E. Chavez, Esquire                      David A. Seal, Esquire
     Young Conaway Stargatt & Taylor LLP             Daniel M. Rusk, IV, Esquire
     Rodney Square                                   Potter Anderson & Corroon LLP
     1000 North King Street                          1313 North Market Street
     Wilmington, DE 19801                            P.O. Box 951
                                                     Wilmington, DE 19801

            Re:    Hollywood Firefighters’ Pension Fund, et al. v. James L. Dolan, et
                   al., C.A. No. 2021-0468-KSJM;
                   Leisz v. MSG Networks Inc., et al., C.A. No. 2021-0504-KSJM

      Dear Counsel:

            I have considered briefing and oral argument on the plaintiffs’ respective motions

      to preliminarily enjoin the stockholder vote on the proposed merger of Madison Square

      Garden Entertainment Corp. (“Entertainment”) and MSG Networks Inc. (“Networks”).

      The motions are DENIED.
C.A. No. 2021-0468-KSJM
C.A. No. 2021-0504-KSJM
July 2, 2021
Page 2 of 3

       The plaintiffs in the above-referenced actions base their respective motions on

alleged violations of Section 203 of the Delaware General Corporation Law.

       I find that the proposed merger does not violate the Section 203 protections of the

Entertainment    stockholders     because    the   Entertainment     board    satisfied   the

Section 203(a)(1) exception by approving the transaction which resulted in Networks

becoming an interested stockholder through the unanimous written consent executed on

November 21, 2019.

       I find that the proposed merger does not violate the Section 203 protections of the

Networks stockholders because the relevant three-year moratorium expired in 2013. The

Dolan Family Group (as that term is defined in the briefs for C.A. No. 2021-0504-KSJM)

became an “interested stockholder” of Networks when it acquired over 15% of Networks

stock in 2010. Thus, the three-year moratorium imposed on the Dolan Family Group

expired in 2013. Entertainment became an “interested stockholder” of Networks in 2019

solely by virtue of its relationship with the Dolan Family Group. The purpose of the

statutory language by which Entertainment fits the definition of “interested stockholder” is

to prohibit a holder of 15% or more of Networks’ stock from accomplishing indirectly what

it is prohibited from accomplishing directly. In these limited circumstances, and where

there are no allegations that the defendants are taking action to subvert the purpose of the

statute, the restrictions imposed on Entertainment (the affiliate) must track those applicable

to those of the Dolan Family Group (the Networks stockholder).
C.A. No. 2021-0468-KSJM
C.A. No. 2021-0504-KSJM
July 2, 2021
Page 3 of 3

       Obviously, a lot more could be said on the rich issues presented. Given the

proximity of the stockholder vote and the long holiday weekend ahead, I thought it

appropriate to deliver my rulings to you as quickly as possible, hence this brief letter.

Please contact my assistant to obtain a time on Tuesday, July 6, 2021, during which I will

explain the bases for this ruling in slightly greater detail.

       I wish you all a safe and restful holiday weekend.

       IT IS SO ORDERED.

                                            Sincerely,

                                            /s/ Kathaleen St. Jude McCormick

                                            Kathaleen St. Jude McCormick
                                            Chancellor

cc:    All counsel of record (by File & ServeXpress)