Sphere Entertainment Co.SPHR
Sphere Entertainment Co. Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets
The carrying amounts and activity of goodwill from June 30, 2024 through December 31, 2025 were as follows:
| Sphere | MSG Networks | Total | ||||||||||||||||||
| Balance as of June 30, 2024 | $ | 45,644 | $ | 424,508 | $ | 470,152 | ||||||||||||||
| Acquisitions | 1,220 | — | 1,220 | |||||||||||||||||
| Impairments | — | (61,200) | (61,200) | |||||||||||||||||
| Balance as of December 31, 2024 | $ | 46,864 | $ | 363,308 | $ | 410,172 | ||||||||||||||
| Impairments | — | (65,400) | (65,400) | |||||||||||||||||
| Balance as of December 31, 2025 | $ | 46,864 | $ | 297,908 | $ | 344,772 | ||||||||||||||
During August 2025 and 2024, the Company performed its annual impairment tests of goodwill. With respect to the Sphere segment, the Company performed a qualitative assessment and determined that, as of the annual impairment test date, there was no impairment of the Sphere segment’s goodwill. For MSG Networks’ August 2024 test, the Company also determined that there were no impairments identified as of the impairment test date.
With respect to the MSG Networks’ segment August 2025 annual impairment test, the Company could not support the conclusion that it is not more likely than not that the fair value of the reporting unit is greater than its carrying amount as of the annual impairment testing date and thus elected to perform a quantitative goodwill impairment test to identify potential impairment by comparing the fair value of the reporting unit with its carrying amount, including goodwill. In doing so, the Company estimated the fair value of the MSG Networks reporting unit based on a discounted cash flow model (income approach). This approach relied on numerous assumptions
and judgments within the model that were subject to various risks and uncertainties. Principal assumptions utilized, all of which are considered Level III inputs under the fair value hierarchy, include the Company’s estimates of future revenue for MSG Networks, estimates of future operating costs for MSG Networks, margin assumptions, terminal growth rates and the discount rate applied to estimate future cash flows.
Based upon the results of the Company’s annual quantitative impairment test, the Company concluded that the carrying value of the MSG Networks reporting unit exceeded its estimated fair value as of the annual impairment testing date and recorded a non-cash charge of $65,400 as a result of projected declines in the reporting unit’s business. The Company continues to closely monitor the performance and fair value of its MSG Networks reporting unit. A significant adverse change in market factors or the business outlook for the MSG Networks reporting unit could negatively impact the fair value of the MSG Networks reporting unit and result in an additional goodwill impairment charge at that time. No additional indicators of impairment were identified through the remainder of the year ended December 31, 2025.
On December 31, 2024, MSG Networks’ affiliation agreement with Altice USA (“Altice”), one of its major Distributors, expired, and as a result, the Company’s networks were not carried by Altice from January 1, 2025 through February 21, 2025. On February 22, 2025, MSG Networks and Altice entered into a multi-year renewal of the MSG Networks affiliation agreement and Altice resumed carriage of the Company's networks.. In connection with the preparation of the financial statements as of December 31, 2024, and in light of changes affecting the MSG Networks reporting unit and the programming industry, the Company concluded that a triggering event had occurred for the reporting unit as of December 31, 2024, and performed an interim quantitative impairment test. For the interim impairment test, the Company estimated the fair value of the MSG Networks reporting unit based on a discounted cash flow model (income approach). This approach relied on numerous assumptions and judgments within the model that were subject to various risks and uncertainties. Principal assumptions utilized, all of which are considered Level III inputs under the fair value hierarchy, include the Company’s estimates of future revenue for MSG Networks, estimates of future operating costs for MSG Networks, margin assumptions, terminal growth rates and the discount rate applied to estimate future cash flows. As a result of the interim impairment test, the Company recorded a non-cash goodwill impairment charge of $61,200 as of December 31, 2024 within the MSG Networks segment.
The Company’s intangible assets subject to amortization as of December 31, 2025 and 2024 were as follows:
| As of | ||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Gross carrying amount | Accumulated amortization | Intangible assets, net | Gross carrying amount | Accumulated amortization | Intangible assets, net | |||||||||||||||||||||||||||||||||
| Affiliate relationships | $ | 83,044 | $ | (72,921) | $ | 10,123 | $ | 83,044 | $ | (69,806) | $ | 13,238 | ||||||||||||||||||||||||||
| Technology | 15,508 | (5,169) | 10,339 | 15,508 | (2,068) | 13,440 | ||||||||||||||||||||||||||||||||
| Trade name | 2,032 | (677) | 1,355 | 2,032 | (327) | 1,705 | ||||||||||||||||||||||||||||||||
| Total | $ | 100,584 | $ | (78,767) | $ | 21,817 | $ | 100,584 | $ | (72,201) | $ | 28,383 | ||||||||||||||||||||||||||
Amortization expense for intangible assets was $6,567, $3,500, $3,788, and $3,115 for the year ended December 31, 2025, the six months ended December 31, 2024, and the years ended June 30, 2024 and 2023, respectively.
The Company’s annual amortization expense for existing intangible assets subject to amortization for each of the succeeding five years is as follows:
| For the years ending December 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | ||||||||||||||||||||||||||||
| Estimated amortization expense | $ | (6,623) | $ | (6,623) | $ | (6,623) | $ | (1,948) | $ | — | ||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Aug 14, 2024 | |
| 2023 | Aug 22, 2023 | |
| 2022 | Aug 19, 2022 | |
| 2021 | Aug 23, 2021 | |
| 2020 | Aug 31, 2020 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.