Sphere's Las Vegas gains have a television problem
The Sphere business added $15.3 million to quarterly adjusted operating income. Falling earnings at MSG Networks absorbed most of the improvement.
Ticker Byline
Sphere Entertainment Co.
Sphere Entertainment combines immersive shows, concerts and venue technology with the MSG Networks regional sports television business.
- Ticker
- SPHR
- Exchange
- XNYS
- SEC CIK
- 0001795250
Sphere Entertainment combines a large entertainment venue and content business with regional sports television. Its Class A shares trade on the New York Stock Exchange as SPHR. The company is incorporated in Nevada.
The Sphere business earns money from immersive productions, concerts, advertising on the building's exterior, sponsorships, suites, food and merchandise. Its first venue opened in Las Vegas in September 2023. The business also develops original content and technology for future venues.
MSG Networks operates MSG Network, MSG Sportsnet and the MSG+ streaming offering, now available through DAZN. It sells sports programming to television distributors and viewers, with coverage concentrated in the New York region. The Dolan family held about 72.1% of Sphere Entertainment's voting power at September 30, 2026.
Quarterly results
| Measure | 2025 | 2026 |
|---|---|---|
| Revenue | $262.5 | $274.3 |
| Operating income | -$163.1 | -$240.6 |
| Net income to shareholders | -$125.7 | -$176.0 |
| Diluted EPS | -$3.47 | -$4.84 |
| Adjusted operating income | $36.4 | $39.2 |
| Operating cash flow | $115.8 | $56.9 |
| Measure | 2025 | 2026 |
|---|---|---|
| Revenue | $282.7 | $313.6 |
| Operating income | -$50.2 | -$61.3 |
| Net income to shareholders | $151.8 | -$38.8 |
| Diluted EPS | $3.39 | -$1.07 |
| Adjusted operating income | $61.5 | $50.9 |
Operating income, net income and EPS follow U.S. accounting rules. Adjusted operating income excludes depreciation, amortization, stock-based compensation, impairments and certain other items, including legal and debt-workout costs. The second quarter of 2025 included a $346.1 million gain on debt restructuring, which helped reported net income.
Third-quarter Sphere revenue reached $198.9 million, up from $174.1 million a year earlier, and adjusted operating income rose to $32.4 million from $17.1 million. MSG Networks revenue fell to $75.4 million from $88.4 million, while adjusted operating income dropped to $6.8 million from $19.3 million. Television subscriber numbers declined about 15.5%.
The group recorded a $177.6 million noncash goodwill write-down at MSG Networks in the latest quarter. It also corrected earlier goodwill calculations after identifying a misallocation of deferred tax liabilities. The updated comparison puts the third-quarter 2025 operating loss at $163.1 million, versus $129.7 million originally reported. MSG Networks generally earns more advertising revenue in the first and fourth quarters, when more live basketball and hockey programming is available.
Cash and debt
Research by Ticker Byline shows that third-quarter operating cash flow was $56.9 million, versus $115.8 million a year earlier, using the nine-month reports less the corresponding first-half reports. The quarter's cash-flow benefit from deferred revenue was $33.0 million, versus $79.5 million. Our analysis of venue growth and the television drag explains the latest results.
For the first nine months of 2026, operating cash flow was $159.5 million, up from $63.1 million. Spending on property and equipment was $62.8 million. The group held $527.2 million of unrestricted cash at September 30, compared with $551.0 million in June. That included $218.8 million of advance proceeds, primarily from ticket sales, some of which is owed to artists and promoters. It also included $26.1 million held at MSG Networks that could not be distributed to the parent.
Outstanding contractual loan and convertible-note principal totaled $639.4 million, down from $649.4 million in June. The higher $768.4 million debt carrying amount on the balance sheet also reflects future interest and potential contingent payments under the restructured MSG Networks loan, less financing costs and discounts. Operating lease liabilities were a separate $131.2 million.
MSG Networks' remaining loan principal was $105.6 million at September 30, with $10 million of scheduled quarterly repayments plus required payments from excess cash. The parent and Sphere venue businesses do not guarantee that loan. Separately, the Las Vegas venue has a $275 million term loan maturing in January 2031 and a $275 million revolving facility. The parent has $258.8 million of convertible notes due in 2028.
Earlier expectations and expansion
In July, management expected substantial growth from Sphere during calendar 2026. It repeated that expectation in November. The next original immersive production, The Rocky Horror Picture Show at Sphere, was previously expected in 2027 and is now targeted to debut by the end of March 2027.
For Abu Dhabi, Sphere signed franchise, development and pre-opening service agreements in July 2025. The Department of Culture and Tourism is funding construction on Yas Island, with completion expected by the end of 2029. Sphere receives fees for its intellectual property and services, with annual content and other royalty fees following opening.
The planned National Harbor venue in Maryland still depends on definitive agreements, financing, government incentives and approvals.
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