NEW YORK, Feb. 5, 2024 /PRNewswire/ — Sphere Entertainment Co. (NYSE: SPHR) (“Sphere Entertainment” or the “Company”) at present reported monetary outcomes for the fiscal second quarter ended December 31, 2023.

Since opening on September 29, 2023, Sphere in Las Vegas has attracted worldwide consideration and strong demand from visitors, artists and advertisers.  Recent Sphere highlights embody:

• U2 has continued its multi-month run at Sphere, with each present sold-out so far. After extending a number of instances because of sturdy demand, U2 will conclude its run at Sphere early subsequent month with its 40^th present;
• Renowned bands Phish and Dead & Co. every introduced upcoming multi-night performances to happen at Sphere;
• The Sphere Experience that includes Postcard from Earth debuted on October 6, 2023, grossing over a million {dollars} in common each day ticket gross sales on days The Sphere Experience happened within the fiscal 2024 second quarter;
• Sphere launched campaigns from quite a few world manufacturers on the Exosphere in the course of the quarter and was a outstanding characteristic of Formula 1’s inaugural Las Vegas Grand Prix in November.

In addition, MSG Networks is now greater than midway via the 2023-24 NBA and NHL common seasons, marking the primary yr of availability of MSG+, MSG Networks’ direct-to-consumer subscription and authenticated steaming service. Last month, MSG Networks and the YES Network introduced the formation of Gotham Advanced Media and Entertainment (GAME), a brand new 50/50 streaming three way partnership which can discover new streaming merchandise and supply a scalable answer to 3rd social gathering content material house owners trying to join with their very own followers. 

For the fiscal 2024 second quarter, the Company reported revenues of $314.2 million, a rise of $154.6 million, as in comparison with the prior yr quarter.  In addition, the Company reported an working lack of $159.7 million, a rise of $109.9 million as in comparison with the prior yr quarter, and adjusted working earnings of $51.4 million, as in comparison with an adjusted working lack of $13.2 million within the prior yr quarter.⁽¹⁾⁽²⁾

Executive Chairman and CEO James L. Dolan stated, “Sphere is a next-generation medium intended to disrupt the traditional venue model. With positive adjusted operating income at the Sphere segment in our first full quarter of operations in Las Vegas, our early results are beginning to prove that thesis, and we remain confident in the global opportunities ahead.”         

Sphere
For the fiscal 2024 second quarter, the Sphere section reported revenues of $167.8 million, a rise of $167.2 million, as in comparison with the prior yr quarter. Revenues associated to The Sphere Experience had been $92.9 million throughout 191 performances in the course of the quarter after debuting on October 6, 2023.  Event-related revenues had been $55.2 million, which mirrored revenues from concert events and, to a lesser extent, one marquee sporting occasion held at Sphere in Las Vegas in the course of the quarter. In addition, revenues from sponsorship, signage, Exosphere promoting and suite license charges had been $17.5 million, primarily reflecting promoting campaigns on the venue’s Exosphere and, to a lesser extent, suite license payment revenues.

For the fiscal 2024 second quarter, the Sphere section had direct working bills of $67.3 million, as in comparison with no direct working bills within the prior yr quarter. This primarily included $27.6 million of bills related to The Sphere Experience, in addition to $20.4 million of event-related bills associated to concert events and, to a lesser extent, one marquee sporting occasion held on the venue in the course of the quarter.  In addition, direct working bills included $15.0 million of venue working prices in addition to $1.6 million in bills related to sponsorship, signage, Exosphere promoting and suite license payment revenues.

Fiscal 2024 second quarter promoting, common and administrative bills of $97.8 million elevated $23.0 million, or 31%, as in comparison with the prior yr quarter, primarily because of the impression of the Company’s transition companies settlement with MSG Entertainment, increased worker compensation and associated advantages and different value will increase. The general enhance was partially offset by the absence of sure company bills that had been included within the outcomes of the prior yr quarter however weren’t included within the outcomes for the present yr quarter. While the Company didn’t incur these prices after the spin-off from MSG Entertainment, which occurred in April 2023, and doesn’t count on to incur these prices in future intervals, they didn’t meet the factors for inclusion in discontinued operations within the prior yr quarter.

In addition, fiscal 2024 second quarter outcomes included a rise in impairment and different losses, internet, of $118.2 million, as in comparison with the prior yr quarter. This primarily displays a non-cash impairment cost of $116.5 million within the present yr quarter in reference to the Company’s resolution in November 2023 to not pursue the event of a Sphere in London.

Fiscal 2024 second quarter working lack of $193.9 million elevated by $111.0 million, as in comparison with the prior yr quarter, primarily reflecting increased impairment and different losses, internet, in addition to increased depreciation and amortization, direct working bills and, to a lesser extent, promoting, common and administrative bills (together with share-based compensation expense), partially offset by the rise in revenues. Adjusted working earnings of $14.1 million elevated by $75.0 million, as in comparison with the prior yr quarter, primarily reflecting the rise in revenues, partially offset by increased direct working bills and promoting, common and administrative bills (excluding share-based compensation expense).

MSG Networks
For the fiscal 2024 second quarter, the MSG Networks section reported complete revenues of $146.4 million, a lower of $12.5 million, or 8%, as in comparison with the prior yr quarter.

Distribution income decreased $13.3 million, as in comparison with the prior yr quarter, primarily because of a lower in complete subscribers of roughly 11.5% and the absence of a good affiliate adjustment of roughly $2.3 million recorded within the prior yr quarter, partially offset by the impression of upper affiliation charges within the present yr quarter.

As a results of the launch of MSG+ in June 2023, distribution income now contains each affiliation payment income earned from MSG Networks’ distributors for the correct to hold the Company’s networks in addition to income earned from subscriptions and single recreation purchases on MSG+.  In addition, complete subscribers contains each affiliate subscribers in addition to month-to-month and annual subscribers of MSG+.

Fiscal 2024 second quarter direct working bills of $92.4 million elevated $2.0 million, or 2%, as in comparison with the prior yr quarter. Other programming and manufacturing prices elevated $1.5 million, as in comparison with the prior yr quarter, primarily because of the impression of MSG+ within the present yr quarter, partially offset by different internet value decreases. In addition, rights charges expense elevated $0.5 million, as in comparison with the prior yr quarter, which primarily displays the impression of annual contractual fee will increase, considerably offset by reductions ensuing from fewer NBA and NHL video games made out there to MSG Networks for unique broadcast.

Fiscal 2024 second quarter promoting, common and administrative bills of $17.7 million decreased $11.9 million, or 40%, as in comparison with the prior yr quarter, primarily because of decrease skilled charges of $5.5 million, primarily reflecting a lower in litigation-related bills related to the merger of a subsidiary of the Company with MSG Networks Inc., decrease worker compensation and associated advantages of $2.9 million, and different value decreases.

Fiscal 2024 second quarter working earnings of $34.2 million elevated $1.0 million, or 3%, as in comparison with the prior yr quarter, primarily because of the lower in promoting, common and administrative bills (together with merger and acquisition associated prices, internet of insurance coverage recoveries, and share-based compensation expense) and the absence of restructuring fees recorded within the prior yr interval, partially offset by the lower in revenues and, to a lesser extent, the rise in direct working bills. Adjusted working earnings of $37.3 million decreased $10.4 million, or 22%, as in comparison with the prior yr quarter, primarily because of the lower in revenues and, to a lesser extent, the rise in direct working bills, partially offset by the lower in promoting, common and administrative bills (excluding merger and acquisition associated prices, internet of insurance coverage recoveries, and share-based compensation expense).

Other Matters
On December 8, 2023, the Company accomplished an providing of three.50% convertible senior notes due 2028 for mixture internet proceeds of roughly $236 million. The Company intends to make use of the web proceeds from the providing for common company functions, together with capital for Sphere-related progress initiatives.

About Sphere Entertainment Co.
Sphere Entertainment Co. is a premier stay leisure and media firm. The Company contains Sphere, a next-generation leisure medium powered by cutting-edge applied sciences to redefine the way forward for leisure. The first Sphere venue opened in Las Vegas in September 2023. In addition, the Company contains MSG Networks, which operates two regional sports activities and leisure networks, MSG Network and MSG Sportsnet, in addition to a direct-to-consumer and authenticated streaming product, MSG+, delivering a variety of stay sports activities content material and different programming. More info is obtainable at www.sphereentertainmentco.com.

Non-GAAP Financial Measures
We outline adjusted working earnings (loss), which is a non-GAAP monetary measure, as working earnings (loss) earlier than ((i) depreciation, amortization and impairments of property and gear, goodwill and intangible property, (ii) amortization for capitalized cloud computing association prices, (iii) share-based compensation expense or profit, (iv) restructuring fees or credit, (v) merger and acquisition-related prices, together with merger-related litigation bills, (vi) features or losses on gross sales or tendencies of companies and related settlements, (vii) the impression of buy accounting changes associated to enterprise acquisitions, and (ix) features and losses associated to the remeasurement of liabilities underneath the Company’s Executive Deferred Compensation Plan. We consider that the exclusion of share-based compensation expense or profit permits traders to raised monitor the efficiency of our enterprise with out regard to the settlement of an obligation that’s not anticipated to be made in money. We eradicate merger and acquisition-related prices, when relevant, as a result of the Company doesn’t contemplate such prices to be indicative of the continued working efficiency of the Company as they consequence from an occasion that’s of a non-recurring nature, thereby enhancing comparability. In addition, administration believes that the exclusion of features and losses associated to the remeasurement of liabilities underneath the Company’s Executive Deferred Compensation Plan, supplies traders with a clearer image of the Company’s working efficiency on condition that, in accordance with U.S. usually accepted accounting ideas (“GAAP”), features and losses associated to the remeasurement of liabilities underneath the Company’s Executive Deferred Compensation Plan are acknowledged in Operating earnings (loss) whereas features and losses associated to the remeasurement of the property underneath the Company’s Executive Deferred Compensation Plan, that are equal to and subsequently totally offset the features and losses associated to the remeasurement of liabilities, are acknowledged in Other earnings (expense), internet, which isn’t mirrored in Operating earnings (loss).

We consider adjusted working earnings (loss) is an acceptable measure for evaluating the working efficiency of our enterprise segments and the Company on a consolidated foundation. Adjusted working earnings (loss) and comparable measures with comparable titles are frequent efficiency measures utilized by traders and analysts to investigate our efficiency. Internally, we use revenues and adjusted working earnings (loss) as an important indicators of our enterprise efficiency, and consider administration’s effectiveness with particular reference to those indicators. Adjusted working earnings (loss) must be considered as a complement to and never an alternative choice to working earnings (loss), internet earnings (loss), money flows from working actions, and different measures of efficiency and/or liquidity introduced in accordance with GAAP. Since adjusted working earnings (loss) just isn’t a measure of efficiency calculated in accordance with GAAP, this measure is probably not similar to comparable measures with comparable titles utilized by different corporations. For a reconciliation of working earnings (loss) to adjusted working earnings (loss), please see web page 6 of this launch.

Forward-Looking Statements
This press launch might comprise statements that represent forward-looking statements inside the that means of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements should not ensures of future efficiency or outcomes and contain dangers and uncertainties, and that precise outcomes, developments or occasions might differ materially from these within the forward-looking statements because of varied elements, together with monetary neighborhood perceptions of the Company and its enterprise, operations, monetary situation and the industries through which it operates and the elements described within the Company’s filings with the Securities and Exchange Commission, together with the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. The Company disclaims any obligation to replace any forward-looking statements contained herein.

Contacts:

Conference Call Information:
The convention name will probably be Webcast stay at present at 10:00 a.m. ET at investor.sphereentertainmentco.com 
Conference name dial-in quantity is 888-800-3155 / Conference ID Number 8089430
Conference name replay quantity is 800-770-2030 / Conference ID Number 8089430 till February 12, 2024

ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)
(In hundreds)
(Unaudited)

The following is an outline of the changes to working loss in arriving at adjusted working earnings (loss) as described on this earnings launch:

• Share-based compensation. This adjustment eliminates the compensation expense regarding restricted inventory models and inventory choices granted underneath the Sphere Entertainment Employee Stock Plan, MSG Sports Employee Stock Plan, MSG Networks Employee Stock Plan, as amended and assumed by Sphere Entertainment, and Sphere Entertainment Non-Employee Director Plan in all intervals.
• Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and gear and intangible property in all intervals.
• Restructuring fees. This adjustment eliminates prices associated to termination advantages supplied to sure executives and staff.
• Impairment and different losses (features), internet. This adjustment eliminates non-cash impairment fees and the impression of features or losses from the disposition of property or companies in all intervals.
• Merger and acquisition associated prices. This adjustment eliminates prices associated to mergers and acquisitions, together with merger-related litigation bills and litigation-related insurance coverage recoveries, in all intervals.
• Amortization for capitalized cloud computing association prices. This adjustment eliminates amortization of capitalized cloud computing association prices.
• Remeasurement of deferred compensation plan liabilities. This adjustment eliminates the impression of features and losses associated to the remeasurement of liabilities underneath the Company’s government deferred compensation plan.

SOURCE Sphere Entertainment Co.