The Board of Directors of media giant Cablevision have approved a plan to spin off Madison Square Garden (MSG), Radio City Music Hall and other assets from its cable television empire, instantly creating a possible future competitor to proposed new entertainment partners Ticketmaster and Live Nation.

Under the plan, which still must receive approval from the board, the Securities and Exchange Commission and the Internal Revenue Service, the new MSG will be a standalone sports and entertainment powerhouse with control of the New York Knicks, Rangers, Rockettes, Beacon Theatre, Radio City, MSG and the MSG cable networks, among other properties. The new entity is valued at an estimated $1.5 billion.

Cablevision will control New York Newsday, the Optimum cable and telecommunications services, American Movie Classics and other media assets.

“This spin-off will create two distinct companies, each with enhanced strategic flexibility, its own defined business focus and clear investment characteristics,” Cablevision President and CEO James Dolan said in a statement. “The new MSG will be an attractive combination of sports, entertainment and programming properties, while Cablevision will continue to house a portfolio that includes industry leading telecommunications services and popular programming networks.”

For the last few years, speculation has swirled around what the Dolan family might do with MSG and its other assets while they continued to grow Cablevision into a major player in the media and entertainment arenas. James Dolan even contributed to the situation last year when he publicly considered a move to Live Nation for its ticketing at MSG and the other venues when Live Nation was ramping up its ticketing operation. The possibility of a shift was quickly tamped down when the company re-upped with Ticketmaster, but now that MSG is on its own it’s freer to either become an ally or a thorn in the side of either Live Nation or Ticketmaster.

In addition, with MSG already aligned with Ticketmaster, it could possibly lead to Ticketmaster shareholders backing away from the Live Nation deal, which may already be on relatively shaky ground.

Dolan already has a relationship with Ticketmaster Entertainment CEO Irving Azoff, because Azoff’s Front Line Management handles Dolan’s personal blue band side project JD and the Straight Shot, and MSG may look to launch outdoor concerts sometime in the future. Also in 2008, Ticketmaster and Cablevision considered acquiring AEG Live, which would have given Ticketmaster access to a major concert promoter before it settled on linking up with Live Nation.

Dolan added, “We believe that the combined value of these assets has not been fully realized, and that this transaction will be beneficial to shareholders as both Cablevision and MSG freely pursue their own individual business plans.”