Sphere Entertainment Co

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this MD&A, there are statements concerning the future operating and future financial performance of Sphere Entertainment Co. and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “Sphere Entertainment,” or the “Company”), including (i) our plans to refinance MSG Networks’ existing debt, (ii) the success of Sphere and The Sphere Experience, (iii)timing and costs of new venue construction and the development of related content, (iv) our execution of the strategy for and the success of MSG Networks’ direct-to-consumer (“DTC”) and authenticated streaming product, MSG+, (v) the ability to reduce or defer certain discretionary capital projects, and (vi) our plans for possible additional debt financing. Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this MD&A, there are statements concerning the future operating and future financial performance of Sphere Entertainment Co. and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “Sphere Entertainment,” or the “Company”), including (i) our plans to refinance MSG Networks’ existing debt, (ii) the success of Sphere and The Sphere Experience, (iii)timing and costs of new venue construction and Sphere immersive productions content, (iv) our ability to reduce or defer certain discretionary capital projects, (v) our plans for possible additional debt financing and (vi) our execution of the strategy for and the success of MSG Networks’ direct-to-consumer (“DTC”) and authenticated streaming product, MSG+. Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:

Previous wording

•the popularity of The Sphere Experience, as well as our ability to attract advertisers and marketing partners, and audiences and artists to residencies, concerts and other events at Sphere in Las Vegas;

Current wording

•the popularity of The Sphere Experience, as well as our ability to continue to attract advertisers and marketing partners, and audiences to attend, and artists to perform at, residencies, concerts and other events at Sphere in Las Vegas;

Previous wording

•the extent to which attendance at Sphere in Las Vegas may be impacted by government actions, health concerns by potential attendees or reduced tourism;

Current wording

•the extent to which attendance at Sphere in Las Vegas may be impacted by government actions, health concerns of potential attendees or reduced tourism;

Previous wording

•the additional factors described under “Risk Factors” included in Part II of this Form 10-Q and under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 filed on August 22, 2023 (the “2023 Form 10-K”).

Current wording

•the additional factors described under “Risk Factors” included in Part II of this Form 10-Q for the fiscal quarter ended March 31, 2024 (this “Form 10-Q”) and under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on August 22, 2023 (the “2023 Form 10-K”).

Previous wording

This MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements (the “financial statements”) and accompanying notes thereto included in this Form 10-Q, as well as the Company’s audited consolidated financial statements and notes thereto as of June 30, 2023 and 2022 and for the three years ended June 30, 2023, 2022 and 2021 (the “Audited Consolidated Annual Financial Statements”) included in the 2023 Form 10-K, to help provide an understanding of our financial condition, changes in financial condition and results of operations.

Current wording

This MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements (the “financial statements”) and accompanying notes thereto included in “— Item 1. Financial Statements” of this Form 10-Q, as well as the Company’s audited consolidated financial statements and notes thereto as of June 30, 2023 and 2022 and for the three years ended June 30, 2023, 2022 and 2021 (the “Audited Consolidated Annual Financial Statements”) included in the 2023 Form 10-K, to help provide an understanding of our financial condition, changes in financial condition and results of operations.

Previous wording

The Company is a premier live entertainment and media company comprised of two reportable segments, Sphere and MSG Networks. Sphere is a next-generation entertainment medium, and MSG Networks operates two regional sports and entertainment networks, as well as a direct-to-consumer and authenticated streaming product.

Current wording

The Company is a premier live entertainment and media company comprised of two reportable segments, Sphere and MSG Networks. Sphere is a next-generation entertainment medium, and MSG Networks operates two regional sports and entertainment networks, as well as a direct-to-consumer (“DTC”) and authenticated streaming product.

Previous wording

MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its direct-to-consumer and authenticated streaming product, MSG+. MSG Networks serves the New York designated market area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the New York Knicks (the “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”), New York Islanders (the “Islanders”), New Jersey Devils (the “Devils”) and Buffalo Sabres (the “Sabres”) of the National Hockey League (the “NHL”), as well as significant coverage of the New York Giants (the “Giants”) and the Buffalo Bills (the “Bills”) of the National Football League (the “NFL”).

Current wording

MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its DTC and authenticated streaming product, MSG+. MSG Networks serves the New York designated market area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the New York Knicks (the “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”), New York Islanders (the “Islanders”), New Jersey Devils (the “Devils”) and Buffalo Sabres (the “Sabres”) of the National Hockey League (the “NHL”), as well as significant coverage of the New York Giants (the “Giants”) and the Buffalo Bills (the “Bills”) of the National Football League (the “NFL”).

Previous wording

Results of Operations. This section provides an analysis of our unaudited results of operations for the three and six months ended December 31, 2023 and 2022 on both a (i) consolidated basis and (ii) segment basis.

Current wording

Results of Operations. This section provides an analysis of our unaudited results of operations for the three and nine months ended March 31, 2024 and 2023 on both a (i) consolidated basis and (ii) segment basis.

Previous wording

Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the six months ended December 31, 2023 and 2022, as well as certain contractual obligations and off-balance sheet arrangements.

Current wording

Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the nine months ended March 31, 2024 and 2023, as well as certain contractual obligations and off-balance sheet arrangements.

Previous wording

Recently Issued Accounting Pronouncements and Critical Accounting Policies. This section discusses accounting pronouncements that have been adopted by the Company, recently issued accounting pronouncements not yet adopted by the Company, as well as the results of the Company’s annual impairment testing of goodwill and identifiable indefinite-lived intangible assets performed during the first quarter of Fiscal Year 2024. This section should be read together with our critical accounting policies, which are discussed in the 2023 Form 10-K under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recently Issued Accounting Pronouncements and Critical Accounting Estimates” and in the notes to the Audited Consolidated Annual Financial Statements of the Company included therein.

Current wording

Recently Issued Accounting Pronouncements and Critical Accounting Policies. This section discusses accounting pronouncements that have been adopted by the Company, recently issued accounting pronouncements not yet adopted by the Company, as well as the results of the Company’s annual impairment testing of goodwill and identifiable indefinite-lived intangible assets performed during the first quarter of Fiscal Year 2024. This section should be read together with our critical accounting policies, which are discussed in the 2023 Form 10-K under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recently Issued Accounting Pronouncements and Critical Accounting Estimates” and in the notes to the Audited Consolidated Annual Financial Statements included therein.

Previous wording

On April 20, 2023 (the “MSGE Distribution Date”), the Company distributed approximately 67% of the outstanding common stock of Madison Square Garden Entertainment Corp. (“MSG Entertainment”, formerly MSGE Spinco, Inc.) to its stockholders (the “MSGE Distribution”), with the Company retaining approximately 33% of the outstanding common stock of MSG Entertainment (in the form of MSG Entertainment Class A common stock) immediately following the MSGE Distribution (the “MSGE Retained Interest”). Following the MSGE Distribution Date, the Company retained the Sphere and MSG Networks businesses and MSG Entertainment now owns the traditional live entertainment business previously owned and operated by the Company through its Entertainment business segment, excluding the Sphere business. In the MSGE Distribution, stockholders of the Company received (a) one share of MSG Entertainment’s Class A common stock, par value $0.01 per share, for every share of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”), held of record as of the close of business, New York City time, on April 14, 2023 (the “Record Date”), and (b) one share of MSG Entertainment’s Class B common stock, par value $0.01 per share, for every share of the Company’s Class B common stock, par value $0.01 per share (“Class B Common Stock”), held of record as of the close of business, New York City time, on the Record Date. See Note 1. Description of Business and Basis of Presentation, to the Audited Consolidated Annual Financial Statements for more information about the MSGE Distribution.

Current wording

On April 20, 2023 (the “MSGE Distribution Date”), the Company distributed approximately 67% of the outstanding common stock of Madison Square Garden Entertainment Corp. (“MSG Entertainment”, formerly MSGE Spinco, Inc.) to its stockholders (the “MSGE Distribution”), with the Company retaining approximately 33% of the outstanding common stock of MSG Entertainment (in the form of MSG Entertainment Class A common stock) immediately following the MSGE Distribution (the “MSGE Retained Interest”). Following the MSGE Distribution Date, the Company retained the Sphere and MSG Networks businesses and MSG Entertainment now owns the traditional live entertainment business previously owned and operated by the Company through its Entertainment business segment, excluding the Sphere business. In the MSGE Distribution, stockholders of the Company received (a) one share of MSG Entertainment’s Class A common stock, par value $0.01 per share, for every share of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”), held of record as of the close of business, New York City time, on April 14, 2023 (the “Record Date”), and (b) one share of MSG Entertainment’s Class B common stock, par value $0.01 per share, for every share of the Company’s Class B common stock, par value $0.01 per share (“Class B Common Stock”), held of record as of the close of business, New York City time, on the Record Date. See Note 1. Description of Business and Basis of Presentation, to the Audited Consolidated Annual Financial Statements included in the 2023 Form 10-K for more information about the MSGE Distribution. As of March 31, 2024, following the sales of portions of the MSGE Retained Interest and the repayment of the delayed draw term loan with MSG Entertainment using a portion of the MSGE Retained Interest, the Company no longer holds any of the outstanding common stock of MSG Entertainment.

Previous wording

On May 3, 2023, the Company completed the sale of its 66.9% majority interest in TAO Group Sub-Holdings LLC (“Tao Group Hospitality”) to a subsidiary of Mohari Hospitality Limited, a global investment company focused on the luxury lifestyle and hospitality sectors (the “Tao Group Hospitality Disposition”). See Note 3. Discontinued Operations, to the Audited Consolidated Annual Financial Statements, for more information about the Tao Group Hospitality Disposition.

Current wording

On May 3, 2023, the Company completed the sale of its 66.9% majority interest in TAO Group Sub-Holdings LLC (“Tao Group Hospitality”) to a subsidiary of Mohari Hospitality Limited, a global investment company focused on the luxury lifestyle and hospitality sectors (the “Tao Group Hospitality Disposition”). See Note 3. Discontinued Operations, to the Audited Consolidated Annual Financial Statements, included in the 2023 Form 10-K for more information about the Tao Group Hospitality Disposition.

Previous wording

The operating results of our Sphere segment are largely dependent on our ability to attract audiences to The Sphere Experience, and advertisers and marketing partners, as well as guests and artists to residencies, concerts and other events at our venue. The operating results of our MSG Networks segment are largely dependent on the affiliation agreements MSG Networks negotiates with Distributors, the number of subscribers of certain Distributors, the success of MSG+, MSG Networks’ DTC and authenticated streaming product, and the advertising rates we charge advertisers. Certain of these factors in turn depend on the popularity and/or performance of the professional sports teams whose games we broadcast on our networks.

Current wording

The operating results of our Sphere segment are largely dependent on our ability to continue to attract (i) audiences to The Sphere Experience, (ii) advertisers and marketing partners, and (iii) guests to attend, and artists to perform at, residencies, concerts and other events at our venue. The operating results of our MSG Networks segment are largely dependent on (i) the affiliation agreements MSG Networks negotiates with Distributors, (ii) the number of subscribers of certain Distributors, (iii) the success of MSG+, MSG Networks’ DTC and authenticated streaming product, and (iv) the advertising rates we charge advertisers. Certain of these factors in turn depend on the popularity and/or performance of the professional sports teams whose games we broadcast on our networks.

Previous wording

Comparison of the Three and Six Months Ended December 31, 2023 versus the Three and Six Months Ended December 31, 2022

Current wording

Comparison of the Three and Nine Months Ended March 31, 2024 versus the Three and Nine Months Ended March 31, 2023

Previous wording

The following is a summary of changes in our segments’ operating results for the three and six months ended December 31, 2023, as compared to the prior year period, which are discussed below under “Business Segment Results.”

Current wording

The following is a summary of changes in our segments’ operating results for the three and nine months ended March 31, 2024, as compared to the prior year period, which are discussed below under “Business Segment Results.”

Previous wording

For the three and six months ended December 31, 2023, depreciation and amortization increased $72,645, and $80,771, respectively, as compared to the prior year period primarily due to assets related to Sphere in Las Vegas that were placed in service during the first quarter of Fiscal Year 2024.

Current wording

For the three and nine months ended March 31, 2024, depreciation and amortization increased $71,667, and $152,438, respectively, as compared to the prior year period primarily due to assets related to Sphere in Las Vegas that were placed in service during the first quarter of Fiscal Year 2024.

Previous wording

For the three and six months ended December 31, 2023, the Company recognized impairment and other losses of $117,235 and $115,738, respectively, as compared to other gains of $1,000 and $3,000, respectively, in the prior year periods. The current year periods include an impairment charge of $116,541 in connection with the Company’s decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom.

Current wording

For the nine months ended March 31, 2024, the Company recognized impairment and other losses, net of $115,738, as compared to other gains of $3,000, in the prior year period. The current year nine-month period includes an impairment charge of $116,541 in connection with the Company’s decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom. There were no impairment and other (losses) gains, net in the three months ended March 31, 2024 and 2023.

Previous wording

For the three and six months ended December 31, 2023, the Company recorded restructuring charges of $1,287 and $4,678, respectively, related to termination benefits provided for certain executives and employees, as compared to restructuring charges of $8,075 in the three and six months ended December 31, 2022, respectively, as a result of the Company’s cost reduction program implemented during Fiscal Year 2023.

Current wording

For the three and nine months ended March 31, 2024, the Company recorded restructuring charges of $4,667 and $9,345, respectively, related to termination benefits provided for certain executives and employees, as compared to restructuring charges of $18,670 and $26,745 in the three and nine months ended March 31, 2023, respectively, as a result of the Company’s cost reduction program implemented during Fiscal Year 2023.

Previous wording

For the three and six months ended December 31, 2023, interest income increased $3,257 and $4,302, respectively, as compared to the prior year period primarily due to higher interest rates and higher average cash and cash equivalent balances.

Current wording

For the three and nine months ended March 31, 2024, interest income increased $4,280 and $8,582, respectively, as compared to the prior year periods, primarily due to higher interest rates and higher average cash and cash equivalent balances.

Previous wording

For the three and six months ended December 31, 2023, interest expense increased $25,828, as compared to the prior year period primarily due to (i) the Company discontinuing the capitalization of interest expense during the second quarter of Fiscal Year 2024 as assets were placed into service following the opening of the Sphere in Las Vegas and (ii) interest expense on the 3.50% Convertible Senior Notes due 2028 (the “3.50% Convertible Senior Notes”), which were issued in December 2023.

Current wording

For the three and nine months ended March 31, 2024, interest expense increased $27,119 and $52,947, respectively, as compared to the prior year periods, primarily due to (i) the Company discontinuing the capitalization of interest expense during the second quarter of Fiscal Year 2024 as assets were placed into service following the opening of the Sphere in Las Vegas and (ii) interest expense on the 3.50% Convertible Senior Notes due 2028 (the “3.50% Convertible Senior Notes”), which were issued in December 2023.

Previous wording

For the three months ended December 31, 2023, other expense, net decreased $225 as compared to the prior year period. For the six months ended December 31, 2023 other income (expense), net increased $42,836, as compared to the prior year period, primarily due to a realized gain of $62,647 related to the settlement of litigation related to the merger between a subsidiary of the Company and MSG Networks Inc. (the “Networks Merger”), partially offset by a realized loss of $19,027 related to the sale of a portion of the MSGE Retained Interest during the first quarter of Fiscal Year 2024.

Current wording

For the three months ended March 31, 2024, other expense, net decreased $926 as compared to the prior year period, primarily due to smaller losses on equity method investments. For the nine months ended March 31, 2024 other income (expense), net increased $43,762, as compared to the prior year period, primarily due to a realized gain of $62,647 related to the settlement of litigation related to the merger between a subsidiary of the Company and MSG Networks Inc. (the “Networks Merger”), partially offset by a realized loss of $19,027 related to the sale of a portion of the MSGE Retained Interest during the first quarter of Fiscal Year 2024.

Previous wording

Income tax benefit for the three and six months ended December 31, 2023 of $7,466 and $97,753, respectively, reflects an effective tax rate of 4% and 48%, respectively. The effective tax rate exceeds the statutory federal tax rate of 21% primarily due to discrete items including $64,401 of income tax benefit related to the state tax rate change used to measure the deferred taxes, and income tax benefit of $15,655 related to the nontaxable gain on the repayment of all amounts outstanding under the delayed draw term loan facility (the “DDTL Facility”), partially offset by an increase in the foreign valuation allowance of $28,807.

Current wording

Income tax benefit for the three and nine months ended March 31, 2024 of $15,874 and $113,627, respectively, reflects an effective tax rate of 25% and 43%, respectively. For the three months ended March 31, 2024, the effective tax rate exceeded the statutory federal tax rate of 21% primarily due to state and local taxes. For the nine months ended March 31, 2024, the effective tax rate exceeds the statutory federal tax rate of 21% primarily due to discrete items including $64,401 of income tax benefit related to the state tax rate change used to measure the deferred taxes, and income tax benefit of $15,655 related to the nontaxable gain on the repayment of all amounts outstanding under the delayed draw term loan facility (the “DDTL Facility”), partially offset by an increase in the foreign valuation allowance of $29,522.

Previous wording

Income tax benefit for the three and six months ended December 31, 2022 of $21,113 and $22,947, respectively, reflects an effective tax rate of 44% and 24%, respectively. The effective tax rate exceeds the statutory federal tax rate of 21% primarily due to state and local taxes.

Current wording

Income tax benefit for the nine months ended March 31, 2023 of $11,663 reflects an effective tax rate of 6%. The effective tax rate was lower than the statutory federal tax rate of 21% primarily due to state and local taxes.

Previous wording

The following is a reconciliation of operating loss to adjusted operating income (loss) (as defined in Note 16. Segment Information to the condensed consolidated financial statements included in this Form 10-Q) for the three and six months ended December 31, 2023 as compared to the prior year periods:

Current wording

The following is a reconciliation of operating loss to adjusted operating income (loss) (as defined in Note 16. Segment Information to the condensed consolidated financial statements included in “— Item 1. Financial Statements” of this Form 10-Q) for the three and nine months ended March 31, 2024 as compared to the prior year periods:

Previous wording

For the three and six months ended December 31, 2023, revenues increased $167,156 and $174,285, respectively, as compared to the prior year period. The changes in revenues were attributable to the following:

Current wording

For the three and nine months ended March 31, 2024, revenues increased $169,738 and $344,023, respectively, as compared to the prior year periods. The changes in revenues were attributable to the following:

Previous wording

For the three and six months ended December 31, 2023, the increase in revenues for The Sphere Experience was due to the October 6, 2023 debut of The Sphere Experience featuring Postcard From Earth, with 191 performances taking place during the period.

Current wording

For the three and nine months ended March 31, 2024, the increase in revenues for The Sphere Experience was due to the October 6, 2023 debut of The Sphere Experience featuring Postcard From Earth TM, with 257 and 449 performances taking place during the three and nine months ended March 31, 2024, respectively.

Previous wording

For the three and six months ended December 31, 2023, the increase in event-related revenues was primarily due to revenues from concerts and, to a lesser extent, revenues from one marquee sporting event held at Sphere in Las Vegas.

Current wording

For the three months ended March 31, 2024, the increase in event-related revenues was due to revenues from concerts. For the nine months ended March 31, 2024, the increase in event-related revenues was primarily due to revenues from concerts and, to a lesser extent, revenues from one marquee sporting event held at Sphere in Las Vegas.

Previous wording

For the three and six months ended December 31, 2023, the increase in revenues from sponsorship, signage, Exosphere advertising and suite license fee revenues primarily reflects advertising campaigns on the venue’s Exosphere, which began in September 2023, and, to a lesser extent, suite license fee revenues, which reflects the opening of Sphere in Las Vegas on September 29, 2023.

Current wording

For the three and nine months ended March 31, 2024, the increase in revenues from sponsorship, signage, Exosphere advertising and suite license fee revenues primarily reflects advertising campaigns on the venue’s Exosphere, which began in September 2023, and, to a lesser extent, suite license fee revenues, which reflects the opening of Sphere in Las Vegas on September 29, 2023.

Previous wording

For the three and six months ended December 31, 2023, direct operating expenses increased by $67,338 and $75,143, respectively, as compared to the prior year period. The changes in direct operating expenses were attributable to the following:

Current wording

For the three and nine months ended March 31, 2024, direct operating expenses increased by $57,880 and $133,023, respectively, as compared to the prior year period. The changes in direct operating expenses were attributable to the following:

Previous wording

For the three and six months ended December 31, 2023, the increase in direct operating expenses for The Sphere Experience reflects expenses associated with 191 performances of The Sphere Experience featuring Postcard From Earth during the current year periods.

Current wording

For the three and nine months ended March 31, 2024, the increase in direct operating expenses for The Sphere Experience reflects expenses associated with 257 and 449 performances of The Sphere Experience featuring Postcard From Earth taking place during the three and nine months ended March 31, 2024, respectively.

Previous wording

For the three and six months ended December 31, 2023, the increase in venue operating expenses reflects the opening of Sphere in Las Vegas on September 29, 2023.

Current wording

For the three and nine months ended March 31, 2024, the increase in venue operating expenses reflects the opening of Sphere in Las Vegas on September 29, 2023.

Previous wording

For the three and six months ended December 31, 2023, the increase in event-related direct operating expenses was primarily due to expenses from concerts and, to a lesser extent, expenses from one marquee sporting event held at Sphere in Las Vegas.

Current wording

For the three months ended March 31, 2024, the increase in event-related direct operating expenses was primarily due to expenses from concerts. For the nine months ended March 31, 2024, the increase in event-related direct operating expenses was primarily due to expenses from concerts and, to a lesser extent, expenses from one marquee sporting event held at Sphere in Las Vegas.

Previous wording

For the three and six months ended December 31, 2023, the increase in direct operating expenses from sponsorship, signage, Exosphere advertising, and suite license fee revenues primarily reflects expenses related to advertising campaigns on the venue’s Exosphere, which began in September 2023.

Current wording

For the three and nine months ended March 31, 2024, the increase in direct operating expenses from sponsorship, signage, Exosphere advertising, and suite license fees primarily reflects expenses related to advertising campaigns on the venue’s Exosphere, which began in September 2023.

Previous wording

For the three and six months ended December 31, 2023, selling, general, and administrative expenses increased $23,045 and $30,004, respectively, as compared to the prior year periods. The increase was primarily due to the impact of the Company’s transition services agreement with MSG Entertainment, higher employee compensation and related benefits and other cost increases. The overall increase was partially offset by the absence of certain corporate expenses that were included in the results for the three and six months ended December 31, 2022. While the Company did not incur these corporate costs after the MSGE Distribution Date (April 20, 2023) and does not expect to incur these corporate costs in future periods, they did not meet the criteria for inclusion in discontinued operations for all periods prior to the MSGE Distribution Date.

Current wording

The overall increase was partially offset by the absence of certain corporate expenses that were included in the results for the three and nine months ended March 31, 2023. While the Company did not incur these corporate costs after the MSGE Distribution Date (April 20, 2023) and does not expect to incur these corporate costs in future periods, they did not meet the criteria for inclusion in discontinued operations for all periods prior to the MSGE Distribution Date.

Previous wording

For the three and six months ended December 31, 2023, depreciation and amortization increased $72,295, and $80,157, respectively, as compared to the prior year period primarily due to an increase in depreciation of assets relating to Sphere in Las Vegas that were placed in service during the first quarter of Fiscal Year 2024.

Current wording

For the three and nine months ended March 31, 2024, depreciation and amortization increased $71,195 and $151,352, respectively, as compared to the prior year periods primarily due to an increase in depreciation of assets relating to Sphere in Las Vegas that were placed in service during the first quarter of Fiscal Year 2024.

Previous wording

For the three and six months ended December 31, 2023, the Company recognized a loss of $117,235 and $115,738, respectively, as compared to a gain of $1,000 and $3,000, respectively, in the prior year periods. The current year periods include an impairment loss of $116,541 in connection with the Company’s decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom.

Current wording

For the nine months ended March 31, 2024, the Company recognized a loss of $115,738, as compared to a gain of $3,000, in the prior year period. The current year nine-month period includes an impairment loss of $116,541 in connection with the Company’s decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom. There were no impairment and other (losses) gains, net in the three months ended March 31, 2024 and 2023.

Previous wording

For the three and six months ended December 31, 2023, the Company recognized restructuring charges of $1,287 and $4,678, respectively, related to termination benefits provided for certain executives and employees, as compared to restructuring charges of $4,087 in the three and six months ended December 31, 2022, respectively, as a result of the Company’s cost reduction program implemented during Fiscal Year 2023.

Current wording

For the three and nine months ended March 31, 2024, the Company recognized restructuring charges of $4,886 and $9,564, respectively, related to termination benefits provided for certain executives and employees, as compared to restructuring charges of $18,670 and $22,757 in the three and nine months ended March 31, 2023, respectively, as a result of the Company’s cost reduction program implemented during Fiscal Year 2023.

Previous wording

For the three and six months ended December 31, 2023, operating loss increased $110,957 and $130,348, respectively, as compared to the prior year period, primarily due to an increase in impairment and other (losses) gains, net, depreciation and amortization, direct operating expenses and, to a lesser extent, selling, general and administrative expenses, partially offset by the increase in revenues.

Current wording

For the three months ended March 31, 2024, operating loss decreased $28,852 as compared to the prior year period, primarily due to an increase in revenues, and, to a lesser extent, a decrease in restructuring charges, partially offset by an increase in depreciation and amortization, direct operating expenses and, to a lesser extent, selling, general and administrative expenses. For the nine months ended March 31, 2024, operating loss increased $101,496 as compared to the prior year period, primarily due to an increase in depreciation and amortization, direct operating expenses, impairment and other (losses) gains, net, and, to a lesser extent, selling, general and administrative expenses, partially offset by an increase in revenues and a decrease in restructuring charges.

Previous wording

For the three and six months ended December 31, 2023, adjusted operating income for the three months increased $74,968 and adjusted operating loss for the six months improved $55,985, respectively, both as compared to the prior year period, primarily due to an increase in revenues, partially offset by an increase in direct operating expenses and selling, general and administrative expenses (excluding share-based compensation expense and merger and acquisition related costs).

Current wording

For the three months ended March 31, 2024, adjusted operating income increased $89,955 and for the nine months ended March 31, 2024, adjusted operating loss improved $145,940, both as compared to the prior year periods, primarily due to an increase in revenues, partially offset by an increase in direct operating expenses and selling, general and administrative expenses (excluding share-based compensation expense and merger and acquisition related costs).

Previous wording

For the three and six months ended December 31, 2023, revenues decreased $12,540 and $24,791, respectively, as compared to the prior year period. The changes in revenues were attributable to the following:

Current wording

For the three and nine months ended March 31, 2024, revenues decreased $10,470 and $35,261, respectively, as compared to the prior year period. The changes in revenues were attributable to the following: