Sphere Entertainment Co

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Sphere Entertainment Co.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sphere Entertainment Co. and its subsidiaries (the "Company") as of June 30, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and equity and redeemable noncontrolling interests for each of the three years in the period ended June 30, 2024, and the related notes and the financial statement Schedule II listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 14, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Related Party Transactions — Refer to Note 18 to the financial statements

Critical Audit Matter Description

The Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the Dolan Family Group), as of June 30, 2024, is the majority beneficial owner of the Company, Madison Square Garden Entertainment Corp. (“MSG Entertainment”), Madison Square Garden Sports Corp. (“MSG Sports”), AMC Networks Inc., and other related entities. In addition, there are certain overlapping directors and executive officers between the companies. Each of these entities has been identified as a related party at June 30, 2024.

Subsequent to the distribution on April 20, 2023 of approximately 67% of the outstanding common stock of MSG Entertainment (the “MSG Entertainment Distribution”), the Company is party to a number of transactions with related parties, including, but not limited to agreements for media rights and business operations services with MSG Sports, certain sponsorship rights with MSG Entertainment and MSG Sports, sponsorship-related account management services with MSG Entertainment, and certain services agreements with MSG Entertainment, which include certain shared executive support costs for the Company’s Executive Chairman and Chief Executive Officer, the Company’s Executive Vice President, and the Company’s Vice Chairman.

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We identified the evaluation of the Company’s identification of related parties and related party transactions as a critical audit matter. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s procedures performed to identify related parties and related party transactions of the Company.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s identification of related parties and related party transactions included the following, among others:

•We tested the effectiveness of internal controls over the Company’s related party process, including controls over the identification of the Company’s related party relationships and transactions, the authorization and approval of transactions with related parties, the allocation of revenues and operating expenses among related parties, and the accounting, classification and disclosure of relationships and transactions with related parties in the financial statements.

•Inquired with executive officers including the Company’s internal legal counsel, key members of management, including non-finance and accounting personnel, and the Audit Committee of the Board of Directors regarding related party transactions.

•Read agreements and contracts with and between related parties, and, in certain cases third parties, and evaluated whether authorization and approvals were obtained and the terms and other information about transactions are consistent with explanations from inquiries and other audit evidence obtained about the business purpose of the transactions.

•With the assistance of our data specialists, we analyzed the general ledger detail to identify potential undisclosed transactions with related parties.

•Compared the Company’s reconciliation of applicable accounts to related parties’ records of transactions and balances.

•For new and amended revenue arrangements among related parties, evaluated the reasonableness of management’s allocation of the transaction price to each performance obligation identified in the arrangement.

•Received confirmations from related parties and, in certain cases third parties, and compared responses to the Company’s records.

•Performed the following procedures to identify information related to potential undisclosed transactions between the Company and related parties that may also include third parties:

◦Read the Company’s minutes from meetings of the Board of Directors and related committees of the Board of Directors;

◦Inspected annual compliance questionnaires completed by the Company’s directors and officers;

◦Read publicly available sources including the Company’s public filings and press releases as well as certain analyst and industry reports; and

◦Listened to or read transcripts of the Company’s earnings calls.

Liquidity and Going Concern — Refer to Notes 2 and 13 to the financial statements

Critical Audit Matter Description

As of June 30, 2024, the legal entities that comprise the MSG Networks reportable segment (“MSG Networks”), have approximately $850 million of debt under the MSG Networks Credit Facilities (as defined in Note 13 to the financial statements) that is scheduled to mature in October 2024 and is classified as short-term on the Company’s consolidated balance sheet. MSG Networks will be unable to generate sufficient operating cash flows prior to the maturity to settle the remaining outstanding borrowings under the MSG Networks Credit Facilities when they become due absent action taken by management to refinance the outstanding borrowings.

The MSG Networks Credit Facilities are guaranteed by the MSGN Guarantors and secured by the MSGN Collateral (as defined in Note 13 to the financial statements). In the event MSG Networks is unable to successfully refinance the MSG Networks Credit Facilities through a work-out or otherwise, the lenders could exercise their remedies under the MSG Networks Credit

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Facilities, which would include, but not be limited to, declaring an event of default and foreclosing on the MSGN Collateral. MSG Networks and its subsidiaries could also seek bankruptcy protection prior to the lenders exercising their rights under the MSG Networks Credit Facilities. However, as of the date the financial statements were issued, MSG Networks does not intend to seek such bankruptcy protection. The Company has concluded that Sphere Entertainment Co., Sphere Entertainment Group and the subsidiaries of Sphere Entertainment Group (collectively, the “Non-Credit Parties”) are not legally obligated to fund the outstanding borrowings under the MSG Networks Credit Facilities, nor are the assets of the Non-Credit Parties pledged as security under the MSG Networks Credit Facilities. In the event of an exercise of post-default rights and remedies, the Company believes the lenders would have no remedies or recourse against the Non-Credit Parties pursuant to the terms of the MSG Networks Credit Facilities.

Auditing the Company’s conclusion that substantial doubt about the Company’s ability to continue as a going concern has been effectively alleviated, including management’s conclusion that the lenders would have no remedies or recourse against the Non-Credit Parties pursuant to the terms of the MSG Networks Credit Facilities, involved a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s analysis of its ability to continue as a going concern in accordance with ASC 205-40, Going Concern (“ASC 205-40”) included the following, among others:

•We tested the effectiveness of internal controls over the Company’s going concern analysis, including controls over the inputs and assumptions used in the Company’s evaluation.

•We obtained the Company’s going concern analysis and evaluated whether the conclusions reached comply with ASC 205-40.

•We obtained the forecast used by the Company in its analysis of its ability to continue as a going concern and evaluated whether the significant assumptions used were reasonable, considering the Company’s recent performance and its forecasting process and evidence obtained in other areas of the audit.

•We obtained and read the agreements related to the MSG Networks Credit Facilities.

•We evaluated the Company’s conclusion regarding the rights and remedies of the lenders to the MSG Networks Credit Facilities, including management’s conclusion that the lenders would have no remedies or recourse against the Non-Credit Parties pursuant to the terms of the MSG Networks Credit Facilities.

•We made inquiries of executive officers, including the Company’s internal legal counsel, key members of management, and the Audit Committee, regarding their understanding of the rights and remedies of the lenders to the MSG Networks Credit Facilities, and the related conclusion reached in the Company’s analysis of its ability to continue as a going concern.

•We read the Company’s minutes from meetings of the Board of Directors and related committees of the Board of Directors and assessed whether any contradictory evidence existed with respect to management’s plans included in the Company’s analysis of its ability to continue as a going concern.

•We assessed the appropriateness of the Company's going concern disclosure in the financial statements.

/s/ Deloitte & Touche LLP

New York, New York

August 14, 2024

We have served as the Company’s auditor since 2020.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Sphere Entertainment Co.:

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Sphere Entertainment Co. and subsidiaries (the “Company”) as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2024, of the Company and our report dated August 14, 2024, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

New York, New York

August 14, 2024

We have served as the Company’s auditor since 2020.

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