Sphere Entertainment Co. (NYSE:SPHR) Q2 2024 Earnings Call Transcript February 5, 2024 10:00 AM ET Company Participants Ari Danes - IR Jim Dolan - Executive Chairman and CEO Andrea Greenberg - President and CEO, MSG Networks Dave Byrnes - EVP and CFO Conference Call Participants Brandon Ross - LightShed Partners Paul Golding - Macquarie Capital Ben Swinburne - Morgan Stanley David Karnovsky - JPMorgan Logan Angress - Wolfe Research David Joyce - Seaport Research Partners Operator Good morning, and thank you ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39245 SPHERE ENTERTAINMENT CO. (Exact name of registrant as specified in its charter) Delaware 84-3 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39245 SPHERE ENTERTAINMENT CO. (Exact name of registrant as specified in its charter) Delaware 84- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission File Number: 001-39245 SPHERE ENTERTAINMENT CO. (Exact name of registrant as specified in its charter) | Delaware | 84-3755666 ...

Financial Data and Key Metrics Changes - For the fiscal 2023 fourth quarter, the company generated revenues of $129 million and reported an adjusted operating loss of $60 million, which included a $90 million adjusted operating loss in the Sphere segment primarily due to corporate overhead expenses related to Sphere Studios and venue preparation costs [25][29]. - The MSG Networks segment generated $128 million in revenues and $31 million in adjusted operating income, reflecting decreases of 8% and 22% respectively compared to the prior year period [29]. Business Line Data and Key Metrics Changes - The Sphere segment's adjusted operating loss was significantly impacted by costs associated with the Las Vegas venue and content development, with expectations for increased operating costs as operations ramp up [25][27]. - MSG Networks experienced a decline in affiliate revenue due to ongoing subscriber losses, although advertising revenue showed strong growth driven by sports gaming and returning advertisers [18][29]. Market Data and Key Metrics Changes - The company anticipates that the Sphere venue in Las Vegas will host a variety of events, including concert residencies and marquee sporting events, with the first major event being the Formula 1 Las Vegas Grand Prix in November [12][13]. - The Exosphere's advertising capabilities have generated significant media coverage and interest from potential advertisers, with an estimated total reach of over 5 billion [14][15]. Company Strategy and Development Direction - The company aims to disrupt the traditional venue model with the Sphere, designed to operate year-round with multiple events daily, leveraging immersive technologies to create a new entertainment medium [8][10]. - Future Spheres are planned to be constructed with a franchise model to reduce capital expenditure, learning from the experience of building the first venue [39][41]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Sphere's potential to generate significant returns despite initial high capital investment, emphasizing the shift from a landlord model to a high-margin experiential business [36][37]. - The company is optimistic about the upcoming launch of the Sphere and expects to see financial impacts from events and experiences starting in the fiscal second quarter [25][26]. Other Important Information - The total construction costs for the Sphere project are expected to be approximately $2.3 billion, with $2.25 billion already paid as of August 18 [32]. - The company has approximately $341 million in unrestricted cash and a debt balance of approximately $1.2 billion, positioning it for future growth [27]. Q&A Session Summary Question: Why does the investment in Sphere make sense despite high costs? - Management acknowledged the unexpected high costs but believes the investment is warranted due to the potential for a new entertainment model that operates year-round and generates higher margins compared to traditional venues [36][37]. Question: What is the plan for additional Spheres and their capital expenditure? - The company plans to adopt a franchise model for future Spheres, which will be less capital-intensive than the first venue, leveraging lessons learned from the initial construction [39][41]. Question: What is the demand for original content like "Postcard from Earth"? - Early demand indicators are not yet available as marketing has not started, but management expects ticket sales to follow a similar pattern to other successful shows, with significant sales occurring close to the event date [48][49]. Question: How will Sphere's cash flows impact MSG Networks' refinancing? - The performance of Sphere will significantly influence decisions regarding MSG Networks' refinancing, with all options being considered as the company monitors the situation [57][69].

Corporate Structure and Financial Position - The Company distributed approximately 67% of the outstanding common stock of MSG Entertainment to its stockholders on April 20, 2023, retaining about 33%[169]. - The Company has classified Tao Group Hospitality as held for sale, resulting in two reportable segments: Entertainment and MSG Networks[173]. - The total debt outstanding as of May 9, 2023, was $1,227,875, reflecting the company's financial obligations post-MSGE Spinco Distribution[244]. - The MSG Networks Credit Facilities include a $1,100,000 term loan facility and a $250,000 revolving credit facility, with no borrowings under the revolving credit facility as of March 31, 2023[257]. - The company entered into a delayed draw term loan facility of up to $65,000 on April 20, 2023, which will mature on October 20, 2024[263]. Revenue and Performance - Revenues for the three months ended March 31, 2023, increased by $10,763 to $363,297, representing a 3% growth compared to the same period in 2022[188]. - For the nine months ended March 31, 2023, revenues rose by $211,050 to $1,139,492, marking a 23% increase year-over-year[189]. - Revenues for the three months ended March 31, 2023 increased by $7,276 to $201,861, and for the nine months ended March 31, 2023, revenues increased by $229,047 to $705,481, representing a 48% increase[207]. - The increase in revenues for the nine months ended March 31, 2023 was primarily driven by a $45,516 increase in revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements[207]. - The increase in advertising revenue for the three months ended March 31, 2023 was $4,476, attributed to higher sales related to professional sports telecasts[232]. Expenses and Losses - Direct operating expenses for the three months ended March 31, 2023, increased by $12,174 to $210,141, a 6% rise compared to the prior year[188]. - Selling, general and administrative expenses surged by $61,082 to $179,870 for the three months ended March 31, 2023, reflecting a 51% increase year-over-year[188]. - The net loss for the three months ended March 31, 2023, was $58,555, compared to a net loss of $19,306 in the same period of 2022, indicating a significant increase in losses[188]. - Restructuring charges for the three months ended March 31, 2023, rose by $5,808 to $20,498, attributed to workforce reductions in the Entertainment segment[193]. - The operating loss for the three months ended March 31, 2023 was $81,140, an increase of $36,324 compared to the prior year period, attributed to higher direct operating and administrative expenses[222]. Cash Flow and Investments - As of March 31, 2023, cash, cash equivalents, and restricted cash totaled $327,245, down from $822,885 as of June 30, 2022[269]. - Net cash provided by operating activities for the nine months ended March 31, 2023, improved by $31,623 to $137,824 compared to the prior year period[270]. - Net cash used in investing activities increased by $277,558 to $825,484 for the nine months ended March 31, 2023, primarily due to capital expenditures for the Sphere in Las Vegas[271]. - Net cash provided by financing activities increased by $278,005 to $200,485 for the nine months ended March 31, 2023, mainly due to proceeds from the LV Sphere Term Loan Facility[272]. Future Projects and Developments - The Company is completing construction of its first Sphere venue in Las Vegas, which is expected to enhance its entertainment offerings[174]. - The estimated cost for the Sphere in Las Vegas is approximately $2,300,000, with actual construction costs paid through May 9, 2023, being around $2,080,000[252]. - The company expects to open the Sphere venue in September 2023, although construction is subject to potential delays[251]. - The company plans to finance the completion of the Sphere construction from cash-on-hand and cash flows from operations, potentially accessing proceeds from the sale of MSGE Retained Interest if needed[253]. Market and Economic Conditions - The demand for MSG Networks programming is influenced by the popularity of sports teams and the ability to renew affiliation agreements with distributors[167]. - The Company’s future performance is dependent on general economic conditions, which may affect demand for entertainment offerings and advertising revenues[183]. - The impact of COVID-19 on operations has diminished, but concerns regarding new variants and government restrictions remain[181]. Operational Metrics - The Company had 181 Christmas Spectacular performances during the holiday season, with approximately 930,000 tickets sold, representing over a 25% increase in attendance on a per-show basis compared to the prior year[211]. - For the nine months ended March 31, 2023, adjusted operating loss improved to $20,650 from $71,739 in the prior year, primarily due to an increase in revenues[224]. - The effective income tax benefit for the three months ended March 31, 2023, was 14%, compared to an effective tax expense of (46)% in the same period of 2022[199].

Financial Performance - Revenues for the three months ended December 31, 2022, increased by $125,759, or 24%, to $642,198 compared to $516,439 in the prior year[172]. - Operating income for the three months ended December 31, 2022, rose by $38,600, or 109%, to $73,950 compared to $35,350 in the prior year[172]. - Net income for the three months ended December 31, 2022, increased significantly by $65,538, resulting in a net income of $70,557 compared to $5,019 in the prior year[172]. - Revenues for the six months ended December 31, 2022, increased by $232,467, or 29%, to $1,043,416 compared to $810,949 in the prior year[172]. - Net income attributable to Madison Square Garden Entertainment Corp.'s stockholders for the six months ended December 31, 2022, was $22,827, a significant increase from a net loss of $76,961 in the prior year[172]. - Adjusted operating income for the three months ended December 31, 2022 increased by $48,024 to $124,132, representing a 63% increase compared to the prior year[188]. - For the six months ended December 31, 2022, adjusted operating income increased by $40,546 to $126,911, a 47% increase compared to the prior year[188]. Debt and Financial Risks - The Company faces risks related to its substantial debt and the ability of its subsidiaries to manage payments and refinancing[151]. - The principal balance of the company's total debt outstanding as of December 31, 2022 was $2,010,725, an increase from $1,756,898 as of September 30, 2022[238]. - A hypothetical 200 basis point increase in floating interest rates would increase the Company's interest expense by $40,215[281]. - The MSGN Credit Agreement requires a maximum total leverage ratio of 5.50:1.00, with compliance confirmed as of December 31, 2022[254]. Operational Developments - The Company is currently building its first MSG Sphere venue in Las Vegas, which is part of its strategy to expand its entertainment offerings[156]. - The Company continues to explore additional opportunities for expansion in the entertainment industry, with new investments aimed at becoming operationally profitable over time[169]. - The company is exploring a sale of its interest in Tao Group Hospitality to advance the MSG Sphere initiative, which may include additional personnel and content development[239]. - The company is exploring additional domestic and international markets for next-generation venues like MSG Sphere[249]. Revenue Sources and Trends - The demand for the Christmas Spectacular and the performance of professional sports teams significantly influence the Company's revenue levels[166]. - The increase in revenues from the presentation of the Christmas Spectacular was $71,092 for the three months ended December 31, 2022, primarily due to higher ticket-related revenues[196]. - The increase in event-related revenues for the three months ended December 31, 2022 was primarily due to higher revenues from concerts of $7,866[199]. - The increase in advertising revenue for the three and six months ended December 31, 2022 was primarily due to a higher number of live professional sports telecasts and increased per-game advertising sales[217]. Cost Management - The Company is focused on successfully implementing cost reductions and managing discretionary capital projects to improve financial performance[151]. - Direct operating expenses for the three months ended December 31, 2022 were $181,042, an increase of 23% from $147,343 in the prior year[192]. - Selling, general and administrative expenses for the three months ended December 31, 2022 increased by $891 to $38,083, while for the six months ended December 31, 2022, they decreased by $29,268 to $55,899[219]. - Direct operating expenses for the three months ended December 31, 2022 increased by $15,603, or 26%, to $76,483, attributed to higher employee compensation and food and beverage costs[230]. Seasonal Trends - The Company experiences seasonality in revenue, with a disproportionate share earned in the second and third quarters, while the first quarter is typically lower[271]. Cash Flow and Liquidity - As of December 31, 2022, the company's unrestricted cash and cash equivalents were $432,173, a slight decrease from $441,350 as of September 30, 2022[238]. - Net cash provided by operating activities for the six months ended December 31, 2022, was $54.965 million, a decrease of $77.821 million compared to the prior year[268]. - Net cash used in investing activities increased by $243,377 to $575,909 for the six months ended December 31, 2022, primarily due to increased capital expenditures for the MSG Sphere[269]. - Net cash provided by financing activities increased by $286,814 to $229,175 for the six months ended December 31, 2022, mainly due to proceeds from the MSG Sphere Term Loan Facility[270].

Madison Square Garden Entertainment Corp. (MSGE) Q2 2023 Earnings Conference Call February 9, 2023 10:00 AM ET Company Participants Ari Danes - Senior Vice President Investor Relations, Financial Communications and Treasury Dave Byrnes - Executive Vice President and Chief Financial Officer Andrea Greenberg - President and Chief Executive Officer Conference Call Participants Brandon Ross - LightShed Partners David Karnovsky - JPMorgan Devin Brisco - Wolfe Research Paul Golding - Macquarie Capital Operator G ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39245 MADISON SQUARE GARDEN ENTERTAINMENT CORP. (Exact name of registrant as specified in its char ...

Madison Square Garden Entertainment Corp. (MSGE) Q1 2023 Earnings Conference Call November 9, 2022 10:00 AM ET Company Representatives Andrea Greenberg - President, Chief Executive Officer Dave Byrnes - EVP, Chief Financial Officer Ari Danes - Senior Vice President, Investor Relations, Financial Communications and Treasury Conference Call Participants Brandon Ross - LightShed Partners David Katz - Jefferies David Karnovsky - JP Morgan Devin Brisco - Wolfe Research Paul Golding - Macquarie Operator Good morn ...