NEW YORK (CelebrityAccess) – Sphere Entertainment Co. (Sphere) has reported financial results for the fiscal fourth quarter and full year ended June 30, 2024.
Recent Sphere highlights include:
- Dead & Co. completed a successful 30-show residency in early August, while the Eagles residency begins in September and is slated for 20 shows after multiple extensions due to demand
- Afterlife presents Anyma ‘The End Of Genesys’ will be the first electronic dance music performance at the venue with 6 shows starting in late December
- The Sphere Experience featuring Postcard from Earth generated over one million dollars in average daily ticket sales on the days it ran during the fiscal fourth quarter
- In June, Sphere hosted its first corporate keynote event with Hewlett Packard Enterprise, as well as the NHL Draft, which was the first live television event broadcast from Sphere
- In September, Sphere will host UFC 306, the first live sports event at the venue.
During the fiscal 2024 fourth quarter, MSG Networks concluded full regular season coverage of its five NBA and NHL professional sports teams, followed by extensive programming around the New York Knicks, Rangers and Islanders postseason runs. This included telecasts of first-round playoff games, along with additional, comprehensive pre/post-game coverage of the Knicks, Rangers and Islanders playoff series across its linear and digital platforms.
For fiscal 2024, the Company reported revenues of $1,026.9 million, an increase of $453.1 million as compared to the prior year. In addition, the Company had an operating loss of $341.2 million, an increase of $68.2 million, and adjusted operating income of $80.7 million, an improvement of $203.3 million, both as compared to the prior year.
For the fiscal 2024 fourth quarter, the Company reported revenues of $273.4 million, an increase of $144.3 million as compared to the prior-year quarter. In addition, the Company reported an operating loss of $71.4 million, an increase of $1.0 million, and adjusted operating income of $25.7 million, an improvement of $85.5 million, both as compared to the prior-year quarter.
Executive Chairman and CEO James L. Dolan said, “Fiscal 2024 marked the opening of Sphere in Las Vegas and a new chapter for our Company. Sphere has already welcomed millions of guests, world-renowned artists and numerous global brands. We are confident that we are on the right path to execute our vision for this next-generation medium.”
Sphere
For the fiscal 2024 fourth quarter, the Sphere segment reported revenues of $151.2 million, an increase of $150.5 million, as compared to the prior-year quarter. Revenues related to The Sphere Experience were $74.5 million across 208 performances during the quarter. Event-related revenues were $58.4 million, which reflected revenues from concerts, as well as a multi-day corporate takeover and marquee sporting event held at Sphere in Las Vegas during the quarter. In addition, revenues from sponsorship, signage, Exosphere advertising and suite license fees were $15.9 million, primarily reflecting advertising campaigns on the venue’s Exosphere and, to a lesser extent, suite license fee revenues.
For the fiscal 2024 fourth quarter, the Sphere segment had direct operating expenses of $67.9 million, compared to $1.1 million in the prior year quarter. This primarily included $22.2 million of event-related expenses and $22.1 million of expenses associated with The Sphere Experience during the quarter. In addition, direct operating expenses included $16.8 million of venue operating costs, as well as $2.1 million in expenses associated with sponsorship, signage, Exosphere advertising and suite license fee revenues.
Fiscal 2024 fourth quarter selling, general and administrative expenses of $102.1 million increased $11.8 million, or 13%, as compared to the prior year quarter, primarily due to higher employee compensation and related benefits and, to a lesser extent, higher professional fees. The overall increase was partially offset by the absence of certain corporate expenses that were included in the results of the prior year’s fourth quarter for the pre-spin period (April 1, 2023, to April 20, 2023) but were not included in the results for the fiscal 2024 fourth quarter. While the Company did not incur these costs after the spin-off of MSG Entertainment, which occurred on April 20, 2023, and does not expect to incur these costs in future periods, they did not meet the criteria for inclusion in discontinued operations in the prior-year quarter. In addition, the overall increase was partially offset by other net cost decreases.
Fiscal 2024 fourth-quarter operating loss of $104.5 million increased by $9.3 million, as compared to the prior year quarter, primarily reflecting higher depreciation and amortization, direct operating expenses and, to a lesser extent, selling, general and administrative expenses (including merger and acquisition-related costs, net of insurance recoveries and share-based compensation expense), as well as impairment and other losses, net, partially offset by the increase in revenues. Adjusted operating loss of $5.5 million improved by $84.9 million, as compared to the prior year quarter, primarily reflecting the increase in revenues, partially offset by higher direct operating expenses.
MSG Networks
For the fiscal 2024 fourth quarter, the MSG Networks segment reported total revenues of $122.2 million, a decrease of $6.2 million, or 5%, as compared to the prior-year quarter.
Distribution revenue decreased $9.2 million, primarily due to a decrease in total subscribers of approximately 13%, partially offset by the impact of higher affiliation rates.
As a result of the launch of MSG+ in June 2023, distribution revenue now includes affiliation fee revenue earned from MSG Networks’ distributors for the right to carry the Company’s networks as well as revenue earned from subscriptions and single-game purchases on MSG+. In addition, total subscribers include affiliate subscribers as well as monthly and annual subscribers of MSG+.
Advertising revenue increased by $3.0 million, as compared to the prior year’s quarter, primarily due to higher average per-game advertising sales related to the regular season and postseason game telecasts on the linear networks and higher advertising revenue related to MSG+.
Fiscal 2024 fourth quarter direct operating expenses of $81.6 million increased $0.1 million as compared to the prior-year quarter. Other programming and production costs increased $0.3 million, as compared to the prior year quarter, primarily due to the impact of MSG+ in the current year quarter, partially offset by other net cost decreases. In addition, rights fees expenses decreased $0.3 million, as compared to the prior year quarter, primarily due to reductions resulting from fewer NBA and NHL games made available to MSG Networks for exclusive broadcast and other rights fee decreases, partially offset by the impact of annual contractual rate increases.
Fiscal 2024 fourth quarter selling, general and administrative expenses of $4.9 million decreased $14.4 million, or 74%, as compared to the prior-year quarter. This decrease was primarily due to lower professional fees of $8.5 million, mainly reflecting litigation-related insurance recoveries in the current year quarter and a decrease in litigation-related expenses, both associated with the merger of a subsidiary of the Company with MSG Networks Inc. In addition, employee compensation and related benefits (including share-based compensation) decreased by $4.8 million.
Fiscal 2024 fourth quarter operating income of $33.2 million increased $8.3 million, or 33%, as compared to the prior year quarter, primarily due to the decrease in selling, general and administrative expenses (including insurance recoveries, net of merger and acquisition-related costs), partially offset by the decrease in revenues. Adjusted operating income of $31.1 million increased $0.6 million, or 2%, as compared to the prior year quarter, primarily due to the decrease in selling, general and administrative expenses (excluding insurance recoveries, net of merger and acquisition-related costs), partially offset by the decrease in revenues.
Other Matters
As of June 30, 2024, MSG Networks had approximately $849.8 million of principal debt outstanding under its credit facilities, which mature on October 11, 2024. This debt is recourse only to MSG Networks. The Company had been in discussions with MSG Networks’ existing syndicate of lenders regarding a potential refinancing of these facilities. As of today’s date, MSG Networks has not been able to finalize a refinancing. Consequently, MSG Networks has decided to pursue refinancing through a work-out with its existing syndicate of lenders and has hired advisors to assist it with the process.
