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].
Sphere Entertainment (SPHR) - 2023 Q3 - Quarterly Report