Sphere Entertainment Co.

Sphere Entertainment Co. is a leader in immersive experiences, technology and media, operating through two reportable segments: Sphere and MSG Networks. Sphere is an experiential medium powered by advanced technologies, with its first venue opening in Las Vegas on September 29, 2023, featuring a 580,000 square foot fully programmable LED Exosphere, a 16K x 16K interior display plane, Sphere Immersive Sound, haptic seating, and 4D environmental effects, accommodating up to 20,000 guests ¹. MSG Networks operates two regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as a direct-to-consumer and authenticated streaming product, MSG+, which is included in the Gotham Sports streaming product, serving the New York designated market area and portions of New York, New Jersey, Connecticut, and Pennsylvania ². The Company is focused on creating a global network of Spheres, working with the Department of Culture and Tourism – Abu Dhabi to bring Sphere to Abu Dhabi, and in January 2026 announced its intent to develop a new Sphere venue at National Harbor, Maryland ³.

The Company's competitive strengths include being a leader in immersive experiences and technology, operating two award-winning regional sports and entertainment networks, and having an established presence in Las Vegas, which attracts more than 40 million visitors each year and has over 2 million local residents, as well as the New York Designated Market Area, the nation's largest media market ⁴. The Company has deep industry relationships across music, entertainment, brands, and sports that drive events to Sphere, a focus on world-class guest experience backed by decades of venue management experience, an in-house interdisciplinary team of creative, production, technology and software engineering experts, a proven history of successfully planning and executing comprehensive venue design and construction projects, an expansive portfolio of over 60 patents issued in the U.S. and internationally spanning areas including Sphere venue design, audio delivery, video capture and display, and 4D technologies, exclusive local media rights to live games of five professional New York-area NBA and NHL teams, and a strong and seasoned management team ⁵. The Company's primary competitors for its Sphere business include other leisure-time activities and entertainment options such as live performances, sporting events, music festivals, television, radio, motion pictures, restaurants, nightlife venues, the Internet, social media, and other public attraction options, with the Las Vegas area being a highly competitive entertainment destination with numerous showrooms, stadiums, arenas, performance residencies, museums, galleries, and other attractions ⁶. For its MSG Networks business, the Company faces competition from other programming networks, including national networks and other regional sports and entertainment networks, for distribution and viewers, as well as from direct-to-consumer streaming services such as Amazon Prime, Hulu, Netflix, Apple TV+, Disney+, Max, Peacock, and sports-focused services like those from Fox and ESPN ⁷.

The Company generates revenue through two reportable segments: Sphere and MSG Networks. The Sphere segment earns revenue from ticket sales for The Sphere Experience, venue license fees from third-party promoters for events the Company does not produce, sponsorships, signage and Exosphere advertising, suite license fees, facility and ticketing fees, concessions, and merchandise sales ⁸. The MSG Networks segment generates revenue principally from distribution fees, which include affiliation fee revenue from Distributors for the right to carry the Company's networks as well as revenue from DTC subscriptions and single game purchases on MSG+, and from the sale of advertising ⁹. For the year ended December 31, 2025, the Sphere segment represented approximately 64% of consolidated revenues, while the MSG Networks segment represented approximately 36% ¹⁰.

The Sphere segment's revenue is derived from several primary sources: ticket sales to audiences for The Sphere Experience, which features original immersive productions like The Wizard of Oz at Sphere, Postcard from Earth, and V-U2 An Immersive Concert Film; license fees for the venue paid by third-party promoters or licensees for events the Company does not produce or promote; sponsorships, signage and Exosphere advertising; suite license fees for 23 premium hospitality suites; facility and ticketing fees; concessions; and the sale of merchandise ¹¹. The Sphere Experience can run multiple times a day, year-round, and the venue can accommodate up to 20,000 guests ¹². The Company is developing its own content ranging from original immersive productions to a dynamic library of content for use by artists or third parties, with original content that the Company owns being a key aspect of its business model as it allows for economic participation as both venue operator and content owner ¹³. The MSG Networks segment's revenue is generated from distribution revenue, which includes affiliation fee revenue from Distributors and revenue from DTC subscriptions and single game purchases on MSG+, and advertising revenue largely derived from the sale of inventory in its live professional sports programming ¹⁴. MSG Network and MSG Sportsnet had an average combined reach of approximately 2.9 million viewing subscribers as of November 2025, inclusive of annual and monthly subscribers to MSG+ ¹⁵.

The Company's Sphere segment includes Sphere Studios, an immersive content studio dedicated to creating multi-sensory experiences exclusively for Sphere, which is home to a team of creative, production, technology and software engineering experts who provide full in-house creative and production services ¹⁶. 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 ¹⁷. The Company has a portfolio of over 60 patents in the U.S. spanning across areas including Sphere venue design, audio delivery, video capture and display, and 4D technologies, and continues to secure international patents ¹⁸. The Company has also deployed certain technology outside of Sphere, introducing Sphere Immersive Sound at Radio City Music Hall in New York in November 2025, after previously introducing a version of the system at the Beacon Theatre in New York in July 2022 ¹⁹. The MSG Networks segment includes two award-winning regional sports and entertainment networks, MSG Network and MSG Sportsnet, which feature exclusive live local games and other programming of the New York Knicks, New York Rangers, New York Islanders, New Jersey Devils, and Buffalo Sabres, as well as significant coverage of the New York Giants and Buffalo Bills ²⁰. In January 2024, MSG Networks and YES Network announced the formation of Gotham Advanced Media and Entertainment, LLC, a 50/50 joint venture to capitalize on technical and operational synergies associated with their streaming services, and in October 2024, through this joint venture, the Gotham Sports streaming product was launched, housing both MSG+ and the YES App ²¹.

During the year ended December 31, 2025, the Company repurchased approximately 1.1 million shares of Class A Common Stock for approximately $50 million ²². As of December 31, 2025, the Company had approximately $300 million remaining available for repurchases under the Stock Repurchase Program ²³. On June 27, 2025, MSG Networks and certain subsidiaries entered into a second amended and restated credit agreement providing for a $210 million term loan facility, the MSGN Term Loan Facility, which matures on December 31, 2029, replacing the prior credit facility that had an outstanding principal amount of $829.1 million that matured without repayment on October 11, 2024 ²⁴. In connection with this restructuring, the Company made a capital contribution to MSG Networks in an amount equal to $15,000 ²⁵. On January 29, 2026, MSG Las Vegas, LLC entered into a new credit agreement providing for a $275 million senior secured term loan facility and a $275 million senior secured revolving credit facility, which refinanced in full the 2022 LV Sphere Term Loan Facility ²⁶. The Company also completed a private unregistered offering of approximately $259 million in aggregate principal amount of its 3.50% Convertible Senior Notes due 2028 on December 8, 2023 ²⁷. The Company used approximately $14.3 million of the net proceeds from the offering of the 3.50% Convertible Senior Notes to fund the cost of entering into capped call transactions ²⁸. The Company invested approximately $80 million to develop the first original immersive production, Postcard from Earth, and over $100 million to develop The Wizard of Oz at Sphere ²⁹. The Company recorded a non-cash goodwill impairment charge of $65.4 million for the MSG Networks reporting unit as a result of the annual goodwill impairment test as of August 31, 2025 ³⁰. The Company also recorded a non-cash impairment charge of $61.2 million as of December 31, 2024 within the MSG Networks reporting unit ³¹.

For the year ended December 31, 2025, total revenues were $1,220,045, compared to $1,130,928 for the year ended December 31, 2024, an increase of $89,117 or 8% ³². Operating loss improved to $229,564 from $372,330 in the prior year, an improvement of $142,766 or 38% ³³. Net income was $33,405, compared to a net loss of $325,059 in the prior year ³⁴. Adjusted operating income increased $151,984 to $261,824 for the year ended December 31, 2025, compared to $109,840 for the year ended December 31, 2024 ³⁵. The Sphere segment's revenues increased $163,739 to $781,412 for the year ended December 31, 2025, compared to $617,673 in the prior year, and its adjusted operating income improved to $144,562 from an adjusted operating loss of $19,663 ³⁶. The MSG Networks segment's revenues decreased $74,622 to $438,633 for the year ended December 31, 2025, compared to $513,255 in the prior year, and its adjusted operating income decreased $12,241 to $117,262 ³⁷.

A primary growth vector is the creation of a global network of Sphere venues. The Company is working with the Department of Culture and Tourism – Abu Dhabi to bring Sphere to Abu Dhabi, United Arab Emirates, with the venue expected to echo the scale of the 20,000-capacity Sphere in Las Vegas ³⁸. Under the terms of the partnership, the Company receives a franchise initiation fee (a portion of which has been received) in connection with providing DCT Abu Dhabi the right to utilize proprietary designs, technology, and intellectual property, with construction funded by DCT Abu Dhabi ³⁹. Following the venue's opening, the Company plans to maintain ongoing arrangements expected to include annual fees for creative and artistic content licensed by the Company, such as Sphere Experiences, use of Sphere's brand, patents, proprietary technology, and intellectual property, and operational services ⁴⁰. In January 2026, the Company, the State of Maryland, Prince George's County, and Peterson Companies announced the intent to develop a new Sphere venue at National Harbor, Maryland, which would be the second in the U.S. and first to utilize a smaller-scale design model with 6,000 seats ⁴¹. Any construction, development, financing and operation of a Sphere venue at National Harbor is contingent upon, among other things, negotiation and execution of definitive agreements, as well as receipt of certain governmental incentives and approvals from Prince George's County and the State of Maryland ⁴². The Company's intention for future venues is to utilize several options, such as joint ventures, equity partners, a managed venue or franchise model, sale-leaseback arrangements and debt financing ⁴³.

Another key growth vector is the development of original content for Sphere. Sphere Studios is dedicated to the development of immersive experiences exclusively for Sphere, featuring technology and proprietary tools developed specifically for the platform ⁴⁴. The Company is developing its own content ranging from original immersive productions, purpose-built for Sphere, to a dynamic library of content that can be used by artists or third parties ⁴⁵. Original content that the Company owns is a key aspect of its business model as it allows for economic participation as both venue operator and content owner, and it also allows the Company to better control event scheduling and reduces the reliance on third-party events ⁴⁶. The Company plans to expand its network of Sphere venues around the world, which would create additional monetization opportunities for the Company's original content ⁴⁷. The Company invested approximately $80 million to develop the first original immersive production, Postcard from Earth, and over $100 million to develop The Wizard of Oz at Sphere, and there can be no assurances as to the cost of future immersive productions, which the Company expects to be significant ⁴⁸.

The Company's MSG Networks segment faces ongoing margin pressure from subscriber declines. MSG Networks has experienced a decrease in subscribers in each of the last several fiscal years, including a 13% decrease in 2025, which has adversely affected operating results ⁴⁹. Distribution revenue declined $73.6 million in 2025 compared to 2024, which included the absence of revenues from Altice during the non-carriage period from January 1, 2025 through February 21, 2025 ⁵⁰. The Company expects significant ongoing subscriber declines to continue, which is expected to result in reductions in MSG Networks' revenue, operating income and AOI in future periods ⁵¹. On June 27, 2025, the media rights agreements between MSG Networks and the Knicks and Rangers were amended to reduce the rights fees payable by MSG Networks, with a 28% reduction for the Knicks and an 18% reduction for the Rangers as of January 1, 2025, and to reduce the term of those agreements to expire after the 2028-29 NBA and NHL seasons, respectively ⁵². MSG Networks also entered into amendments with certain other professional sports teams that provide for reductions in the annual rights fees payable to such teams ⁵³.

The Company's operational outlook includes a focus on leveraging Sphere's unique capabilities to drive venue utilization. Sphere in Las Vegas was designed and engineered to be one of the most highly utilized venues of its size, with advanced technologies and design enabling it to seamlessly accommodate a variety of different event types, with fast turnover between events, and accommodate multiple events per-day, year-round ⁵⁴. The Company believes this allows for Sphere to be more efficiently utilized than traditional large-scale venues ⁵⁵. The Company also continues to explore additional domestic and international markets where it believes Sphere venues can be successful, with the design of future Spheres being flexible to accommodate a wide range of sizes and capacities – from large to smaller-scale – based on the needs of any individual market ⁵⁶. The Company's technology investments include the continued development of Sphere Immersive Sound, which was introduced at Radio City Music Hall in New York in November 2025, and the Big Sky ultra-high-resolution proprietary camera system developed by Sphere Entertainment ⁵⁷.

The Company's capital allocation strategy includes significant investment in content development and capital expenditures. The Company invested approximately $80 million to develop Postcard from Earth and over $100 million to develop The Wizard of Oz at Sphere ⁵⁸. The Company expects to continue to make significant investments in developing additional original immersive productions ⁵⁹. The Company's capital expenditure plans include spending related to its Sphere initiative, and the Company may require additional financing to fund planned capital expenditures, as well as other obligations and ongoing operations ⁶⁰. The Company has a share repurchase program authorized to repurchase up to $350 million of Class A Common Stock, with approximately $300 million remaining available for repurchases as of December 31, 2025 ⁶¹. The Company did not pay any dividends on its common stock during the year ended December 31, 2025 and does not have any current plans to pay cash dividends for the foreseeable future ⁶².

A significant headwind for the Company is the substantial debt and leverage. As of December 31, 2025, the balance of consolidated debt outstanding was approximately $830.4 million ⁶³. The Company is required to make interest and principal payments on its indebtedness, including mandatory quarterly amortization payments of $10 million each quarter under the MSGN Term Loan Facility ⁶⁴. The Company incurred operating losses of approximately $230 million, $261 million, $341 million, $273 million and $166 million for 2025, the Transition Period, and Fiscal Years 2024, 2023 and 2022, respectively, and expects these significant operating losses to continue ⁶⁵. The Company's ability to have sufficient liquidity to fund its operations, including the creation of content, and to service its indebtedness is dependent on the ability of Sphere to generate significant positive cash flow ⁶⁶. Another headwind is the ongoing subscriber decline at MSG Networks, which has experienced a decrease in subscribers in each of the last several fiscal years, including a 13% decrease in 2025, and the Company expects significant ongoing subscriber declines to continue ⁶⁷.

The Company faces structural headwinds from the geographic concentration of its businesses. The Sphere business currently operates only in Las Vegas with one venue and, as a result, is subject to significantly greater degrees of risk than competitors with more operating properties or that operate in more markets ⁶⁸. MSG Networks' programming networks are distributed throughout New York State and certain nearby areas, making the Company particularly vulnerable to adverse events and economic conditions in Las Vegas and New York State and surrounding areas ⁶⁹. The Company also faces risks from doing business internationally, including with respect to its agreements with DCT Abu Dhabi to bring Sphere to Abu Dhabi, United Arab Emirates, which subject the Company to risks such as laws and policies affecting trade and taxes, exchange rate fluctuation, exchange controls, tariffs and other trade barriers, differing degrees of protection for intellectual property, foreign privacy and data protection laws, instability of foreign economies and governments, war, acts of terrorism, and anti-corruption laws ⁷⁰.

The Company faces material risks from its substantial indebtedness, with consolidated debt outstanding of approximately $830.4 million as of December 31, 2025, requiring significant interest and principal payments including mandatory quarterly amortization payments of $10 million under the MSGN Term Loan Facility ⁷¹. The success of the Sphere business depends on the popularity of The Sphere Experience and the ability to continue to attract advertisers, marketing partners, audiences, and artists, with the Company having invested approximately $80 million to develop Postcard from Earth and over $100 million to develop The Wizard of Oz at Sphere, and there is no assurance that future productions will achieve expected levels of popularity ⁷². The MSG Networks business depends on affiliation fees from a limited number of Distributors, with substantially all affiliation fee revenue coming from the top four Distributors, and the Company has experienced a 13% decrease in subscribers in 2025, with significant ongoing subscriber declines expected to continue ⁷³. The Company has incurred substantial operating losses of approximately $230 million, $261 million, $341 million, $273 million and $166 million for 2025, the Transition Period, and Fiscal Years 2024, 2023 and 2022, respectively, and expects these significant operating losses to continue ⁷⁴. The Company is controlled by the Dolan family, which collectively owned 100% of the Class B Common Stock and approximately 72.3% of the total voting power as of December 31, 2025, giving them the ability to prevent or cause a change in control or approve, prevent or influence certain actions ⁷⁵.

Management's message emphasizes the Company's position as a leader in immersive experiences, technology and media, with a strategy to leverage its unique assets and brands – including Sphere, an experiential medium powered by advanced technologies, and regional sports and entertainment networks – to create world-class experiences for all key stakeholders ⁷⁶. Key components of the strategy include developing an experiential medium powered by advanced technologies, leveraging Sphere's unique capabilities to drive venue utilization, developing original content, pursuing a global network and brand, and maintaining a continued commitment to innovation in media ⁷⁷. Management highlights that Sphere represents an innovative business model for entertainment venues with new and expanded revenue opportunities spanning original immersive productions, concerts and residencies, marquee sports and brand events, advertising and sponsorship, and premium hospitality, as well as food, beverage and merchandise ⁷⁸. The Company is focused on creating a global network of Spheres, with plans to bring Sphere to Abu Dhabi and National Harbor, Maryland ⁷⁹. Management also emphasizes the Company's commitment to innovation in media through MSG Networks, which has been at the forefront of the industry for more than 50 years, and the introduction of MSG+, a DTC streaming product, and the Gotham Sports streaming product through the GAME joint venture with YES Network ⁸⁰.