Sphere Entertainment Co.
For the period ended Mar 31, 2025. Filed May 8, 2025.
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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.
Mar 31, 2025 · Filed May 8, 2025
SPHR$120.02+6.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001795250-24-000042
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001795250-25-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 204 previous paragraphs and 210 current paragraphs.
96 unchanged; 65 reworded; 43 added; 42 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (43)
Current report
Recent Developments
Current report
On April 24, 2025, the Company, MSG Networks Inc. and certain subsidiaries of MSG Networks Inc. entered into a Transaction Support Agreement (the “Transaction Support Agreement”) with respect to the restructuring of the debt of subsidiaries of MSG Networks Inc. and amendments to the media rights agreements between MSG Networks and New York Knicks, LLC and New York
Current report
Rangers, LLC (collectively, the “Teams”), each an indirect subsidiary of MSG Sports, respectively (the “Proposed Transactions”).
Current report
The Transaction Support Agreement is among MSG Networks Inc., MSGN L.P., certain of MSG Networks Inc.’s other subsidiaries (together with MSG Networks Inc. and MSGN Holdings, L.P.’s (“MSGN L.P.”), the “MSGN Parties”), the lenders under MSGN L.P.’s existing credit facilities identified therein (the “Consenting Lenders”), the Teams and the Company (together with the Consenting Lenders and the Teams, the “Consenting Stakeholders”), pursuant to which the Consenting Stakeholders agreed to support the Proposed Transactions on the terms set forth in the Transaction Support Agreement and in the term sheet attached thereto as Exhibit A (the “Term Sheet”).
Current report
The Term Sheet sets forth the principal terms of the Transactions that will be consummated upon the execution of definitive documents containing terms consistent with those set forth in the Term Sheet and such other terms as agreed to by the MSGN Parties and the Consenting Stakeholders. The Term Sheet contemplates, among other things:
Current report
•that the Company will make a $15 million capital contribution to MSGN L.P.;
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•that MSGN L.P.’s existing credit facilities will be replaced with a new $210 million term loan facility (the “New Term Loan Facility”), which will mature in December 2029, have a fixed amortization of $10 million per quarter and require 100% of the MSGN L.P.’s excess free cash flow generated through operating activities to be used to repay the principal amount outstanding under the New Term Loan Facility until fully repaid, subject to limited exceptions set forth in the Term Sheet and otherwise to be agreed;
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•that outstanding borrowings under the New Term Loan Facility will bear interest at a rate per annum equal to SOFR plus 5.00%;
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•that MSGN L.P. will make a minimum cash payment of $80 million (including the $15 million capital contribution from the Company to MSGN L.P.) to the Consenting Lenders upon the closing of the New Term Loan Facility;
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•amendments to media rights agreements, effective as of January 1, 2025, as follows:
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◦Knicks:
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▪a reduction of 28% in the annual rights fee;
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◦Rangers:
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▪a reduction of 18% in the annual rights fee;
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•the issuance by MSG Networks Inc. of penny warrants to MSG Sports exercisable for 19.9% of the equity interests in MSG Networks Inc.;
Current report
•beginning with the first calendar year-end following the repayment in full of the New Term Loan Facility, annual payments to the Consenting Lenders in an amount equal to 50% of the difference between MSGN L.P.’s balance sheet cash and the Minimum Cash Balance (as defined in the Term Sheet) until the earlier of the December 31, 2029 payment and payment of $100 million in the aggregate to the Consenting Lenders; and
Current report
•the entry into a mutual release agreement by and among the parties to the Transaction Support Agreement providing for a customary mutual release of claims among the parties thereto.
Current report
The Transaction Support Agreement contains certain covenants on the part of each of the Consenting Stakeholders, including, among other things, (i) commitments to support, and to use commercially reasonable efforts and timely take all reasonable actions necessary to support, implement and consummate the Transactions and (ii) commitments to negotiate in good faith and use commercially reasonable efforts to execute and implement definitive documents that are consistent with the Transaction Support Agreement.
Current report
Pursuant to the Transaction Support Agreement, the Consenting Stakeholders have agreed to implement the Transactions by June 27, 2025, which date may be extended or waived in writing by each of the Consenting Stakeholders and MSG Networks. The Company expects to record a non-cash gain in connection with the completion of the refinancing transaction contemplated by the Transaction
Current report
Support Agreement. Such refinancing would also result in adverse tax consequences to the Company, including the elimination of approximately half of the Company’s net operating losses as a result of the debt extinguishment.
Current report
For the three months ended March 31, 2025, interest expense decreased $913 as compared to the prior year period due to a reduction in the average outstanding principal balance of the MSGN Term Loan Facility (as defined below) as compared to the prior year period and a reduction in commitment charges resulting from the termination of the MSGN Revolving Credit Facility (as defined below) on October 11, 2024.
Current report
Other expense, net
Current report
For the three months ended March 31, 2025, other expense, net decreased $1,916 as compared to the prior year period, primarily due to smaller losses on equity method investments and foreign exchange.
Current report
For the three months ended March 31, 2025, The Sphere Experience included 166 performances of Postcard From Earth, and 34 performances of V-U2 An Immersive Concert Film, which debuted in September 2024, (with combined average revenues per performance of approximately $371) as compared to 257 performances of Postcard from Earth (with combined average revenues per performance of approximately $392) in the prior year period.
Current report
For the three months ended March 31, 2025, the decrease in revenues from sponsorship, signage, Exosphere advertising and suite license fee revenues primarily reflects lower Exosphere advertising revenues, due to the absence of revenues from advertising campaigns around the Super Bowl which was held in Las Vegas in the prior year period, partially offset by higher sponsorship revenues due to increased sales of existing sponsorship inventory and higher suite license fee revenues.
Current report
For the three months ended March 31, 2025, the increase in venue operating expenses was primarily related to an increase in employee compensation and related benefits.
Current report
For the three months ended March 31, 2025, the decrease in direct operating expenses for The Sphere Experience was primarily due to fewer performances held in the current year period as compared to the prior year period, partially offset by higher average per-show expenses (combined average direct operating expenses of $130 per show in the current year period as compared to $117 per show in the prior year period). The current year period reflects expenses associated with 166 performances of Postcard From Earthand 34 performances of V-U2 An Immersive Concert Film, which debuted in September 2024, as compared to 257 performances of Postcard from Earth in the prior year period.
Current report
In addition, on December 31, 2024, MSG Networks’ affiliation agreement with Altice expired, subsequent to which the Company’s programming networks were not carried by Altice from January 1, 2025 through February 21, 2025. On February 22, 2025, MSG Networks reached a multi-year renewal of the affiliation agreement and Altice resumed carriage of the Company’s programming networks. Results for the three months ended March 31, 2025 reflect the absence of revenues from Altice during the non-carriage period. Furthermore, MSG Networks has experienced significant ongoing subscriber declines and is expected to continue to experience significant subscriber declines in the future, which is expected to result in reductions in MSG Networks’ revenue, operating income and AOI in future periods.
Current report
For the three months ended March 31, 2025, distribution revenue decreased $29,917, primarily due to the absence of revenues from Altice during the non-carriage period, and a decrease in total subscribers of approxi mately 11.5% (excluding the impact of the Altice non-carriage period).
Current report
Advertising revenue increased $1,858 as compared to the prior year quarter, primarily due to a higher number of live professional sports telecasts, partially offset by lower average per-game advertising sales.
Current report
For the three months ended March 31, 2025, rights fees expense decreased by $2,521, primarily due to a decrease in other rights fees.
Current report
Under the Transaction Support Agreement, the Consenting Lenders have agreed to forbear from exercising certain of their available remedies under the MSGN Credit Agreement with respect to or arising out of (i) MSGN L.P.’s failure to make payment on the outstanding principal amount of the MSGN Term Loan Facility on the Maturity Date, (ii) the failure to deliver the budget of the MSG Networks Inc. and its subsidiaries for the following year by March 31, 2025 (which, if not cured by April 30, 2025, would have resulted in an event of default), (iii) a failure to maintain a total leverage ratio of less than 5.50:1.00 for the MSGN Holdings Entities (as defined under Note 10. Credit Facilities and Convertible Notes) and MSGN L.P. and its restricted subsidiaries on a consolidated basis and (iv) a failure to maintain an interest coverage ratio of not less than 2.00:1.00 for the MSGN Holdings Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis, in each case, until the earlier of the date on which the termination of the Transaction Support Agreement is effective with respect to the Consenting Lenders and the date on which the Proposed Transactions are consummated.
Current report
As disclosed in Note 10, Credit Facilities and Convertible Notes to the condensed consolidated financial statements, all of the outstanding principal amount under the MSG Networks Credit Facilities is guaranteed by the MSGN Guarantors and secured by the MSGN Collateral (each as defined below). In the event MSG Networks is unable to successfully refinance or achieve a work-out of the MSGN Term Loan Facility as contemplated by the Transaction Support Agreement, the lenders could exercise their remedies under the MSGN Credit Agreement, which would include, but not be limited to, foreclosing on the MSGN Collateral. If MSG Networks is not able to achieve a refinancing or work-out of its indebtedness (including as contemplated by the Transaction Support Agreement), the Company believes it is probable that MSG Networks Inc. and/or its subsidiaries would seek bankruptcy protection or the lenders would foreclose on the MSGN Collateral.
Current report
Under the Transaction Support Agreement, the Consenting Lenders have agreed to forbear from exercising certain of their available remedies under the MSGN Credit Agreement with respect to or arising out of (i) MSGN L.P.’s failure to make payment on the outstanding principal amount of the MSGN Term Loan Facility on the Maturity Date, (ii) the failure to deliver the budget of MSG Networks Inc. and its subsidiaries for the following year by March 31, 2025 (which, if not cured by April 30, 2025, would have resulted in an event of default), (iii) a failure to maintain a total leverage ratio of less than 5.50:1.00 for the MSGN Holdings Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis and (iv) a failure to maintain an interest coverage ratio of not less than 2.00:1.00 for the MSGN Holdings Entities and MSGN L.P. and its restricted subsidiaries on a consolidated basis, in each case, until the earlier of the date on which the termination of the Transaction Support Agreement is effective with respect to the Consenting Lenders and the date on which the Proposed Transactions are consummated.
Current report
Net cash provided by operating activities for the three months ended March 31, 2025 decreased by $94,670 to $6,348 as compared to the three months ended March 31, 2024.
Current report
The changes in net cash provided by assets and liabilities were primarily driven by (i) a decrease in net cash provided by operating activities related to Accounts receivable, net of $8,988, primarily due to the timing of cash collections from revenue generating activities; (ii) an increase in net cash used for Prepaid expenses and other current and non-current assets of $42,315, primarily for the development of the Company’s original immersive productions content and other related assets, which are capitalized within Other non-current assets in the accompanying consolidated balance sheet; (iii) a decrease in net cash used for operating activities related to
Current report
Accounts payable of $43,603, primarily as a result of the timing of payments to vendors; (iv) an increase in net cash provided by operating activities related to Accrued and other current and non-current liabilities of $19,067, primarily as a result of timing of settlements with promoters; and (v) an increase in net cash provided by operating activities related to deferred revenue of $16,786, which was driven by the timing of cash receipts partially offset by the timing of revenue generating activities. The due to promoter and deferred revenue balance sheet liability accounts increase as cash is collected in advance of revenue generating activities and decrease as the Company’s obligations are satisfied, including when The Sphere Experience, other live events and Exosphere advertising occur. Timing of when other live events go on sale, tickets are sold, cash is collected, the live events occur and cash is paid to the promoters also significantly impact the balances.
Current report
In addition to the net decreases driven by changes in assets and liabilities, the Company generated a larger net loss of $81,954 in the current year period, compared to a net loss of $47,240 in the prior year period, as adjusted by larger net adjustments of $93,559 in the current year period, compared to $89,852. Refer to Management’s Discussion and Analysis Business Segment Results for further detail pertaining to the Company’s operating results.
Current report
Net cash used in financing activities for the three months ended March 31, 2025 increased by $13,344 as compared to the prior year period, primarily due to an increase in principal repayments of debt in the current year period as well as a reduction in cash proceeds from the exercise of stock options.
Current report
On December 31, 2024, MSG Networks’ affiliation agreement with Altice, one of its major Distributors, expired, subsequent to which the Company’s networks were not carried by Altice from January 1, 2025 through February 21, 2025. On February 22, 2025, the Company and Altice entered into a multi-year renewal of the affiliation agreement and Altice resumed carriage of the Company’s programming networks. In connection with the preparation of the financial statements included in the Form 10-KT, and in light of changes affecting the MSG Networks reporting unit and the programming industry, the Company concluded that a triggering event had occurred as of December 31, 2024 (“interim testing date”) for the MSG Networks reporting unit, which required the Company to assess the carrying value of its long-lived assets, amortizable intangible assets and goodwill as of the interim testing date.
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Removed paragraphs (42)
Previous report
Dhabi, United Arab Emirates.
Previous report
Impairment and other (losses) gains, net
Previous report
For the three months ended September 30, 2024, the Company recognized impairment and other losses, net of $4,033, as compared to other gains, net of $1,497, in the prior year period. The current year three-month period charge relates to fixed assets at Sphere Las Vegas that were removed from the venue and were impaired. The Company received insurance proceeds of $1,497 during the three months ended September 30, 2023.
Previous report
For the three months ended September 30, 2024, interest expense increased $26,974 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 in service following the opening of 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.
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Other (expense) income, net
Previous report
For the three months ended September 30, 2024, the Company recorded other expense, net of $695, compared to other income, net of $42,196 in the prior period, which included 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 in the corresponding prior year period.
Previous report
Income tax benefit for the three months ended September 30, 2023 of $90,287, reflects an effective tax rate of 389%. 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 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 with MSG Entertainment (the “Delayed Draw Term Loan Facility”).
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Adjusted operating loss
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On September 29, 2023, the Company opened Sphere in Las Vegas. As a result, the prior year quarter reflects minimal operations while the current year quarter reflects a full quarter of operations.
Previous report
For the three months ended September 30, 2024, the increase in revenues for The Sphere Experience reflects revenues associated with 192 performances of The Sphere Experience featuring Postcard From Earth, and 15 performances of V-U2 An Immersive Concert Film, generating combined average revenues of approximately $345 per performance.
Previous report
For the three months ended September 30, 2024, the increase in revenues from sponsorship, signage, Exosphere advertising and suite license fee revenues primarily reflects (i) higher Exosphere advertising revenues, primarily due to a full quarter of campaigns in the current year period as compared to a partial quarter in the prior year period as a result of the start of Exosphere campaigns in September 2023 and, to a lesser extent, (ii) higher suite license fee revenues, primarily due to a full quarter of venue operations in the current year period as compared to a partial quarter in the prior year period as a result of the opening of Sphere in Las Vegas on September 29, 2023.
Previous report
For the three months ended September 30, 2024, the increase in direct operating expenses for The Sphere Experience reflects expenses associated with 192 performances of The Sphere Experience featuring Postcard From Earthand 15 performances of V-U2 An Immersive Concert Film, equating to combined average direct operating expenses of approximately $119 per performance.
Previous report
For the three months ended September 30, 2024, the increase in venue operating expenses reflects a full quarter of venue operations in the current year period as compared to a partial quarter in the prior year period as a result of the opening of Sphere in Las Vegas on September 29, 2023.
Previous report
Impairment and other (losses) gains, net
Previous report
For the three months ended September 30, 2024, the Company recognized impairment and other losses of $4,033, as compared to other gains, net of $1,497, in the prior year period. The current year three-month period charge relates to fixed assets at Sphere in Las Vegas that were removed from the venue and were impaired. The Company received insurance proceeds of $1,497 during the three months ended September 30, 2023, related to the Company’s creative studio in Burbank, California.
Previous report
Adjusted operating loss
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For the three months ended September 30, 2024, distribution revenue decreased $9,307, primarily due to a decrease in total subscribers of approximately 13.0%, partially offset by the impact of higher affiliation rates in the current year quarter.
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For the three months ended September 30, 2024, rights fees expense increased $1,301 primarily due to the impact of annual contractual rate increases, partially offset by the net impact of reductions resulting from fewer NBA and NHL games made available to MSG Networks for exclusive broadcast.
Previous report
Adjusted operating income
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MSGN L.P. and the Supporting Lenders that hold a majority in principal amount of term loans held by all Supporting Lenders under the MSGN Term Loan Facility and (b) the date on which any Termination Event (as defined in the Forbearance Agreement) occurs. See Note 10. Credit Facilities and Convertible Notes to the condensed consolidated financial statements. MSG Networks will be unable to settle the remaining outstanding borrowings under the MSG Networks Credit Facilities prior to the expiration of the Forbearance Period absent action taken by management to refinance the outstanding borrowings.
Previous report
As of the issuance date, MSG Networks continues to pursue a work-out of the MSG Networks Credit Facilities with its syndicate of lenders. The Company has been advised that a cash equity contribution from Sphere Entertainment Group, LLC (“Sphere Entertainment Group”) to MSG Networks will be required in connection with a work-out. If a contribution is made, it is not expected to adversely impact Sphere Entertainment Co.’s ability to fund its operations.
Previous report
See Note 10. Credit Facilities and Convertible Notes to the condensed consolidated financial statements included in Part I— Item 1. of this Form 10-Q for a discussion of the MSG Networks Credit Facilities, the LV Sphere Term Loan Facility and the 3.50% Convertible Senior Notes.
Previous report
The Forbearance Period under the Forbearance Agreement was initially scheduled to expire on November 8, 2024 and has been extended to expire on the earlier to occur of (a) November 26, 2024, or such later date agreed to by MSGN L.P. and the Supporting Lenders that hold a majority in principal amount of term loans held by all Supporting Lenders under the MSGN Term Loan Facility and (b) the date on which any Termination Event (as defined in the Forbearance Agreement) occurs.
Previous report
The Company used $14,309 of the net proceeds from the Offering to fund the cost of entering into the capped call transactions described below, with the remaining net proceeds from the Offering designated for general corporate purposes, including capital for Sphere-related growth initiatives. The capped call transactions met all of the applicable criteria for equity classification in accordance with ASC Subtopic 815-10-15-74(a), “Derivatives and Hedging—Embedded Derivatives—Certain Contracts Involving an Entity’s Own Equity,” and were recorded as a reduction to Equity on the Company’s condensed consolidated statements of stockholders’ equity and condensed consolidated balance sheets.
Previous report
On December 8, 2023, the Company entered into an Indenture (the “Indenture”) with U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), relating to the 3.50% Convertible Senior Notes. The 3.50% Convertible Senior Notes constitute a senior general unsecured obligation of the Company.
Previous report
The 3.50% Convertible Senior Notes bear interest at a rate of 3.50% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2024. The 3.50% Convertible Senior Notes will mature on December 1, 2028, unless earlier redeemed, repurchased or converted.
Previous report
Subject to the terms of the Indenture, the 3.50% Convertible Senior Notes may be converted at an initial conversion rate of 28.1591 shares of Class A Common Stock per $1,000 principal amount of 3.50% Convertible Senior Notes (equivalent to an initial conversion price of approximately $35.51 per share of Class A Common Stock). Upon conversion of the 3.50% Convertible Senior Notes, the Company will pay or deliver, as the case may be, cash, shares of Class A Common Stock or a combination of cash and shares of Class A Common Stock, at the Company’s election, in accordance with the Indenture. Holders of the 3.50% Convertible Senior Notes may convert their 3.50% Convertible Senior Notes at their option at any time on or after September 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the 3.50% Convertible Senior Notes will also have the right to convert the 3.50% Convertible Senior Notes prior to September 1, 2028, but only upon the occurrence of specified events described in the Indenture. The conversion rate is subject to anti-dilution adjustments if certain events occur.
Previous report
Prior to December 6, 2026, the 3.50% Convertible Senior Notes will not be redeemable. On or after December 6, 2026, the Company may redeem for cash all or part of the 3.50% Convertible Senior Notes (subject to certain exceptions), at its option, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 3.50% Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date. No sinking fund is provided for the 3.50% Convertible Senior Notes.
Previous report
If certain corporate events occur or the Company delivers a notice of redemption prior to the maturity date of the 3.50% Convertible Senior Notes, and a holder elects to convert its 3.50% Convertible Senior Notes in connection with such corporate event or notice of redemption, as the case may be, the Company will, under certain circumstances, increase the conversion rate for the 3.50% Convertible Senior Notes so surrendered for conversion by a number of additional shares of Class A Common Stock in accordance with the Indenture. No adjustment to the conversion rate will be made if the price paid or deemed to be paid per share of Class A Common Stock in such corporate event or redemption, as the case may be, is either less than $28.41 per share or exceeds $280.00 per share.
Previous report
If a specified “Fundamental Change” (as defined in the Indenture) occurs prior to the maturity date of the 3.50% Convertible Senior Notes, under certain circumstances each holder may require the Company to repurchase all or part of its 3.50% Convertible Senior Notes at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest to, but not including, the repurchase date.
Previous report
Under the Indenture, the 3.50% Convertible Senior Notes may be accelerated upon the occurrence of certain events of default. In the case of an event of default with respect to the 3.50% Convertible Senior Notes arising from specified events of bankruptcy or insolvency of the Company, 100% of the principal of and accrued and unpaid interest on the 3.50% Convertible Senior Notes will automatically become due and payable. If any other event of default with respect to the 3.50% Convertible Senior Notes under the Indenture occurs or is continuing, the Trustee or holders of at least 25% in aggregate principal amount of the then outstanding 3.50% Convertible Senior Notes may declare the principal amount of the 3.50% Convertible Senior Notes to be immediately due and payable.
Previous report
On December 5, 2023, in connection with the pricing of the 3.50% Convertible Senior Notes, and on December 6, 2023, in connection with the exercise in full by the initial purchasers of their option to purchase additional 3.50% Convertible Senior Notes, the Company entered into capped call transactions with certain of the initial purchasers of the 3.50% Convertible Senior Notes or their respective affiliates and other financial institutions, pursuant to capped call confirmations. The capped call transactions are expected generally to reduce the potential dilution to the Class A Common Stock upon any conversion of the 3.50% Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 3.50% Convertible Senior Notes, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to approximately $42.62 per share (which represents a premium of approximately 50% over the last reported sale price of the Class A Common Stock of $28.41 per share on the New York Stock Exchange on December 5, 2023), and is subject to certain adjustments under the terms of the capped call transactions.
Previous report
Net cash from operating activities for the three months ended September 30, 2024 increased by $128,735 as compared to the prior year period, primarily due to an increase in cash flows from changes in working capital of $173,272. The increase in cash flows from changes in working capital were driven by higher collections from customers and fewer payments to vendors and related parties, offset by fewer cash collections related to deferred revenue, as compared to the corresponding prior year period. The increase was further offset by a decrease of net income adjusted for non-cash items of $44,537 in the current year period, as compared to the corresponding prior year period.
Previous report
Net cash from financing activities for the three months ended September 30, 2024 decreased by $86,476 as compared to the prior year period, primarily due to the absence of proceeds of $65,000 from the Delayed Draw Term Loan Facility received in the corresponding prior year period, as well as principal repayments of debt of $20,625 in the current year period.
Previous report
The Company elected to perform the qualitative assessment of impairment for both of the Company’s reporting units during the quarterly period ended September 30, 2024. These assessments considered qualitative factors such as:
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•macroeconomic conditions;
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•industry and market considerations;
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•cost factors;
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•overall financial performance of the reporting units;
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•other relevant company-specific factors such as changes in management, strategy or customers; and
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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) the ability of MSG Networks to successfully pursue a work-out with the lenders of its 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 plans to bring Sphere to Abu Dhabi, United Arab Emirates under a franchise model, (v) our ability to reduce or defer certain discretionary capital projects, (vi) our plans for possible additional debt financing and (vii) our execution of the strategy for and the success of MSG Networks’ direct-to-consumer (“DTC”) and authenticated streaming product, MSG+ (which is now included in the Gotham Sports streaming product launched as part of MSG Networks’ joint venture with YES Network) . 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) the ability of MSG Networks to refinance or work-out its indebtedness and the Company’s expectation that if MSG Networks is not able to achieve a work-out, it is probable that MSG Networks Inc. and/or its subsidiaries (“MSG Networks”) would seek bankruptcy protection, (ii) the success of Sphere and The Sphere Experience and development of newimmersive productions content, (iii) our plans to bring Sphere to Abu Dhabi, United Arab Emirates under a franchise model, (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 offering, MSG+ (which is now included in the Gotham Sports streaming product). 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 substantial amount of debt we have incurred, the ability of our subsidiaries to make payments on, or repay or refinance, such debt under their respective credit facilities (including MSG Networks’ ability to successfully pursue a work-out with the lenders of its existing debt, and if successful, the terms of such work-out), the implications of a default under those credit facilities (including the existing event of default under MSG Networks’ debt) and the terms of any forbearance agreements entered into in connection therewith, our ability to make payments on our 3.50% Convertible Senior Notes (as defined below) and our ability to obtain additional financing, to the extent required, on terms favorable to us or at all;
Current wording
•the substantial amount of debt we have incurred, the ability of our subsidiaries to make payments on, or repay or refinance, such debt under their respective credit facilities (including MSG Networks’ ability to complete the Proposed Transactions contemplated by the Transaction Support Agreement (as defined below)), and, if unsuccessful, the implications thereof, including the Company’s belief that it would then be probable that MSG Networks Inc. and/or its subsidiaries would seek bankruptcy protection or the lenders would foreclose on the MSGN Collateral (as defined below), the implications of a default under those credit facilities (including the existing events of default under the MSGN Credit Agreement (as defined below)) and the terms of the Transaction Support Agreement and any other agreements entered into in connection therewith;
Previous wording
•our ability to finalize definitive agreements for a Sphere venue in Abu Dhabi with the Department of Culture and Tourism – Abu Dhabi (“DCT Abu Dhabi”);
Current wording
•our ability to finalize definitive agreements for a Sphere venue in Abu Dhabi with the Department of Culture and Tourism – Abu Dhabi (“DCT Abu Dhabi”) and DCT Abu Dhabi’s ability to complete construction of that Sphere venue;
Previous wording
•our ability to successfully provide design, construction and pre- and post-opening services to Sphere partners, including DCT Abu Dhabi, as well as our ability to construct, finance and operate new Sphere venues, and the investments, costs and timing associated with those efforts, including obtaining financing, the impact of inflation and any construction delays and/or cost overruns;
Current wording
•our ability to successfully provide design, construction and pre- and post-opening services to Sphere partners, including DCT Abu Dhabi, as well as our ability to construct, finance and operate new Sphere venues, and the investments, costs and timing associated with those efforts, including obtaining financing, the impact of inflation and tariffs and any construction delays and/or cost overruns;
Previous wording
•general economic conditions, especially in the Las Vegas and New York City metropolitan areas where we have significant business activities;
Current wording
•general economic conditions, especially in the Las Vegas and New York City metropolitan areas where we have significant business activities, including the impact of a recession on our business;
Previous wording
•our ability to successfully execute MSG Networks’ strategy for its DTC and authenticated streaming offering, MSG+, and its streaming joint venture with YES Network, the success of such offerings and our ability to adapt to new content distribution platforms or changes in consumer behavior resulting from emerging technologies;
Current wording
•our ability to successfully execute MSG Networks’ strategy for its DTC and authenticated streaming offering, MSG+ (which is now included in the Gotham Sports streaming product), the success of such offering and our ability to adapt to new content distribution platforms or changes in consumer behavior resulting from emerging technologies;
Previous wording
•the demand for advertising and marketing partnership offerings at Sphere and advertising and viewer ratings for our networks;
Current wording
•the demand for advertising and marketing partnership offerings at Sphere and advertising sales and viewer ratings for our networks;
Previous wording
•activities or other developments (such as pandemics, including the COVID-19 pandemic) that discourage or may discourage congregation at prominent places of public assembly, including our venue;
Current wording
•activities or other developments (including pandemics, such as the COVID-19 pandemic) that discourage or may discourage congregation at prominent places of public assembly, including our venue;
Previous wording
•the operating and financial performance of our strategic acquisitions and investments, including those we do not control, and the impact of goodwill and other impairments with respect to businesses;
Current wording
•the operating and financial performance of our strategic acquisitions and investments, including those we do not control, and the impact of goodwill and other impairments with respect to businesses (including as a result of changes to the MSG Networks business);
Previous wording
•the additional factors described under “Risk Factors” included in Part II of this Form 10-Q for the fiscal quarter ended September 30, 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, 2024 filed with the Securities and Exchange Commission (the “SEC”) on August 14, 2024 (the “2024 Form 10-K”).
Current wording
•the additional factors described under “Risk Factors” included in Part II of this Form 10-Q for the quarter ended March 31, 2025 (this “Form 10-Q”) and under “Risk Factors” in the Company’s Report on Form 10-KT for the six-months ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2025 (the “Form 10-KT”).
Previous wording
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in this Form 10-Q and in the 2024 Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Current wording
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in this Form 10-Q and in the Form 10-KT. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
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 “— 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, 2024 and 2023 and for the three years ended June 30, 2024, 2023 and 2022 (the “Audited Consolidated Annual Financial Statements”) included in the 2024 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 and for the period ended December 31, 2024 (the “Audited Consolidated Financial Statements”) included in the Form 10-KT, 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 DTC and authenticated streaming offering (which is now included in the Gotham Sports streaming product launched as part of its joint venture with YES Network.
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 DTC and authenticated streaming product.
Previous wording
Sphere: This segment reflects Sphere TM, a next-generation entertainment medium powered by cutting-edge technologies to create multi-sensory experiences at an unparalleled scale. The Company’s first Sphere opened in Las Vegas in September 2023. The venue can accommodate up to 20,000 guests and can host a wide variety of events year-round, including The Sphere Experience TM, which features original immersive productions, as well as concerts and residencies from renowned artists, and marquee sports and corporate events. Production efforts are supported by Sphere Studios TM, an immersive content studio dedicated to creating multi-sensory live and recorded entertainment experiences exclusively for Sphere. Sphere Studios is home to a team of creative, production, technology and software experts who provide full in-house creative and production services. The studio campus in Burbank includes a 68,000-square-foot development facility, as well as Big Dome, a 28,000-square-foot, 100-foot high custom dome, with a quarter-sized version of the interior display plane at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere. The entire exterior surface of Sphere, referred to as the Exosphere TM, is covered with nearly 580,000 square feet of fully programmable LED paneling, creating the largest LED screen in the world — and an impactful display for artists, brands and partners. In October 2024, Sphere Entertainment and DCT Abu Dhabi announced that they will work together to bring the world’s second Sphere to Abu
Current wording
Sphere: This segment reflects Sphere, a next-generation entertainment medium powered by cutting-edge technologies to create multi-sensory experiences at an unparalleled scale. The Company’s first Sphere opened in Las Vegas in September 2023. The venue can accommodate up to 20,000 guests and can host a wide variety of events year-round, including The Sphere Experience, which features original immersive productions, as well as concerts and residencies from renowned artists, and marquee sports and corporate events. Production efforts are supported by Sphere Studios, an immersive content studio dedicated to creating multi-sensory entertainment experiences exclusively for Sphere. Sphere Studios is home to a team of creative, production, technology and software experts who provide full in-house creative and production services. The studio campus in Burbank includes a 68,000-square-foot development facility, as well as Big Dome, a 28,000-square-foot, 100-foot high custom dome, with a quarter-sized version of the interior display plane at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere. The entire exterior surface of Sphere, referred to as the Exosphere, is covered with nearly 580,000 square feet of fully programmable LED paneling, creating the largest LED screen in the world — and an impactful display for artists, brands and partners. In October 2024, the Company and DCT Abu Dhabi announced that they will work together to bring the world’s second Sphere to Abu Dhabi, United Arab Emirates.
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 DTC and authenticated streaming offering, MSG+ (which is now included in the Gotham Sports streaming product launched as part of MSG Networks’ joint venture with YES Network). 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 NBA and the New York Rangers (the “Rangers”), New York Islanders, New Jersey Devils and Buffalo Sabres of the NHL, as well as significant coverage of the New York Giants and the Buffalo Bills of the National Football League.
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 offering, MSG+ (which is now included in the Gotham Sports streaming product). 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 NBA and the New York Rangers (the “Rangers”), New York Islanders, New Jersey Devils and Buffalo Sabres of the NHL, as well as significant coverage of the New York Giants and the Buffalo Bills of the National Football League.
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 performed during the quarterly period ended September 30, 2024. This section should be read together with our critical accounting policies, which are discussed in the 2024 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.
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 impairment testing of goodwill. This section should be read together with our critical accounting policies, which are discussed in the Form 10-KT 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 Financial Statements included therein.
Previous 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.
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 terms of MSG Networks’ affiliation agreements with Distributors (including renewals thereof), (ii) the number of subscribers of MSG Networks’ Distributors, (iii) the terms of MSG Networks’ media rights agreements (including renewals thereof), (iv) the terms of the new term loan facility with respect to MSG Networks’ indebtedness, (v) the success of MSG+, MSG Networks’ DTC and authenticated streaming offering (which is now available through the Gotham Sports streaming product), and (vi) 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
Our Company’s future performance is dependent in part on general economic conditions and the effect of these conditions on our customers. Weak economic conditions may lead to lower demand for our entertainment offerings (including The Sphere Experience) and programming content, which would also negatively affect concession and merchandise sales, and could lead to lower levels of advertising, sponsorship and venue signage. These conditions may also affect the number of immersive productions, concerts, residencies and other events that take place in the future. An economic downturn could adversely affect our business and results of operations. The Company continues to explore additional opportunities to expand our presence in the entertainment industry. Any new investment may not initially contribute to operating income, but is intended to contribute to the success of the Company over time. Our results will also be affected by investments in, and the success of, new original immersive productions.
Current wording
Our Company’s future performance is dependent in part on general economic conditions and the effect of these conditions on our customers. Weak economic conditions may lead to lower demand for our entertainment offerings (including The Sphere Experience) and programming content, which would also negatively affect concession and merchandise sales, and could lead to lower levels of advertising, sponsorship and venue signage. Recent developments relating to tariffs have intensified concerns over the global macroeconomic environment, which has resulted in a rise in volatility across financial markets and concerns over the prospect of a U.S. recession. These conditions may also affect the number of immersive productions, concerts, residencies and other events that take place in the future. An economic downturn could adversely affect our business and results of operations. The Company continues to explore additional opportunities to expand our presence in the entertainment industry both domestically and internationally. Any new investment may not initially contribute to operating income, but is intended to contribute to the success of the Company over time. Our results will also be affected by investments in, and the success of, new immersive productions.
Previous wording
The following is a summary of changes in our segments’ operating results for the three months ended September 30, 2024, 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 months ended March 31, 2025 as compared to the three months ended March 31, 2024, which are discussed below under “Business Segment Results.”
Previous wording
For the three months ended September 30, 2024, depreciation and amortization increased $67,461 as compared to the prior year period primarily due to an increase in depreciation of assets related to Sphere in Las Vegas that were placed in service at the end of the first quarter of Fiscal Year 2024.
Current wording
For the three months ended March 31, 2025, depreciation and amortization increased $4,362, as compared to the prior year period due to the increase in total property and equipment, gross in the first quarter of 2025 as compared to the first quarter of 2024.
Previous wording
For the three months ended September 30, 2024, the Company recorded restructuring charges of $913 related to termination benefits provided for certain executives and employees, as compared to restructuring charges of $3,391 related to termination benefits provided for certain executives and employees in the three months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025 and 2024, the Company recorded restructuring charges of $1,841 and $4,667, respectively, related to termination benefits provided for certain executives and employees.
Previous wording
For the three months ended September 30, 2024, interest income increased $2,661, as compared to the prior year period, primarily due to higher average cash and cash equivalent balances.
Current wording
For the three months ended March 31, 2025, interest income of $3,878 decreased $3,776 as compared to the prior year period, primarily due to lower average cash and cash equivalent balances.
Previous wording
Income tax benefit for the three months ended September 30, 2024 of $32,966, reflects an effective tax rate of 24%. The effective tax rate exceeds the statutory federal tax rate of 21% primarily due to income tax benefit from state and local taxes, partially offset by income tax expense related to nondeductible officer’s compensation.
Current wording
Income tax benefit for the three months ended March 31, 2025 of $20,323, reflects an effective tax rate of 20%. The effective tax rate is lower than statutory federal tax rate of 21% primarily due to income tax expense related to nondeductible officer’s compensation, partially offset by income tax benefit from state and local taxes.
Previous wording
The following is a reconciliation of operating loss to adjusted operating loss (as defined in Note 15. Segment Information to the condensed consolidated financial statements included in “— Item 1. Financial Statements” of this Form 10-Q) for the three months ended September 30, 2024 as compared to the prior year period:
Current wording
The following is a reconciliation of operating loss to adjusted operating income (as defined in Note 15. Segment Information to the condensed consolidated financial statements included in “— Item 1. Financial Statements” of this Form 10-Q) for the three months ended March 31, 2025 as compared to the prior year period:
Previous wording
Adjusted operating loss for the three months ended September 30, 2024 improved $47,687 as compared to the prior year period to $10,194. The changes in adjusted operating loss were attributable to the following:
Current wording
Adjusted operating income for the three months ended March 31, 2025 decreased $25,553 as compared to the prior year period to $35,968. The changes in adjusted operating income were attributable to the following:
Previous wording
The tables below set forth, for the periods presented, certain historical financial information and a reconciliation of operating loss to adjusted operating loss for the Company’s Sphere segment.
Current wording
The tables below set forth, for the periods presented, certain historical financial information and a reconciliation of operating loss to adjusted operating income for the Company’s Sphere segment.
Previous wording
For the three months ended September 30, 2024, revenues decreased $9,387 as compared to the prior year period. The changes in revenues were attributable to the following:
Current wording
For the three months ended March 31, 2025, revenues decreased $12,819 as compared to the prior year period. The changes in revenues were attributable to the following:
Previous wording
For the three months ended September 30, 2024, the increase in event-related revenues reflects higher revenues from concerts, primarily due to a full quarter of concerts held at Sphere in Las Vegas, and, to a lesser extent, revenues from one marquee sporting event and one corporate takeover held at Sphere in Las Vegas during the current year period.
Current wording
For the three months ended March 31, 2025, the increase in event-related revenues reflects (i) higher revenues from concerts, primarily due to an increase of 10 concerts held at Sphere in Las Vegas as compared to the prior year period, partially offset by lower average per-event revenues, and, to a lesser extent, (ii) revenues from one corporate takeover event held at Sphere in Las Vegas during the current year period as compared to none in the prior year period.
Previous wording
For the three months ended September 30, 2024, the increase in other revenues primarily reflects the impact of the Company’s acquisition of Holoplot GmbH (“Holoplot”) in April 2024.
Current wording
For the three months ended March 31, 2025, the increase in other revenues primarily reflects the impact of revenues related to the Company’s plans to bring the world’s second Sphere to Abu Dhabi, United Arab Emirates.
Previous wording
For the three months ended September 30, 2024, direct operating expenses increased by $54,644 as compared to the prior year period. The changes in direct operating expenses were attributable to the following:
Current wording
For the three months ended March 31, 2025, direct operating expenses increased by $8,242 as compared to the prior year period. The changes in direct operating expenses were attributable to the following:
Previous wording
For the three months ended September 30, 2024, the increase in event-related direct operating expenses was primarily due to higher expenses from concerts, primarily due to an increase in the number of concerts held at Sphere in Las Vegas as compared to the prior year period, and, to a lesser extent, expenses from one marquee sporting event and one corporate takeover held at Sphere in Las Vegas during the current year period.
Current wording
For the three months ended March 31, 2025, the increase in event-related direct operating expenses reflects (i) higher expenses from one corporate takeover event held at Sphere in Las Vegas during the current year period as compared to none in the prior year period, and (ii) higher expenses from concerts, primarily due to an increase in the number of concerts held at Sphere in Las Vegas as compared to the prior year period, partially offset by lower average per-show expenses.
Previous wording
For the three months ended September 30, 2024, the increase in other direct operating expenses primarily reflects the impact of the Company’s acquisition of Holoplot in April 2024.
Current wording
For the three months ended March 31, 2025, the increase in other direct operating expenses primarily reflects the impact of consolidating Holoplot’s results following its acquisition by the Company in April 2024.
Previous wording
For the three months ended September 30, 2024, the increase in direct operating expenses from sponsorship, signage, Exosphere advertising and suite license fees primarily reflects higher expenses related to advertising campaigns on the venue’s Exosphere, primarily due to a full quarter of campaigns in the current year period as compared to a partial quarter in the prior year period as a result of the start of Exosphere campaigns in September 2023.
Current wording
For the three months ended March 31, 2025, the decrease in direct operating expenses from sponsorship, signage, Exosphere advertising and suite license fees primarily reflects lower expenses related to Exosphere advertising, mainly due to the absence of advertising campaigns around the Super Bowl which was held in Las Vegas in the prior year period.
Previous wording
For the three months ended September 30, 2024, selling, general, and administrative expenses increased $20,800 as compared to the prior year period. The increase was primarily due to higher employee compensation and related benefits.
Current wording
For the three months ended March 31, 2025, selling, general, and administrative expenses decreased $12,572 as compared to the prior year period primarily due to a decrease in professional fees of $9,673 and lower employee compensation and related benefits of $4,232.
Previous wording
For the three months ended September 30, 2024, depreciation and amortization increased $67,654, as compared to the prior year period primarily due to an increase in depreciation of assets related to Sphere in Las Vegas that were placed in service at the end of the first quarter of Fiscal Year 2024.
Current wording
For the three months ended March 31, 2025, depreciation and amortization increased $4,299 as compared to the prior year period primarily due to the increase in total property and equipment, gross in the first quarter of 2025 as compared to the first quarter of 2024.
Previous wording
For the three months ended September 30, 2024, the Company recognized restructuring charges of $883 related to termination benefits provided for certain executives and employees, as compared to restructuring charges of $3,391 related to termination benefits provided for certain executives and employees in the three months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025 and 2024, the Company recognized restructuring charges of $1,841 and $4,886, respectively, related to termination benefits provided for certain executives and employees.
Previous wording
For the three months ended September 30, 2024, operating loss increased $26,634 as compared to the prior year period, primarily due to an increase in depreciation and amortization, direct operating expenses, selling, general and administrative expenses, and, to a lesser extent, impairment and other losses, net, offset by an increase in revenues, and, to a lesser extent, a decrease in restructuring charges.
Current wording
For the three months ended March 31, 2025, operating loss increased $10,264 as compared to the prior year period, primarily due to a decrease in revenue and an increase in direct operating expenses and depreciation and amortization, partially offset by a decrease in selling, general and administrative expenses, and, to a lesser extent, a decrease in restructuring charges.
Previous wording
For the three months ended September 30, 2024, adjusted operating income improved $56,768 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, debt work-out, and acquisition related costs, net of insurance recoveries).
Current wording
For the three months ended March 31, 2025, adjusted operating income improved $238 as compared to the prior year period, primarily due to a decrease in selling, general and administrative expenses (excluding share-based compensation expense, amortization for capitalized cloud computing arrangement costs, and merger, debt work-out, and acquisition related costs, net of insurance recoveries), partially offset by a decrease in revenues and an increase in direct operating expenses.
Previous wording
For the three months ended September 30, 2024, revenues increased $119,293 as compared to the prior year period. The changes in revenues were attributable to the following:
Current wording
For the three months ended March 31, 2025, revenues decreased $27,937 as compared to the prior year period. The changes in revenues were attributable to the following:
Previous wording
For the three months ended September 30, 2024 direct operating expenses increased by $553 as compared to the prior year period. The changes in direct operating expenses were attributable to the following:
Current wording
For the three months ended March 31, 2025 direct operating expenses decreased by $3,959 as compared to the prior year period. The changes in direct operating expenses were attributable to the following:
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Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
•our ability to make payments on our 3.50% Convertible Senior Notes (as defined below);
Current report — wording carried from elsewhere
•our ability to obtain additional financing, to the extent required, on terms favorable to us or at all;
Current report — wording carried from elsewhere
Sphere Entertainment Co., Sphere Entertainment Group, LLC (“Sphere Entertainment Group”) and the subsidiaries of Sphere Entertainment Group (collectively, the “Non-Credit Parties”) will not be legally obligated to fund the outstanding borrowings under the New Term Loan Facility, nor will the assets of the Non-Credit Parties be pledged as security under the New Term Loan Facility.
Current report — wording carried from elsewhere
Income tax benefit for the three months ended March 31, 2024 of $15,874, reflects an effective tax rate of 25%. The effective tax rate exceeds the statutory federal tax rate of 21% primarily due to state and local taxes.
Current report — wording carried from elsewhere
During the three months ended March 31, 2025, the Company did not have any material changes in its non-cancelable contractual obligations (other than activities in the ordinary course of business).
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
changing their lines of business; (vi) engaging in certain transactions with affiliates; (vii) amending specified material agreements; (viii) merging or consolidating; (ix) making certain dispositions; and (x) entering into agreements that restrict the granting of liens. The MSGN Holdings Entities are also subject to customary passive holding company covenants.