Madison Square Garden Co. decided to go ahead with the separation of its media operations from the sports and entertainment businesses.

The planned split would be structured as a tax-free spinoff of the sports and entertainment units -- home of the New York Knicks basketball team and Radio City Music Hall -- to shareholders on a pro rata basis, MSG said in a statement.

The New York-based company, controlled by the Dolan family, said last year it was exploring various ways to split up. The live sports and entertainment company will also include teams like the National Hockey League’s Rangers and venues such as the Madison Square Garden Arena. The media company will consist of regional sports networks that appear in most expanded basic pay- TV packages throughout the New York area.

“Presumably the media operations will trade at a higher multiple than the slower-growing and capital-intensive sports and entertainment assets,” said Paul Sweeney, a Bloomberg Intelligence analyst.

The shares jumped as much as 7.4 percent to $86.70 after the market closed. They had gained 23 percent since Oct. 27, when MSG first said it was considering a spinoff and nominated Nelson Peltz, the co-founder of Trian Fund Management LP, and Scott Sperling, co-president of private-equity firm Thomas H. Lee Partners LP, to its board.

The Dolan family, which spun out MSG from Cablevision Systems Corp. in 2010, had been under pressure from investor John A. Thaler’s JAT Capital Management LP after it took a stake in August and pushed for changes to boost the value.

Other media companies, including Tribune Media Co. and News Corp., have divided up businesses recently, betting that the separate pieces will fetch a higher valuation in the stock market.

The MSG transaction is expected to be completed during 2015, subject to certain conditions.

JPMorgan Chase & Co. and LionTree Advisors are financial advisers for the deal and Sullivan & Cromwell LLP is the legal adviser.

--With assistance from Alex Sherman in New York.

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