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Mar 31, 2023
Sphere Entertainment Co Q3 2023 Earnings Report
Reported a modest revenue increase but posted a net loss for the quarter
Key Takeaways
Sphere Entertainment Co. delivered higher revenues in Q3 2023 driven by growth in the Entertainment segment, but recorded a net loss due to higher operating expenses and merger-related costs.
Revenues rose 3% year-over-year to $363.3 million.
Entertainment segment revenues increased by 4%, boosted by higher arena-related revenues and event sales.
MSG Networks revenues declined 4% due to lower subscription fees despite higher advertising sales.
Net loss widened to $56.8 million driven by higher SG&A expenses and restructuring costs.
Revenue by Segment
Forward Guidance
The company remains focused on the launch of Sphere in Las Vegas, with events planned for late 2023, and anticipates long-term value creation.
Positive Outlook
- Sphere Las Vegas construction in final phases with opening scheduled for September 2023.
- U2 residency to launch Sphere's debut events.
- Postcard from Earth immersive production set to run year-round starting October 2023.
- Formula 1 Las Vegas Grand Prix will feature a multi-day takeover of Sphere.
- Company holds significant liquidity including $230M in cash and valuable equity stakes.
Challenges Ahead
- Increased construction cost estimates for Sphere to $2.3 billion due to project complexity.
- Higher SG&A expenses driven by spin-off and Sphere-related costs.
- Ongoing operating losses in the Entertainment segment.
- Declining subscriber base for MSG Networks affecting affiliation fee revenues.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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