Madison Square Garden Company (MSGS -0.14%) is about to split itself in two. The company announced Wednesday that it is spinning off its entertainment business from its sports assets, a move that will result in the creation of two separate, publicly traded businesses.

The two will be called Madison Square Garden Entertainment and Madison Square Garden Sports. Stockholders of the current Madison Square Garden will receive, on April 17, one share of Madison Square Garden Entertainment per share of the present company they hold.

Interior of Madison Square Garden.

Image source: Getty Images.

As with the current company, Madison Square Garden Entertainment will have an A and a B share class. The class(es) Madison Square Garden shareholders receive on April 17 will match what they own in the original company. 

At the same time, the original company will take on the Madison Square Garden Sports name. 

Current Madison Square Garden CEO and executive chairman James Dolan will serve in those capacities at both successor companies.

All stockholders of record as of April 13 will receive a stake in Madison Square Garden Entertainment. No action on their part is required; the process will be automatic. Madison Square Garden said in the press release trumpeting the move that it has been designed to qualify as a tax-free distribution to current shareholders.

The A shares of both companies should trade on the New York Stock Exchange (NYSE), like Madison Square Garden does at present (its B shares are not publicly traded).

Madison Square Garden did not specify which assets will be directed to which successor company, although the destination of most -- basketball's New York Knicks is a prime example -- seem obvious.

On Tuesday, Madison Square Garden stock fell more precipitously (by 6%) than many top stocks and major equity indexes.