Sphere Entertainment Co

For the period ended Dec 31, 2023. Filed Feb 5, 2024.

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Dec 31, 2023 · Filed Feb 5, 2024

SPHR$121.40+1.1%Stored close · as of Nov 9, 2026

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Contents

Item 5. Other information

Capital expenditures	$44,298	$3,103	$47,401

	Three Months Ended
Sphere · MSG Networks · Total
Revenues	$643	$158,898		$159,541
Direct operating expenses	—	(90,400)		(90,400)
Selling, general and administrative expenses	(74,759)	(29,656)		(104,415)
Depreciation and amortization	(5,749)	(1,637)		(7,386)
Other gains	1,000	—		1,000
Restructuring charges	(4,087)	(3,988)		(8,075)
Operating (loss) income	$(82,952)	$33,217		$(49,735)
Interest income			2,669
Other expense, net			(1,355)
Loss from operations before income taxes			$(48,421)
Reconciliation of operating (loss) income to adjusted operating (loss) income:
Operating (loss) income	$(82,952)	$33,217		$(49,735)
Add back:
Share-based compensation	13,056	3,299		16,355
Depreciation and amortization	5,749	1,637		7,386
Restructuring charges	4,087	3,988		8,075
Other gains	(1,000)	—		(1,000)
Merger and acquisition related costs	(58)	5,544		5,486
Amortization for capitalized cloud computing arrangement costs	83	44		127
Remeasurement of deferred compensation plan liabilities	154	—		154
Adjusted operating (loss) income	(60,881)	$47,729		$(13,152)
Other information:
Capital expenditures	$277,014	$2,665		$279,679

	Six Months Ended
Sphere · MSG Networks · Total
Revenues	$175,578	$256,586		$432,164
Direct operating expenses	(75,143)	(169,122)		(244,265)
Selling, general and administrative expenses	(181,954)	(20,710)		(202,664)
Depreciation and amortization	(90,421)	(3,869)		(94,290)
Impairment and other losses, net	(115,738)	—		(115,738)
Restructuring charges	(4,678)	—		(4,678)
Operating (loss) income	$(292,356)	$62,885		$(229,471)
Interest income			10,304
Interest expense			(25,828)
Other income, net			41,066
Loss from operations before income taxes			$(203,929)
Reconciliation of operating (loss) income to adjusted operating (loss) income:
Operating (loss) income	$(292,356)	$62,885		$(229,471)
Add back:
Share-based compensation	14,904	1,895		16,799
Depreciation and amortization	90,421	3,869		94,290
Restructuring charges	4,678	—		4,678
Impairment and other losses, net	115,738	—		115,738
Merger and acquisition related costs, net of insurance recoveries	(2,502)	(6,161)		(8,663)
Amortization for capitalized cloud computing arrangement costs	—	44		44
Remeasurement of deferred compensation plan liabilities	138	—		138
Adjusted operating (loss) income	$(68,979)	$62,532		$(6,447)
Other information:
Capital expenditures	$227,461	$4,511		$231,972

	Six Months Ended
Sphere · MSG Networks · Total
Revenues	$1,293	$281,377		$282,670
Direct operating expenses	—	(165,820)		(165,820)
Selling, general and administrative expenses	(151,950)	(47,096)		(199,046)
Depreciation and amortization	(10,264)	(3,255)		(13,519)
Other gains	3,000	—		3,000
Restructuring charges	(4,087)	(3,988)		(8,075)
Operating (loss) income	$(162,008)	$61,218		$(100,790)
Interest income			6,002
Other expense, net			(1,770)
Loss from operations before income taxes			$(96,558)
Reconciliation of operating (loss) income to adjusted operating (loss) income:
Operating (loss) income	$(162,008)	$61,218		$(100,790)
Add back:
Share-based compensation	22,842	5,003		27,845
Depreciation and amortization	10,264	3,255		13,519
Restructuring charges	4,087	3,988		8,075
Other gains	(3,000)	—		(3,000)
Merger and acquisition related costs	2,691	7,445		10,136
Amortization for capitalized cloud computing arrangement costs	160	88		248
Adjusted operating (loss) income	$(124,964)	$80,997		$(43,967)
Other information:
Capital expenditures	$537,253	$3,892		$541,145

Concentration of Risk

Accounts receivable, net in the accompanying condensed consolidated balance sheets as of December 31, 2023 and June 30, 2023 include amounts due from the following individual customers, which accounted for the noted percentages of the gross balance:

	As of
	December 31,2023	June 30,2023
Customer A	13%	23%
Customer B	13%	22%
Customer C	10%	17%

Revenues in the accompanying condensed consolidated statements of operations for the three and six months ended December 31, 2023 and December 31, 2022 include amounts from the following individual customers:

Three Months Ended · Six Months Ended
	December 31,		December 31,
	2023	2022	2023	2022
Customer 1	11%	24%	16%	27%
Customer 2	11%	24%	16%	27%
Customer 3	9%	19%	13%	22%

Note 17. Additional Financial Information

The following table provides a summary of the amounts recorded as cash, cash equivalents and restricted cash.

	As of
	December 31,2023	June 30,2023
Cash and cash equivalents	$614,549	$131,965
Restricted cash	13,278	297,149
Total cash, cash equivalents and restricted cash	$627,827	$429,114

The Company’s cash, cash equivalents, and restricted cash are classified within Level I of the fair value hierarchy as it is valued using observable inputs that reflect quoted prices for identical assets in active markets. The Company’s restricted cash includes cash deposited in escrow accounts. The Company has deposited cash in interest-bearing escrow accounts related to credit support, debt facilities, and collateral to its workers compensation and general liability insurance obligations.

Prepaid expenses and other current assets consisted of the following:

	As of
	December 31,2023	June 30,2023
Prepaid expenses	$21,201	$22,616
Note and other receivables	11,050	21,453
Inventory	894	—
Current deferred production content costs	9,772	6,524
Other	3,893	5,492
Total prepaid expenses and other current assets	$46,810	$56,085

Accounts payable, accrued and other current liabilities consisted of the following:

	As of
	December 31,2023	June 30,2023
Accounts payable	$28,032	$39,654
Accrued payroll and employee related liabilities	61,316	75,579
Cash due to promoters	67,121	73,611
Capital expenditure accruals	164,247	236,593
Accrued legal fees	23,159	53,857
Other accrued expenses	48,028	36,437
Total accounts payable, accrued and other current liabilities	$391,903	$515,731

Other income (expense), net includes the following:

Three Months Ended · Six Months Ended
	December 31,		December 31,
	2023	2022	2023	2022
Gain on litigation settlement	$—	$—	$62,647	$—
Realized loss on equity method investments	—	—	(19,027)	—
Other	(1,130)	(1,355)	(2,554)	(1,770)
Total other (expense) income, net	$(1,130)	$(1,355)	$41,066	$(1,770)

Income Taxes

During the six months ended December 31, 2023 and 2022, the Company made income tax payments, net of refunds, of $18,789 and $4,075, respectively.

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