SPHR - Earnings call 2 2024 | Sphere Entertainment Co.

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Operator

Good morning, and thank you for standing by, and welcome to the Sphere Entertainment Co. Fiscal 2024 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Investor Relations. ahead. go Please

Ari Danes

will morning, Andrea Second Good begin to Entertainment's by Dolan, Sphere the our This conclude on Thank be Executive Chief will Financial for Earnings Officer, and Conference XXXX followed Greenberg, who Jim CEO, President Quarter Chairman Networks. update will After an MSG Call. financial President, of Fiscal period. review update Executive Sphere. And from you. then an and welcome our provide Today's Treasurer, with remarks, Vice open will with prepared and CEO Dave a of Byrnes, for we our the up our and questions. results will call call

section not of a copy website. do it today's you is have our the of corporate release, If Investors earnings available in

may not of statements involve obligation statements materially results future to Litigation Reform discussed and and note the filings company's update forward-looking this cause statements. forward-looking meaning refer the such discussion Any guarantees uncertainties risks are XXXX. and Today's following. forward-looking Private contain of take statements of Please Act for results Securities that the in could disclaims within or the Please forward-looking be call. from performance the actual the company any The discussion any of to SEC uncertainties. that a risks may with those to during differ of

earnings we financial operating consolidated provide non-GAAP release, today's statements and of AOI, X adjusted to income of and operating a operations X reconciliation Pages income, On measure. a of or

turn over Jim. call to the And I'll now with that,

James Dolan

morning, everyone. Thank you, good Ari, and

next-generation Sphere medium for the traditional a from that create venue we the the said As start, to model. vision very would disrupt was

see us, results wanted busy to events first in a of operations XXX be from is day. play with our days design out. Las our thesis we Vegas we behind with venue per a would Sphere, to starting quarter that year our With full that Now, multiple can

the XXX over tickets would to busiest size is more the events. we what arena Xx than quarter, from to second X Xx sold the in greater see This venues During you million than volume typically world.

Sphere category, million The sales high content in ticket volume, margin. original at grossing Our than drove a Experience, average $X more daily this

residencies our Sphere place event The not sold-out Experience only the economic is UX's Sphere High-profile have events they engine, is for example. important at key residencies venue. continue calendar. on an to a great will profitable, and our generate awareness extended run other While are

can demand our to business income the a be business of to many our profitable build know to self-sustaining. for can we into is entertainment strong we this We that global adjusted strong continue Formula second We've events had our from November, unique been the both the value generated segment demonstrated also what company. have do recognize an and that model Sphere of technology in demonstrating corporate from milestones who operating come Sphere X. for and Sphere our partners milestone, important advertising, quick quarter. and just Exosphere. results And With financial through This with positive advertisers collaboration Sphere is both the first as

As more to our we our continue revenue we maximize refine audience, to about will learn business opportunities. model

We as stay edge in content to on keep and technology, the immersive look property will we of investing cutting experiences. intellectual

of investments multiple platforms. these at monetize Vegas globe. includes the venues across to venue, This Las is plan Sphere but time Our network over not only around our a

substantive reaction markets. have to continue Sphere, international worldwide expanding we discussions positive to to With about

early for So, in we're Sphere Vegas. pleased with our results Las

the of surface in scratching opportunity also this medium. we terms believe the we're next-generation for global However, only

was business all has lead will recently Before brands, business. Sphere of her named including background execution recently entertainment Jennifer Business forward our operations. premier working I I to at like the turn look Google. At welcome she and Sphere, development call Jennifer of most on of technology with the Operations. and growth of over growing Andrea, to I'd extensive who an to driving President Koester,

and also as and Chief Treasurer. Byrnes. joined like Officer EVP would Sphere now to I welcome Dave and has EVP, as MSG Financial Dave Officer, served Entertainment Financial Chief previously Entertainment's

little You will later on. hear from him a

With call to will I Andrea. that, now the turn over

Andrea Greenberg

you, Thank morning. good and Jim,

to execute second on with plans the our how we and on building and deliver For quarter, for Networks. our partnerships our expanding of continued we innovation. This distributors to MSG our advertisers, includes strengthening networks history fans,

our we subscriber business. also our and goals, decline we impact focus As remain of on its continued on these mindful

of all programming, other operating With we're sports and an live midst original regard efficiencies. to on the broadcasts in hundreds eye and content, year with award-winning professional of another delivering of cost

are we're making more the NBA of behavior time from pleased our have subscriber and marked streaming effectively. takeaways has our season, to how gone also key launch Since and the through through to first offering date. XXXX-'XX service, NHL the to and market start our which MSG+, learned the we've the utilize we're DXC authenticated halfway We begun available with direct-to-consumer games seasons,

On including another New Moderna of the on sponsor while presenting signed us track of of Islanders broadcast. join York advertising front, These solid welcomed a advertising returning advertisers, which several puts partners, MSG+ pharmaceutical named as Aleve of on results. category. new the sponsor significant for our number was new year we presenting partners the a

own opportunity. deliver new with to progress products one solution partnership, these new the streaming to venture. developed and and the we'll the launches. we have renewals Entertainment, state-of-the-art venture several York lastly, The New and direct-to-consumer completed And look on building will turnkey technology, agreement want we We sports multiyear as distributors, to experience a elevate Networks sports that offer explore a our Media new their major and and announced experience streaming that joint Network to Network sharing a area for Advanced the YES forward to MSG customers. fans. this Gotham with just joint scalable technology combine insights our form work this to affiliates. further YES with owners their partnership entertainment streaming Both expertise with YES content Network recently of valuable also including We a third-party with also customizable a With XX-XX

turn the And call with that, to Dave. over I'll

David Byrnes

I'm Thank to Entertainment here reflect to spin-off Sphere and Hospitality like operations. you join by the the interest discontinued of Tao last Hospitality MSG I'd in the at Group you Group last sale role Entertainment Entertainment you, start Entertainment. April its year completed Sphere for all majority of that new quarter Results and pleased reminding as today May. in my second Tao prior MSG Andrea.

incur did but the did factors, comparable does However, of Due basis. after a these inclusion to criteria spin expect in future not the the period incur discontinued the fully on date does not in include for periods certain results meet are prior not overhead year Entertainment Sphere year-over-year to costs not that our corporate operations. and

million. our operating second October million of times 'XX Sphere Postcard since Experience, of items $XX in income full on Vegas. These reflect $XXX in from Sphere The currently Sphere to income during content of quarter generated debuted approximately $XXX which our ran Earth, and $XX on opening Sphere Turning Las operating features revenues led original results, a quarter results of total fiscal of adjusted first of XXX operations The million its by adjusted which quarter. X. category, Experience the revenues a segment basis, company generated The million we and number

the we positively were also to run. And by & close, drawing forward Dead are a band and this to while UX's multi-month look hosting Co. fiscal shows results impacted later year. Our Phish

of from quarter Grand well Prix campaigns advertising benefited as full venue's takeover also the the as We inaugural Formula X's from Sphere Exosphere. a of for multiday Las Vegas on

includes This we've from Jim the tentpole As weekend. like been this noted, coming pleased early advertisers. Bowl around with Super events demand

We revenue are week at are ahead of for brands record-setting advertising of number premier running from the advertising Exosphere. a event a the and looking campaigns

strong overhead technology and to also Sphere In events segment second $XXX addition pursue related a of advertising, impairment quarter I charge the income and expenses, in at to note no results development. expenses associated London. of and Sphere Sphere million including to Studios decision a noncash and of demand reflect to our that related our the include content corporate the impact impact SG&A also across results operating would longer

As international Jim about have mentioned, bringing markets. the Sphere discussions continues to substantive company to other

generated which XX%, revenue distribution respectively, Networks, represent and compared of offset and expenses. to quarter. The MSG operating lower $XXX segment AOI, SG&A primarily lower and prior X% in higher as partially revenues to decreases million costs, $XX year the decrease reflected million AOI in the direct Turning in by

and corporate general Turning to to annual sheet, including of and convertible $XXX offering December approximately coupon convertible our our was debt balance net XXXX. approximately proceeds the for from $XXX X.X% balance carry had notes balances million. for of December debt million growth we in Sphere-related our mature unrestricted reflect XX, and intend an approximately proceeds $X.X net These of equivalents, the billion. cash recent offering use as cash We The initiatives. purposes, of

turn back call now over will Ari. I the that, to With

Ari Danes

Thank open questions? you, Dave. up Operator, can the call we for

Operator

Thank you. Ross Instructions] We'll Partners. first [Operator Brandon at LightShed to go

Brandon Ross

remarks, a does have on South in asset-light. There know In announcement? gating said markets give detailed mean? foresee growth exactly like been how you What you international Korea. update for And you the prepared deal international to factors that few are was structuring? talked substantive hoping could an locations. about I your the What you plans. discussions those do a I press,

James Dolan

evolution in gating I markets. Okay. -- exploring I you Well, more don't It's an and we're factors, gating know, time. that the much on -- right, factors, pretty they're really -- we're think see like these really

Brandon, is the that Sphere through. quarter the of I has that is thing, one gone But operations this full think first

making markets an thing soon factors, more it And just to quarter's be have keenest attractive, going of are interest, that out yes, the we this showing -- the this we with we we're you're more one we're and would And going doing arrangement. results profitable, our that, so be which it, are are I to negotiate proving model, And product in profitable. we'll to the right? now continue doing that and gating are so, expect and right? to that the is removes conclude those profitable? we By that be that, There's need business think and I confidence

Brandon Ross

on segment for where grow Networks, like Great. in general. the going MSG a the encumbered and do in to business MSG guess, by that And you flexibility related, isn't and the Sphere RSN is Networks updated MSG think is I terms your about How debt business sufficient outlook the has due Networks? would challenged October. love And in ensuring asset then of that then refinancing

James Dolan

part the of I'll let first then Dave I'll answer the the answer question, one. second

David Byrnes

growth Sphere, obviously why to going not we're here. flexibility for to this did opportunity at looking December debt to do anything That's appropriate growth have looking drive growth. ensure that be Sphere. to offering the And our we financial we're we ability a that long-term With convertible drive to hinder to

it's mentioned Yes, You October. the refi. due in

Just in should refi, pursuing options more on regular we contact with the that, are lenders. and to our with currently the have of on regard we that potential in touch number ultimate We're months. coming a to

James Dolan

And it's As are cable mechanisms for part just it answer. right, we the a and think still model. developing But some that just that product, move consumers much a And that, quite that how entertainment only et Networks monetization challenged along. the streaming pay of The to I about think Andrea progress think the up are very from you want it. have the do transition terms content. linear would to far business great that goes, we've saying is -- resolved. a traditional it the certainly very monetize with some and how been as the issues key all for takes they linear platforms, sports continue making, consumers Having yet the to by and but it, But how MSG question general to has in streaming -- in right, the way business in aware, everybody of Networks, time, is for business. of the to air. has be -- consume I cetera, very are Right? said what MSG long not strong kind I from is are But the and that right? be are going itself is content streaming impaired that it putting

Operator

at Macquarie Golding We'll next Paul to Capital. move

Paul Golding

This or is Jim either Dave. for

an whether if ticket you after and this wondering Experience, quarter original seeing clear a The could daily million you this at the that over Sphere to life for Just speak I'm going? indication now generate informs average of in that $X of might Sphere to that have if sales you attraction keep content Experience subsequent cycle momentum you grossed Sphere

James Dolan

for we what renews -- the market a Vegas fresh the week is never almost call here, as every The it perfect, it about demand question. itself talk robust. good a great It's we around with first like is this pancake. but Las customers. It's

Sphere go But The -- will is a -- whole new what cut and our run how time I long right, a it but to open keep we is won't still -- Spheres, replace off, it they'll then -- last? plan they it, that when that, happens and have amount of will up What set think off. syndrome. first dealing the that with it Experience of up is you don't -- is right, content, pancake of a library building be first course, that

just to Sphere or coming in the quantify, -- for part probably to hard Sphere? So but mix Right? content, see How Earth of consumers the And Experience it coming say it's from current the of -- it, or closer that's pure time, Postcard technology? they that. content the to versus But are much for our other preparing both. the will to medium just see and draw a we're does I'd they move over are and the

Paul Golding

Jim, circle on to back wanted point. And then itself. I venue that's a great the

venues potential rate what engage the continue in of the model what venue be venues? think estimate these construction subsequent the might as substantive to of cost partners, you ROI conversations cost we about is these run clearer for with original relative As franchising a potential to becoming

James Dolan

heaviest-loads don't franchising I capital means Well, a carry which it is that mean it. into model, the we

We a we new it, can that sort less making in And Spheres already down thing. a up. first of do the looking basis designs construction costly the the be we've out go and at really, learned. go than at shouldn't on But that deliver over pancake again, that. think lot. good time, everything we'll more the one, of learned we midst We're first efficient. faster, However, should taking because of really go It costs of it get hopefully, new

Operator

next to Stanley. go Morgan Ben Swinburne at We'll

Benjamin Swinburne

you have Jim, the guys year. residency think experiences. this you I'm a full this if wondering calendar residency pretty is mix of just versus right

& when around think XXX run-rating and I of year you're in now Dead Co. look UX, Phish, a we at almost kind residents

long shorter forward move And partner guys? construction as anticipate you then maybe it pancake? how do sticking And the just next it's generating until -- any -- that opens take the you partners? time think with revenue line you Do to the the build think pancake, or is under to new your will do you venue going you with for

James Dolan

question? me Yes. your like Well, -- you What would answered let parse how part I first? do apart

Benjamin Swinburne

costs Residencies line, and sorry. then pancake -- or time

James Dolan

already and we to full that demand be committed right, don't grow, have the what continuing significant. room, we've I tell anything to, another already to acts announced without our next telling who do beyond year. XX for to have artists the to we more calendar is But much expect full from calendar you that is X residencies, -- can the we've this you come. year, So pretty

surprised with up shows off UX, demand we're cetera. same and started right, is, that this tickets XX around with and committing to time -- which the I has ended Dead, Phish for like XX, will for say what of us et the seeing

so And anticipated residencies than of they're to looks like go we going because these ticket longer demand. initially

does question? good residency - So, so that thing that's a that answer your the

Benjamin Swinburne

absolutely. Yes,

James Dolan

And what want then specifically? know to you

Benjamin Swinburne

time cash thought to curious trying could from your you point so think to updated from we're line. [indiscernible] view, on company - Spheres. How start flow if have long about benefiting, Obviously, build, a when an additional of time

James Dolan

franchise I model. So a it's mean,

model. that for construction They So that a don't free. work and division development -- that the franchise we services have

to from the start will And and process. build the support construction they be so, revenue generating right yes,

there's revenue -- streams has construction go the that with it. model, franchise with we're associated but the along different So model revenue

there our associated won't minimal goal any with with Most here there essentially, And is profits. will likely, construction. that -- to losses be Sphere be

a a provide content, then like is beyond servicing providing But franchise stream model ongoing. ongoing which of and there's construction, the that will revenue

Operator

our move Karnovsky David next question JPMorgan. to We'll at from

David Karnovsky

as Jim, not Is about to when they're destination for tour a or an maybe artist up you in touring a think for interested for stop Vegas? X-night for a music Vegas as residencies X- it the following just in the consider venue feasible in question, just on generally. residency Sphere how but

James Dolan

order The they're to the Sphere this is a for it investment their create they an into markets. the more playing tour, in the unique it because model, do build than and of Not mean, at doesn't With show XX I least doesn't. they time. They make that to when what move has shows. just or show artist show markets. artist X the and right, most Sphere, how requires build content, X a really over is, touring at amortize investment of The or XX on

justify on have they to run that it Sphere. based So, The at they the need

So X or X shows doesn't do it.

David Karnovsky

networks, you're question, expiration rights on still as amended wondering then following And SG&A, as term you of could even business far loan thinking out take potential the costs up on that about programming, I'm the just fees. or how

And JV this to and view as down York content together a technology you bundle game area? in is or then the there market line tie-up, the the with New separately, do go to YES, with purely opportunity

Andrea Greenberg

teams. focus more similar take to run the are companies, costs That all that we're percentage and fixed. remain pressures of big a includes I'll looking a of the said, is will as our that right And considering know, David. always That our we Well, for you significant efficiently. fees pay that, ours. business our ways facing

same the our Network. new time, screening expect renewed last on see reflect mentioned, we landscape. that and the the with realities efficiencies our YES coming did renewal call venture I we Devils That agreement. operating the rights At our to had from We previously current think, of do

deal related that venture potential announced financial we with Yes, a always, the about to venture, strategic and deal open the streaming question second to the to us. sense as your for opportunities larger we're that only and to As make exploring streaming but

Operator

We'll move Research. next to Logan Wolfe Angress at

Logan Angress

results. Congrats on the

I'm curious. seeing The very residencies drive you and expect do venue Sphere the point opportunities that able is year? at just costs? concerts both are Sphere to First, or fiscal Acknowledging to extent at in to in of some new, to Sphere Specifically, greater efficiencies Experiences you be or what this day still do same either utilization during terms

James Dolan

Right? on just The we're we the other times, a are a to concert right, same And events. -- looking far this we stretch will How do -- can including towards. that multiple a talked Sphere events day. can same event the that's to at lucrative. we and we driving not but strategized, And designed, different a Yes. we're exactly Sphere things, have [ quite is run there ] be day, on looking DDM too, we what actually But we're yes, are multiple that And it. Experience thing, about show. that think at, we've late-night want

to a definitely and model The venue I -- of but different is right, there with The much know to the and day, took. events get what don't can if kinds part call Sphere. how that do and big was we old in we're load-out, another going load-out And and time X load-in load-in the a no basically -- X. the of they

that The that by come enables that which UX is deal But expense on still a running in results we we're to there's now. Thursday to and this, a noon, Wednesday the you're revenue of us, the do concert side. seeing and Sphere Experience, refinement some right then on the on So why both now, is like of great with at have

Logan Angress

social I'm as does reach important Exosphere factor advertisers the social I on the at And is? physical reach Great. media as for guess, on price the then how side, is ads? reach How the media And into much Exosphere venue you curious.

James Dolan

There's we're at to them using right, Exosphere space designing what -- amount products, just advertisers and new -- launch well Yes. want look that significant that through the that to by media. to and advertisers new wouldn't limit look, in content enough see, with we social the by quite how is it seeing that seeing way. it I'd say it advertisers of Right? particularly brands, Sphere do, the attention Las And group you'll probably of marketers have for And to taking Vegas them but in social to lot of media, that just -- a I Bowl, it make a the just with -- market. that's the utilize the beyond now. the Super are using grabs, like designing -- for reaching the specifically it it that robust statements Exosphere, right, but it's

Ari Danes

take we'll caller. one Operator, last

Operator

We'll at Seaport take that Partners question (sic) [ from David ]. Partner Joyce Research

David Joyce

sponsorship please you For status lately Jim, business? a the update us the of few had on could announcements You've post-quarter.

see do going some where So, be from advertising? would you was to helpful. I more your do sponsorship you here? between and differentiate color just wondering, that Just excess opportunities How there

James Dolan

I this that, most product. client going sort even so the runs is involve on that, in the some have we'll the for involve product, association Yes, the we're right, -- that And direct which that mean, right, and the expect to announcements content predominant but I the and at continue between point, significant of are But the this those sponsorship Exosphere, yes, [indiscernible]. something the the is more year, focused develop advertisers. to of opportunities Exosphere medium

Operator

turn does over the like question-and-answer to Ari closing that the to session. would conclude conference Danes for remarks. And I

Ari Danes

good joining next all a look to day. you call. We on us. Thank earnings forward our Have you for speaking with

Andrea Greenberg

Goodbye.

Operator

conference today's concludes this And call.

disconnect. You may now

Sphere Entertainment (SPHR) 5 Feb 242024 Q2 Earnings call transcript