SPHR 10-K & 10-Q changes, risk factors and insider trading

•The success of our Sphere business depends on the popularity of The Sphere Experience, as well as our ability to continue to attract advertisers and marketing partners, andaudiences audiencesto attend, and artistsartists, entertainers and athletes to perform at, concerts, residencies and other events at Sphere in Las Vegas.

•The success of our MSG Networks business depends on affiliation fees we receive under our affiliation agreements,agreements with our major Distributors, the loss of which would, or renewal of which on less favorable terms maymay, have a material negative effect on our business and results of operations.

The Success of Our Sphere Business Depends on the Popularity of The Sphere Experience, as Well as Our Ability to Continue to Attract Advertisers and Marketing Partners, andAudiences Audiencesto Attend and ArtistsArtists, Entertainers and Athletes to Perform at, Concerts, Residencies and Other Events at Sphere in Las Vegas. If The Sphere Experience Does Not Continue to Appeal to Customers or We Are Unable to Attract Advertisers and Marketing Partners, There Will be a Material Negative Effect on Our Business and Results of Operations.

The financial results of our Sphere business are largely dependent on the popularity of The Sphere Experience, which features original immersive productions that can run multiple times per day, year-round and are designed to utilize the full breadth of the venue’s next-generationexperiential technologies. The Sphere Experience employs novel and transformative technologies for which there is no established basis of comparison, and there is an inherent risk that we may be unable to achieve the level of success appropriate for the significant investment involved. Fan and consumer tastes also change frequently and it is a challenge to anticipate what will be successful at any point in time. For example, prior to debuting The Wizard of Oz at Sphere, we had experienced a decline in the average revenues per show of The Sphere Experience since its opening on October 6, 2023 (and may experience such declines in the future). Should the popularity of The Sphere Experience not meet our expectations, our revenues from ticket sales, and concession and merchandise sales would be adversely affected, and we might not be able to replace the lost revenue with revenues from other sources. For example, we have experienced a decline in the average revenues per show of The Sphere Experience quarter-over-quarter since its debut on October 6th at Sphere in Las Vegas. As a result of any of the foregoing, we may not be able to generate sufficient revenues to cover our costs, which could adversely impact our business and results of operations, the price of our Class A Common Stock and the value of our 3.50% Convertible Senior Notes.Notes due 2028 (the “3.50% Convertible Senior Notes”).

Currently, our Sphere business only has access to onethree original immersive production,productions, Postcard from Earth.Earth, V-U2 An Immersive Concert Film and The Wizard of Oz at Sphere. The risk of reliance on The Sphere Experience described above is exacerbated by the lack of availability of alternative content. If The Sphere Experience is not successful in continuing to attract guests, we may not have sufficient capital to develop additional original immersive productions. In that event, Sphere in Las Vegas may need to either rely on increased advertising and marketing revenues and the success of much more frequent third-party live entertainment offerings and marquee sporting and brand events to generate enough capital to develop additional original immersive productions and/or partner with third parties to develop and finance such productions.

The success of our Sphere business also depends upon our ability to offer liveimmersive entertainmentexperiences that isare popular with guests. While the Company believes that these next-generationexperiential venues powered by advanced technologies will enable new experiences and innovative opportunities to engage with audiences, there can be no assurance that guests, artists, promoters, advertisers and marketing partners will continue to embrace this new platform. We contract with promoters and others to provide performers and events at Sphere and Sphere grounds. Although our concert performances have been popular with guests, there can be no assurances that future performances will achieve similar popularity. There may be a limited number of popular artists, groups or events that are willing to invest in and to take advantage of the immersive experiences and next generation technologies (which generally cannot be re-used in venues other than Sphere) or that can attract audiences to Sphere, and our business would suffer to the extent that we are unable to attract such artists, groups and events willing to perform at our venue.

The DifficultyCompany’s withvenue Estimatingstrategy is to create, build and operate Spheres, which consist of an experiential medium powered by advanced technologies. There is no assurance that the Costs of our Initial Sphere ininitiative Laswill Vegasbe andsuccessful. theThe Complexitiescomplexities of the Planningplanning Processprocess Createfor Risksfuture Spheres create risks with Respectrespect to our Sphere Initiative,initiative, Whichwhich Mayfocuses Noton Bedeveloping Successfuladditional Unless We Can Develop Additional Venues.venues.

We completed construction of our first Sphere in Las Vegas in September 2023. The costs to build Sphere were substantial. While it is always difficult to provide a definitive construction cost estimate for large-scale construction projects, it was particularly challenging for one as unique as Sphere. In May 2019, the Company’s preliminary cost estimate for Sphere in Las Vegas was approximately $1.2 billion. This estimate was based only upon schematic designs for purposes of developing the Company’s budget and financial projections. The cost estimate for Sphere was subsequently increased numerousa number of times during the course of the project and the final construction cost for Sphere in Las Vegas meaningfully exceeded the initial estimate. See Note 89. Property and Equipment, Net and Note 911. Leases to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

WeWhile continuewe expect that these alternative funding arrangements for future Sphere venues may reduce upfront capital requirements relative to exploreself-funding, domesticthere and international markets where these next-generation venues are expected tocan be successful.no Theassurance designthat ofthe future SpheresCompany will be flexibleable to accommodateimplement asuch widealternative rangearrangements ofon sizesterms and capacities—from large-scalefavorable to smallerus and(or moreat intimate—basedall), onor that such alternative arrangements will ultimately reduce the needs of any individual market. While the Company has self-funded the construction of Sphere in Las Vegas, the Company’s intention for future venues isneed to utilizesecure severaladditional options, such as joint ventures, equity partners, a managed venue model and non-recourse debt financing.capital. In connection with the construction of future Sphere venues, the Company may need to obtain additional capital beyond what is available from cash-on-handcash-on-hand, available borrowings under the LV Sphere Revolving Credit Facility and cash flows from operations. There is no assurance that we would be able to obtain financing for any costs relating to any future venues on terms favorable to us or at all.

While the Company believes that these next-generationexperiential venues will enable new experiences and innovative opportunities to engage with audiences, there can be no assurance that guests, artists, promoters, advertisers and marketing partners will continue to embrace this new platform. The substantial cost of building Sphere in Las Vegas, as well as the potential costs and/or financing needs with respect to future Spheres, may constrain the Company’s ability to undertake other initiatives during these multi-year construction periods. Given our strategy of using original immersive productions across multiple venues, our Sphere initiative may not be successful unless we can develop additional venues.

As part of our Sphere business strategy, we have developed The Sphere Experience, including Postcard from Earth, V-U2 An Immersive Concert Film and The Wizard of Oz at Sphere, our first original immersive production,productions, and have commenced the development of additional original immersive productions, which will require significant upfront expense that may never result in a viable production, as well as investment in creative processes,processes and personnel, commissioning and/or licensing of intellectual property,property from third parties, casting and advertising and may lead to dislocation of other alternative sources of entertainment that may have played in our venue absent these productions. We invested approximately $81.4$80 million to develop the first original immersive production, Postcard from Earth, and over $100 million to develop The Wizard of Oz at Sphere (which was our first original immersive production to use artificial intelligence), and there can be no assurances as to the cost of future immersive productions, which we expect to be significant. To the extent that any efforts at creating new immersive productions do not result in a viable offering, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may not recover the substantial expenses we previously incurred for non-capitalized investments, or may need to write-off all or a portion of capitalized investments. In addition, any delay in launching such productions could result in the incurrence of operating costs which may not be recouped.

The Success of Our MSG Networks Business Depends on Affiliation Fees We Receive Under Our Affiliation Agreements,Agreements theWith LossOur ofDistributors. WhichFailure to Renew Our Major Distributor Agreements Would, or Renewal of Which on Less Favorable Terms MayCould, Have a Material Negative Effect on Our Business and Results of Operations.

MSG Networks’Networks success is dependentdepends upon affiliation relationships with a limited number of Distributors.Distributors and the license fees we receive under those affiliation agreements. Existing affiliation agreements with major Distributors expire during each of the next several years, including during calendar year 2024,2026, and we cannot provide assurances that we will be able to renew these affiliation agreements or obtain terms as attractive as our existing agreements in the event of a renewal. For example, in connection with renewals, Distributors have modified, and we expect they will continue to seek to modify, the packaging terms that impact the tiers on which our programming networks are offered. Any such modification or non-renewal with a major Distributor would materially impact the number of subscribers that receive our programming networks, result in a material negative effect on ourMSG Networks’ affiliation revenues, operating income and adjusted operating income. For example, weMSG Networks’ affiliation agreement with Altice USA (“Altice”), one of its major Distributors, expired on December 31, 2024, 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. Prior to that, MSG Networks was not able to renew ourits affiliation agreement with Comcast when it expired in September 2021, which caused a reduction in annual affiliation revenue, operating income and adjusted operating income.

Affiliation fees constitute a significant majority of our MSG Networks revenues.revenues and substantially all of our affiliation fee revenue comes from our top four Distributors. Changes in affiliation fee revenues generally result from a combination of changes in Distributor affiliation rates and/or changes in subscriber counts. Reductions in the license fees that we receive per subscriber or in the number of subscribers for which we are paid, including as a result of a loss of or reduction in carriage of our programming networks or a loss of subscribers by one or more of our Distributors, have in the past adversely affected (e.g., the non-renewal with Comcast) and will in the future adversely affect our affiliation fee revenue.revenue (e.g., the non-renewal with Comcast). For example, our distribution revenue declined $42.6$73.6 million in Fiscal Year 20242025 compared to Fiscal2024 Year(which 2023.included the absence of revenues from Altice during the non-carriage period from January 1, 2025 through February 21, 2025). Subject to the terms of our affiliation agreements, Distributors from time to time introduce, market and/or modify tiers of programming networks that impact the number of subscribers that receive our programming networks, including tiers of programming that may exclude our networks. Any loss or reduction in carriage would also decrease the potential audience for our programming, which maycould adversely affect our advertising revenues. See “—If the Rate of Decline in the Number of Subscribers to Traditional MVPDsMVPD Services Increases or These Subscribers Shift to Other Services or Bundles That Do Not Include the Company’s Programming Networks, There May Be a Material Negative Effect on the Company’s Affiliation Revenues.”

Following the launch of MSG+, a DTC and authenticated streaming product,offering (which is included in the Gotham Sports streaming product), which is available on a free, authenticated basis to subscribers of participating Distributors (including all of MSG Networks’ major Distributors), as well as for purchase by viewers on a DTC basis through monthly and annual subscriptions, as well as single game purchases, distribution revenue for our MSG Networks segment now 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+.purchases. Losses in monthly subscribersDTC of MSG+,subscribers, including during the off-season, would adversely affect our distribution revenues.

Our affiliation agreements generally require us to meet certain content criteria, such as minimum thresholds for professional event telecasts throughout the calendar year on our networks. The impacts of the NBA and NHL national broadcast agreements, including the new NBA agreements that are scheduled to beginbegan with the 2025-20262025-26 NBA season, couldare expected to result in fewer professional event telecasts of our teams made available to us for broadcastexhibition by our networks as compared to prior seasons, and could impact our ability to meet these criteria. If we do not meet these criteria, remedies may be available to our Distributors, such as fee reductions, rebates or refunds and/or termination of these agreements in some cases. For example, we recorded $10.7 million in Fiscal Year 2022 for affiliate rebates.rebates as a result of impacts from the COVID-19 pandemic and related league and government actions.

Occasionally, we may have disputes with Distributors over the terms of our affiliation agreements. If not resolved through business discussions, such disputes could result in administrative complaints, litigation and/or actual or threatened termination of an existing agreement. The loss of any of our significantmajor Distributors, the failure to renew on terms as attractive as our existing agreements (or to do so in a timely manner) or disputes with our counterparties relating to the interpretation of their agreements with us, could result in our inability to generate sufficient revenues to perform our obligations under our agreements or otherwise materially negatively affect our business and results of operations.

The pay television industry is highly concentrated, with a relatively small number of Distributors serving a significant percentage of pay television subscribers that receive our programming networks, thereby affording the largest Distributors significant leverage in their relationship with programming networks, including ours. Substantially all of our affiliation fee revenue comes from our top four Distributors. Further consolidation in the industry could reduce the number of Distributors available to distribute our programming networks and increase the negotiating leverage of certain Distributors, which could adversely affect our revenue. For example, FuboTV Inc. and The Walt Disney Company recently announced the entry into a definitive agreement for Disney to combine its Hulu + Live TV business with Fubo, forming a combined virtual MVPD company. Additionally, Charter Communications, Inc. and Cox Enterprises, Inc. recently announced that they have entered into a definitive agreement for Cox to combine its residential cable business with Charter. In some cases, if a Distributor is acquired, the affiliation agreement of the acquiring Distributor will govern following the acquisition. In those circumstances, the acquisition of a Distributor that is a party to one or more affiliation agreements with us on terms that are more favorable to us than that of the acquirer could have a material negative impact on our business and results of operations.

We must successfully adapt to technological advances in our industry and the manner in which consumers watch sporting events, including the emergence of alternative distribution platforms. Our ability to exploit new distribution platforms and viewing technologies may affect our ability to maintain and/or grow our business. Emerging forms of content distribution provide different economic models and compete with current distribution methods in ways that are not entirely predictable. Such competition has reduced and could continue to reduce demand for our programming networks or for the offerings of our Distributors and, in turn, reduce our revenue from these sources. Content providers (such as certain broadcast and cable networks) and new content developers, Distributors and syndicators are distributing programming directly to consumers on a DTC basis. In addition to existing subscription DTC streaming services such as Amazon Prime, Hulu, Netflix, Apple TV+, Disney+, ESPN+, HBO Max and Peacock and free advertiser-supported streaming television (“FAST”) channels that are offered directly to consumers at no cost, additional services have launched and more will likely launch in the near term, which may include sports-focused services that may compete with our networks for viewers and advertising revenue. For example, ESPN,each Warnerof Bros.Fox Discovery(including Fox sports content) and FoxESPN have announcedlaunched their intentionown toDTC partnersubscription onstreaming aproducts sports-orientedin digital2025 distributionand platformsimilar currentlyofferings knowncould asbe Venulaunched Sportsin the future that willcompete offerwith theirour national sports programming directly to consumers and is expected to launch in fall 2024.networks. DTC distribution of content has contributed to consumers eliminating or downgrading their pay television subscription, which results in certain consumers not receiving our programming networks. If we are unable to offset this loss of subscribers through incremental distribution of our networks (including through MSG Networks’ own DTC offeringoffering, MSG+, which is included in the Gotham Sports streaming product) or through rate increases or other revenue opportunities, our business and results of operations will be adversely affected. Gaming, television and other console and device manufacturers, Distributors and others, such as Microsoft, Apple and Roku, are offering and/or developing technology to offer video programming, including in some cases, various DTC platforms.

In order to respond to these developments, we have in the past needed, and may in the future need, to implement changes to our business models and strategies and there can be no assurance that any such changes will prove to be successful or that the business models and strategies we develop will be as profitable as our current business models and strategies. For example, in January 2023, we introduced MSG SportsZone, a FAST channel, and,and in June 2023, we launched our DTC product, MSG+, which is included in the Gotham Sports streaming product launched in connection with our joint venture with YES, but there can be no assurance that we will successfully execute our strategystrategies for such offering. Our DTC offering represents a new consumer offering for which we have limited prior experience and we may not be able to successfully predict the demand for such DTC product or the impact such DTC product may have on our traditional distribution business, if any, including with respect to renewals of our affiliation agreements with Distributors.therefor. In addition, the success of our DTC product may depend on a number of factors, including our ability to: (i) acquire and maintain DTC rights from the professional sports teams and/or leagues we currently air on our networks; (ii) appropriately price our offering; (iii) offer competitive content and programming; and (iv) ensure our DTC technology operates efficiently. If we fail to adapt to emerging technologies, our appeal to Distributors and our targeted audiences might decline, which could have a material adverse impact on our business and results of operations.

During the last few years, the number of subscribers to traditional MVPD services in the U.S. has been declining. In addition, Distributors have introduced, marketed and/or modified tiers or bundles of programming that have impacted the number of subscribers that receive our programming networks, including tiers or bundles of programming that exclude our programming networks, and may continue to do so in the future. As a result of these factors, theMSG CompanyNetworks has experienced a decrease in subscribers in each of the last several fiscal years, including a 13% decrease in 2025, which has adversely affected our operating results.

Advertising revenues depend on a number of factors, many of which are beyond our control, such as: (i) team performance; (ii) whether live sports games are being played and the number of live games available for telecast on our programming networks; (iii) the popularity of our programming; (iv) the extent of the distribution of our networks; (v) the activities of our competitors, including increased competition from other forms of advertising-based media (such as Internet, mobiledigital media,and social media platforms, other programming networks, radio and print media) and an increasing shift of advertising expenditures to digital and mobile offerings; (vvi) shifts in consumer viewing patterns, including consumers watching more ad-free content, non-traditional and shorter-form video content online, and the increased use of ad skipping functionality; (vivii) increasing audience fragmentation caused by increased availability of alternative forms of leisure and entertainment activities, such as social networking platforms and video games; (viiviii) consumer budgeting and buying patterns; (viii) the extent of the distribution of our networks; (ix) changes in the audience demographic for our programming; (x) the ability of third parties to successfully and accurately measure audiences due to changes in emerging technologies and otherwise; (xi) the health of the economy in the markets our businesses serve and in the nation as a whole; and (xii) general economic trends in the advertising industry. A decline in the economic prospects of advertisers or the economy in general has in the past altered, and could in the future alter, current or prospective advertisers’ spending priorities, which could cause our revenues and operating results to decline significantly in any given period. Even in the absence of a general recession or downturn in the economy, an individual business sector that tends to spend more on advertising than other sectors may be forced to reduce its advertising expenditures if that sector experiences a downturn. In such case, a reduction in advertising expenditures by such a sector may adversely affect our revenues. See “—Operational and Economic Risks—Our Operations and Operating Results Have Been, and May in the Future Be, Materially Impacted by a Pandemic or Another Public Health Emergency, Such as the COVID-19 Pandemic.”

The pricing and volume of advertising has been affected by shifts in spending away from more traditional media toward onlineonline, digital and mobilesocial media offerings or towards new ways of purchasing advertising, such as through automated purchasing, dynamic advertising insertion, third parties selling local advertising spots and advertising exchanges, some or all of which may not be as advantageous to the Company as current advertising methods.

Our MSG Networks business is dependent upon media rights agreements with professional sports teams. Our existing media rights agreements are multi-year. Upon expiration, we may seek renewal of these agreements and, if we do, we may be outbid by competing programming networks or others for these agreements or the renewal costs could substantially exceed our costs under the current agreements. In addition, one or more of these teams may seek to establish their own programming offering or join one of our competitor’s offerings and, in certain circumstances, we may not have an opportunity to bid for the media rights.

Even if we are able to renew suchour media rights agreements, the Company’s results could be adversely affected if our obligations under our media rights agreements prove to be outsized relative to the revenues our MSG Networks segment is able to generate.generate Our media rights agreements with professional sports teams have varying terms and include significant obligations, (which increasemay annually,be withoutaffected regard toby the number of subscribers to our programming networks or the level of our affiliation and/or advertising revenues.revenues). Our media rights agreements with professional sports teams have varying terms and include significant obligations. If we are not able to generate sufficient revenues, including due to a loss of any of our significantmajor DistributorsDistributors, a decrease in the number of subscribers, or failure to renew affiliation agreements on terms as attractive as our existing agreements, we may be unable to renew media rights agreements on acceptable terms, or to perform our obligations under our existing media rights agreements, including making payments thereunder, which could lead to a default under those agreements and the potential loss of such media rights, which could materially negatively affect our business and results of operations. In recent years, certain regional sports networks have experienced financial difficulties. For example, Diamond Sports Group, LLC,LLC an(now unconsolidatedMain subsidiaryStreet of Sinclair BroadcastSports Group, Inc.,“Diamond”), which licenses and distributes sports content in a number of regional markets, filed for protection under Chapter 11 of the bankruptcy code in March 2023.2023 Asand acompleted result,its certain of Diamond Sports Group’s media rights agreements have either been rejectedreorganization in January 2025. In connection with theDiamond’s bankruptcy proceedings orand havereorganization expiredplan, withouta renewal.number Forof example,Diamond’s Diamond Sports Group has ended itspre-existing media rights agreements with a number of NHL, NBA and MajorMLB Leagueteams Baseballwere either rejected, substantially modified or expired without renewal. As a result, Diamond emerged from its bankruptcy proceedings controlling the media rights to 29 teams (compared to 42 teams prior to its bankruptcy). Despite emerging from such bankruptcy proceedings, Diamond reportedly continues to face financial difficulties, and as of the date hereof, various media reports have indicated that Diamond has missed its scheduled rights fee payments to certain MLB teams under Diamond’s media rights agreements with such teams, includingand it has been reported that as a result, Diamond has lost (or could lose) control of the Phoenixmedia Sunsrights andto those teams for the Dallas2026 Stars.MLB season.

Moreover, the value of our media rights agreements may also be affected by various league decisions and/or league agreements that we may not be able to control, including a decision to alter the number of games played during a season or the number of team games that can be selected by national broadcasters (which could reduce the number of games available for exclusive broadcastexhibition by our networks). The value of our media rights could also be affected, or we could lose such rights entirely, if a team is liquidated, undergoes reorganization in bankruptcy or relocates to an area where it is not possible or commercially feasible for us to continue to distribute games. Any loss or diminution in the value of rights could impact the extent of the sports coverage offered by us and could materially negatively affect our business and results of operations. In addition, our affiliation agreements generally include certain remedies in the event our networks fail to include a minimum number of professional event telecasts, and, accordingly, any loss of rights could materially negatively affect our business and results of operations. See “—The Success of Our MSG Networks Business Depends on Affiliation Fees We Receive Under Our Affiliation Agreements, the Loss of Which or Renewal of Which on Less Favorable Terms May Have a Material Negative Effect on Our Business and Results of Operations” and “—The Actions of the NBA and NHL May Have a Material Negative Effect on Our MSG Networks Business and Results of Operations.”

The governing bodies of the NBA and the NHL have imposed, and may impose in the future, various rules, regulations, guidelines, bulletins, directives, policies and agreements (collectively, “League Rules”) that we may not be able to control, which could affect the value of our media rights agreements, including a decision to alter the number of games played during a season or the number of team games that can be selected by national broadcasters (which could reduce the number of games available for exclusive broadcastexhibition by our networks). For example, due to the COVID-19 pandemic and related government actions, decisions made by the NBA and NHL affected, and in the future could affect, our ability to produce and distribute live sports games on our networks. See “—Operational and Economic Risks—Our Operations and Operating Results Have Been, and May in the Future Be, Materially Impacted by a Pandemic or Another Public Health Emergency, Such as the COVID-19 Pandemic.” In addition, in July 2024, the NBA finalized new national media rights arrangements,arrangements with Disney/ESPN, NBC Universal/Peacock, and Amazon, which beginning with the 2025-26 NBA season, increaseincreased the total number of teamNBA (and each team’s) games that can be selected for distribution by national broadcasters (whichwhich, couldfor reducethe 2025-26 NBA season, is expected to result in a reduction in the number of NBA games available for exclusive broadcastexhibition by our networks as compared to the 2024-25 NBA season). Each league also imposes rules that define the territories in which we may distribute games of the teams in the applicable league. Changes to these rules or other League Rules, or the adoption of new League Rules, could have a material negative effect on our business and results of operations.

Our MSG Networks segment has historically been, and we expect will continue to be, dependent on the popularity of the NBA and NHL teams whose local media rights we control and, in varying degrees, those teams achieving on-court and on-ice success, which can generate fan enthusiasm, resulting in increased viewership and advertising revenues.revenues, and which could also offset or reduce loss of DTC subscribers. Furthermore, success in the regular season may qualify a team for participation in the post-season, which generates increased excitement and interest in the teams, which can improve viewership and advertising revenues.revenues, and which could also offset or reduce loss of DTC subscribers.

Some of our teams have not participated in the post-season for extended periods of time, and may not participate in the post-season in the future. For example, the Sabres have not qualified for the post-season since the 2010-11 NHL season and the Rangers and Islanders did not qualify for the post-season following the 2024-25 NHL season. In addition, if a team declines in popularity or fails to generate fan enthusiasm, this may negatively impact the terms on which our affiliate agreements are renewed. There can be no assurance that any sports team will generate fan enthusiasm or compete in post-season play and the failure to do so could result in a material negative effect on our business and results of operations.

We are highly leveraged with a significant amount of debt and we may continue to incur additional debt in the future. As of JuneDecember 30,31, 2024,2025, the principal balance of our consolidated debt outstanding was approximately $1.4$830.4 billion, $849 million of which is due prior to June 30, 2025 and is classified as short-term on our condensed consolidated balance sheets.million. As a result of our indebtedness, we are required to make interest and principal payments on our borrowingsindebtedness, including mandatory quarterly amortization payments pursuant to the terms of the A&R MSGN Credit Agreement, that are significant in relation to our revenues and cash flows. See “—Risks Related to Our MSG Networks Business — If MSG Networks Is Unable to Generate Sufficient Operating Cash Flows to Repay Outstanding Borrowings Under its Term Loan Facility When They Become Due, it is Expected That the Outstanding Debt Thereunder Would Be Accelerated and the Lenders Could Foreclose Upon the MSG Networks Business.” These payments reduce our earnings and cash available for other potential business purposes. Furthermore, our interestaverage expenseborrowing rate has in the past increased and could in the future increase if interest rates increase (including in connection with rising inflation) because our indebtedness bears interest at floating ratesrates, if we are in default and have to pay a higher rate or to the extent we have to refinance existing debt with higher cost debt.debt, which occurred in connection with the refinancing of MSG Networks’ indebtedness. This leverage also exposes us to significant risk by limiting our flexibility in planning for, or reacting to, changes in our business (whether through competitive pressure or otherwise), the entertainment and video programming industries and the economy at large. Although our cash flows could decrease in these scenarios, our required payments in respect of indebtedness would not decrease.

On December 22, 2022, MSG Las Vegas, LLC (“MSG LV”), entered into a credit agreement providing for a five-year, $275 million senior secured term loan facility (as amended prior to January 29, 2026, the “2022 LV Sphere Term Loan Facility”). All obligations under the 2022 LV Sphere Term Loan Facility arewere guaranteed by Sphere Entertainment Group. None of the Company, MSG Networks Inc.,Networks, MSGN L.P.,L.P. or any of the subsidiaries of MSGN L.PL.P. arewere parties to the 2022 LV Sphere Term Loan Facility.

On December 8, 2023, the Company completed a private unregistered offering (the “Offering”) of approximately $259 million in aggregate principal amount of its 3.50% Convertible Senior Notes due 2028 (the “3.50% Convertible Senior Notes”).

Our ability to have sufficient liquidity to fund our operationsoperations, including the creation of content, and refinanceto service our indebtedness is dependent on the ability of Sphere to generate significant positive cash flow. There can be no assurance that guests, artists, promoters, advertisers and marketing partners will continue to embrace this new platform and that Sphere will generate revenue and adjusted operating income in line with our expectations. Original immersive productions, such as Postcard From Earth, V-U2 An Immersive Concert Film and The Wizard of Oz at Sphere have not been previously pursued on the scale of Sphere, which increases the uncertainty of our operating expectations. To the extent that our efforts do not result in viable shows, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may not generate the cash flows from operations necessary to fund our operations. Our future operating performance, to a certain extent, is subject to general economic conditions, recession, fears of recession, financial, competitive, regulatory and other factors that are beyond our control. To the extent we do not realize expected cash flows from operations from Sphere, we would have to take several actions to improve our financial flexibility and preserve liquidity, including significant reductions in both labor and non-labor expenses as well as reductions and/or deferrals in capital spending. Therefore, while we currently believe we will have sufficient liquidity from cash and cash equivalents and cash flows from operations (including expected cash flows from operations from Sphere) to fund our operations and, at a minimum, make a required quarterly amortization payment of $20.6 million on the MSG Networks Credit Facilities,operations, no assurance can be provided that our liquidity will be sufficient in the event any of the preceding uncertainties facing Sphere are realized over the next 12 months.

The failure to make payments when due, satisfy the covenants, including any inability to attain a covenant waiverwaiver, and comply with other requirements under each credit agreement could trigger (and, with respect to the Prior MSGN Credit Agreement, triggered) a default thereunder, which could result in an acceleration of the outstanding debt thereunder and,and witha respectdemand tofor payment by the respective guarantors. Additionally, the LV Sphere Term Loan Facility,Facility arestricts demandMSG forLV paymentfrom undermaking cash contributions to us unless certain financial covenants are met and the guaranteeA&R providedMSGN byCredit SphereAgreement Entertainmentrestricts Group.MSG Additionally,Networks and MSGN L.P. from making cash distributions to us, subject to certain limited exceptions. Any failure to make payments when due or satisfy the covenants under the LV Sphere Term Loan Facility and the MSGMSGN NetworksTerm CreditLoan FacilitiesFacility (together, the “Credit Facilities”) each restrict MSG LV and MSGN L.P., respectively, from making cash distributions to us unless certain financial covenants are met. Any failure to satisfy the covenants under our Credit Facilities could negatively impact our liquidity and could have a negative effect on our businesses.

The terms of the indenture governing the 3.50% Convertible Senior Notes (the “Indenture”) do not restrict us from incurring additional indebtedness, including secured indebtedness. As of December 31, 2025, (i) the principal balance of the Company’s indebtedness (excluding subsidiaries) was approximately $258.8 million under the 3.50% Convertible Senior Notes and (ii) the balance of indebtedness of the Company’s subsidiaries was $578.7 million, all of which is senior secured indebtedness. If we incur secured indebtedness and such secured indebtedness is either accelerated or becomes subject to a bankruptcy, liquidation or reorganization, our assets would be used to satisfy obligations with respect to the indebtedness secured thereby before any payment could be made on the 3.50% Convertible Senior Notes that are not similarly secured. The Indenture also does not restrict our subsidiaries from incurring additional debt, which would be structurally senior to the 3.50% Convertible Senior Notes. If new debt or other liabilities are added to our current debt levels, the related risks that we now face could intensify. Our Credit Facilities restrict the ability of our subsidiaries to incur additional indebtedness, including secured indebtedness, but if the facilities mature or are repaid, our subsidiaries may not be subject to such restrictions under the terms of any subsequent indebtedness.

All dollar amounts included in the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are presented in thousands, except as otherwise noted.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this MD&A, there are statements concerning our future operating and future financial performance, including (i) the ability of MSG Networks to successfully pursue a work-out with the lenders of its existing debt, (ii) the success of Sphere and The Sphere Experience, (iii) timingExperience and costsdevelopment of new venue construction and Sphere immersive productions content, (ivii) our plans to bring Sphere to Abu Dhabi, United Arab Emirates, under a franchise model, and to National Harbor, Maryland (iii) our ability to reduce or defer certain discretionary capital projects, (viv) our plans for possible additional debt financing and (viv) our execution of the strategy for and the success of MSG Networks’Networks DTCsubscriber and authenticated streaming product, MSG+.declines. Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:

•the substantial amount of debt we have incurred, the ability of our subsidiaries to make payments on, or repay or refinance, such debt under their respective credit facilities (including MSG Networks’ ability to successfully pursue a work-out with the lenders ofmake its existingquarterly debt,principal andamortization payments pursuant to its term loan facility), and, if successful, the terms of such work-out),unsuccessful, the implications of a default under those credit facilities, our ability to make payments on our 3.50% Convertible Senior Notes (as defined below) and our ability to obtain additional financing, to the extent required, on terms favorable to us or at allthereof;

•the popularity of The Sphere Experience, as well as our ability to continue to attract advertisers and marketing partners, and audiences to attend, and artistsartists, entertainers and athletes to perform at, residencies, concerts and other events at Sphere in Las Vegas and other future Sphere venues;

•our ability to successfully design, construct, finance and operate new Sphere venues, and the investments, costs and timing associated with those efforts, including obtaining financing, the impact of inflation and tariffs, and any construction delays and/or cost overruns;

•the demand for MSG Networks programming among Distributors and the number of subscribers thereto, and our ability to enter into and renew affiliation agreements with Distributors, orincluding tothe doterms soof onany favorablesuch terms,renewals, as well as the impact of consolidation among Distributors;

•our ability to successfully execute MSG Networks’ strategy for its DTC and authenticated streaming product,offering, MSG+ (which is included in the Gotham Sports streaming product), the success of such offering and our ability to adapt to new content distribution platforms or changes in consumer behavior resulting from emerging technologies;

•any adverse changes in the distribution of our networks or the impact of subscribers selecting Distributors’ packages that do not include our networks or distributors that do not carry our networks at all;

•MSG Networks’ ability to renewrenew, renegotiate or replace its media rights agreements with professional sports teams and its ability to perform its obligations thereunder;

•the demand for advertising and marketing partnership offerings at Sphere and advertising sales and viewer ratings for our networks;

•the effect of any postponements or cancellations of events by third-parties or the Company as a result of future pandemics, due to operational challengeschallenges, force majeure events and other health and safety concerns;

•the extent to which attendance at Sphere in Las Vegas or future Sphere venues may be impacted by government actions, health concerns of potential attendees or reduced tourism;

•activities or other developments (including pandemics, such as pandemics, including the COVID-19 pandemic) that discourage or may discourage congregation at prominent places of public assembly, including our venue;

•our ability to successfully integrate acquisitions, new venues or new businesses into our operations and secure intellectual property rights in territories where such businesses operate and/or conduct business;

•the operating and financial performance of our strategic acquisitions and investments, including those we do not controlcontrol, and the impact of goodwill and other impairments with respect to businesses (including as a result of changes to the MSG Networks business);

Results of Operations. This section provides an analysis of our results of operations for Fiscalthe Yearsyears 2024,ended 2023December 31, 2025 and 2022December 31, 2024 and six months ended December 31, 2024 and December 31, 2023 on both a (i) consolidated basis and (ii) segment basis.

Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, as well as an analysis of our cash flows for Fiscalthe Yearsyears 2024,ended 2023December 31, 2025 and 2022.December 31, 2024. The discussion of our financial condition and liquidity includes summaries of our primary sources of liquidity, our contractual obligations and off balance sheet arrangements that existed at JuneDecember 30,31, 2024.2025.

The Company is a premierleader livein entertainmentimmersive experiences, technology and media companyand is comprised of two reportable segments, Sphere and MSG Networks. Sphere is aan next-generationexperiential entertainmentmedium medium,powered by advanced technologies, and MSG Networks operates two regional sports and entertainment networks, as well as a DTC and authenticated streaming product.

Sphere: This segment reflects SphereTM,Sphere, aan next-generation entertainmentexperiential medium powered by cutting-edgeadvanced technologies that bring storytelling to createa multi-sensorynew experiences at an unparalleled scale.level. The Company’s first Sphere venue opened in Las Vegas on September 29, 2023. The entire exterior surface of Sphere, referred to as the Exosphere, is covered with nearly 580,000 square feet of fully programmable LED lighting, creating the largest LED screen in the world and an impactful display for artistic and branded content. Inside, the venue features a 16K x 16K interior display plane – the world’s highest-resolution LED screen that wraps up, over, and around the audience creating a fully immersive visual environment. In addition, Sphere’s advanced technologies include Sphere Immersive Sound – Sphere’s proprietary audio system – as well as haptic seating and 4D environmental effects. The venue can accommodate up to 20,000 guests and can hosthosts a wide variety of events year-round, including The Sphere ExperienceTM,Experience, which features original immersive productions, as well as concerts and residencies from renowned artists, and marquee sports and brand events (formerly referred to as corporate events.events). Production efforts for Sphere events are supported by Sphere StudiosTM,Studios, an immersive content studio dedicated to creating multi-sensory experiences exclusively for Sphere.Sphere, using proprietary technology, tools and production facilities. Sphere Studios,Studios is home to a team of creative, production, technology and software engineering experts who provide full in-house creative and production services. The studio campus in Burbank includes a 68,000-square-foot development facility, as well as Big Dome, a 28,000-square-foot, 100-foot high custom dome, with a quarter-sized version of the screeninterior display plane at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere. The entire exterior surface of Sphere, referred to as the ExosphereTM, is covered with nearly 580,000 square feet of fully programmable LED paneling, creating the largest LED screen in the world and an impactful display for artists, brands and partners.

MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its DTC and authenticated streaming product,offering, MSG+ (which is included in the Gotham Sports streaming product). MSG Networks serves the New York Designateddesignated Marketmarket Area,area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the Knicks of the NBA and the Rangers, the Islanders, the Devils and the Sabres of the NHL, as well as significant coverage of the Giants and the Bills of the NFL.

For Fiscalthe Yearyear 2024,ended December 31, 2025, the Sphere segment represented approximately 48.4%64% of our consolidated revenues.

For The Sphere Experience we recognize revenues from the sale of tickets to our audiences. We sell tickets to the public through our box office, via our websiteswebsites, ticketing agencies and ticketingthrough agencies.group sales. The amount of revenue we earn from ticket sales depends on the number of shows and the mix of events that we promote, the available venue capacity, the extent to which we can sell to fully utilize the capacity, and our ticket prices.

For entertainment events held at Sphere that we do not produce, promote or co-promote, we typically earn revenue from venue license fees charged to the third-party promoter or producer of the event (including live entertainment, marquee sporting and corporatebrand events). The amount of license fees we charge varies by the size of the production and the number of days utilized, among other factors. Our fees typically include both the cost of renting Sphere in Las Vegas and costs for providing event staff, such as front-of-house and back-of-house staff, including stagehands, electricians, laborers, box office staff, ushers and security as well as production services such as staging, lighting and sound.

We earn revenues from the sale of merchandise related to The Sphere Experience and other live entertainment events that take place at Sphere. The majority of our merchandise revenues are generated through on-site sales during performances of The Sphere Experience and other live events. Typically, the revenues we earn from our merchandise sales at ourevents non-proprietaryother eventsthan The Sphere Experience relate to sales of merchandise provided by the artist, the producer or promoter of the event and are generally subject to a revenue sharing arrangement and are generally recorded on a net basis (as agent).

The Sphere segment incurs expenses related to day-of-event costs associated with events, costs to produce The Sphere Experience and costs associated with the promotion of events through various advertising campaigns, including production costs for Exosphere advertising. Additionally, it incurs corporate and supporting department operating costs, including charges under the transition services/services agreement with MSG Entertainment (the “MSGE TSA”),Entertainment, and other operating expenses such as insurance, utilities, repairs and maintenance, labor related to the overall management of the Sphere segment, non-capitalizable content development and technology costs associated with the Company’s Sphere initiative, and depreciation and amortization expense related to certain corporate property, equipment and leasehold improvements.

The MSG Networks segment generates revenues principally from distribution fees, as well as from the sale of advertising. For Fiscalthe Yearyear 2024,ended December 31, 2025, this segment represented approximately 51.6%36% of our consolidated revenues.

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 Company’sGotham DTC and authenticatedSports streaming product. The fees we receive depend largely on the demand from subscribers for our programming.

MSG Networks’ advertising revenue is largely derived from the sale of inventory in its live professional sports programming. As such, a disproportionate share of this revenue is earned in the secondthree months ending March 31 and thirdDecember fiscal quarters.31. In certain advertising arrangements, the Company guarantees specific viewer ratings for its programming.

MSG Networks is a party to long-term media rights agreements with the Knicks and the Rangers, which provide the Company with the exclusive live media rights to the teams’ games in their local markets. In addition, MSG Networks has multi-year media rights agreements with the Islanders, Devils and Sabres. The media rights acquired under these agreements to telecast various sporting events and other programming for exhibition on our networks are typically expensed on a straight-line basis over the applicable annual contract or license period. We negotiate directly with the teams to determine the fee and other provisions of the media rights agreements. Media rights fees for sports programming are influenced by, among other things, the size and demographics of the geographic area in which the programming is distributed, and the popularity and/or the competitiveness of a team.

The Company’s selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, advertising sales commissions, as well as sales and marketing costs, including non-event related advertising expenses. Selling, general and administrative expenses for periods prior to the MSGE Distribution include certain corporate overhead expenses that do not meet the criteria for inclusion in discontinued operations.

The operating results of our Sphere segment are largely dependent on our ability to continue to attract (i) audiences to The Sphere Experience, (ii) advertisers and marketing partners, and (iii) guests to attend, and artistsartists, entertainers and athletes, to perform at, residencies, concerts and other events at our venue. The operating results of our MSG Networks segment are largely dependent on (i) the terms of MSG Networks’ affiliation agreements MSG Networks negotiates with Distributors,Distributors (including renewals thereof), (ii) the number of subscribers of certainMSG Networks’ Distributors, (iii) the terms of MSG Networks’ media rights agreements (including renewals thereof), (iv) the ability of MSG Networks to make its required debt service payments, including quarterly principal amortization payments pursuant to the terms of its term loan facility, (v) the success of MSG+, MSG Networks’ DTC and authenticated streaming product,offering (which is included in the Gotham Sports streaming product), and (ivvi) the advertising rates weMSG chargeNetworks charges advertisers. Certain of these factors in turn depend on the popularity and/or performance of the professional sports teams whose games weMSG broadcastNetworks broadcasts on ourits networks.

Our Company’s future performance is dependent in part on general economic conditions and the effect of these conditions on our customers. Weak economic conditions may lead to lower tourism and lower demand for our entertainment offerings (including The Sphere Experience) and programming content, which would also negatively affect concession and merchandise sales, and could lead to lower levels of advertising, sponsorship and venue signage. Recent developments relating to tariffs have intensified concerns over the global macroeconomic environment, which has resulted in a rise in volatility across financial markets and concerns over the prospect of a U.S. recession. These conditions may also affect the number of immersive productions, concerts, residencies and other events that take place in the future. An economic downturn could adversely affect our business and results of operations.

•our ability to negotiate and execute definitive agreements for the financing and development of a Sphere venue at National Harbor, Maryland, as well as the receipt of certain governmental incentives and approvals from Prince George’s County and the State of Maryland related to the development and construction of the venue;

•our ability to construct, finance and operate new Sphere venues, and the investments, costs and timing associated with those efforts, including obtaining financing,financing and governmental incentives, the impact of inflation and tariffs, and any construction delays and/or cost overruns;

•our ability to successfully execute MSG Networks’ strategy for its direct-to-consumer (“DTC”) and authenticated streaming offering, MSG+ (which is currently included in the Gotham Sports streaming product and is anticipated to be available through the DAZN streaming product during the 2026-2027 National Basketball Association (the “NBA”) and National Hockey League (the “NHL”) seasons), the success of such offering and our ability to adapt to new content distribution platforms or changes in consumer behavior resulting from emerging technologies;

•any economic, social or political actions, such as boycotts, protests, work stoppages or campaigns by labor organizations, including the unions representing players and officials of the National Basketball Association (the “NBA”) and the National Hockey League (the “NHL”),NHL, artists or employees involved in our productions or other work stoppages that may impact us or our business partners;

•business, reputational and litigation risk ifdue there isto a cyber or other security incident resulting in loss, disclosure or misappropriation of stored personal information, disruption of our Sphere or MSG Networks businesses or disclosure of confidential information or other breaches of our information security;

The Company is focused on creating a global network of Spheres. The Company is working with DCT Abu Dhabi to bring Sphere to Abu Dhabi, United Arab Emirates. In May 2026, Yas Island was selected as the site for Sphere Abu Dhabi. DCT Abu Dhabi is funding construction, which is expected to be completed by end of 2029. In January 2026, the Company, the State of Maryland, Prince George’s County, and Peterson Companies announced the Company’s intent to develop a new Sphere venue at National Harbor, Maryland.

MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its DTC and authenticated streaming offering, MSG+ (which is currently included in the Gotham Sports streaming product and is anticipated to be available through the DAZN streaming product during the 2026-2027 NBA and NHL seasons). MSG Networks serves the New York designated market area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the New York Knicks of the NBA and the New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres of the NHL, as well as significant coverage of the New York Giants and the Buffalo Bills of the National Football League.

Results of Operations. This section provides an analysis of our unaudited results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 on both a (i) consolidated basis and (ii) segment basis.

Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025, as well as certain contractual obligations and off-balance sheet arrangements.

The operating results of our Sphere segment are largely dependent on our ability to continue to attract (i) audiences to The Sphere Experience, (ii) advertisers and marketing partners, and (iii) guests to attend, and artists, entertainers and athletes, to perform at, residencies, concerts and other events at our venue. The operating results of our MSG Networks segment are largely dependent on (i) the terms of MSG Networks’ affiliation agreements with Distributors (including renewals thereof), (ii) the number of subscribers of MSG Networks’ Distributors, (iii) the terms of MSG Networks’ media rights agreements (including renewals thereof), (iv) the ability of MSG Networks to make its required debt service payments, including quarterly principal amortization payments pursuant to the terms of its term loan facility, (v) the success of MSG+, MSG Networks’ DTC and authenticated streaming offering (which is included in the Gotham Sports streaming product),offering, and (vi) the advertising rates MSG Networks charges advertisers. Certain of these factors in turn depend on the popularity and/or performance of the professional sports teams whose games MSG Networks broadcasts on its networks.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 versus the Three and Six Months Ended MarchJune 31,30, 2025

The following is a summary of changes in our segments’ operating results for the three and six months ended MarchJune 31,30, 2026 as compared to the three and six months ended MarchJune 31,30, 2025, which are discussed below under “—Business Segment Results.”

For the three and six months ended MarchJune 31,30, 2026, depreciation and amortization increased $138$401 and $539, respectively, as compared to the prior year periodperiods due to the increase in total property and equipment, gross in 2026 as compared to 2025.

During the three and six months ended MarchJune 31,30, 2026, the Company recognized impairments and other losses, net of $79.$0 and $79, respectively. During the three and six months ended MarchJune 31,30, 2025, the Company recognized impairments and other losses, net of $521$3,641 relatingand $4,162, respectively, primarily due to the recorded losses of $3,741 from the sale of the Company’s land in Stratford, London and fixed assets at Sphere Las Vegas that were removed from the venue and were impaired.

For the three and six months ended MarchJune 31,30, 2026, the Company recorded restructuring charges of $3,414,$323 and $3,737, respectively, as compared to restructuring charges of $1,841$947 and $2,788, in the three and six months ended MarchJune 31,30, 2025, respectively, primarily related to termination benefits provided as part of a voluntary exit program the Company implementedconducted during theeach six month period.

For the three and six months ended MarchJune 31,30, 2026, the Company recorded a loss on extinguishment of debt of $0 and $2,071, respectively, related to the write-off of deferred financing costs in connection with the partial repayment of its 2022 LV Sphere Term Loan Facility.

For the three and six months ended MarchJune 31,30, 2026, interest income increased $73$702 and $775, respectively, as compared to the prior year period,periods, primarily due to higher average cash and cash equivalent balances.

For the three and six months ended MarchJune 31,30, 2026, interest expense decreased $18,167$17,589 and $35,756, respectively, as compared to the prior year periodperiods primarily due to (i) a reduction in the average outstanding principal balance of the MSGN Term Loan Facility as compared to the prior year period and (ii) the application of troubled debt restructuring for interest expense recognition for the MSGN Term Loan Facility as described in Note 10. Credit Facilities and Convertible Notes to the condensed consolidated financial statements included in “— Item 1. Financial Statements” of this Form 10-Q.

For the three and six months ended MarchJune 31,30, 2026, other expense, net increased $84$104 and $188, respectively, as compared to the prior year period,periods, primarily due to smallerhigher losses on equity method investments and foreign exchange.

Income tax benefit for the three and six months ended MarchJune 31,30, 20252026 of $20,323$26,926 and $31,767, respectively, reflects an effective tax rate of 20%.41% and 48%, respectively. The estimated annual effective tax rate is lowerhigher than the statutory federal tax rate of 21% primarily due to discrete income tax expensebenefit related to nondeductiblethe officer’simpact of CODI, excess tax benefit related to share based award compensation, partially offset by incomenondeductible taxofficers’ benefit from state and local taxes.compensation.

The following is a reconciliation of operating income (loss) to adjusted operating income (as defined in Note 15. Segment Information to the condensed consolidated financial statements included in “— Item 1. Financial Statements” of this Form 10-Q) for the three and six months ended MarchJune 31,30, 2026 as compared to the prior year period:

Adjusted operating income for the three months ended MarchJune 31,30, 2026 increaseddecreased $74,008$10,542 as compared to the prior year period adjustedto $50,924. Adjusted operating income offor $109,976.the six months ended June 30, 2026 increased $63,466 as compared to the prior year period to $160,900. The changes in adjusted operating income were attributable to the Company’s segments as follows:

For the three and six months ended MarchJune 31,30, 2026, revenues increased $108,420$50,766 and $159,186, respectively, as compared to the prior year period.periods. The change in revenues was attributable to the following:

For the three and six months ended MarchJune 31,30, 2026, the increase in revenues for The Sphere Experience primarily reflects higher average per-show revenue as compared to the prior year period due to the impact of The Wizard of Oz at Sphere, which debuted on August 28, 2025. In the current year period, The Sphere Experience reflected 209220 and 429 performances of The Wizard of Oz at Sphere (which generated per-show revenue of approximately $746$553 and $647). Infor the priorthree yearand period,six months ended June 30, 2026, respectively. For the three months ended June 30, 2025, The Sphere Experience reflected 200215 total performances, comprised of 166198 performances of Postcard From Earth and 3417 performances of V-U2 An Immersive Concert Film (withwhich generated a combined per-show revenue of approximately $371$315). For the six months ended June 30, 2025, The Sphere Experience reflected 415 total performances, comprised of 364 performances of Postcard From Earth and 51 performances of V-U2 An Immersive Concert Film (which generated a combined per-show revenue of approximately $342).

For the three and six months ended MarchJune 31,30, 2026, the increase in revenues from sponsorship, signage, Exosphere advertising and suite license fees primarilyreflects reflectshigher Exosphere advertising revenue and, to a lesser extent, higher sponsorship revenues (due to increased sales of existing sponsorship inventory) and suite license fee revenues.

For the three and six months ended MarchJune 31,30, 2026, direct operating expenses increased by $28,690$11,379 and $40,069, respectively, as compared to the prior year period.periods. The change in direct operating expenses was attributable to the following:

For the three and six months ended MarchJune 31,30, 2026, the increase in direct operating expenses for The Sphere Experience was primarily due to higher per-show expenses,expenses primarilyas compared to the prior year period, due to the impact of The Wizard of Oz at Sphere, which debuted on August 28, 2025. In the current year period, The Sphere Experience reflected 209220 and 429 performances of The Wizard of Oz at Sphere (which incurred per-show direct operating expenses of approximately $213$193 and $203). Infor the priorthree yearand period,six months ended June 30, 2026, respectively. For the three months ended June 30, 2025, The Sphere Experience reflected 200215 total performances, comprised of 166198 performances of Postcard From Earth and 3417 performances of V-U2 An Immersive Concert Film (withwhich incurred combined per-show direct operating expenses of approximately $130$106). For the six months ended June 30, 2025, The Sphere Experience reflected 415 total performances, comprised of 364 performances of Postcard From Earth and 51 performances of V-U2 An Immersive Concert Film (which incurred combined per-show direct operating expenses of approximately $118).

For the threesix months ended MarchJune 31,30, 2026, the increase in venue operating expenses was primarily related to an increase in employee compensation and benefits and repairs and maintenance expenses.

For the three and six months ended MarchJune 31,30, 2026, selling, general, and administrative expenses increased $10,192$29,201 and $39,393, respectively, as compared to the prior year period,periods, primarily due to (i) the impact of mark-to-market adjustments on certain share-based compensation awards as a result of the appreciation in the Company’s stock price appreciation during the current year quarter, (ii) higher employee compensation and related benefits and (iii) higher professional fees, including an increase in litigation-related expenses associated with the Networks Merger, partially offset by the absence of costs associated with pursuing a work-out of the Prior MSGN Credit Facilities in the prior year period.

During the three and six months ended MarchJune 31,30, 2026, the Company recognized Impairments and other losses, net of $79.$0 and $79, respectively. During the three and six months ended MarchJune 31,30, 2025, the Company recognized Impairments and other losses, net of $521$3,641 relatingand $4,162, respectively, primarily due to the recorded losses of $3,741 from the sale of the Company’s land in Stratford, London and fixed assets at Sphere Las Vegas that were removed from the venue and were impaired.

For the three and six months ended MarchJune 31,30, 2026, depreciation and amortization increased $269$579 and $848, respectively, as compared to the prior year period primarily due to the increase in total property and equipment, gross.

For the three and six months ended MarchJune 31,30, 2026, the Company recognized restructuring charges of $2,673$323 and $2,996, respectively, as compared to restructuring charges of $1,841$947 and $2,788 for the three and six months ended MarchJune 31,30, 2025, respectively, primarily due to termination benefits provided as part of a voluntary exit program the Company implemented during the threesix monthsmonth ended March 31, 2026.period.

For the three and six months ended MarchJune 31,30, 2026, operating loss improved by $68,879$13,872 and $82,751, respectively as compared to the prior year period, primarily due to an increase in revenue,revenue and, to a lesser extent, the absence of impairment and other losses, net,, partially offset by an increase in direct operating expenses and selling, general and administrative expenses and direct operating expenses.

For the three and six months ended MarchJune 31,30, 2026, adjusted operating income improved by $61,143$14,960 and $76,103 as compared to the prior year period, primarily due to an increase in revenue, partially offset by an increase in direct operating expenses and selling, general and administrative expenses and direct operating expenses.

For the three and six months ended MarchJune 31,30, 2026, revenues decreased $2,582,$19,804 and $22,386, respectively, as compared to the prior year period.periods. The change in revenues was attributable to the following:

For the three months ended MarchJune 31,30, 2026, direct operating expenses increased by $8,366 and for the six months ended June 30, 2026 direct operating expenses decreased by $17,366$9,000, as compared to the prior year period.periods. The change in direct operating expenses was attributable to the following:

On June 27, 2025, MSG Networks completed the restructuring of its credit facilities and amended certain of its media rights agreements to, among other things, effect a reduction in the annual media rights fees payable under such agreements effective as of January 1, 2025, discussed in further detail in Note 10. Credit Facilities and Convertible Notes and Note 14. Related Party Transactions to the condensed consolidated financial statements included in Part I of this Form 10-Q. For the three months ended March 31, 2026, rights fees expense decreased by $16,500, primarily reflecting reductions in media rights fees for certain professional sports teams as a result of such amendments. Although the reductions in media rights fees for the certain professional sports teams were effective as of January 1, 2025, the media rights fees recorded in the three months ended March 31, 2025 were not impacted by those amendments given that the retroactive adjustments for the 2024-25 NBA and NHL seasons were recorded during the three months ended June 30, 2025.

For the three months ended MarchJune 31,30, 2026, selling, general and administrative expenses decreased $2,758$3,017 as compared to the prior year period, primarily due to (i) lower professional fees of $3,643, mainly due to the absence of costs associated with pursuing a work-out of the Prior MSGN Credit Facilities with its syndicate of lenders recorded in the prior year period, and (ii) lower employee compensation and related benefits of $2,283,$1,899 partially offset byand (iiiii) higherlower advertising and marketing costs of $2,995.$1,224.

For the three months ended MarchJune 31,30, 2026, operating income increaseddecreased by $16,932$24,975 as compared to the prior year period, primarily due to a decrease in revenues and higher direct operating expensesexpenses, andpartially offset by lower selling, general and administrative expenses, partially offset by a decrease in revenues.expenses.

For the three months ended MarchJune 31,30, 2026, adjusted operating income increaseddecreased by $12,865$25,502 as compared to the prior year period, primarily due to a decrease in revenues and higher direct operating expenses, partially offset by alower decreaseselling, in revenuesgeneral and theadministrative absence of merger, debt work-out and acquisition related costs, net of insurance recoveries.expenses.

The Company’s primary sources of liquidity are cash and cash equivalents, cash flows from the operations of our businesses and available borrowings under the 2026 LV Sphere Revolving Credit Facility (as defined and described below). The Company’s uses of cash over the next 12 months and thereafter are expected to be substantial and include working capital-related items (including funding its operations and satisfying its accounts payable and accrued liabilities), capital spending (including the creation of additional original content for Sphere and costs to develop a new Sphere venue at National Harbor, Maryland, as described below), required debt service payments (including principal amortization payments and excess cash flow payments pursuant to the MSGN Term Loan Facility), and investments, including in connection with its Sphere initiative, and related loans and advances that the Company may fund from time to time. The Company may also use cash to repurchase its common stock. The Company’s decisions as to the use of its available liquidity will be based upon the ongoing review of the funding needs of its businesses, the optimal allocation of cash resources, and the timing of cash flow generation. To the extent that the Company desires to access alternative sources of funding through the capital and credit markets, market conditions could adversely impact its ability to do so at that time.

As of MarchJune 31,30, 2026, the Company’s unrestricted cash and cash equivalents balance was $629,108,$550,974, as compared to $507,776$629,108 as of DecemberMarch 31, 2025.2026. Included in unrestricted cash and cash equivalents as of MarchJune 31,30, 2026 was (1) $380,923$310,279 in advance cash proceeds primarily from ticket sales, a portion of which the Company expects to pay to artists and promoters, and (2) $32,979$17,157 of cash and cash equivalents at MSG Networks, which were not available for distribution to the Company pursuant to the terms of the A&R MSGN Credit Agreement. In April 2026, MSGN L.P. made a $17,837 mandatory cash sweep payment based on excess cash as of March 31, 2026. In addition, as of MarchJune 31,30, 2026, the Company had $36,484$13,880 of Accounts payable and $427,060$391,507 of Accrued expenses and other current liabilities, including $127,512$116,026 of capital expenditure accruals primarily related to Sphere construction (a significant portion of which is in dispute). The balance of the Company’s total debt outstanding as of MarchJune 31,30, 2026 was $810,390.$780,405. We believe we have sufficient liquidity from cash and cash equivalents, cash flows from operations and available borrowings under the 2026 LV Sphere Revolving Credit Facility to fund our operations and service debt payments under our credit facilities for the foreseeable future.

The Company’s ability to have sufficient liquidity to fund its operations, refinance its indebtednessindebtedness, fund capital spending and make investments, including in connection with its Sphere initiative, is dependent on the ability of Sphere to generate significant positive cash flow. Although Sphere has been embraced by guests, artists, promoters, advertisers and marketing partners, and the Company anticipates that Sphere will generate substantial revenue and adjusted operating income on an annual basis over time, there can be no assurance that guests, artists, promoters, advertisers and marketing partners will continue to embrace this platform. Original immersive productions, such as Postcard From Earth, V-U2 An Immersive Concert Film and The Wizard of Oz at Sphere, have not been previously pursued on the scale of Sphere, which increases the uncertainty of our operating expectations. To the extent that the Company’s efforts do not result in viable shows, or to the extent that any such productions do not achieve expected levels of popularity among audiences, the Company may not generate the cash flows from operations necessary to fund its operations. To the extent the Company does not realize expected cash flows from operations from Sphere, it would have to take several actions to improve its financial flexibility and preserve liquidity, including significant reductions in both labor and non-labor expenses as well as reductions and/or deferrals in capital spending.spending and investments, including in connection with its Sphere initiative. Therefore, while the Company currently believes it will have sufficient liquidity from cash and cash equivalents, cash flows from operations (including expected cash flows from operations from Sphere) and available borrowings under the 2026 LV Sphere Revolving Credit Facility to fund its operations, no assurance can be provided that its liquidity will be sufficient in the event any of the preceding uncertainties facing Sphere are realized over the next 12 months. See “Part I —Item 1A. Risk Factors — Risks Related to Our Indebtedness, Financial Condition, and Internal Control — We Have Substantial Indebtedness and Are Highly Leveraged, Which Could Adversely Affect Our Business” in the Form 10-K.