v3.26.1
Segment Information
 3 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
Segment Information Segment Information
As of March 31, 2026, the Company was comprised of two reportable segments: Sphere and MSG Networks. The Company takes into account whether two or more operating segments can be aggregated together as one reportable segment as well as the type of discrete financial information that is available and regularly reviewed by its Chief Operating Decision Maker (“CODM”). The CODM is the Company’s Executive Chairman and Chief Executive Officer.
The CODM evaluates segment performance and determines how to allocate resources based on the Company’s key financial measure of adjusted operating income (“AOI”), a non-GAAP financial measure. The Company defines AOI as operating income excluding:
(i) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,
(ii) amortization for capitalized cloud computing arrangement costs,
(iii) share-based compensation expense,
(iv) restructuring charges or credits,
(v) merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries,
(vi) gains or losses on sales or dispositions of businesses and associated settlements,
(vii) the impact of purchase accounting adjustments related to business acquisitions, and
(viii) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan (which was established in November 2021).
The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash. The Company eliminates merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan are recorded in Operating (loss) income whereas gains and losses related to the remeasurement of the assets under the Company’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recorded in Other (expense) income, net, which is not reflected in Operating (loss) income.
The CODM uses AOI for each segment predominantly throughout the annual budget and forecasting process. The CODM also considers budget-to-actual variances in AOI, at least quarterly, when making decisions about the allocation of operating and capital resources to each segment. Management believes AOI is an appropriate measure for evaluating the operating performance of its business segments and the Company on a consolidated basis. AOI and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company’s performance. The Company uses revenues and AOI measures as the most important indicators of its business performance, and evaluates management’s effectiveness with specific reference to these indicators.
Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to adjusted operating income (loss).
Information as to the operations of the Company’s reportable segments is set forth below.
Three Months Ended
March 31, 2026
SphereMSG NetworksTotal
Revenues$265,965 $120,447 $386,412 
Operating expenses:
Event-related expenses (a)
94,426 — 94,426 
Rights fee expense— 50,646 50,646 
Network programming and production costs— 19,775 19,775 
Other direct operating expenses (a)
4,800 — 4,800 
Overhead expenses(b)
106,596 15,107 121,703 
Other segment expenses(c)
85,026 2,834 87,860 
Operating (loss) income$(24,883)$32,085 $7,202 
Other income (expense):
Loss on extinguishment of debt
(2,071)
Interest income3,951 
Interest expense(8,039)
Other expense, net(1,424)
Loss from operations before income taxes$(381)
Reconciliation of operating (loss) income to adjusted operating income:
Operating (loss) income$(24,883)$32,085 $7,202 
Adjustments:
Share-based compensation expense
13,143 767 13,910 
Depreciation and amortization82,274 2,093 84,367 
Restructuring charges2,673 741 3,414 
Impairment and other losses, net79 — 79 
Merger, debt work-out, and acquisition related costs, net of insurance recoveries87 — 87 
Amortization for capitalized cloud computing arrangement costs
917 — 917 
Adjusted operating income$74,290 $35,686 $109,976 
Three Months Ended
March 31, 2025
SphereMSG NetworksTotal
Revenues$157,545 $123,029 $280,574 
Operating expenses:
Event-related expenses (a)
62,497 — 62,497 
Rights fee expense— 67,146 67,146 
Network programming and production costs— 20,641 20,641 
Other direct operating expenses (a)
8,039 — 8,039 
Overhead expenses(b)
96,404 17,865 114,269 
Other segment expenses(c)
84,367 2,224 86,591 
Operating (loss) income$(93,762)$15,153 $(78,609)
Other income (expense):
Interest income3,878 
Interest expense(26,206)
Other expense, net(1,340)
Loss from operations before income taxes$(102,277)
Reconciliation of operating (loss) income to adjusted operating income:
Operating (loss) income$(93,762)$15,153 $(78,609)
Adjustments:
Share-based compensation expense
19,954 1,641 21,595 
Depreciation and amortization82,005 2,224 84,229 
Restructuring charges1,841 — 1,841 
Impairment and other losses, net521 — 521 
Merger, debt work-out, and acquisition related costs, net of insurance recoveries988 3,803 4,791 
Amortization for capitalized cloud computing arrangement costs
1,579 — 1,579 
Remeasurement of deferred compensation plan liabilities21 — 21 
Adjusted operating income$13,147 $22,821 $35,968 
_______________
(a)Event-related expenses include, but are not limited to, day-of-event costs, direct operating expenses for The Sphere Experience, venue operating expenses, and other event-related direct operating expenses. Other direct operating expenses include, but are not limited to, expenses related to sponsorship, signage, Exosphere advertising, suite licenses, and other operating expenses. In total, these expenses when combined with MSG Networks rights fee expense and network programming and production costs represent the Company’s Direct operating expenses as presented on the accompanying condensed consolidated statements of operations.
(b)For each reportable segment, Overhead expenses currently include selling, general and administrative costs.
(c)For each reportable segment, Other segment expenses include all other expenses that do not meet the definition of other previously disclosed expenses, primarily depreciation and amortization, impairment and other losses, net and restructuring charges.
Concentration of Risk
Accounts receivable, net in the accompanying condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 include amounts due from the following individual customers, which accounted for the noted percentages of the gross balance:
As of
March 31,
2026		December 31,
2025
Customer A11 %11 %
Customer B
8 %9 %
Customer C
7 %8 %
Revenues in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 include amounts from the following individual customers, derived from the MSG Networks segment, which accounted for the noted percentages of the total:
Three Months Ended
March 31,
20262025
Customer 18 %11 %
Customer 2
5 %— %
Customer 3
5 %8 %