Sphere Entertainment Co.SPHR
Sphere Entertainment Co. Segments Disclosure
Segment Information
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As of December 31, 2025, the Company was comprised of two reportable segments: Sphere and MSG Networks.
Sphere
The Sphere segment derives revenues primarily from ticket sales and other ticket-related revenues, venue license fees from third-party promoters, sponsorships, signage and Exosphere advertising, suite licenses and food, beverage, and merchandise sales. The Sphere segment incurs expenses related to day-of-event costs, costs to produce The Sphere Experience, marketing and advertising costs, production costs for Exosphere advertising as well as corporate and supporting department operating costs, including charges under the transition services/services agreement with MSG Entertainment, and venue usage costs such as other operating expenses including insurance, utilities, repairs and maintenance, labor related to the overall management of the Sphere segment, depreciation and amortization expense related to certain corporate property, equipment and leasehold improvements. The Sphere segment also incurs non-capitalizable content development and technology costs associated with the Company’s Sphere business.
MSG Networks
The MSG Networks segment derives revenues principally from distribution fees, as well as from the sale of advertising. Distribution revenue includes both affiliation fee revenue earned from Distributors for the right to carry the Company’s networks, as well as revenue earned from DTC subscriptions and single game purchases on MSG+ (which is included in the Gotham Sports streaming product). MSG Networks’ advertising revenue is largely derived from the sale of inventory in its live professional sports programming.
The MSG Networks segment incurs expenses related to the cost of professional team rights acquired under media rights agreements to telecast various sporting events on the Company’s networks as well as other direct programming and production related costs of the networks.
In making its segment determination, the Company takes into account whether two or more operating segments can be aggregated together as one reportable segment as well as the type of discrete financial information that is available and regularly reviewed by its Chief Operating Decision Maker (“CODM”). The CODM is the Company’s Executive Chairman and Chief Executive Officer.
The CODM evaluates segment performance and determines how to allocate resources based on the Company’s key financial measure of adjusted operating income (loss) (“AOI”), a non-GAAP financial measure. The Company defines AOI as operating income (loss) excluding:
(i) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,
(ii) amortization for capitalized cloud computing arrangement costs,
(iii) share-based compensation expense,
(iv) restructuring charges or credits,
(v) merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries,
(vi) gains or losses on sales or dispositions of businesses and associated settlements,
(vii) the impact of purchase accounting adjustments related to business acquisitions, and
(viii) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan (which was established in November 2021).
The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash. The Company eliminates merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan are recognized in Operating loss (income) whereas gains and losses related to the remeasurement of the assets
under the Company’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other (expense) income, net, which is not reflected in Operating loss (income).
The CODM uses AOI for each segment predominantly throughout the annual budget and forecasting process. The CODM also considers budget-to-actual variances in AOI, at least quarterly, when making decisions about the allocation of operating and capital resources to each segment. Management believes AOI is an appropriate measure for evaluating the operating performance of its business segments and the Company on a consolidated basis. AOI and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company’s performance. The Company uses revenues and AOI measures as the most important indicators of its business performance and evaluates management’s effectiveness with specific reference to these indicators.
Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to adjusted operating income (loss).
Information as to the operations of the Company’s reportable segments is set forth below.
| Year Ended December 31, 2025 | ||||||||||||||||||||
| Sphere | MSG Networks | Total | ||||||||||||||||||
| Revenues | $ | 781,412 | $ | 438,633 | $ | 1,220,045 | ||||||||||||||
Event-related expenses (a) | (288,734) | — | (288,734) | |||||||||||||||||
| Rights fee expense | — | (204,473) | (204,473) | |||||||||||||||||
| Network programming and production costs | — | (67,241) | (67,241) | |||||||||||||||||
Other direct operating expenses (a) | (29,531) | — | (29,531) | |||||||||||||||||
Overhead expenses(b) | (389,594) | (52,324) | (441,918) | |||||||||||||||||
Other segment expenses(c) | (341,710) | (76,002) | (417,712) | |||||||||||||||||
Operating (loss) income | $ | (268,157) | $ | 38,593 | $ | (229,564) | ||||||||||||||
| Gain on extinguishment of debt | 346,092 | |||||||||||||||||||
| Interest income | 13,498 | |||||||||||||||||||
| Interest expense | (70,546) | |||||||||||||||||||
Other expense, net | (2,265) | |||||||||||||||||||
| Income from operations before income taxes | $ | 57,215 | ||||||||||||||||||
Reconciliation of operating (loss) income to adjusted operating income: | ||||||||||||||||||||
| Operating (loss) income | $ | (268,157) | $ | 38,593 | $ | (229,564) | ||||||||||||||
| Adjustments: | ||||||||||||||||||||
Share-based compensation expense | 60,272 | (1,267) | 59,005 | |||||||||||||||||
| Depreciation and amortization | 327,769 | 8,642 | 336,411 | |||||||||||||||||
| Restructuring charges | 9,560 | 1,960 | 11,520 | |||||||||||||||||
| Impairment and other losses, net | 4,381 | 65,400 | 69,781 | |||||||||||||||||
| Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries | 3,954 | 3,934 | 7,888 | |||||||||||||||||
| Amortization for capitalized cloud computing costs | 6,316 | — | 6,316 | |||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | 467 | — | 467 | |||||||||||||||||
Adjusted operating income | $ | 144,562 | $ | 117,262 | $ | 261,824 | ||||||||||||||
| Six Months Ended December 31, 2024 | ||||||||||||||||||||
| Sphere | MSG Networks | Total | ||||||||||||||||||
| Revenues | $ | 296,092 | $ | 240,111 | $ | 536,203 | ||||||||||||||
Event-related expenses (a) | (118,971) | — | (118,971) | |||||||||||||||||
| Rights fee expense | — | (135,081) | (135,081) | |||||||||||||||||
| Network programming and production costs | — | (36,676) | (36,676) | |||||||||||||||||
Other direct operating expenses (a) | (16,143) | — | (16,143) | |||||||||||||||||
Overhead expenses(b) | (223,953) | (30,310) | (254,263) | |||||||||||||||||
Other segment expenses(c) | (170,007) | (65,622) | (235,629) | |||||||||||||||||
Operating loss | (232,982) | (27,578) | (260,560) | |||||||||||||||||
| Interest income | 11,413 | |||||||||||||||||||
| Interest expense | (57,388) | |||||||||||||||||||
Other expense, net | (44) | |||||||||||||||||||
| Loss from operations before income taxes | $ | (306,579) | ||||||||||||||||||
Reconciliation of operating loss to adjusted operating (loss) income: | ||||||||||||||||||||
| Operating loss | $ | (232,982) | $ | (27,578) | $ | (260,560) | ||||||||||||||
| Adjustments: | ||||||||||||||||||||
Share-based compensation expense | 29,363 | 4,031 | 33,394 | |||||||||||||||||
| Depreciation and amortization | 160,840 | 4,392 | 165,232 | |||||||||||||||||
| Restructuring charges | 5,134 | 30 | 5,164 | |||||||||||||||||
| Impairment and other losses, net | 4,033 | 61,200 | 65,233 | |||||||||||||||||
| Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries | 4,843 | 7,534 | 12,377 | |||||||||||||||||
| Amortization for capitalized cloud computing costs | 1,579 | 152 | 1,731 | |||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | 91 | — | 91 | |||||||||||||||||
Adjusted operating (loss) income | $ | (27,099) | $ | 49,761 | $ | 22,662 | ||||||||||||||
| Year Ended June 30, 2024 | ||||||||||||||||||||
| Sphere | MSG Networks | Total | ||||||||||||||||||
| Revenues | $ | 497,159 | $ | 529,730 | $ | 1,026,889 | ||||||||||||||
Event-related expenses (a) | (187,610) | — | (187,610) | |||||||||||||||||
| Rights fee expense | — | (268,747) | (268,747) | |||||||||||||||||
| Network programming and production costs | — | (73,770) | (73,770) | |||||||||||||||||
Other direct operating expenses (a) | (17,697) | — | (17,697) | |||||||||||||||||
Overhead expenses(b) | (393,039) | (39,814) | (432,853) | |||||||||||||||||
Other segment expenses(c) | (379,197) | (8,256) | (387,453) | |||||||||||||||||
| Operating (loss) income | (480,384) | 139,143 | (341,241) | |||||||||||||||||
| Interest income | 25,687 | |||||||||||||||||||
| Interest expense | (79,868) | |||||||||||||||||||
| Other income, net | 35,197 | |||||||||||||||||||
| Loss from operations before income taxes | $ | (360,225) | ||||||||||||||||||
Reconciliation of operating (loss) income to adjusted operating (loss) income: | ||||||||||||||||||||
| Operating (loss) income | $ | (480,384) | $ | 139,143 | $ | (341,241) | ||||||||||||||
| Adjustments: | ||||||||||||||||||||
Share-based compensation expense | 40,514 | 6,330 | 46,844 | |||||||||||||||||
| Depreciation and amortization | 248,248 | 8,246 | 256,494 | |||||||||||||||||
| Restructuring charges | 9,476 | 10 | 9,486 | |||||||||||||||||
| Impairment and other (gains) losses, net | 121,473 | — | 121,473 | |||||||||||||||||
| Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries | (1,176) | (11,542) | (12,718) | |||||||||||||||||
| Amortization for capitalized cloud computing costs | — | 87 | 87 | |||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | 306 | — | 306 | |||||||||||||||||
Adjusted operating (loss) income | $ | (61,543) | $ | 142,274 | $ | 80,731 | ||||||||||||||
| Year Ended June 30, 2023 | ||||||||||||||||||||
| Sphere | MSG Networks | Total | ||||||||||||||||||
| Revenues | $ | 2,610 | $ | 571,221 | $ | 573,831 | ||||||||||||||
| Rights fee expense | — | (266,670) | (266,670) | |||||||||||||||||
| Network programming and production costs | — | (69,996) | (69,996) | |||||||||||||||||
Other direct operating expenses (a) | (5,545) | — | (5,545) | |||||||||||||||||
Overhead expenses(b) | (325,660) | (126,482) | (452,142) | |||||||||||||||||
Other segment expenses(c) | (40,955) | (11,565) | (52,520) | |||||||||||||||||
| Operating (loss) income | (369,550) | 96,508 | (273,042) | |||||||||||||||||
| Interest income | 11,585 | |||||||||||||||||||
| Interest expense | — | |||||||||||||||||||
Other income, net | 536,887 | |||||||||||||||||||
| Income from operations before income taxes | $ | 275,430 | ||||||||||||||||||
Reconciliation of operating (loss) income to adjusted operating (loss) income: | ||||||||||||||||||||
| Operating (loss) income | $ | (369,550) | $ | 96,508 | $ | (273,042) | ||||||||||||||
| Adjustments: | ||||||||||||||||||||
Share-based compensation expense | 36,188 | 6,419 | 42,607 | |||||||||||||||||
| Depreciation and amortization | 24,048 | 6,668 | 30,716 | |||||||||||||||||
| Restructuring charges | 23,136 | 4,788 | 27,924 | |||||||||||||||||
| Impairment and other gains, net | (6,229) | 109 | (6,120) | |||||||||||||||||
| Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries | (189) | 55,236 | 55,047 | |||||||||||||||||
| Amortization for capitalized cloud computing costs | — | 161 | 161 | |||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | 187 | — | 187 | |||||||||||||||||
Adjusted operating (loss) income | $ | (292,409) | $ | 169,889 | $ | (122,520) | ||||||||||||||
(a)Event-related expenses include, but are not limited to, day-of-event costs, direct operating expenses for The Sphere Experience, venue operating expenses, and other event-related direct operating expenses. Other direct operating expenses include, but are not limited to, expenses related to sponsorship, signage, Exosphere advertising, suite licenses, and other operating expenses. In total, these expenses when combined with MSG Networks rights fee expense and network programming and production costs represent the Company’s Direct operating expenses as presented on the Consolidated Statement of Operations.
(b)For each reportable segment, Overhead expenses currently include selling, general and administrative costs.
(c)For each reportable segment, Other segment expenses include all other expenses that do not meet the definition of other previously disclosed expenses, primarily depreciation and amortization, impairment and other losses, net and restructuring charges.
Concentration of Risk
Accounts receivable, net on the accompanying consolidated balance sheets as of December 31, 2025 and 2024 included amounts due from the following individual customers, substantially derived from the MSG Networks segment, which accounted for the noted percentages of the gross balance:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Customer A | 11 | % | 14 | % | ||||||||||
| Customer B | 9 | % | 14 | % | ||||||||||
| Customer C | 8 | % | 10 | % | ||||||||||
Revenues in the accompanying consolidated statements of operations for the year ended December 31, 2025, the six months ended December 31, 2024, and the years ended June 30, 2024 and 2023 included amounts from the following individual customers, primarily derived from the MSG Networks segment, which accounted for the noted percentages of the total:
| Year Ended December 31, | Six Months Ended December 31, | Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | 2024 | 2023 | |||||||||||||||||||||||
| Customer 1 | 10 | % | 12 | % | 13 | % | 26 | % | ||||||||||||||||||
| Customer 2 | 7 | % | 9 | % | 10 | % | 21 | % | ||||||||||||||||||
| Customer 3 | 6 | % | 12 | % | 14 | % | 26 | % | ||||||||||||||||||
As of December 31, 2025, the Company employed approximately 3,300 full-time and part-time employees, of which approximately 16% are subject to CBAs. Approximately 0% of those union employees are subject to CBAs that expired as of December 31, 2025 and approximately 14% are subject to CBAs that will expire by December 31, 2026, if they are not extended prior thereto.
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 Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.