Sphere Entertainment (SPHR)

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Sphere Entertainment (SPHR) - 2025 Q4 - Annual Report
2025-08-11 11:52
[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides Sphere Entertainment Co.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Sphere Entertainment Co.'s unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show decreased total assets and current liabilities, increased total stockholders' equity, and a shift from current to non-current long-term debt | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total assets | $4,199,061 | $4,515,300 | $(316,239) | | Total liabilities | $1,885,374 | $2,313,881 | $(428,507) | | Total stockholders' equity | $2,313,687 | $2,201,419 | $112,268 | | Current portion of long-term debt, net | $58,799 | $829,125 | $(770,326) | | Long-term debt, net | $830,535 | $524,010 | $306,525 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved net income for the three and six months ended June 30, 2025, driven by a debt extinguishment gain, despite mixed revenue performance | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $282,677 | $273,395 | $563,251 | $594,725 | | Operating loss | $(50,159) | $(71,377) | $(128,768) | $(111,770) | | Gain on extinguishment of debt | $346,092 | — | $346,092 | — | | Net income (loss) | $151,816 | $(46,586) | $69,862 | $(93,826) | | Basic income (loss) per common share | $4.18 | $(1.31) | $1.93 | $(2.64) | | Diluted income (loss) per common share | $3.39 | $(1.31) | $1.56 | $(2.64) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income significantly improved for the three and six months ended June 30, 2025, due to net income and positive cumulative translation adjustments | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $151,816 | $(46,586) | $69,862 | $(93,826) | | Other comprehensive income (loss), net of income taxes | $5,489 | $407 | $7,474 | $(253) | | Comprehensive income (loss) | $157,305 | $(46,179) | $77,336 | $(94,079) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net decrease in cash for the six months ended June 30, 2025, primarily from debt repayments and operating activities, partially offset by investing activities | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(52,711) | $28,570 | | Net cash provided by (used in) investing activities | $16,441 | $(46,156) | | Net cash used in financing activities | $(111,059) | $(36,242) | | Net decrease in cash, cash equivalents, and restricted cash | $(146,706) | $(54,604) | | Cash, cash equivalents, and restricted cash at end of period | $368,927 | $573,223 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased from December 31, 2024, to June 30, 2025, due to net income and other comprehensive income | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :------------------ | :-------------- | | Total Equity | $2,201,419 | $2,313,687 | | Net income (loss) for the period | $(81,954) (Q1 2025) / $151,816 (Q2 2025) | N/A | | Share-based compensation | $21,921 (Q1 2025) / $19,070 (Q2 2025) | N/A | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on business operations, accounting policies, financial performance, and subsequent events supporting the consolidated financial statements [Note 1. Description of Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Sphere Entertainment Co. operates two segments: Sphere (live entertainment) and MSG Networks (regional sports media), with financial statements prepared under GAAP - Sphere Entertainment Co. is comprised of two reportable segments: Sphere (next-generation entertainment medium) and MSG Networks (regional sports and entertainment networks, including DTC streaming)[23](index=23&type=chunk) - The first Sphere venue opened in Las Vegas in September 2023, offering immersive productions, concerts, and corporate events, with plans underway for a second Sphere in Abu Dhabi, UAE, announced in October 2024[24](index=24&type=chunk) - MSG Networks serves the New York designated market area, broadcasting live local games for NBA (Knicks) and NHL (Rangers, Islanders, Devils, Sabres), and NFL (Giants, Bills)[24](index=24&type=chunk) [Note 2. Accounting Policies](index=11&type=section&id=Note%202.%20Accounting%20Policies) This note details the company's accounting policies, including consolidation principles, use of estimates, and the impact of new and adopted accounting pronouncements - The company's condensed consolidated financial statements include Sphere Entertainment Co. and its subsidiaries, with all significant intercompany transactions eliminated[31](index=31&type=chunk) - Management uses estimates for items such as credit losses, valuation of investments, goodwill, intangible assets, deferred production content, deferred tax assets, and pension obligations[32](index=32&type=chunk) - Recently issued ASUs include 2024-03 (Disaggregation of Income Statement Expenses, effective Dec 31, 2027), 2024-04 (Induced Conversions of Convertible Debt Instruments, effective Dec 31, 2026), and 2025-05 (Measurement of Credit Losses for Accounts Receivable and Contract Assets, effective Q1 2026)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Recently adopted ASUs include 2023-07 (Improvements to Reportable Segment Disclosures, effective Dec 31, 2024) and 2023-09 (Improvements to Income Tax Disclosures, effective Dec 31, 2025)[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 3. Revenue Recognition](index=13&type=section&id=Note%203.%20Revenue%20Recognition) This note outlines revenue recognition policies and disaggregates revenue by source and segment, distinguishing between event-related and media-related revenues | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sphere | $175,587 | $151,217 | $333,132 | $321,581 | | MSG Networks | $107,090 | $122,178 | $230,119 | $273,144 | | Total Revenues | $282,677 | $273,395 | $563,251 | $594,725 | | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ticketing and venue license fee revenues | $124,640 | $104,973 | $237,618 | $215,628 | | Sponsorship, signage, Exosphere advertising, and suite license revenues | $22,624 | $20,356 | $46,798 | $60,867 | | Food, beverage, and merchandise revenues | $27,884 | $25,074 | $47,773 | $43,549 | | Media networks revenues | $107,090 | $122,178 | $230,119 | $273,144 | | Total revenues from contracts with customers | $282,238 | $272,581 | $562,308 | $593,188 | - As of June 30, 2025, remaining performance obligations were **$208,881 thousand**, of which **66%** is expected to be recognized over the next two years and **34%** thereafter, primarily from sponsorship agreements[50](index=50&type=chunk) [Note 4. Restructuring Charges](index=17&type=section&id=Note%204.%20Restructuring%20Charges) The company incurred restructuring charges for employee termination benefits in the Sphere segment, leading to a decrease in the restructuring liability | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $947 | $141 | | Six Months Ended June 30, | $2,788 | $4,808 | | Metric | Amount | | :-------------------------- | :----- | | Balance as of December 31, 2024 | $3,590 | | Restructuring charges | $2,788 | | Payments | $(4,115) | | Balance as of June 30, 2025 | $2,263 | [Note 5. Investments](index=17&type=section&id=Note%205.%20Investments) The company's investments, primarily equity method holdings, increased slightly, with recognized unrealized gains on other equity investments | Investment | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :-------------- | :---------------- | | SACO Technologies Inc. (30% ownership) | $19,151 | $18,095 | | Gotham Advanced Media and Entertainment, LLC (50% ownership) | $9,718 | $10,000 | | Equity investments without readily determinable fair values | $8,721 | $8,721 | | Other equity investments with readily determinable fair values | $3,721 | $3,580 | | Total investments | $41,311 | $40,396 | - The Company recognized unrealized gains on equity investments of **$219 thousand** (three months) and **$240 thousand** (six months) for the period ended June 30, 2025[53](index=53&type=chunk) [Note 6. Property and Equipment, net](index=18&type=section&id=Note%206.%20Property%20and%20Equipment%2C%20net) Net property and equipment decreased due to depreciation and a pre-tax loss from the sale of land in Stratford, London | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total property and equipment, gross | $3,508,527 | $3,528,414 | | Less accumulated depreciation and amortization | $(656,549) | $(492,684) | | Property and equipment, net | $2,851,978 | $3,035,730 | - The Company completed the sale of its land in Stratford, London, for **$48,757 thousand**, recognizing a pre-tax loss of **$3,741 thousand**[57](index=57&type=chunk) | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $82,251 | $80,885 | | Six Months Ended June 30, | $164,880 | $159,973 | [Note 7. Original Immersive Production Content](index=18&type=section&id=Note%207.%20Original%20Immersive%20Production%20Content) Deferred production content costs for original immersive productions significantly increased, particularly for in-process content, with amortization reported in direct operating expenses | Production Content | June 30, 2025 | December 31, 2024 | | :------------------- | :-------------- | :---------------- | | Released, less amortization | $39,880 | $52,782 | | In-process | $114,979 | $49,837 | | Total production content | $154,859 | $102,619 | | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $5,845 | $7,093 | | Six Months Ended June 30, | $13,089 | $14,882 | [Note 8. Goodwill and Intangible Assets](index=19&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained stable after a $61.2 million impairment charge for MSG Networks, while amortizable intangible assets slightly decreased | Segment | June 30, 2025 | December 31, 2024 | | :---------- | :-------------- | :---------------- | | Sphere | $46,864 | $46,864 | | MSG Networks | $363,308 | $363,308 | | Total Goodwill | $410,172 | $410,172 | - A non-cash goodwill impairment charge of **$61.2 million** was recorded for the MSG Networks segment as of December 31, 2024, following an interim impairment test triggered by the expiration of an affiliation agreement with Altice[62](index=62&type=chunk) | Intangible Asset | June 30, 2025 | December 31, 2024 | | :----------------- | :-------------- | :---------------- | | Affiliate relationships | $11,680 | $13,238 | | Technology | $11,889 | $13,440 | | Trade name | $1,560 | $1,705 | | Total | $25,129 | $28,383 | [Note 9. Commitments and Contingencies](index=20&type=section&id=Note%209.%20Commitments%20and%20Contingencies) The company has significant broadcast rights commitments and settled Networks Merger litigations, with an ongoing insurance coverage dispute for one settlement | Segment | 2025 (Remainder) | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :---------------------- | :--------------- | :----- | :----- | :----- | :----- | :--------- | :------ | | Sphere | $23,890 | $20,103 | $15,333 | $— | $— | $— | $59,326 | | MSG Networks | $114,918 | $219,363 | $225,092 | $204,742 | $113,008 | $39,393 | $916,516 | | Total Commitments | $138,808 | $239,466 | $240,425 | $204,742 | $113,008 | $39,393 | $975,842 | - The MSG Entertainment Litigation was settled for approximately **$85 million**, paid to the Company by insurers[69](index=69&type=chunk) - The MSG Networks Litigation settled for approximately **$48.5 million**, with **$28 million** paid by the Company and **$20.5 million** by insurers, with an ongoing dispute over remaining insurance coverage[71](index=71&type=chunk) [Note 10. Credit Facilities and Convertible Notes](index=22&type=section&id=Note%2010.%20Credit%20Facilities%20and%20Convertible%20Notes) This note details the company's debt structure, including the MSG Networks debt restructuring that yielded a $346.092 million gain, and terms for other credit facilities and convertible notes - On June 27, 2025, MSG Networks' prior credit facilities were replaced with a new **$210 million** MSGN Term Loan Facility, maturing December 31, 2029, following a troubled debt restructuring[79](index=79&type=chunk) - The troubled debt restructuring resulted in a gain on extinguishment of debt of **$346.092 million**[93](index=93&type=chunk) - The MSGN Term Loan Facility requires fixed amortization of **$10 million** per quarter starting September 30, 2025, and mandatory prepayments from excess cash sweep[84](index=84&type=chunk) - The LV Sphere Term Loan Facility is a **$275 million** senior secured term loan maturing December 22, 2027, with principal due at maturity and no prior amortization payments[94](index=94&type=chunk)[96](index=96&type=chunk) - The Company has **$258.750 million** in 3.50% Convertible Senior Notes due 2028[101](index=101&type=chunk) | Year | MSGN Term Loan Facility | LV Sphere Term Loan Facility | 3.50% Convertible Senior Notes | Total Debt | | :--------- | :---------------------- | :--------------------------- | :----------------------------- | :--------- | | 2025 (rem) | $20,000 | $— | $— | $20,000 | | 2026 | $40,000 | $— | $— | $40,000 | | 2027 | $40,000 | $275,000 | $— | $315,000 | | 2028 | $40,000 | $— | $258,750 | $298,750 | | 2029 | $70,000 | $— | $— | $70,000 | | Thereafter | $— | $— | $— | $— | | Total debt | $210,000 | $275,000 | $258,750 | $743,750 | | Liability | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Fair Value | | :-------------------------------- | :----------------------------- | :------------------------- | :------------------------------- | :------------------------- | | MSG Networks term loan facility | $363,970 | $168,000 | $829,125 | $335,796 | | LV Sphere Term Loan Facility | $275,000 | $270,875 | $275,000 | $273,625 | | 3.50% Convertible Senior Notes | $253,863 | $363,984 | $253,155 | $353,246 | | Total debt | $892,833 | $802,859 | $1,357,280 | $962,667 | [Note 11. Pension Plans and Other Postretirement Benefit Plan](index=30&type=section&id=Note%2011.%20Pension%20Plans%20and%20Other%20Postretirement%20Benefit%20Plan) The company sponsors various pension and postretirement plans, with net periodic benefit costs for pension plans and increased expenses for defined contribution plans - The Company sponsors both funded and unfunded, qualified and non-qualified pension plans (Networks Plans, Sphere Excess Plan) and a postretirement benefit plan[108](index=108&type=chunk) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net periodic benefit cost (Pension Plans) | $389 | $475 | $778 | $851 | | Net periodic benefit cost (Postretirement Plan) | $28 | $69 | $56 | $74 | | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $2,417 | $1,420 | | Six Months Ended June 30, | $4,012 | $3,163 | [Note 12. Share-based Compensation](index=33&type=section&id=Note%2012.%20Share-based%20Compensation) Share-based compensation expense increased, with $91.391 million in unrecognized compensation cost for unvested awards to be recognized over 2.1 years | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $19,497 | $13,263 | | Six Months Ended June 30, | $40,918 | $30,427 | - As of June 30, 2025, there was **$91.391 million** of unrecognized compensation cost related to unvested RSUs, PSUs, stock options, and SARs, with a weighted-average recognition period of approximately **2.1 years**[119](index=119&type=chunk) - For the six months ended June 30, 2025, approximately **465 RSUs**, **368 PSUs**, and **1,685 stock options** were granted[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) [Note 13. Stockholders' Equity](index=34&type=section&id=Note%2013.%20Stockholders%27%20Equity) The company has no outstanding preferred stock, a re-authorized $350 million share repurchase program with no activity, and significantly improved accumulated other comprehensive loss - The Company is authorized to issue **15,000 shares** of preferred stock, but none were outstanding as of June 30, 2025[126](index=126&type=chunk) - A share repurchase program for up to **$350 million** of Class A Common Stock was re-authorized on March 29, 2023, but no shares have been repurchased to date[127](index=127&type=chunk) | Metric | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :------------------ | :-------------- | | Balance of Accumulated Other Comprehensive Loss | $(7,508) | $(34) | | Other comprehensive income (loss), total (Q2 2025) | $5,489 | N/A | | Other comprehensive income (loss), total (YTD 2025) | $7,474 | N/A | [Note 14. Related Party Transactions](index=35&type=section&id=Note%2014.%20Related%20Party%20Transactions) The Dolan Family Group controls the company, with significant related party transactions including amended MSG Networks media rights and issued penny warrants to MSG Sports - The Dolan Family Group beneficially owns **100%** of Class B Common Stock and approximately **6.0%** of Class A Common Stock, representing about **71.8%** of aggregate voting power[133](index=133&type=chunk) - MSG Networks' media rights agreements with New York Knicks, LLC and New York Rangers, LLC were amended on June 27, 2025, to reduce annual rights fees by **28%** and **18%** respectively, eliminate escalators, and shorten terms to expire after the 2028-29 seasons[135](index=135&type=chunk)[188](index=188&type=chunk) - MSG Networks issued penny warrants to MSG Sports, exercisable for **19.9%** of MSG Networks' common stock, with an estimated fair value of **$0** at inception[136](index=136&type=chunk) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $1,202 | $323 | $2,486 | $1,538 | | Total operating expenses, net | $(44,800) | $(75,619) | $(111,718) | $(154,182) | | - Media fees | $(24,181) | $(42,845) | $(69,124) | $(86,792) | | - Corporate G&A (MSG Ent. Agreement) | $(17,188) | $(27,355) | $(34,522) | $(54,849) | [Note 15. Segment Information](index=37&type=section&id=Note%2015.%20Segment%20Information) The company's two reportable segments, Sphere and MSG Networks, are evaluated by Adjusted Operating Income, with detailed financial results and reconciliation provided - The company's two reportable segments are Sphere and MSG Networks, with performance evaluated using Adjusted Operating Income (AOI)[140](index=140&type=chunk)[141](index=141&type=chunk) | Period | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Three Months Ended June 30, | $61,466 | $25,657 | $35,809 | | Six Months Ended June 30, | $97,434 | $87,178 | $10,256 | | Period | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Three Months Ended June 30, | $24,949 | $(5,473) | $30,422 | | Six Months Ended June 30, | $38,096 | $7,436 | $30,660 | | Period | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Three Months Ended June 30, | $36,517 | $31,130 | $5,387 | | Six Months Ended June 30, | $59,338 | $79,742 | $(20,404) | | Customer | Accounts Receivable (June 30, 2025) | Accounts Receivable (Dec 31, 2024) | Revenues (Q2 2025) | Revenues (Q2 2024) | Revenues (YTD 2025) | Revenues (YTD 2024) | | :--------- | :---------------------------------- | :--------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Customer A | 13% | 14% | N/A | N/A | N/A | N/A | | Customer B | 12% | 14% | N/A | N/A | N/A | N/A | | Customer C | 10% | 10% | N/A | N/A | N/A | N/A | | Customer 1 | N/A | N/A | 11% | 12% | 11% | 11% | | Customer 2 | N/A | N/A | 9% | 12% | 6% | 12% | | Customer 3 | N/A | N/A | 8% | 9% | 8% | 9% | [Note 16. Additional Financial Information](index=43&type=section&id=Note%2016.%20Additional%20Financial%20Information) This note summarizes cash, prepaid expenses, accrued liabilities, and income tax payments, providing additional financial details | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $355,661 | $501,954 | | Restricted cash | $13,266 | $13,679 | | Total cash, cash equivalents and restricted cash | $368,927 | $515,633 | | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Accrued payroll and employee related liabilities | $41,058 | $42,892 | | Cash due to promoters | $94,827 | $109,078 | | Capital expenditure accruals | $131,930 | $142,989 | | Accrued legal fees | $25,683 | $22,046 | | Other accrued expenses | $53,427 | $71,365 | | Total Accrued expenses and other current liabilities | $346,925 | $388,370 | - Income tax payments, net of refunds, for the six months ended June 30, 2025, were **$1,939 thousand**, compared to **$(140) thousand** in the prior year[159](index=159&type=chunk) [Note 17. Subsequent Events](index=44&type=section&id=Note%2017.%20Subsequent%20Events) Post-period, Sphere Entertainment Group finalized agreements with DCT Abu Dhabi for Sphere Abu Dhabi, securing franchise rights, technology licenses, and future royalties - On July 25, 2025, Sphere Entertainment Group and DCT Abu Dhabi finalized agreements for Sphere Abu Dhabi, granting DCT Abu Dhabi exclusive rights to build and operate the venue and additional Spheres in the MENA region[160](index=160&type=chunk)[161](index=161&type=chunk) - Sphere Entertainment Group will receive a franchise initiation fee (partially paid, with installments tied to milestones) and royalties based on Sphere Abu Dhabi's total revenues and ticket sales for licensed content, plus fees for pre-construction and construction services[163](index=163&type=chunk)[164](index=164&type=chunk) - The Franchise Agreement has an initial term of **25 years** from opening, with two **10-year** renewal options[163](index=163&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Sphere Entertainment Co.'s financial condition and results for the three and six months ended June 30, 2025, covering business, recent developments, performance, liquidity, and accounting estimates [Introduction](index=47&type=section&id=Introduction) This MD&A introduction supplements financial statements, discusses forward-looking statements and risks, and outlines the company's primary business activities - The MD&A contains forward-looking statements regarding future operating and financial performance, including the success of Sphere, development of immersive productions, plans for Sphere Abu Dhabi, debt financing, and MSG Networks subscriber trends[165](index=165&type=chunk) - Investors are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties, which are detailed in the 'Risk Factors' section[165](index=165&type=chunk)[167](index=167&type=chunk) [Business Overview](index=47&type=section&id=Business%20Overview) Sphere Entertainment Co. operates two segments: Sphere, a next-generation entertainment medium, and MSG Networks, a regional sports and entertainment network - Sphere segment focuses on multi-sensory experiences at its Las Vegas venue, hosting immersive productions, concerts, and corporate events, supported by Sphere Studios, with a second Sphere planned for Abu Dhabi[171](index=171&type=chunk) - MSG Networks segment includes MSG Network and MSG Sportsnet, providing exclusive live local games and programming for major New York-area sports teams (Knicks, Rangers, Islanders, Devils, Sabres, Giants, Bills), along with the MSG+ streaming service[172](index=172&type=chunk)[175](index=175&type=chunk) [Factors Affecting Operating Results](index=49&type=section&id=Factors%20Affecting%20Operating%20Results) Operating results are influenced by Sphere's audience and event attraction, MSG Networks' subscriber trends and media rights, and broader economic conditions - Sphere segment's operating results are dependent on attracting audiences to The Sphere Experience, advertisers, marketing partners, and guests/artists for events[178](index=178&type=chunk) - MSG Networks' operating results are influenced by affiliation agreements with distributors, subscriber numbers, media rights agreements, debt service payments, the success of MSG+ streaming, and advertising rates[178](index=178&type=chunk) - General economic conditions, especially in Las Vegas and New York City, can impact tourism, demand for entertainment, advertising, sponsorship, and concession sales, potentially affecting the number of events and immersive productions[179](index=179&type=chunk) [Recent Developments](index=49&type=section&id=Recent%20Developments) Recent developments include MSG Networks' debt restructuring with reduced media rights fees and finalized agreements for Sphere Abu Dhabi, securing franchise fees and royalties [MSG Networks Debt Restructuring](index=49&type=section&id=MSG%20Networks%20Debt%20Restructuring) MSG Networks completed a debt restructuring on June 27, 2025, establishing a new $210 million term loan, involving a capital contribution, cash payment, and amended media rights agreements - MSG Networks' debt was restructured on June 27, 2025, replacing prior facilities with a **$210 million** MSGN Term Loan Facility maturing December 31, 2029[182](index=182&type=chunk) - The Company made a **$15 million** capital contribution to MSG Networks, and MSGN L.P. made an **$80 million** cash payment to lenders[183](index=183&type=chunk) - Media rights agreements with the New York Knicks and New York Rangers were amended, reducing annual rights fees by **28%** and **18%** respectively, eliminating escalators, and setting new expiration dates after the 2028-29 seasons[185](index=185&type=chunk)[188](index=188&type=chunk) - MSG Networks issued penny warrants to MSG Sports, exercisable for **19.9%** of MSG Networks' common stock[186](index=186&type=chunk) [Sphere Abu Dhabi](index=51&type=section&id=Sphere%20Abu%20Dhabi) Sphere Entertainment Group finalized agreements with DCT Abu Dhabi for Sphere Abu Dhabi, granting exclusive rights for development and operation in exchange for franchise fees and royalties - On July 25, 2025, Sphere Entertainment Group and DCT Abu Dhabi finalized agreements for Sphere Abu Dhabi, granting DCT Abu Dhabi exclusive rights to build and operate the venue and additional Spheres in the MENA region[187](index=187&type=chunk)[189](index=189&type=chunk) - Sphere Entertainment Group will receive a franchise initiation fee (partially paid, with installments tied to milestones) and annual royalties based on Sphere Abu Dhabi's total revenues and ticket sales for licensed content, plus fees for pre-construction and construction services[191](index=191&type=chunk)[192](index=192&type=chunk) - The Franchise Agreement has an initial term of **25 years** from opening, with two **10-year** renewal options[191](index=191&type=chunk) [Other Matters](index=52&type=section&id=Other%20Matters) The "One Big Beautiful Bill Act" was signed into law on July 4, 2025, and the company is evaluating its impact on financial statements - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, introducing tax reform provisions[193](index=193&type=chunk) - The Company is currently evaluating the impact of OBBBA's tax reform provisions on its consolidated financial statements[193](index=193&type=chunk) [Condensed Consolidated Results of Operations](index=53&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) The company reported net income for the three and six months ended June 30, 2025, driven by a $346.092 million debt extinguishment gain, despite mixed revenue and operating loss trends | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $282,677 | $273,395 | $563,251 | $594,725 | | Direct operating expenses | $(131,318) | $(149,519) | $(289,641) | $(303,559) | | Selling, general, and administrative expenses | $(113,023) | $(107,040) | $(227,292) | $(230,189) | | Operating loss | $(50,159) | $(71,377) | $(128,768) | $(111,770) | | Gain on extinguishment of debt | $346,092 | — | $346,092 | — | | Net income (loss) | $151,816 | $(46,586) | $69,862 | $(93,826) | | Adjusted operating income | $61,466 | $25,657 | $97,434 | $87,178 | - The **$346.092 million** gain on extinguishment of debt for the three and six months ended June 30, 2025, was a primary driver of the net income turnaround[201](index=201&type=chunk) - Interest income decreased by **$3,645 thousand** (Q2) and **$7,421 thousand** (YTD) due to lower average cash balances, while interest expense decreased by **$1,059 thousand** (Q2) and **$1,972 thousand** (YTD) due to a reduction in the average outstanding principal balance of the MSGN Term Loan Facility[202](index=202&type=chunk)[203](index=203&type=chunk) - Income tax expense for the six months ended June 30, 2025, was **$101,616 thousand** (**59%** effective rate), significantly impacted by cancellation of debt income (CODI) excluded from taxable income under insolvency provisions[206](index=206&type=chunk)[207](index=207&type=chunk) [Business Segment Results](index=58&type=section&id=Business%20Segment%20Results) This section analyzes Sphere and MSG Networks segment performance, highlighting Sphere's revenue growth and improved operating income, and MSG Networks' revenue declines despite reduced media rights expenses [Sphere Segment](index=58&type=section&id=Sphere%20Segment) Sphere segment revenues increased due to more concerts and corporate events, improving operating loss and adjusted operating income, despite lower Sphere Experience revenues | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $175,587 | $151,217 | $333,132 | $321,581 | | Direct operating expenses | $(76,351) | $(67,870) | $(146,887) | $(130,164) | | Selling, general, and administrative expenses | $(96,389) | $(102,109) | $(192,793) | $(211,085) | | Operating loss | $(83,448) | $(104,530) | $(177,210) | $(188,028) | | Adjusted operating income (loss) | $24,949 | $(5,473) | $38,096 | $7,436 | - Event-related revenues increased due to **9** (Q2) and **19** (YTD) additional concert residency shows and higher corporate events at Sphere in Las Vegas[217](index=217&type=chunk) - Revenues for The Sphere Experience decreased due to lower average per-show revenues (**$315k/performance** Q2 2025 vs **$358k/performance** Q2 2024) and fewer overall performances for the six-month period[220](index=220&type=chunk)[221](index=221&type=chunk) - Direct operating expenses increased due to higher event-related expenses and the impact of consolidating Holoplot after its acquisition in April 2024[222](index=222&type=chunk)[224](index=224&type=chunk) - Selling, general, and administrative expenses decreased due to lower employee compensation and professional fees[228](index=228&type=chunk)[229](index=229&type=chunk) [MSG Networks Segment](index=62&type=section&id=MSG%20Networks%20Segment) MSG Networks segment revenues decreased due to subscriber losses and the Altice non-carriage period, despite significant reductions in media rights fees, while SG&A expenses increased | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $107,090 | $122,178 | $230,119 | $273,144 | | Direct operating expenses | $(54,967) | $(81,649) | $(142,754) | $(173,395) | | Selling, general, and administrative expenses | $(16,634) | $(4,931) | $(34,499) | $(19,104) | | Operating income | $33,289 | $33,153 | $48,442 | $76,258 | | Adjusted operating income | $36,517 | $31,130 | $59,338 | $79,742 | - Distribution revenue decreased primarily due to a **13.0%** (Q2) and **12.5%** (YTD) decrease in total subscribers (excluding Altice non-carriage period) and the absence of Altice revenues during its non-carriage period (Jan 1 - Feb 21, 2025)[241](index=241&type=chunk) - Advertising revenue decreased due to a lower number of live regular season and postseason professional sports telecasts[242](index=242&type=chunk) - Direct operating expenses decreased significantly due to reductions in media rights fees for certain professional sports teams, including retroactive adjustments, following the June 27, 2025, credit facilities restructuring[243](index=243&type=chunk) - Selling, general, and administrative expenses increased due to higher advertising and marketing costs and increased professional fees, partly due to the absence of litigation-related insurance recoveries in the prior year[244](index=244&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash and operating cash flows, used for working capital, capital spending, and debt service, with future liquidity dependent on Sphere's cash flow generation - Primary liquidity sources are cash and cash equivalents and cash flows from operations, with uses including working capital, capital spending (e.g., Sphere content), and debt service[249](index=249&type=chunk) - As of June 30, 2025, unrestricted cash and cash equivalents were **$355.661 million**, down from **$501.954 million** at December 31, 2024[250](index=250&type=chunk)[157](index=157&type=chunk) - Cash usage for the period included **$105 million** in principal payments and **$52.711 million** net cash used in operating activities[250](index=250&type=chunk) - The company's liquidity is highly dependent on Sphere generating significant positive cash flow, which is uncertain given the novel nature of its immersive productions[251](index=251&type=chunk)[320](index=320&type=chunk) - The company has a **$350 million** share repurchase program authorized, but no shares have been repurchased to date[253](index=253&type=chunk) - Sphere Entertainment Group finalized agreements for Sphere Abu Dhabi on July 25, 2025, which will provide franchise initiation fees and future royalties[255](index=255&type=chunk) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(52,711) | $28,570 | | Net cash provided by (used in) investing activities | $16,441 | $(46,156) | | Net cash used in financing activities | $(111,059) | $(36,242) | | Net decrease in cash, cash equivalents, and restricted cash | $(146,706) | $(54,604) | [Seasonality of Our Business](index=71&type=section&id=Seasonality%20of%20Our%20Business) MSG Networks' annual revenues are typically higher in the first and fourth quarters, driven by advertising from live NBA and NHL programming - MSG Networks segment's annual revenues are higher in the first and fourth quarters, driven by advertising revenue from live NBA and NHL programming[283](index=283&type=chunk) [Recently Issued Accounting Pronouncements and Critical Accounting Estimates](index=71&type=section&id=Recently%20Issued%20Accounting%20Pronouncements%20and%20Critical%20Accounting%20Estimates) No material changes occurred in critical accounting policies, but an interim goodwill impairment test for MSG Networks resulted in a $61.2 million non-cash charge - No material changes to critical accounting policies were reported[285](index=285&type=chunk) - The company performed an annual goodwill impairment test as of August 31, 2024, and an interim quantitative impairment test for the MSG Networks reporting unit as of December 31, 2024[285](index=285&type=chunk)[288](index=288&type=chunk) - The interim impairment test for MSG Networks resulted in a non-cash goodwill impairment charge of **$61.2 million**, triggered by changes in the programming industry and the expiration of an affiliation agreement with Altice[288](index=288&type=chunk)[291](index=291&type=chunk) | Reporting Unit | June 30, 2025 | | :------------- | :-------------- | | Sphere | $46,864 | | MSG Networks | $363,308 | | Total Goodwill | $410,172 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's market risk exposure, including interest rate risk on floating-rate debt and foreign currency exchange rate risk from international operations - The Company is exposed to interest rate risk from floating-rate borrowings under its credit facilities; a hypothetical **200 basis point** increase in floating interest rates would increase interest payments by **$12.779 million** annually[293](index=293&type=chunk) - Foreign currency exchange rate exposure primarily relates to activities in the United Kingdom (British pound sterling) and Germany (Euro); a hypothetical **10%** fluctuation in GBP/USD would change net asset value by approximately **$100 thousand**, and for EUR/USD by approximately **$140 thousand**[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - The Company may use foreign currency forward exchange contracts to reduce translation risk but does not plan to use derivative financial instruments for speculative purposes[297](index=297&type=chunk) [Item 4. Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[298](index=298&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[299](index=299&type=chunk) [PART II. OTHER INFORMATION](index=75&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings, risk factors, equity security sales, exhibits, and the report's signature [Item 1. Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) This section details Networks Merger legal proceedings, including the MSG Entertainment Litigation settled by insurers and the MSG Networks Litigation with an ongoing insurance coverage dispute - The MSG Entertainment Litigation, alleging fiduciary breaches in the Networks Merger, was settled for approximately **$85 million**, fully funded by the other defendants' insurers[305](index=305&type=chunk) - The MSG Networks Litigation, also alleging fiduciary breaches, was settled for approximately **$48.5 million**; the Company paid **$28 million**, and insurers paid **$20.5 million**, with an ongoing dispute regarding further insurance coverage[307](index=307&type=chunk) - As of June 30, 2025, approximately **$18 million** has been accrued in Accrued expenses and other current liabilities related to the MSG Networks Litigation settlement[307](index=307&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks, including MSG Networks' debt repayment challenges, reliance on media rights, and the company's high leverage and dependence on Sphere's uncertain cash flow - MSG Networks faces risks including the inability to generate sufficient operating cash flows to repay its **$210 million** term loan facility (MSGN Term Loan Facility) maturing December 31, 2029, which could lead to acceleration of debt and foreclosure by lenders[310](index=310&type=chunk)[311](index=311&type=chunk) - The MSG Networks business is highly dependent on media rights agreements with professional sports teams (Knicks, Rangers), which were amended on June 27, 2025, to reduce rights fees and shorten terms to the 2028-29 seasons; failure to renew these or generate sufficient revenue could materially negatively affect the business[312](index=312&type=chunk)[314](index=314&type=chunk) - Sphere Entertainment Co. is highly leveraged with approximately **$889.3 million** in consolidated debt as of June 30, 2025; its ability to fund operations and service debt depends on Sphere generating significant positive cash flow, which is uncertain given the novel nature of its immersive productions[317](index=317&type=chunk)[320](index=320&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a re-authorized $350 million share repurchase program for Class A Common Stock, with no shares repurchased to date - The Company's Board of Directors authorized a share repurchase program for up to **$350 million** of Class A Common Stock, re-authorized on March 29, 2023[327](index=327&type=chunk) - As of June 30, 2025, no shares have been repurchased under the share repurchase program[327](index=327&type=chunk) [Item 6. Exhibits](index=80&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, certifications, and XBRL data [SIGNATURE](index=82&type=section&id=SIGNATURE) The report is signed by Robert Langer, Executive Vice President, Chief Financial Officer and Treasurer, on August 11, 2025 - The report was signed by Robert Langer, Executive Vice President, Chief Financial Officer and Treasurer, on August 11, 2025[334](index=334&type=chunk)[335](index=335&type=chunk)
Sphere Entertainment (SPHR) - 2025 Q4 - Annual Results
2025-08-11 11:37
[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Sphere Entertainment Co. reported a 3% revenue increase to $282.7 million, with operating loss narrowing by 30% and adjusted operating income surging 140% to $61.5 million, driven by strong Sphere segment performance Q2 2025 Key Financial Metrics (Consolidated) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $282.7M | $273.4M | +$9.3M | +3% | | **Operating Loss** | ($50.2M) | ($71.4M) | +$21.2M | +30% | | **Adjusted Operating Income** | $61.5M | $25.7M | +$35.8M | +140% | - Executive Chairman and CEO James L. Dolan stated the company is executing its strategic priorities for long-term growth and is making progress with global expansion plans[2](index=2&type=chunk) - Key operational highlights for the Sphere segment include surpassing **four million total tickets sold** for The Sphere Experience since its October 2023 opening and hosting multiple concert residencies and corporate events[5](index=5&type=chunk) [Segment Performance Analysis](index=2&type=section&id=Segment%20Performance%20Analysis) The Sphere segment achieved **16% revenue growth** and positive adjusted operating income, while MSG Networks saw a **12% revenue decline** due to subscriber loss, partially offset by cost-cutting measures Q2 2025 Revenue by Segment (in millions) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Sphere | $175.6 | $151.2 | +16% | | MSG Networks | $107.1 | $122.2 | -12% | Q2 2025 Adjusted Operating Income by Segment (in millions) | Segment | Q2 2025 AOI | Q2 2024 AOI | Change ($) | | :--- | :--- | :--- | :--- | | Sphere | $24.9 | ($5.5) | +$30.4 | | MSG Networks | $36.5 | $31.1 | +$5.4 | [Sphere Segment](index=2&type=section&id=Sphere%20Segment) The Sphere segment's revenue grew **16%** to **$175.6 million**, driven by event-related revenues, with operating loss improving by **20%** and adjusted operating income turning positive at **$24.9 million** - Event-related revenues rose by **$26.7 million** due to more corporate events and nine additional concert residency shows compared to the prior year quarter[7](index=7&type=chunk) - Revenue from The Sphere Experience decreased by **$6.7 million**, as lower average per-show revenues offset an increase in the total number of performances[9](index=9&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **$5.7 million (6%)** due to lower employee compensation and professional fees[12](index=12&type=chunk) Sphere Segment Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $175.6 | $151.2 | +16% | | Operating Loss | ($83.4) | ($104.5) | +20% | | Adjusted Operating Income | $24.9 | ($5.5) | +$30.4M | [MSG Networks Segment](index=2&type=section&id=MSG%20Networks%20Segment) MSG Networks' revenue declined **12%** to **$107.1 million** due to subscriber loss, but direct operating expenses fell **33%** due to restructured media rights, leading to increased operating and adjusted operating income - Distribution revenue fell by **$11.4 million**, primarily driven by an approximate **13.0% decrease** in total subscribers[14](index=14&type=chunk) - Direct operating expenses decreased significantly by **$26.7 million (33%)**, mainly due to a **$25.6 million reduction** in rights fees expense following amendments to media rights agreements[16](index=16&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **$11.7 million**, largely due to higher marketing costs and the absence of prior-year litigation-related insurance recoveries[17](index=17&type=chunk) [Other Matters](index=3&type=section&id=Other%20Matters) MSG Networks restructured its credit facilities, resulting in a **$346.1 million gain** on debt extinguishment, amended media rights agreements, and issued warrants for **19.9%** equity to Madison Square Garden Sports Corp - MSG Networks restructured its credit facilities, replacing an **$804 million term loan** with a new **$210 million term loan**, leading to a recorded **gain on debt extinguishment of $346.1 million** for the quarter[19](index=19&type=chunk) - Media rights agreements with the Knicks and Rangers were amended to reduce annual rights fees by **28% and 18%** respectively, effective January 1, 2025, and eliminate annual fee escalators[20](index=20&type=chunk) - MSG Networks issued penny warrants to Madison Square Garden Sports Corp. exercisable for **19.9%** of the equity interests in MSG Networks[20](index=20&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Consolidated statements show **net income of $151.8 million** for Q2 2025, driven by a **$346.1 million gain** on debt extinguishment, with total assets at **$4.2 billion** and liabilities at **$1.9 billion**, and negative operating cash flow [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues were **$282.7 million** with an operating loss of **$50.2 million**, but a **$346.1 million gain** on debt extinguishment led to **net income of $151.8 million** or **$4.18 per basic share** Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $282,677 | $273,395 | | Operating loss | ($50,159) | ($71,377) | | Gain on extinguishment of debt | $346,092 | $— | | Net income (loss) | $151,816 | ($46,586) | | Basic income (loss) per share | $4.18 | ($1.31) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$4.2 billion**, liabilities decreased to **$1.9 billion** due to debt restructuring, and total stockholders' equity increased to **$2.3 billion** Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, and restricted cash | $368,927 | $515,633 | | Total Assets | $4,199,061 | $4,515,300 | | Total Liabilities | $1,885,374 | $2,313,881 | | Total Stockholders' Equity | $2,313,687 | $2,201,419 | [Selected Cash Flow Information](index=10&type=section&id=Selected%20Cash%20Flow%20Information) For the first six months of 2025, operating activities resulted in a **$52.7 million net cash outflow**, financing activities used **$111.1 million**, leading to a **$146.7 million net decrease in cash** Six Months Ended June 30 Cash Flow (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($52,711) | $28,570 | | Net cash provided by (used in) investing activities | $16,441 | ($46,156) | | Net cash used in financing activities | ($111,059) | ($36,242) | | **Net decrease in cash** | **($146,706)** | **($54,604)** | [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted Operating Income (Loss) is a key non-GAAP metric, defined by excluding depreciation, amortization, share-based compensation, and restructuring charges, with Q2 2025 consolidated Adjusted Operating Income at **$61.5 million** - Adjusted operating income (loss) is defined as operating income (loss) excluding depreciation, amortization, share-based compensation, restructuring charges, and other specific non-recurring or non-cash items[23](index=23&type=chunk) Q2 2025 Reconciliation of Operating Loss to Adjusted Operating Income (in thousands) | Description | Amount | | :--- | :--- | | **Operating loss** | **($50,159)** | | Share-based compensation | $18,850 | | Depreciation and amortization | $83,907 | | Other adjustments | $8,868 | | **Adjusted operating income** | **$61,466** |
SPHR: The High-Risk, High-Reward Play On Tomorrow's Entertainment Revolution
Seeking Alpha· 2025-07-07 13:27
Group 1 - Sphere Entertainment (NYSE: SPHR) is a hybrid live-entertainment and media company that features the most advanced immersive venue [1] - The company continues to operate its legacy MSG Network business, which is experiencing declining subscribers and significant debt [1] Group 2 - The investment analysis emphasizes the importance of identifying high-quality and/or severely mispriced investment ideas [1] - A successful investment idea is characterized by the ability to intuitively recognize great companies at great prices [1]
Gabelli Funds to Host 17th Annual Media & Entertainment Symposium Thursday, June 5, 2025
Globenewswire· 2025-05-12 12:00
Core Insights - Gabelli Funds will host its 17th Annual Media & Entertainment Symposium on June 5, 2025, at the Harvard Club in New York City, focusing on industry dynamics, current trends, and business fundamentals [1] - The symposium will include discussions on Sports Investing, Media & Telecom Regulatory issues, and Advertising Panels, providing a platform for attendees to engage with leading companies in the media ecosystem [1][3] - A webcast option will be available for those unable to attend in person, ensuring broader access to the discussions and insights shared during the event [1] Presenting Companies - Notable companies participating in one-on-one meetings include Atlanta Braves Holdings, AMC Networks, Lionsgate Studios, Churchill Downs, Nexstar Media Group, Genius Sports, Reservoir Media, Gray Television, Rogers Communications, Live Nation Entertainment, Sinclair Inc., Sportradar Group, TEGNA Inc., TKO Group, and The E.W. Scripps Company [2] Panel Discussions - The symposium will feature several panel discussions, including "Sports Investing: Ways to Play," a TV Bureau of Advertising (TVB) Panel, and a Media & Telecom Regulatory Expert Session led by former FCC Commissioner Rob McDowell [3]
Sphere Entertainment (SPHR) - 2025 Q3 - Quarterly Report
2025-05-08 20:16
PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Sphere Entertainment Co. as of March 31, 2025, and for the three months ended March 31, 2025 and 2024. It includes the balance sheets, statements of operations, comprehensive loss, cash flows, and stockholders' equity, along with detailed notes explaining the financial data. Key highlights include a net loss of **$82.0 million** for the quarter, a significant decrease in cash from operating activities, and a critical situation regarding the matured debt of the MSG Networks segment [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, shows total assets of **$4.45 billion** and total liabilities of **$2.31 billion**. Compared to December 31, 2024, total assets decreased slightly. A significant portion of current liabilities is the **$804.1 million** current portion of long-term debt, primarily related to the matured MSG Networks term loan Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $735,105 | $760,993 | | **Total Assets** | **$4,447,618** | **$4,515,300** | | **Total Current Liabilities** | $1,381,092 | $1,371,667 | | Current portion of long-term debt, net | $804,125 | $829,125 | | **Total Liabilities** | **$2,305,554** | **$2,313,881** | | **Total Stockholders' Equity** | $2,142,064 | $2,201,419 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, the company reported revenues of **$280.6 million**, a decrease from **$321.3 million** in the prior-year period. The operating loss widened to **$78.6 million** from **$40.4 million**, and the net loss increased to **$82.0 million** from **$47.2 million** year-over-year Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $280,574 | $321,330 | | Operating Loss | $(78,609) | $(40,393) | | Net Loss | $(81,954) | $(47,240) | | Basic Loss Per Share | $(2.27) | $(1.33) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$6.3 million** for the quarter, a sharp decline from **$101.0 million** in the same period last year. Net cash used in investing activities was **$17.6 million**, while financing activities used **$26.3 million**. This resulted in a net decrease in cash of **$37.4 million** for the quarter Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,348 | $101,018 | | Net cash used in investing activities | $(17,570) | $(21,213) | | Net cash used in financing activities | $(26,307) | $(12,963) | | **Net (decrease) increase in cash** | **$(37,431)** | **$66,119** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes provide critical details on accounting policies, segment information, debt, and contingencies. A key disclosure is the 'Liquidity and Going Concern' section (Note 2), which discusses the material uncertainty related to the MSG Networks' debt default and the subsequent Transaction Support Agreement aimed at restructuring it. Note 17 details this subsequent event, outlining the proposed debt restructuring, which is crucial for the company's financial stability. Other notes detail revenue sources, debt composition, and related-party transactions - The company's business is comprised of two reportable segments: Sphere, a next-generation entertainment medium, and MSG Networks, which operates regional sports networks[21](index=21&type=chunk) - A material uncertainty exists regarding the company's ability to continue as a going concern due to the MSG Networks' term loan maturing without repayment in October 2024. However, management believes its plans, including the Transaction Support Agreement, have alleviated substantial doubt[34](index=34&type=chunk)[39](index=39&type=chunk) - Subsequent to the quarter end, on April 24, 2025, the company entered into a Transaction Support Agreement to restructure the MSG Networks debt. Key terms include a new **$210 million** term loan, a **$15 million** capital contribution from Sphere Entertainment, and reduced media rights fees payable to the Knicks and Rangers[149](index=149&type=chunk)[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results, liquidity, and operational factors affecting the business. The analysis highlights a **13% decrease** in consolidated revenue, driven by a **19% drop** at MSG Networks. The Sphere segment's revenue also declined **8%**. A significant portion of the discussion is dedicated to the MSG Networks' debt situation, detailing the default, forbearance, and the subsequent Transaction Support Agreement. Management expresses confidence that Sphere's cash flow will support operations but acknowledges the uncertainty. Adjusted Operating Income (AOI), a key non-GAAP metric, decreased **42% to $36.0 million**, primarily due to a **53% decline** in MSG Networks' AOI Consolidated Results of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $280,574 | $321,330 | (13)% | | Operating Loss | $(78,609) | $(40,393) | 95% | | Net Loss | $(81,954) | $(47,240) | 73% | Adjusted Operating Income (AOI) Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Operating Loss | $(78,609) | $(40,393) | 95% | | **Adjusted Operating Income** | **$35,968** | **$61,521** | **(42)%** | - The primary source of liquidity is cash from operations, which is expected to be substantially used for working capital, capital spending (including Sphere content), and debt service. The ability to fund operations is dependent on Sphere generating significant positive cash flow[220](index=220&type=chunk)[221](index=221&type=chunk) - A Transaction Support Agreement was signed on April 24, 2025, to restructure MSG Networks' debt. This is expected to result in a non-cash gain but also the elimination of approximately half of the company's net operating losses[171](index=171&type=chunk)[177](index=177&type=chunk) [Business Segment Results - Sphere](index=50&type=section&id=Business%20Segment%20Results%20-%20Sphere) The Sphere segment reported revenues of **$157.5 million**, an **8% decrease** from the prior year. The decline was driven by lower revenues from The Sphere Experience and Exosphere advertising, partially offset by an increase in event-related revenues from more concerts. Direct operating expenses increased **13% to $70.5 million**. Despite the revenue drop, adjusted operating income improved slightly to **$13.1 million** from **$12.9 million**, primarily due to lower SG&A expenses Sphere Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $157,545 | $170,364 | (8)% | | Direct Operating Expenses | $(70,536) | $(62,294) | 13% | | Operating Loss | $(93,762) | $(83,498) | 12% | | Adjusted Operating Income | $13,147 | $12,909 | 2% | - Revenue from The Sphere Experience decreased by **$26.2 million** due to fewer performances. Exosphere advertising and sponsorship revenue fell by **$15.8 million**, mainly due to the absence of Super Bowl-related campaigns that occurred in the prior-year period[194](index=194&type=chunk)[195](index=195&type=chunk) - Event-related revenues increased by **$25.6 million**, driven by **10 more concerts** held at the venue compared to the prior year[194](index=194&type=chunk)[196](index=196&type=chunk) [Business Segment Results - MSG Networks](index=52&type=section&id=Business%20Segment%20Results%20-%20MSG%20Networks) The MSG Networks segment saw a **significant 19% revenue decline to $123.0 million**, primarily due to a **$29.9 million drop** in distribution revenue. This was caused by the temporary non-carriage by Altice and an **11.5% decrease** in total subscribers. Direct operating expenses decreased **4% to $87.8 million**. Consequently, adjusted operating income fell **53% to $22.8 million** MSG Networks Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $123,029 | $150,966 | (19)% | | Direct Operating Expenses | $(87,787) | $(91,746) | (4)% | | Operating Income | $15,153 | $43,105 | (65)% | | Adjusted Operating Income | $22,821 | $48,612 | (53)% | - Distribution revenue decreased by **$29.9 million**, driven by the absence of revenue from Altice during a non-carriage period (Jan 1 - Feb 21, 2025) and a decline in total subscribers of **approximately 11.5%** (excluding the Altice impact)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Advertising revenue increased by **$1.9 million** due to a higher number of live professional sports telecasts[210](index=210&type=chunk)[212](index=212&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company had **$465.0 million** in unrestricted cash. A major liquidity concern is the **$804.1 million** MSG Networks term loan that matured in October 2024 and is in default. The company entered a Transaction Support Agreement in April 2025 to restructure this debt. Management states that while this situation raises substantial doubt about the ability to continue as a going concern, their plans have effectively alleviated this doubt. Future liquidity is highly dependent on Sphere generating significant positive cash flow - The principal balance of total debt was **$1.34 billion** as of March 31, 2025, including **$804.1 million** of MSG Networks debt that matured in October 2024 and is in default[221](index=221&type=chunk) - If the MSG Networks debt work-out fails, it is probable that MSG Networks Inc. would seek bankruptcy protection or lenders would foreclose on its assets. The parent company and Sphere segment are not legally obligated for this debt[223](index=223&type=chunk)[224](index=224&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,348 | $101,018 | | Net cash used in investing activities | $(17,570) | $(21,213) | | Net cash used in financing activities | $(26,307) | $(12,963) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from interest rates and foreign currency fluctuations. A hypothetical **200 basis point (2%)** increase in floating interest rates would increase annual interest payments by approximately **$21.6 million**. The company also has foreign currency exposure to the British pound sterling and the Euro, though the potential impact from a **10% fluctuation** is relatively small (**$3.2 million** and **$0.18 million**, respectively) - The company is subject to interest rate risk on its floating-rate debt. A hypothetical **200 basis point** increase in rates would increase annual interest payments by **$21.6 million**[266](index=266&type=chunk) - The company has foreign currency exchange rate exposure to the British pound sterling (GBP) and the Euro (EUR). A hypothetical **10% fluctuation** in the GBP/USD rate would change net asset value by approximately **$3.2 million**, and a similar fluctuation in EUR/USD would change it by **$0.18 million**[267](index=267&type=chunk)[268](index=268&type=chunk) [Item 4. Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes in internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[270](index=270&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control[271](index=271&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) This section details litigation related to the 2021 merger with MSG Networks Inc. The MSG Entertainment Litigation was settled with an **$85 million** payment to the company, funded by insurers. The MSG Networks Litigation was settled for **approximately $48.5 million**, with **about $28 million** paid by the company. An insurance dispute over coverage for this settlement is ongoing - The MSG Entertainment Litigation related to the Networks Merger was settled, resulting in a payment of **approximately $85 million** to the Company, funded by defendants' insurers[278](index=278&type=chunk) - The MSG Networks Litigation was settled for **approximately $48.5 million**. The Company paid **about $28 million** of the settlement, with the remainder covered by insurers, although a dispute over the full insurance coverage remains[280](index=280&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks to the company's business. The most critical risks relate to the MSG Networks segment's debt situation, including the potential for bankruptcy or foreclosure if the refinancing efforts fail. Other major risks include the company's high overall leverage, its dependence on the financial success of the Sphere venue to generate sufficient cash flow for operations and debt service, and its reliance on media rights agreements for the MSG Networks business [Risks Related to Our MSG Networks Business](index=66&type=section&id=Risks%20Related%20to%20Our%20MSG%20Networks%20Business) The primary risk is the failure to refinance the MSG Networks term loan, which is currently in default. The company believes a failure to complete the workout contemplated by the Transaction Support Agreement would probably lead to MSG Networks Inc. seeking bankruptcy protection or lenders foreclosing on the business. This could lead to the deconsolidation of the segment and potential claims against the parent company. The business also depends on renewing media rights agreements with sports teams, which is not guaranteed - If MSG Networks cannot refinance its term loan, the company believes it is probable that MSG Networks Inc. and/or its subsidiaries would seek bankruptcy protection or lenders would foreclose on the collateral[283](index=283&type=chunk)[289](index=289&type=chunk) - Events of default exist under the MSG Networks Credit Agreement. While a Transaction Support Agreement is in place, there is no assurance it will be successfully consummated. Any successful refinancing is expected to be on terms materially less favorable than the current ones[293](index=293&type=chunk)[296](index=296&type=chunk) - The MSG Networks business is dependent on media rights agreements with professional sports teams. The Transaction Support Agreement proposes reducing the term of the Knicks and Rangers agreements to expire after the 2028-29 season[299](index=299&type=chunk) [Risks Related to Our Indebtedness, Financial Condition, and Internal Control](index=69&type=section&id=Risks%20Related%20to%20Our%20Indebtedness,%20Financial%20Condition%20and%20Internal%20Control) The company is highly leveraged with a consolidated debt balance of **approximately $1.3 billion** as of March 31, 2025. Its ability to fund operations and service this debt is dependent on Sphere generating significant positive cash flow, which is not assured. The uncertainty surrounding the MSG Networks debt raises substantial doubt about the company's ability to continue as a going concern, although management believes its plans have alleviated this doubt for the next year - The company is highly leveraged with a consolidated debt balance of **approximately $1.3 billion** as of March 31, 2025[302](index=302&type=chunk) - The company's ability to have sufficient liquidity to fund operations and refinance its debt is dependent on the ability of the Sphere venue to generate significant positive cash flow[306](index=306&type=chunk) - While conditions at MSG Networks raise substantial doubt about the company's ability to continue as a going concern, management has concluded that its plans have effectively alleviated this doubt as of the report's issuance date[311](index=311&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a share repurchase program authorizing **up to $350 million** of its Class A Common Stock. The program was re-authorized in March 2023. To date, no shares have been repurchased under this program - The company has a board-authorized share repurchase program for **up to $350 million** of Class A Common Stock. No shares have been repurchased under this program to date[313](index=313&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various amendments to the MSG Networks Forbearance Agreement, the Transaction Support Agreement, and certifications by the CEO and CFO
Sphere Entertainment (SPHR) - 2025 Q1 - Earnings Call Transcript
2025-05-08 15:02
Financial Data and Key Metrics Changes - The company reported total revenues of $280.6 million and adjusted operating income of $36 million for the quarter [12] - The Sphere segment generated revenues of $157.5 million, a decrease from $170.4 million in the prior year period, primarily due to lower revenues from the Sphere experience and advertising campaigns [12] - Adjusted operating income for the Sphere segment was $13.1 million, slightly up from $12.9 million in the prior year period, reflecting a decrease in revenues offset by lower SG&A expenses [13] Business Line Data and Key Metrics Changes - The Sphere experience welcomed over half a million guests, contributing to total revenues of over $500 million since its debut in October 2023 [7] - MSG Networks generated $123 million in revenues and $22.8 million in adjusted operating income, down from $151 million and $48.6 million respectively in the prior year period, due to a non-carriage period and a decrease in subscribers [14] Market Data and Key Metrics Changes - The Las Vegas market continues to attract over 40 million visitors annually, with international guests accounting for over 20% of Sphere attendees [22] - The company has seen strong consumer demand, with acts like Dead and Company and the Eagles scheduled for over 40 performances at the Sphere [9] Company Strategy and Development Direction - The company aims to drive growth by hosting concerts and events, optimizing the go-to-market strategy for the Exosphere, and enhancing operational efficiencies [6] - Plans are underway to develop a smaller Sphere model for faster and cheaper deployment in various markets [39] - The company is focused on creating a diverse slate of original content and has multiple projects in development [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth despite macroeconomic concerns, noting that demand for concerts exceeds capacity [23] - The company is optimistic about the potential of new productions and the expansion of concert residencies, indicating a strong pipeline of artist demand [34] Other Important Information - The company has entered into new marketing partnerships with major brands like Pepsi and Google, enhancing its sponsorship opportunities [10][61] - As of the end of the quarter, the company had approximately $465 million in unrestricted cash and cash equivalents, with a debt balance of approximately $1.34 billion [14][15] Q&A Session Summary Question: Can you elaborate on the relationship with Google and the new product? - Management acknowledged the question but noted connectivity issues, indicating they would circle back later [18][19] Question: What is the current state of the tourism market in Vegas? - Management reported no significant changes in visitation or spending, with international guests making up over 20% of Sphere attendees [22][23] Question: What are the revenue expectations for new Sphere experience shows? - Management expects higher revenues from new productions, indicating they will be more experiential and impactful [31] Question: What is the strategy for MSG Networks moving forward? - Management discussed pursuing a hybrid model between traditional linear and streaming distribution, exploring strategic partnerships [44] Question: How is the company managing costs moving forward? - Management emphasized a focus on driving profitable growth and optimizing infrastructure to identify cost efficiencies [47] Question: Can you provide an update on the Exosphere and sponsorship strategy? - Management highlighted progress in pricing and packaging, establishing relationships with media agencies, and building a recurring sponsorship business [60][61]
Sphere Entertainment (SPHR) - 2025 Q1 - Earnings Call Transcript
2025-05-08 15:00
Financial Data and Key Metrics Changes - The company reported total revenues of $280.6 million and adjusted operating income of $36 million for the quarter [10] - The Sphere segment generated revenues of $157.5 million, a decrease from $170.4 million in the prior year period, primarily due to lower revenues from the Sphere experience and advertising campaigns [10][11] - Adjusted operating income for the Sphere segment was $13.1 million, slightly up from $12.9 million in the prior year period, reflecting a decrease in revenues offset by lower SG&A expenses [11] Business Line Data and Key Metrics Changes - The Sphere experience welcomed over half a million guests, contributing to total revenues exceeding $500 million since its debut in October 2023 [6] - MSG Networks generated $123 million in revenues and $22.8 million in adjusted operating income, down from $151 million and $48.6 million respectively in the prior year period, mainly due to a non-carriage period and a decrease in subscribers [13] Market Data and Key Metrics Changes - The Las Vegas market continues to attract over 40 million visitors annually, with international guests accounting for over 20% of Sphere attendees and 10% for concerts [22] - The company has seen strong consumer demand, with acts like Dead and Company and the Eagles scheduled for over 40 performances at the Sphere [7] Company Strategy and Development Direction - The company aims to drive growth by hosting a variety of concerts and events, optimizing the go-to-market strategy for the Exosphere, and enhancing operational efficiencies [5] - Plans are underway to develop a smaller Sphere model for faster and cheaper deployment in various markets, alongside the ongoing project in Abu Dhabi [37] Management's Comments on Operating Environment and Future Outlook - Management noted that despite macroeconomic concerns, there has not been a significant change in visitation or spending in Las Vegas [23] - The company remains optimistic about the demand for concerts, stating that demand exceeds capacity [23] Other Important Information - The company has entered into new marketing partnerships with major brands like Pepsi and Google, enhancing exposure on the Exosphere [8] - The company is focused on creating a diverse slate of original content and has multiple projects in development [6] Q&A Session Summary Question: Inquiry about the partnership with Google - Management acknowledged the question but noted connectivity issues and promised to circle back later [18] Question: Observations on the tourism market in Vegas - Management reported that international guests account for over 20% of Sphere attendees and noted no significant changes in visitation or spending [22][23] Question: Opportunities for new Sphere experience shows - Management expressed optimism about new shows driving higher revenues, expecting better performance compared to previous productions [30] Question: Update on concert residencies - Management confirmed ongoing discussions with multiple artists and noted that demand exceeds available slots [31][33] Question: Sphere expansion and geopolitical tensions - Management confirmed global discussions for Sphere expansion and mentioned designing a smaller Sphere for various markets [37] Question: Long-term plan for MSG Networks - Management discussed pursuing a hybrid model between traditional and streaming distribution, with potential strategic partnerships [42] Question: Cost management moving forward - Management emphasized a focus on driving profitable growth and optimizing infrastructure to identify cost efficiencies [44]
Sphere Entertainment (SPHR) Reports Q1 Loss, Tops Revenue Estimates
ZACKS· 2025-05-08 14:05
分组1 - Sphere Entertainment reported a quarterly loss of $2.27 per share, better than the Zacks Consensus Estimate of a loss of $2.48, but worse than a loss of $1.33 per share a year ago, indicating an earnings surprise of 8.47% [1] - The company posted revenues of $280.57 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.26%, but down from $321.33 million year-over-year [2] - Sphere Entertainment shares have declined approximately 26.1% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is -$1.99 on revenues of $282.18 million, and for the current fiscal year, it is -$5.40 on revenues of $1.19 billion [7] - The Zacks Industry Rank indicates that the Media Conglomerates sector is in the bottom 37% of over 250 Zacks industries, suggesting potential underperformance compared to higher-ranked industries [8]
Sphere Entertainment (SPHR) - 2025 Q3 - Quarterly Results
2025-05-08 11:33
Exhibit 99.1 SPHERE ENTERTAINMENT CO. REPORTS FIRST QUARTER 2025 RESULTS NEW YORK, N.Y., May 8, 2025 - Sphere Entertainment Co. (NYSE: SPHR) ("Sphere Entertainment" or the "Company") today reported financial results for the first quarter ended March 31, 2025. (1) Recent Sphere operating highlights include: For the three months ended March 31, 2025, the Company reported revenues of $280.6 million, a decrease of $40.8 million as compared to the prior year quarter. In addition, the Company reported an operatin ...
SPHERE ENTERTAINMENT CO. REPORTS FIRST QUARTER 2025 RESULTS
Prnewswire· 2025-05-08 11:30
Core Insights - Sphere Entertainment Co. reported a total revenue of $280.6 million for Q1 2025, a decrease of $40.8 million or 13% compared to the same quarter last year [1][2] - The company experienced an operating loss of $78.6 million, which is an increase of $38.2 million or 95% from the prior year quarter [1][2] - Adjusted operating income was reported at $36.0 million, down $25.6 million or 42% year-over-year [1][2] Financial Performance - Sphere segment revenues were $157.5 million, down $12.8 million or 8% from $170.4 million in Q1 2024 [2][4] - MSG Networks segment revenues decreased to $123.0 million, a decline of $27.9 million or 19% from $151.0 million in the prior year [2][12] - Total operating loss for the company was $78.6 million, compared to a loss of $40.4 million in the same quarter last year [2][11] Segment Analysis - Sphere's direct operating expenses increased by $8.2 million or 13% to $70.5 million, primarily due to additional concerts and higher employee compensation [9] - MSG Networks faced a significant drop in distribution revenue, decreasing by $29.9 million, largely due to the absence of revenues from Altice during a non-carriage period [12][14] - Adjusted operating income for the Sphere segment was $13.1 million, a slight increase of $0.2 million or 2% from the previous year, while MSG Networks' adjusted operating income fell to $22.8 million, down $25.8 million or 53% [2][11] Strategic Developments - The company announced new multi-year marketing partnerships with Pepsi and Google, and plans to host multiple corporate events in Las Vegas [5] - Sphere is set to host the 'Unity' electronic dance music event with nine shows scheduled between August and October [5] - MSG Networks is pursuing a refinancing of its credit facilities, which includes a Transaction Support Agreement with lenders to restructure existing debt obligations [19][20] Cash Flow and Balance Sheet - For Q1 2025, net cash provided by operating activities was $6.3 million, a significant decrease from $101.0 million in Q1 2024 [38] - The company reported a net decrease in cash, cash equivalents, and restricted cash of $37.4 million, ending the quarter with $478.2 million [39] - Total assets as of March 31, 2025, were $4.45 billion, down from $4.52 billion at the end of the previous year [36]