Sphere Entertainment Stock

Sphere Entertainment Co. operates as a premier live entertainment and media company.

Segments

The company operates through two segments, Sphere and MSG Networks

Sphere is a next-generation entertainment medium, and MSG Networks operates two regional sports and entertainment networks, as well as a direct-to-consumer and authenticated streaming product.

Sphere: This segment reflects Sphere, a next-generation entertainment medium powered by cutting-edge technologies that the company will enable multi-sensory storytelling at an unparalleled scale. The company’s first Sphere is expected to open in Las Vegas in September 2023. The venue can accommodate up to 20,000 guests and is expected to host a wide variety of events year-round, including The Sphere Experience, which will feature original immersive productions, as well as concerts and residencies from renowned artists, and marquee sporting and corporate events. Supporting this strategy is Sphere Studios, which is home to a team of creative, production, technology and software 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 screen at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere.

MSG Networks: This segment consists of the company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its direct-to-consumer streaming product, MSG+. 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 (the Knicks) of the National Basketball Association (the NBA) and the New York Rangers (the Rangers), New York Islanders (the Islanders), New Jersey Devils (the Devils) and Buffalo Sabres (the Sabres) of the National Hockey League (the NHL), as well as significant coverage of the New York Giants (the Giants) and the Buffalo Bills (the Bills) of the National Football League (the NFL).

Strategy

The company’s strategy is to leverage its unique assets and brands – which includes a next-generation entertainment medium, Sphere, and regional sports and entertainment networks – to create world-class experiences for all key stakeholders, including performers, athletes, content creators, guests, viewers, advertisers and marketing partners. The key elements of the company’s strategy include creating a new entertainment medium; leveraging sphere’s unique capabilities to drive venue utilization; developing original content; pursuing a global network and brand; and seeking to enhance the value that its networks provide to viewers, advertisers, and distributors by utilizing state-of-the-art technology to deliver high-quality, best-in-class content and live viewing experiences

Business

Sphere

The company is progressing with its creation of the first Sphere venue, adjacent to the Las Vegas Strip, which will utilize cutting-edge technologies to create immersive experiences on an unparalleled scale. Sphere is an entirely new medium, uniquely built for immersive entertainment experiences. Key design features include:

A 580,000 square foot, fully-programmable LED Exosphere – the world’s largest LED screen, which consists of approximately 1.2 million LED pucks, spaced eight inches apart. Each puck contains 48 individual LED diodes, with each diode capable of displaying 256 million different colors.

The main venue bowl featuring a 16K x 16K LED screen – a 160,000-square foot high-resolution interior display plane that surrounds the audience, creating a fully immersive visual environment.

Sphere Immersive Sound, powered by HOLOPLOT – an advanced audio system that delivers crystal-clear, concert-grade sound to every seat in Sphere through beamforming and wave field synthesis technology.

4D multi-sensory technologies – which enable guests to feel experiences, such as vibrations, wind, scent and changing temperatures to enhance storytelling.

The company is building its first Sphere in Las Vegas, a 17,600-seat venue with capacity to hold up to 20,000 guests, on land adjacent to The Venetian Resort leased from a subsidiary of Venetian Las Vegas Gaming, LLC (The Venetian). The lease is for a term of 50 years, and the company expects to open the venue on September 29, 2023.

Events

The Sphere Experience: A core content category at Sphere in Las Vegas will be The Sphere Experience, which the company will appeal to the over 40 million visitors to Las Vegas annually and the over 2 million local residents and can run multiple times a day, year-round. The company expects The Sphere Experience to be approximately two hours long and begin when guests enter the venue’s atrium, where they will engage with the latest in technological advancements through a variety of immersive experiences and activations.

The experience will continue to the main venue bowl where the company will feature original immersive productions that utilize the full breadth of the venue’s immersive technologies. On October 6, 2023, the company plans to debut the original immersive production, Postcard from Earth, directed by Academy Award nominee, Darren Aronofsky.

Live Entertainment: The company has deep industry relationships that are expected to drive the world’s biggest artists to Sphere in Las Vegas. Global rock band U2 will open Sphere in Las Vegas on September 29, 2023 with the first of 25 shows from the band.

Marquee Sporting and Corporate Events: The company plans to host a broad array of live sporting events, including professional boxing, mixed martial arts, eSports, and wrestling, as well as corporate events. In November 2023, during the Formula 1 Las Vegas Grand Prix, Sphere will have a prime position along the race circuit to showcase the venue to a global audience – in-person and on TV – as well as significant exposure through planned takeovers of the Exosphere for race-related content, activations and advertising.

Advertising, Sponsorship, and Premium Hospitality Partner Offerings

Sphere’s unique platform and technological capabilities offer powerful and premium opportunities for advertisers and marketing partners to engage with audiences. The company expects that Sphere in Las Vegas will deliver significant exposure not only to the guests that attend events at the venue and the more than 40 million annual visitors to Las Vegas, and the over 2 million local residents, but also around the world on social media. Sphere will offer bespoke advertising and sponsorship opportunities, including externally with the Exosphere and internally with immersive galleries, interactive installations, the atrium, and suites. Sphere in Las Vegas will offer advertising and marketing partners unique and valuable inventory that is not available in traditional large-scale entertainment venues.

Sphere will also offer premium hospitality products. This includes 23 suites, as well as other hospitality spaces.

MSG Networks

MSG Networks is an industry leader in sports production, content development and distribution. It includes two award-winning regional sports and entertainment networks, MSG Network and MSG Sportsnet, and as well as its direct-to-consumer and authenticated streaming product, MSG+.

MSG Networks’ exclusive, award-winning programming continues to be a valuable differentiator for viewers, advertisers and the cable, satellite, fiber-optic and other platforms (Distributors) that distribute its networks. MSG Networks and MSG Sportsnet are widely distributed throughout all of New York State and significant portions of New Jersey and Connecticut, as well as parts of Pennsylvania. MSGN and MSG SportsNet are widely carried by major Distributors in the company’s region, with an average combined reach of approximately 4.1 million viewing subscribers (as of the most recent available monthly information) in its Regional Territory. MSG Network and MSG Sportsnet are also carried nationally by certain Distributors on sports tiers or in similar packages.

In June 2023, MSG Networks introduced MSG+, a DTC and authenticated streaming product (replacing MSG GO), which allows subscribers to access MSG Network and MSG Sportsnet and on demand content across devices. MSG+ 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. In addition to monthly and annual DTC subscription options, in an innovative offering not currently available from any other regional sports network, MSG+ will also offer single game purchases of MSG Networks’ NBA and NHL teams.

Throughout its history, MSG Networks has been at the forefront of the industry, pushing the boundaries of regional sports coverage. In the process, its networks have become a powerful platform for some of the world’s greatest athletes and entertainers. MSG Networks’ commitment to programming excellence has earned it a reputation for best-in-class programming, production, marketing, and technical innovation.

The foundation of MSG Networks’ programming is its professional sports coverage. MSG Network and MSG Sportsnet feature a wide range of compelling sports content, including exclusive live local games and other programming of the Knicks, Rangers, Islanders, Devils and Sabres, as well as significant coverage of the New York Giants and Buffalo Bills. MSG Networks also showcases a wide array of other sports and entertainment programming, which includes Westchester Knicks basketball, New York Riptide lacrosse, NY/NJ Gotham FC of the National Women’s Soccer League, NCAA basketball, soccer, baseball, softball and other college sporting events, as well as horse racing, soccer, poker, tennis, pickleball, mixed martial arts and boxing programs.

MSG Network and MSG Sportsnet collectively air hundreds of live professional games each year, along with a comprehensive lineup of other sporting events and original programming designed to give fans behind-the-scenes access and insight into the teams and players they love. This content includes pre- and post-game coverage throughout the seasons, along with team-related programming that features coaches and players, all of which capitalizes on the enthusiasm for the teams featured on MSG Network and MSG Sportsnet.

MSG Networks is also positioned as one of the premium destinations for sports gaming content. In Fiscal Year 2023, MSG Networks produced daily, original sports betting shows and multiple betting themed simulcasts for both NBA and NHL games that were each sponsored by one of the Company’s sports gaming partners. The original shows and segments featured a mix of sports gaming experts and former New York athletes covering betting-related topics across the sports world, from NBA and NHL to NFL, MLB, tennis, golf, and mixed martial arts.

Intellectual Property

The company’s registrations and applications relate to trademarks and inventions associated with, among other of its brands, Sphere, The Sphere Experience, Sphere Studios, Sphere Immersive Sound and MSG Networks. The company’s ability to maintain and monetize its intellectual property rights, including the technology and content developed for Sphere, The Sphere Experience, MSG Networks (including its DTC and authenticated streaming product, MSG+), and its brand logos, are important to its business, its brand-building efforts and the marketing of its products and services.

Other Investments

In 2019, the company acquired a 30% interest in SACO Technologies Inc. (SACO), a global provider of high-performance LED video lighting and media solutions. The company is utilizing SACO as a preferred display technology provider for Sphere and is benefiting from agreed-upon commercial terms. In addition, the company has other investments in various entertainment and related technology companies, accounted for under the equity method.

In 2018, the company acquired a 25% interest in Holoplot GmbH (Holoplot), a global leader in 3D audio technology based in Berlin, Germany. The company has partnered with Holoplot to create the world's largest, fully integrated concert-grade audio system. In January 2023, the company, through an indirect subsidiary, extended financing to Holoplot in the form of a three-year convertible loan.

On April 20, 2023, the company distributed approximately 67% of the outstanding common stock of MSG Entertainment to its stockholders, with the Ccompany retaining approximately 33% of the outstanding common stock of MSG Entertainment immediately following the MSGE Distribution. Following the sale of a portion of the MSGE Retained Interest on June 27, 2023 and its repayment of the delayed draw term loan with MSG Entertainment through the use of shares of MSG Entertainment Class A common stock, it holds approximately 17% of the outstanding common stock of MSG Entertainment.

On April 20, 2023 (the MSGE Distribution Date), the company distributed approximately 67% of the outstanding common stock of Madison Square Garden Entertainment Corp. to its stockholders (the MSGE Distribution), with the company retaining approximately 33% of the outstanding common stock of MSG Entertainment immediately following the MSGE Distribution (the MSGE Retained Interest).

Dispositions

On May 3, 2023, the company completed the sale of its 66.9% majority interest in TAO Group Sub-Holdings LLC (Tao Group Hospitality) to a subsidiary of Mohari Hospitality Limited, a global investment company focused on the luxury lifestyle and hospitality sectors (the Tao Group Hospitality Disposition).

Regulation

The company’s venues are subject to the federal Americans with Disabilities Act (and related state and local statutes), which requires the company to maintain certain accessibility features at each of its facilities.

The company is subject to laws and regulations relating to, among other things, foreign privacy and data protection, such as the E.U. General Data Protection Regulation, currency and repatriation of funds, anti-bribery, anti-money laundering and anti-corruption, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.

The company’s MSG Networks business is also subject to regulation by the Federal Communications Commission (the ‘FCC’).

History

The company was founded in 2006. The company was incorporated in 2019. The company was formerly known as Madison Square Garden Entertainment Corp. and changed its name to Sphere Entertainment Co. in April 2023.