Sphere Entertainment’s second-quarter financial results showed revenue of $282.7 million, up 3% versus the prior year. It was a tick ahead of S&P Global Market Intelligence estimates, and the stock saw a slight 3.82% dip to finish Monday trading at $38.75.
The stock has rebounded significantly for the James Dolan-controlled company, whose shares had sunk as low as $24.28 in April, as an escalating trade war created economic uncertainty and concerns for leisure stocks. Sphere had also warned that bankruptcy was an option for its MSG Networks subsidiary if it couldn’t refinance its $804 million in debt that originally came due in October. The debt was on the regional sports network and non-recourse to Sphere Entertainment.
In late April, Sphere reached an agreement to restructure its credit facilities. The company made an $80 million payment, and the $804 million term loan was replaced with a new $210 million term loan. The agreement included annual rights fee reductions of 28% for the New York Knicks and 18% for the New York Rangers, retroactive to Jan. 1; it also eliminated the annual rights fee escalators.
For the three months ended June 30, the company recorded a gain on extinguishment of debt of $346.1 million, reflecting the net impact of the restructuring. It pushed net income to $151.8 million, compared to a loss of $46.6 million in the prior year.
The Sphere segment generated revenue of $175.6 million for the three months, up 16%. Corporate events and nine additional concerts were the main drivers. Sphere Experience revenue fell $6.7 million, primarily due to lower average per-show revenue, and advertising revenue dipped slightly. The company booked $4.8 million in other revenue, which was primarily related to the recent agreement to build the world’s second Sphere in Abu Dhabi.
The MSG Networks segment generated revenue of $107.1 million, marking a 12% decline. Affiliate fees ticked up, but the subscriber count fell approximately 13%. Advertising revenue also fell, primarily due to fewer regular-season and postseason broadcasts for the Knicks, Rangers, Buffalo Sabres, New York Islanders and New Jersey Devils.
MSG operating income was flat at $33.3 million. The Sphere segment posted an operating loss of $83.4 million, a 20% improvement compared to the prior year quarter.
(This story has been updated in the first paragraph with Sphere’s closing price from Monday.)
