Q3 2024 Sphere Entertainment Co Earnings Call
Regina: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sphere Entertainment Co. Fiscal 2024 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the sphere Entertainment co fiscal 'twenty 'twenty four third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer says.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question price Star One again I would now like to turn the conference over to Ari Danes Investor Relations. Please go ahead.
Regina: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Ari Danes, Investor Relations. Please go ahead.
Ari Danes: Thank you.
Ari Danes: Good morning, and welcome to Sphere Entertainment's Fiscal 2024 Third Quarter Earnings Conference Call. Today's call will begin with our Executive Chairman and CEO, Jim Dolan, who will provide an update on Sphere. Dave Byrnes, our Executive Vice President, Chief Financial Officer, and Treasurer, will then review our financial results for the period.
Ari Danes: Good morning, and welcome to sphere entertainments fiscal 2024 third quarter earnings Conference call.
Ari Danes: Today's call will begin with our executive Chairman and CEO, Jim Dolan, who will provide an update on the sphere.
Ari Danes: Dave Burns, our executive Vice President Chief Financial Officer, and Treasurer will then review our financial results for the period.
Ari Danes: After our prepared remarks, we will open the call for questions. If you do not have a copy of today's earnings release, it is available in the investors section of our corporate website. Please take note of the following.
Speaker Change: After our prepared remarks, we will open up the call for questions.
Speaker Change: Do not have a copy of today's earnings release. It is available in the investors section of our corporate website.
Speaker Change: Please take note of the following.
Ari Danes: Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. However, any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statement. Please refer to the company's filings with the SEC for a discussion of risks and uncertainty. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call.
David F. Byrnes: Today's discussion may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
David F. Byrnes: Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements.
David F. Byrnes: Please refer to the company's filings with the SEC for a discussion of risks and uncertainties.
David F. Byrnes: The company disclaims any obligation to update any forward looking statements that may be discussed during this call.
Ari Danes: On pages 5 and 6 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non-GAAP financial measure. And with that, I'll now turn the call over to Jim.
David F. Byrnes: On pages five and six of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income on a non-GAAP financial measure.
David F. Byrnes: And with that I'll now turn the call over to Jim.
James Lawrence Dolan: Thank you, Ari, and good morning, everyone. As you know, Sphere was built with the idea of disrupting the traditional venue model. We saw this thesis begin to play out in the December quarter. Today, we reported results for our second full quarter of operations in Las Vegas. And while it is still early days, we're pleased with our progress and remain optimistic about our vision for this new medium. For the third quarter, Sphere welcomed nearly 1 million guests to more than 270 events.
James Lawrence Dolan: Thank you Ari and good morning, everyone. As you know fear was built with the idea of disrupting the traditional venue model. We saw this thesis begin to play out in the December quarter.
James Lawrence Dolan: Today, we reported results for our second full quarter of operations in Las Vegas.
James Lawrence Dolan: And while it is still early days, we're pleased with our progress and we remain optimistic about our vision for this new media.
James Lawrence Dolan: For the third quarter sphere, welcome nearly 1 million guests to more than 270 events.
James Lawrence Dolan: This event volume once again far exceeded the world's busiest venues. It also drove robust revenue and positive adjusted operating income for the Sphere segment for the second consecutive quarter. These results were led by the Sphere Experience.
Events by once again far exceeded the world's busiest.
Yes.
James Lawrence Dolan: It also drove robust revenue and positive adjusted operating income for the sphere segment for the second consecutive quarter.
James Lawrence Dolan: These results were led by the sphere experience featuring postcards from Merck.
James Lawrence Dolan: Featuring postcards from our, Since its October debut, the signature content category has already generated over $200 million in revenue. That includes more than $1 million in average daily ticket sales in both the second and third quarter. These results reinforce our belief in the value of original content.
James Lawrence Dolan: Since its October debut this taking share content category has already generated over $200 million in revenue.
James Lawrence Dolan: That includes more than $1 million in average daily ticket sales in both the second and third quarters.
James Lawrence Dolan: These results reinforce our belief in the value of original content.
James Lawrence Dolan: And we are now developing new cinematic offerings to strengthen this core category. On the concert front, headline acts are seeing the advantages of performing at Sphere. U2's 40-show run drew an audience on par with a national arena tour.
James Lawrence Dolan: And we are now developing new cinematic offerings to strengthen this core category.
On a constant.
James Lawrence Dolan: Headline acts are seeing the advantage of advantages of performing at sphere.
James Lawrence Dolan: Youtube 40, Shannon show run grew an audience on par with the National Arena Tour.
James Lawrence Dolan: Fish sold out its four nights in less than one hour and getting co has already extended their upcoming residency.
James Lawrence Dolan: Fish sold out its four nights in less than one hour, and Dead & Co. has already extended their upcoming. When we first launched Sphere, we outlined three content categories as the foundation for its business: original content, concerts and residencies, and marquee sports and corporate events. We are now looking forward to our first corporate keynote event with Hewlett Packard next month. This event will showcase how the venue's technology and offerings provide a compelling platform to educate and demonstrate.
James Lawrence Dolan: When we first launched <unk>, we outlined three content categories as a foundation for its business.
James Lawrence Dolan: Original content concert residencies and marquee sports and corporate events.
Now looking forward to our first corporate keynote event with Hewlett Packard next month.
James Lawrence Dolan: This event will showcase how the venues technology and offerings provide a compelling platform to educate and demonstrate.
James Lawrence Dolan: We believe that this corporate category will become an important and growing component for us. Our overall business strategy also focuses on maximizing venue utilization. Later in June, Sphere will welcome the NHL Draft, which will be the first live event televised from inside the venue. During this multi-day run, we will also showcase the Sphere experience, demonstrating our ability to efficiently host multiple event types on the same day. In addition, we continue to explore other event types, such as EDM shows that can run on the same day as original content.
James Lawrence Dolan: We believe that this corporate Karen category will become an important and growing component for us.
James Lawrence Dolan: Our overall business strategy also focuses on maximizing venue utilization.
James Lawrence Dolan: Later in June sphere will welcome the NHL direct which will be the first well I've event televised from inside of the value.
James Lawrence Dolan: Over this multi day one we will also show the sphere experience demonstrating our ability to efficiently host multiple then types on the same day.
James Lawrence Dolan: In addition, we continue to explore other event types such as EDM shows that can run on the same day as original content.
James Lawrence Dolan: Turning to the Exosphere, advertisers continue to see significant value in this platform. This is especially true during tentpole events in Las Vegas. We had two great examples this past quarter, the Consumer Electronics Show in January followed by the Super Bowl in February. As we look ahead, we remain focused on exploring ways to maximize the potential of Sphere, not only in Las Vegas but also around the world. Expansion discussions with international markets are progressing, and we look forward to sharing more in the future. So we're pleased with our results this past quarter and are confident in our plans for this next-generation medium. With that, I will now turn the call over to Dave.
James Lawrence Dolan: Turning to the exosphere advertisers continue to see significant value in this platform. This is especially true during tentpole events in Las Vegas, we have two great. Examples of this past quarter. The consumer electronics show in January followed by the Super Bowl in February.
James Lawrence Dolan: As we look ahead, we remain focused on exploring ways to maximize the potential of sphere not only in Las Vegas, but also around the world expansion discussions with international markets are progressing and we look forward to sharing more in the future. So I'm pleased with our results. This past quarter and are confident in our plans for this next generation.
James Lawrence Dolan: With that I will now turn the call over to Dave.
David F. Byrnes: Thank you, Jim, and good morning, everyone. For the fiscal 24th third quarter, we generated total company revenues of approximately $321 million and adjusted operating income of $61.5 million. This included revenues of approximately $170 million and adjusted operating income of $12.9 million at the Sphere segment. These results were led by our original content category, the Sphere Experience, featuring Darren Aramowski's postcard from Earth, which generated over $100 million in revenue. The Sphere experience ran 257 times in the third quarter versus 192 times in the December quarter.
Thank you Jim and good morning, everyone.
David F. Byrnes: For the fiscal 2000 and for third quarter, we generated total company revenues of approximately $321 million and adjusted operating income of $61 5 million.
This included revenues of approximately $170 million and adjusted operating income of $12 9 million at the sphere segment.
David F. Byrnes: These results were led by our original content category the sphere experience featuring Darren Aronofsky postcard from BARDA.
David F. Byrnes: Which generated over $100 million in revenue.
David F. Byrnes: The sphere experience ran 257 times in the third quarter versus 192 times in the December quarter.
David F. Byrnes: We also benefited from the conclusion of U2's multi-month run with 15 performances during our third quarter compared to 23 in the December quarter. And as Jim mentioned earlier, another positive impact on our results was continued strong performance for the Exosphere. In the third quarter, this included robust demand around the annual Consumer Electronics Show in January, followed by a record-setting advertising week leading up to the Super Bowl in February.
David F. Byrnes: We also benefited from the conclusion of Youtube multi month run with 15 performances during our third quarter compared to 23 in the December quarter.
David F. Byrnes: And as Jim mentioned earlier, another positive impact on our results was continued strong performance for the XL sphere.
David F. Byrnes: In the third quarter. This included robust demand around the annual consumer electronics show in January.
David F. Byrnes: Followed by a record setting advertising week, leading up to the Super Bowl in February.
David F. Byrnes: SG&A expenses for the third quarter were $109 million, as compared to $98 million in the December quarter. This primarily reflects corporate overhead and expenses related to Sphere Studios and associated content and technology development. Turning to MSG Network,
David F. Byrnes: SG&A expenses for the third quarter were $109 million as compared to $98 million in the December quarter.
This primarily reflects corporate overhead and expenses related to sphere studios and associated content and technology development.
David F. Byrnes: Turning to MSG networks.
David F. Byrnes: The segment generated $151 million in revenues and $48.6 million in AOI, which represent decreases of 6% and 17%, respectively, as compared to the prior year period. The revenue decrease reflects lower distribution revenue, primarily due to a 12.5% decrease in subscribers, inclusive of the impact of MSG Plus, partially offset by higher affiliate rates. In addition, advertising revenue decreased year over year, primarily due to lower per-game advertising sales on the linear network and lower branded content advertising, partially offset by advertising revenue related to MSG Plus.
David F. Byrnes: Segment generated $151 million in revenues and $48 $6 million in AOI.
David F. Byrnes: Which represent decreases of 6% and 17% respectively as compared to the prior year period.
David F. Byrnes: The revenue decrease reflects lower distribution revenue, primarily due to a 12, 5% decrease in subscribers.
David F. Byrnes: Inclusive of the impact of MSG plus.
David F. Byrnes: Partially offset by higher affiliate rates.
David F. Byrnes: In addition, advertising revenue decreased year over year, primarily due to lower per game advertising sales on the linear networks and lower branded content advertising, partially offset by advertising revenue related to MSG plus.
David F. Byrnes: The decrease in AOI reflects lower revenue as well as higher direct operating costs, partially offset by lower SG&A expenses. Thus, while the industry remains challenging, we continue to pursue incremental revenue opportunities like our direct-to-consumer app, MSG Plus, and we also remain focused on how we can operate our business more efficiently.
David F. Byrnes: The decrease in NOI reflects lower revenue as well as higher direct operating costs.
David F. Byrnes: Partially offset by lower SG&A expenses.
So while the industry remains challenging we continue to pursue incremental revenue opportunities like our direct to consumer App MSG plus.
David F. Byrnes: As we also remain focused on how we can operate our business more efficiently.
David F. Byrnes: Turning to our balance, As of March 31st, we had approximately $681 million of unrestricted cash and cash equivalents. Our debt balance was approximately $1.4 billion as of quarter end, which reflected approximately $870 million outstanding on the MSG Networks term loan. The $275 million credit facility related to Sphere in Las Vegas and $259 million in convertible debt. With regard to MSG Networks' term loan, we remain in discussions with our lenders regarding an extension of the credit facility on terms that would be satisfactory. And with that, I will now turn the call back over to Ari.
David F. Byrnes: Turning to our balance sheet.
David F. Byrnes: As of March 31, we had approximately $681 million of unrestricted cash and cash equivalents.
David F. Byrnes: Our debt balance was approximately $1 4 billion as of quarter end, which reflected approximately $870 million outstanding on the MSG networks term loan.
David F. Byrnes: The $275 million credit facility related to the sphere in Las Vegas, and $259 million in convertible debt.
David F. Byrnes: With regard to the MSG networks turmoil, we remain in discussions with our lenders regarding an extension of the credit facility on terms that would be satisfactory.
David F. Byrnes: And with that I will now turn the call back over to Ari.
Ari Danes: Thanks, Dave. Operator, can we open up the call for questions, please?
Ari Danes: Thanks, Dave Operator can we open up the call for questions. Please.
Regina: We will now begin the question and answer session. To ask a question, press star 1 on your telephone keypad, and your first question will come from the line of Brandon Ross with LightShed. Please go ahead.
Ari Danes: We will now begin the question and answer session to ask a question press Star one on your telephone keypad and your first question will come from the line of Brandon Ross with <unk>. Please go ahead.
Brandon A Ross: Thanks for taking the questions, guys. I wanted to start off with your expansion plans.
Brandon A Ross: Thanks for taking the questions guys.
Brandon A Ross: Wanted to start off with your expansion plans you said in the prepared remarks.
James Lawrence Dolan: You said in your prepared remarks that things are progressing. Any more details on those discussions would be helpful to investors, kind of what the hold-up is, when we could expect resolution. And then, since the last call, has there been any additional interest or discussion with or from any other potential domestic or international markets?
Brandon A Ross: That things are progressing any more details on those discussions would be helpful to investors kind of what the holdup is when we could expect resolution and then since the last call has there been any additional interest or discussion.
Brandon A Ross: With or from any other potential domestic or international markets.
James Lawrence Dolan: Hi Brandon, this is Jim. I don't really see us as having a holdup. I just think that, you know, building a sphere is not, you know, it's not like building a McDonald's. It's complicated. It's a very expensive project. This will only be the second one; the next one we build will only be the second one in the world to have been built.
Brandon A Ross: Hi, Brian This is Jim.
James Lawrence Dolan: I don't really see us as having a holdup.
James Lawrence Dolan: Thanks Bill.
James Lawrence Dolan: Building a sphere is not.
James Lawrence Dolan: It's not like building a mcdonalds.
James Lawrence Dolan: Yeah.
James Lawrence Dolan: Yes.
James Lawrence Dolan: It's complicated it's a very expensive project. This will only be the second one is when we build will only be the second one in the world.
James Lawrence Dolan: And so working out all the details and the construction costs and the relationships that are in there does take time. And remember, I mean, I don't think that, you know, there's been plenty of interest over the year, but not until we launched the product in late September did people really get to see what it was and begin to see how it could perform. So with all that, though, we are in discussions with several markets.
James Lawrence Dolan: Yes.
James Lawrence Dolan: And so working out all the details.
James Lawrence Dolan: The construction costs and the relationships that are in there does take time and remember I mean, I don't think that.
James Lawrence Dolan: There has been plenty of adventurers over the over the year, but not until we launch the product in late September.
James Lawrence Dolan: People really get to see what it was.
James Lawrence Dolan: And begin to see how it can perform.
James Lawrence Dolan: We think we're going to conclude at least one of those markets soon. How soon? I'm not going to predict. But soon. And we continue to hear from new markets, too, as the sphere becomes better known and people begin to understand the economics behind it and what it can do for a marketplace. The interest remains strong.
James Lawrence Dolan: So with all of that though we have we are in discussions with several markets.
James Lawrence Dolan: We think we're going to conclude at least one of those markets soon.
Speaker Change: How soon.
Speaker Change: Im not going to predict.
Speaker Change: But soon.
Speaker Change: Yes.
Speaker Change: And we continue to hear from from new markets too as you know is the sphere becomes better known and people begin to understand the economics behind it and what it can do for our marketplace.
Interest remains strong.
James Lawrence Dolan: Right. And then on postcards, it was certainly up quarter over quarter, but the per show and per show day revenues appear to be at least flattening out, if not a little weaker. Can you provide an assessment of where postcards stand today in terms of demand, the ticket price refinements that you made and showtime refinements that you made, and then what you think the longevity of that show is?
Great and then on postcards.
Speaker Change: It was certainly up quarter over quarter, but then the per show and per show day revenues.
Year to be at least flattening out.
Speaker Change: If not a little weaker can you provide necessity of where you think postcard stands today in terms of demand.
Speaker Change: The ticket price refinements that you made in Showtime refinements that you made and then what you think the longevity of that show us.
James Lawrence Dolan: Yeah. So this is our first year of operation. And what we're doing is we're learning about the marketplace itself. So when we schedule postcards, the pricing of them, etc., how we market them, it fluctuates with the market. The Las Vegas market is an interesting market. It's an international market. It has over 40 million visitors a year, and understanding how those visitors come and go and what they do is something that we're still getting good at.
Yeah.
Speaker Change: This is our first year of operation and what we're doing is we're learning about the marketplace itself.
Speaker Change: So when we schedule postcards.
Speaker Change: Pricing of it et cetera, how we market it.
Speaker Change: Fluctuates with the market the Las Vegas market is.
Speaker Change: An interesting market, it's an international market. It has over 40 million visitors a year.
Speaker Change: Okay.
Speaker Change: Understanding how those visitors come and go and what they do is something that we're still getting good at and then having that reflect in both the scheduling and the pricing et cetera.
James Lawrence Dolan: And then having that reflect in both the scheduling and the pricing, etc., is what we're getting better at every day. Look, I do think that... You know, that postcards benefited from being the first show in, and the reason that people came, right, was yes, to see postcards, but also to see the sphere. Las Vegas is a cyclical market, meaning that people go once a year for a convention or for their annual trip.
Speaker Change: Is.
Speaker Change: What we're getting better at every day.
Speaker Change: Look I do think that.
Speaker Change: That postcards benefited from being.
Speaker Change: The first show in.
Speaker Change: And the reason that people came right was the STC postcards, but but to see this year also.
Speaker Change: Las Vegas is a cyclical market.
Speaker Change: Meaning that.
Speaker Change: People go once a year for our convention or floor.
Their annual trip, so I do think that.
James Lawrence Dolan: So I do think that as we hit the annual mark for postcards, we need to have new content in place, and that new content has to be able to draw people in. So it needs to be, honestly, better than postcards and be, in itself, something that draws the customer in. That's what we're preparing to do, and I think we're going to be very successful, but I can't give you too many details about it.
Speaker Change: As we hit the annual Mark for post cards that we need to add new content in place and that new content.
Speaker Change: Has to be able to draw people in so it needs to be honestly better than postcards.
Speaker Change: Andy in itself.
Speaker Change: Something that draws the customer and that's what we're preparing to do I think we're going to be very successful, but I can't give you too many details.
unknown: Perfect. Thank you very much.
Speaker Change: Perfect. Thank you very much.
Peter John Henderson: Your next question will come from the line of Peter Henderson with Bank of America. Please go ahead.
Speaker Change: Your next question will come from the line of Peter Henderson with Bank of America. Please go ahead, yes. Good morning, and thank you for taking the questions. Just following up on Brandon's question around postcards and original content. Just wondering if you can sort of update us on the strategy and just in terms of when you expect the next original wood.
Peter John Henderson: Yes, good morning, and thank you for taking the questions. Just following up on Brandon's question around postcards and original content, just wondering if you can sort of update us on the strategy and just in terms of when you expect the next original to debut, the type of content that you're considering, and also how you're thinking about costs. I believe there's been some speculation around a potential U2 Sphere experience. Is that something that is in the works, or could it be in the works?
Bu the type of content that you were considering and also how youre thinking about costs I believe there's been some speculation around a potential Youtube sphere experience is that something that is in the works or it could be in the works.
Peter John Henderson: And then just on MSG networks quickly, there was another big RSN dispute recently, this time between Comcast and Bally. Can you just update us on your thoughts around the RSN model and whether or not there are any considerations to extend your JV with YES or perhaps even form partnerships with other RSNs?
Speaker Change: And then just on.
Speaker Change: And on MSG networks.
Speaker Change: Quickly.
Speaker Change: Another big Orison dispute recently this time between Comcast and valley can.
Speaker Change: Can you just update us on your thoughts around the RSA model and whether or not there are any considerations to extend your JV with yes, or perhaps even formed partnerships with other RF sense. Thank you.
Speaker Change: There was there was at least six questions.
Speaker Change: Okay.
James Lawrence Dolan: Peter, there were at least six questions in the chat. So, let me try and parse it, starting with the second attraction. So, like I said before, the second attraction has to have its own pull through what theme it pursues, et cetera. But there is a tremendous amount of technology that we're employing in building the second transaction and the second attraction. You will see something you've never seen before when we debut the second attraction. I know I'm teasing you about it, and I'm just going to continue to tease you about it.
Speaker Change: Yeah.
Speaker Change: So let me try and parse it started starting with the second the second attraction.
Speaker Change: Like I said before.
Speaker Change: The second attraction has to have its own poll the bias.
Speaker Change: Theme that pursues etsy.
Speaker Change: Et cetera, but there is a tremendous amount of technology that we're employing and building a second transaction.
Speaker Change: Attraction, you will see something you've never seen before when we debut the second attraction I know I'm teasing you on it.
Speaker Change: It's going to continue to teach you on it.
James Lawrence Dolan: We'll probably announce, I suppose, this summer what we're actually up to. But I can tell you that we're employing a great deal of tech, including a significant component of AI, in this. And we're following along the same themes that we followed before, which is basically experience and immersion, but with an additional technological component in there that should blow your socks off.
Speaker Change: We will probably announce I suppose this summer.
Speaker Change: What were actually up to.
Speaker Change: I can tell you that we're employing.
Speaker Change: <unk>.
Speaker Change: A great deal of tax, including a significant component of AI in this.
Speaker Change: And we're following along.
Speaker Change: The same themes that we've filed before which is basically experienced an immersion.
Speaker Change: But with an additional technology component in there that should.
Speaker Change: Blow your socks off.
James Lawrence Dolan: Going to the RSN model, it's an interesting question. Now, let me just talk about RSNs in general. When it comes to things like NFL and sports like that, the national model works very well. But when it comes to sports like basketball and hockey that have 82 games a season, that national model tends to not do everything that we need it to do.
Speaker Change: The.
Speaker Change: Going to the IRS and model.
Speaker Change: Interesting question.
Speaker Change: Just talk about <unk> in general.
Speaker Change: No.
Speaker Change: When it comes to things like NFL.
Speaker Change: And.
Speaker Change: Sports like that the National model works, very well, but when it comes to sports like basketball and hockey that have 82 games. This season.
Speaker Change: <unk>.
Speaker Change: That national model tends to.
Speaker Change: Not do everything that we needed to do.
James Lawrence Dolan: We need RSS. We need local markets. The product, honestly, is still very, very, very much in demand. People want to see their home team sports, especially the Knicks and the Rangers.
Speaker Change: We need our asset.
Speaker Change: We need local markets.
Speaker Change: No.
And so.
Speaker Change: And the product honestly is still.
Speaker Change: It's very very very much in demand.
Speaker Change: People want to see their hometown sports, especially the Knicks and the range.
Speaker Change: Yes.
Speaker Change: And so so.
James Lawrence Dolan: So we have to have RSS. We have to have regional components in our marketing and on our television. Those markets are in disarray, primarily because of the shift from linear to digital, appointment viewing versus on-demand, access, all these things are factoring into what's going on with RSS. But underlying all of that, the RSNs came from a place where they were distributed to the major suppliers, primarily the cable television companies, and were priced on an overall basis, meaning that if you are a cable television subscriber, right, even in your basic package, you get, And you paid for them, even if you didn't watch them.
Speaker Change: So we have to have RSA.
Speaker Change: We have to have regional components to our marketing and to our television.
Speaker Change: But right now.
Speaker Change: And those markets are in disarray.
Speaker Change: Primarily because of the shift from linear to digital.
Speaker Change: Appointment viewing versus.
Speaker Change: On demand.
Speaker Change: Access all of these things are figuring into what's going on.
With RSA.
Speaker Change: But underlying all of that.
Speaker Change: The RF sense came from a place where they were distributed out to the major suppliers, primarily the cable TV companies.
Speaker Change: We are priced on a on an overall basis, meaning that if you are cable TV subscriber right. Even in your basic package you received these and you paid for them.
James Lawrence Dolan: Now that model is changing. What needs to change along with that is pricing. If we're not going to sell it to everybody, then the people who do want to watch it need to pay the same as we were getting before. And that's that transition model we are right in the middle of. And I believe right now we're probably close to, if not at, the bottom of the trough in that curve.
Speaker Change: Even if you didn't watch them.
Speaker Change: Now that model is changing what needs to change along with that is pricing.
Speaker Change: If we're not going to sell sell it to everybody and the people who do want to watch it need to pay.
Speaker Change: Still what what we were getting before.
Speaker Change: And that's the trend that transition model, where we are right in the middle of and I believe right now.
Speaker Change: We can.
Speaker Change: Close to if not at the bottom of.
Speaker Change: The trough in that curve.
Speaker Change: The re pricing.
Speaker Change: And in distribution.
James Lawrence Dolan: The repricing and distribution via online, et cetera, is going to start to increase. Pricing should increase, and a new model should emerge. And there are going to be a lot of different changes with that model, and that's what we're starting to see. But I do believe that RSNs are very, very important to the league, that sports is still a very, very important component in every market. And so, therefore, I don't see them going away.
Speaker Change: Yes.
Speaker Change: Online et cetera is going to start to increase pricing should increase.
Speaker Change: And a new model should emerge.
Speaker Change: And there's going to be a lot of different changes with that model and that's what we're starting to see but.
Speaker Change: But I do believe that RSA.
Speaker Change: Our very very important to the league that sports is still very very important component in every market.
Speaker Change: And.
Speaker Change: And so therefore, I don't see them going away.
James Lawrence Dolan: And as far as ours goes, you know that we announced our platform, our combined platform with YES, and we are continuing discussions to look at things like the consumer offering that would be joined together, the idea of taking the power of the entire marketplace plus multiple sports and multiple teams and basically going to the marketplace and saying, Here, that the, you know, you know, if you want sports, here's all of your local sports in one package. We think that's going to be Barry Powell.
Speaker Change: And as far as as ours does.
Speaker Change: You know that we announced our platform our combined platform with yes and we.
Speaker Change: We are continuing discussions look at things like the consumer offering that would be joined together that the idea of that taking the power of the entire marketplace across multiple sports and multiple teams and basically going to the marketplace and say hey.
Speaker Change: Sure.
Speaker Change: If you watch sports Here's all of your local sports in one package.
Speaker Change: We think thats going to be very powerful.
Speaker Change: And so.
James Lawrence Dolan: And so, even though we're at a low point now with the drop and et cetera, I still think that that product is important, and I think that the consumer wants it, and we're just going to have to figure out how we can monetize that product in a way that's profitable.
Speaker Change: Yes.
Speaker Change: Even though we are at.
Speaker Change: At a low point now with the drop in et cetera.
Speaker Change: Still thinks that that product is important and I think that the consumer wants it and we're just going to have to figure out how we can make it make monetize that product in a way that's prop.
Speaker Change: Thank you.
Benjamin Daniel Swinburne: Your next question comes from the line of Ben Swinburne with Morgan Stanley. Please go ahead.
Speaker Change: Your next question comes from the line of Ben Swinburne with Morgan Stanley. Please go ahead.
Benjamin Daniel Swinburne: Thank you. Good morning.
Benjamin Daniel Swinburne: Thank you good morning, Jim just sticking with the network's theme.
Benjamin Daniel Swinburne: I know in the prepared remarks, there was the comment that you are in discussions with lenders what do you think or what was what should we be thinking as the likely outcome of.
James Lawrence Dolan: Jim, just sticking with the networks theme, I know in the prepared remarks there was the comment that you're in discussions with lenders. What do you think or what should we be thinking is the likely outcome of those discussions? What are you guys trying to accomplish as you get closer to that October maturity? And then I had a follow-up question on Sphere.
Benjamin Daniel Swinburne: Those discussions what are you guys trying to accomplish as you get closer to that October maturity, and then I had a follow up on sphere.
David F. Byrnes: Hey, Ben, it's Dave. I'll take the network's question. As I mentioned in my remarks, to your point, we do remain in discussions with our lenders regarding an extension. If we're successful in reaching an agreement, I just want to note that debt will continue to remain a recourse only to MSG networks. Any extension will likely include a partial pay-down of the existing term loan using cash on hand at MSG Networks, as well as a cash contribution from the parent.
Benjamin Daniel Swinburne: Hey, Ben it's Dave I'll take the networks question.
David F. Byrnes: As I mentioned in the remarks to your point, we do remain in discussions with our lenders regarding an extension.
David F. Byrnes: If we're successful in reaching an agreement I just want to note that that will continue to remain recourse only to MSG networks.
David F. Byrnes: Any extension will likely include a partial pay down of the existing term loan using cash on hand at MSG networks as well as the cash contribution from the parent.
David F. Byrnes: But again, continuing from the parent, we're confident any cash contribution from the parent will not impact Sphere's ability to pursue any growth initiatives, including international expansion. We would expect to extend the maturity on the Networks loan by one year, which gives us the flexibility to continue to evaluate the right long-term path for the MSG Networks business. At this stage, we don't know how this will play out. If we're unsuccessful in reaching an extension with our lenders, you should assume that MSG Networks would decide to enter into a workout. And we'll continue to update you as we move through this process.
David F. Byrnes: Again continuing.
David F. Byrnes: From the parent we're confident any cash contribution from the parent will not impact spheres ability to pursue any growth initiatives, including international expansion.
David F. Byrnes: We would expect to extend the maturity on the networks loan by one year, which gives us the flexibility to continue to evaluate the right long term path for the MSG networks business.
David F. Byrnes: At this stage, we don't know how this will play out.
David F. Byrnes: If we're unsuccessful in reaching an extension with our lenders you should assume that MSG networks will decided to enter into a workout.
David F. Byrnes: And we will continue to update you as we move through this process.
Benjamin Daniel Swinburne: Got it. Thank you, Dave, for all that detail.
Speaker Change: Got it thank you Dave for all that detail.
Speaker Change: I guess, Jim just on the resident sees which is.
Speaker Change: Clearly a huge success both in terms of revenue and profits.
Benjamin Daniel Swinburne: I guess, Jim, just on the residencies, which have clearly been a huge success, both in terms of revenue and profits. Has that changed at all? You're thinking of the right mix of residency nights and postcard nights, and I know you want to be able to do more on one, you know, more than one in a day, but it seems like the demand from artists is really strong. Consumers, same thing. I'm just wondering if you think as you look out over the next couple of years if maybe the amount of residency volume might be higher than maybe your original expectations, or any comments you have there would be great.
Speaker Change: Has that changed at all your thinking of the right mix of residency nights and postcard nights and I know you wont be able to do more on one more than one on a day, but it seems like the demand from artists is really strong consumers same thing I'm. Just wondering if you think as you look out over the next couple of years, if maybe the amount of residency volume might be higher than maybe your original.
Speaker Change: <unk> or any comments you have there would be great.
James Lawrence Dolan: So there is a very strong demand from artists, honestly stronger than we can even accommodate at this point, so there's no problem there that the, but, you know, the, when you take a look at things like the postcard show. EDM, the corporates, et cetera, they all contend with each other for the use of the sphere. And being the good capitalists that we are, we're gonna go to the highest bidder. And so, which ones will win?
Speaker Change: So.
Speaker Change: Dara as the areas of very strong demand from artists.
Speaker Change: Sure.
Dara: Honestly stronger than we can even accommodate at this point.
Dara: So there is no problem there.
Dara: Hey.
Dara: But.
Dara: When you take a look at.
Dara: On slide.
Dara: Postcard show.
Dara: <unk>.
Dara: The corporates.
Dara: Et cetera.
Dara: Paul contend with each other for the use of the sphere.
Dara: And.
Dara: Being that good capital is that we are that.
Dara: We're going to go to the highest bidder.
Dara: And so.
Dara: Which ones will win that's really good question right.
James Lawrence Dolan: That's a really good question, right? The, the, but when we can do multiples on the same day, and everybody goes, and so that's kind of our model. It's a model that's built with contention in it between the uses of the sphere. And the benefit of that is that the revenue, particularly the gross revenue, goes up.
Dara: But when we can do multiples on the same day and everybody wins.
Dara: And.
Dara: So thats kind of our model.
Dara: It's a model that's built with contention and it between the uses of the sphere and.
Dara: The benefit of that is that.
Dara: <unk>.
Dara: The revenue and particularly the gross revenue goes up.
Dara: Yes.
Benjamin Daniel Swinburne: Absolutely. Thanks a lot.
Speaker Change: Absolutely Thanks, a lot.
David Karnovsky: Your next question will come from the line of David Karnovsky with J.P. Morgan. Please go ahead.
Speaker Change: Your next question will come from the line of David Karnofsky with J P. Morgan. Please go ahead.
David Karnovsky: Hey, following up on the last question around residencies, Jim, I don't know if you could say anything more about what the early fiscal 25 pipeline looks like. And then you talked about strong demand from artists.
David Karnofsky: Hey, following up on the last question around residencies, Karen I don't know if you could say anything more about what the early <unk>.
David Karnofsky: Fiscal 'twenty five pipeline looks like and then you talked to strong demand to play the venue from artists curious to know how that demand compares for current major touring acts versus some of the more legacy acts that are placed so far and then just one for David.
David Karnofsky: <unk> segment, SG&A stepped up a bit quarter over quarter I wanted to know if thats. The right figure to think about going forward or are there some onetime items in there.
David Karnofsky: Okay.
James Lawrence Dolan: Okay, well, let me take the first one. So, do you like country? We are cognizant that we want to have a varied number of different kinds of acts, not just legacy rock acts. And I'm not sure that those acts would like to be called legacy. They think they're still pretty vibrant, but no, we are talking basically about almost every category. And we're looking for the acts that have the biggest draws, that have demonstrated the biggest draws. And we are in discussions with a whole bunch of them.
Speaker Change: Let me take the first one so yes.
Speaker Change: Like country.
Speaker Change: The.
Speaker Change: We're trying to work with.
Speaker Change: Are cognizant that we want to have a very number of very tiny backs not just legacy <unk>.
Speaker Change: Sure.
And I'm not sure that those actually liked with like the.
Speaker Change: They call it legacy.
Speaker Change: Hey, Thanks, there still.
Speaker Change: <unk>.
Speaker Change: But.
Speaker Change: No.
Speaker Change: We are talking basically almost in every category and we're looking for.
Speaker Change: For the acts that.
Speaker Change: Have the biggest draws that have demonstrated the biggest drops and.
Speaker Change: And we are in discussions with a whole with a whole bunch of cells alright.
James Lawrence Dolan: Remember, every time an act hooks the sphere, they have to create content around it. We will never have an act play the sphere that doesn't have something compelling on the screen. So it takes a while to do that.
Speaker Change: Remember every time.
Speaker Change: Books, this fear, but they have to create content around alright.
Speaker Change: We will never have an act lay the sphere that doesn't have something compelling up on the screen.
Speaker Change: So it takes a while to do that.
James Lawrence Dolan: So we're being judicious about it. The more than an act can play in the sphere, like you two, the more they can monetize the content across multiple shows and, therefore, invest more in the content and create an even better show. That's what we're seeing now. I think that, you know, The Dead premiers on Thursday, right? And I think you're going to find that there, even if you're not a fan, right? You're going to love that show. And I think the same will be true for The Eagles and for the next acts that we have coming up.
Speaker Change: So we're being judicious about it.
Speaker Change: Yes, the more than enacted and play to sphere like you too right.
Speaker Change: The more they can monetize the content.
Speaker Change: Across multiple shows and therefore invest more on the times that can create an even better so that's what we're seeing that.
Speaker Change: I think net debt.
Speaker Change: Dennis.
Speaker Change: Premieres on Thursday, right and.
Speaker Change: I think youre going to find that there.
Speaker Change: Even if even if youre not a dead head right.
Speaker Change: Youre going to love that show.
Speaker Change: And I think to say will be true for the Eagles them for the next X that Brian.
David F. Byrnes: And then, David, you had a question about SG&A. I'll just, we're not going to provide specifics. What I'll say is that in the quarter, a significant portion of the SG&A increases in the March quarter compared to the December quarter were due to non-recurring expenses. There were some employee comp matters as well as some professional fees mixed in that number. All right, let me just chime in on that
Speaker Change: And then David you had a question on on SG&A.
Speaker Change: We're not going to provide specifics what I will say is in the quarter a significant portion of the SG&A increases in the March quarter compared to the December quarter were due to nonrecurring expenses. There were some employee comp matters as well as some professional fees mixed in that number.
James Lawrence Dolan: All right, let me just chime in on that. Look, we should all understand that this is the first year of operation, right? That we're learning where to spend, where not to spend, you know, what gives us a bang for the buck. And we're also learning about how to operate. That the, I can tell you that, for instance, when we first opened the sphere, right? Some of the things like security, et cetera, might've been slightly over thought.
Speaker Change: Let me just chime in on that.
Speaker Change: Yes.
Speaker Change: We also understand this is the first year of operation right.
Speaker Change: We're learning where to spend we're not to spend.
Speaker Change: What what gives us a bang for the Buck and we're also learning about how to operate.
Speaker Change: I can tell you that for instance, when we first opened this fear right.
Speaker Change: Some of the things like security et cetera might have been slightly overdone.
James Lawrence Dolan: And we're just learning how to be efficient with the model, and we're going to get better and better at that. And so I expect that overheads will drop, particularly operating overheads. And once we announce and begin the next sphere, a bunch of that overhead is dedicated to being ready to build the next sphere. So there will actually be some place to apply that overhead, which should also drop.
Speaker Change: Sure.
Speaker Change: And we're just learning how to be efficient.
Speaker Change: With the model and now.
Speaker Change: And we're going to get better and better at that.
Speaker Change: And so I expect that overheads will will drop particularly operating overhead.
Speaker Change: And once we are once we announce and begin.
Speaker Change: The next sphere.
Speaker Change: A bunch of that overhead is dedicated to being ready to build the next fear so they'll actually be someplace to apply that overhead.
Speaker Change: Which should also change.
Speaker Change: Okay.
Logan Drake Angress: Our next question will come from Logan Angress with Wolf Research. Please go ahead.
Speaker Change: Our next question will come from the line of Logan Andrus with Wolfe Research. Please go ahead.
Logan Drake Angress: All right, thank you for taking my questions. Yes, first.
Logan Angress: Hi, Thanks for taking my questions first.
Logan Drake Angress: We're approaching the end of fiscal 24. I'm curious if you could just talk generally about the main priorities for Sphere in fiscal 25, and what we think about regarding the main leverage school for growth. And then you mentioned the appeal of the Vegas market, part of the genius with the original spheres that is Envy. I'm curious, generally, about the future spheres. How do you think about the three to four sphere experiences per day working in those markets? Because it seems like the three to four sphere experiences per day are
Logan Angress: We're approaching it.
Logan Angress: Fiscal 2000.
Logan Angress: I'm curious if you could just talk about the priorities for sphere in fiscal 'twenty five.
Logan Angress: Should we think about regarding the main levers for growth.
Logan Angress: You mentioned the appeal the Vegas market.
Logan Angress: The.
Logan Angress: Yes.
Logan Angress: Curious for the future years, how do you think about the quarter.
Logan Angress: Per day working those.
Logan Angress: Those markets.
Logan Angress: Right.
Logan Angress: And of course their experiences per day.
Logan Angress: Most of the market.
Logan Angress: Yes.
Ari Danes: Hey Logan, it's Ari Danes. Can you repeat your first question, please? Oh, wait a minute.
Logan Angress: Hey, Logan, it's already Danes can you repeat your first question. Please.
Logan: Just your first question you were breaking up.
Logan: Right.
Logan: It sounded like it was a good question just don't really know what it was.
Logan Drake Angress: Yeah, sorry about that. I hope you can hear me better now. I was just wondering if you
Logan: Yes, sorry about that I hope you can hear me better now.
Logan: Wondering if you can talk about the priorities for sphere in fiscal 'twenty five.
Logan: Think about the main goal for growth in the next fiscal year and I Hope you hear the second question.
Logan Drake Angress: Hang on to your second question. Main priorities for Sphere in fiscal 25 and levers for growth, Logan, that's what I got. Main? Yeah.
Logan: Your experiences hang on to your second question main priorities for sphere in fiscal 'twenty, five and levers for growth Logan Thats, what I got.
James Lawrence Dolan: Main priorities. Oh, main priority. In fiscal 25, and potential levers for growth next fiscal year. Okay.
Logan: The main priorities for any priority in fiscal 'twenty, five and potential levers for growth next fiscal year. Okay.
James Lawrence Dolan: Well, I mean, there are a bunch of priorities, right? The beginning of the construction of a second sphere would certainly be a very high priority. Becoming efficient in our operations and being able to schedule multiple events on the same day is a very, very high priority for the company. Getting our infrastructure at the right size so that it can execute on the strategy is a very big priority. There are a few others, but I'd say those are the three top, at least business, ones.
Speaker Change: I mean, there are a bunch of priorities right.
Speaker Change: Beginning of construction of a second sphere.
Logan: It would certainly be a very high priority.
Logan: Becoming efficient in our operations and being able to.
Logan: Schedule multiple events on the same day very very high priority for the company.
Logan: Getting our infrastructure in the right size, so that it can execute on the strategy, that's a very big priority.
Logan: There are a few others, but I'd say those are the three top lease business warrants.
Speaker Change: Got it and then.
James Lawrence Dolan: Next question was just around the fact that part of the genius of the Vegas sphere is that it's in Vegas, which seems like an optimal city to host multiple sphere experiences per day. How do you think about the extent to which the three to four sphere experiences per day business model might work in other markets that are different than Vegas?
Speaker Change: Okay.
Speaker Change: It was just around.
Speaker Change: That part of it.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: In Vegas.
Speaker Change: Most of it is to host multiple security screening.
Speaker Change: Okay.
What do you think about this.
Speaker Change: The three to four sphere experience.
Speaker Change: This model might work in other markets that are different than Vegas.
James Lawrence Dolan: Okay, I think I got it, right? And every market is different, right? And Las Vegas is a particularly peculiar market because of the transient nature of the people that come through here, right? But New York is obviously a much bigger market. There are other markets that are smaller. We also have smaller spheres, right?
Speaker Change: Okay.
Speaker Change: I think I got it right. So every market is different right.
Speaker Change: Yes.
Speaker Change: <unk> four and Las Vegas is particularly peculiar markets because of the transient nature of the people that come through here right, but New York is obviously a much bigger market. There are other markets that are smaller we also have smaller spheres right.
James Lawrence Dolan: That we can adjust to the size of the marketplace. But it is a question of, I mean, how many people are available, right, to come and see your product in a year, right? Assuming that they're not coming there specifically to see Sphere, right? I mean, I do think that that will happen, right?
Speaker Change: So that we can adjust to the size of the marketplace, but it is it is a question of scale.
Speaker Change: How many people are available right to come and see the product in a year right assuming that they're not coming there specifically.
Speaker Change: C sphere right.
Speaker Change: I mean, I do think that that will happen right that people will do that but I also think that for instance in New York people come to New York, then they capture shelf they catch a Broadway show.
James Lawrence Dolan: That people will do that. But I also think that, for instance, in New York, people come to New York, and they catch a show. They catch a Broadway show, and you want to be the show that they catch.
Speaker Change: And do you want to be the Broadway show, that's a catch up.
James Lawrence Dolan: And so you look at each market. You look at what its potential is, how you're going to market to that market, and you adjust from there. I do think that internationally, there are quite a few markets, right, that contain a full-sized sphere, particularly looking at their home population and then their visiting population. There's plenty of room in the market, right, to follow the same model that we built in Las Vegas.
Speaker Change: And so you look at each market Youll look at what its potential is.
Speaker Change: How youre going to market market too that that market and.
Speaker Change: You adjust from that I do think that internationally there are quite a few markets right.
Speaker Change: Dana full size sphere.
Speaker Change: And particularly looking at their home population and then they're visiting population there is theres plenty enough market to follow the same model that we built in Las Vegas.
Ari Danes: Thanks, Logan. Operator, we'll take the next question.
Speaker Change: Thanks, Logan operator, we'll take the next question.
David Carl Joyce: Our next question will come from the line of David Joyce with Seaport Global. Please go ahead.
Speaker Change: Our next question will come from the line of David <unk> with Seaport Global. Please go ahead.
David Carl Joyce: Thank you. I've got two questions, Jim. The first is just wondering how the Exosphere advertising has been trending post-Super Bowl and CES. Is it a medium that can maintain prices even when special events or particular conventions are not in town?
David Karnofsky: Thank you.
David Karnofsky: Two questions. The first is just wondering how the exosphere advertising has been trending post Super Bowl and CES is it a medium that can maintain price, even when special events or particular conventions.
David Karnofsky: And then I've got a follow up.
James Lawrence Dolan: Sure. You know, they look like it. Las Vegas is an international marketplace, right? I was thinking about this earlier. If you go ask a yak herder in Siberia, about Las Vegas, he knows what Las Vegas is. And the Sphere has now become, you know, sort of the showcase for Las Vegas. And what we put on the Sphere, right, garners attention around the world. Not just the advertising, but the art and the other things that we do on there.
David Karnofsky: Sure.
David Karnofsky: Yes.
David Karnofsky: Look.
Speaker Change: Las Vegas is an international marketplace right.
Speaker Change: I was thinking about the cereal earlier you go ask a yak herder in Siberia, right about Las Vegas, He knows what Las Vegas.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: And the sphere has now become.
Speaker Change: Sort of the showcase for Las Vegas.
Speaker Change: And what we put on this on the sphere right garners attention around the world.
Speaker Change: Not just the advertising, but the art and the other things that we do on there.
James Lawrence Dolan: You know, one of the interesting things that happened when we opened up the Exosphere, when we turned it on, is that casino hotels, right, have a surcharge if you get a room that faces the Sphere. So that doesn't happen with a billboard. And it gives you sort of, you know, an idea of the power that the exosphere can have. And a lot of it depends, by the way, on the advertiser or the artists themselves.
Speaker Change: One of the interesting things about.
Speaker Change: Above that it happened when we opened up the XO sphere. When we turned it on is that the casino hotels right have a surcharge if you get a room that faces the sphere.
Speaker Change: So.
Speaker Change: That doesn't happen with a billboard.
Sure.
Speaker Change: And it gives you sort of an idea of the power.
That the exosphere can have in a lot of it depends by the way on on the advertiser or the artists themselves the more compelling.
James Lawrence Dolan: The more compelling the content they put up there, right, the more that, you know, the more it will go social, go worldwide, etc. And finally, we think that there's more to do with the exosphere. We think that we'll be able this year, probably this summer, to add an audio component that goes along with the exosphere, which will make, of course, the medium even more attractive. So we're still pretty bullish on the exosphere.
Speaker Change: The.
Speaker Change: The content, they put up there right and more debt.
Speaker Change: The more they will go social worldwide et cetera.
Speaker Change: Finally.
Speaker Change: We think that there is more to do with the Exxon sphere.
Speaker Change: We think that we'll be able this year, probably this summer to be able to add an audio component that goes along with that the exosphere, which will make of course the medium even more attractive. So we're still pretty bullish on the excess fair.
James Lawrence Dolan: Okay, great. And second, I was wondering what the strategy is for sponsorship and naming rights from here on in. How often should we expect new sponsors to be announced and come online?
Speaker Change: Okay great.
Speaker Change: And then second I was wondering what the strategy is for sponsorship and naming rights from here, how often should we expect new sponsors to be announced and come online.
James Lawrence Dolan: I think we're still, you know, I mean, I think you're going to see more, for sure, that we're in discussions with a bunch of major sponsors now. Naming rights, I won't take it off the table, but it will be a big number. And so I don't know if we're going to get there or not with it.
Speaker Change: I think we're still I mean.
Speaker Change: <unk>.
Speaker Change: I think youre going to see more.
Speaker Change: For sure.
Speaker Change: We're in we're in discussions with a bunch of major sponsors now naming rights.
Speaker Change: I won't take it off the table, but it will be a big number.
Speaker Change: Yes.
Speaker Change: And so I don't know if were going to get there or not with it.
Speaker Change: So, yes, I think youre, just youre going to continue to see it grow I think advertisers are definitely getting used to that.
James Lawrence Dolan: So yeah, I think you're gonna continue to see it grow. I think advertisers are definitely getting used to the medium, right? Understanding what it can do for them. And so we're starting to see repeat business, which is really a good sign for the media.
Speaker Change: The medium right understanding what it can do for them and so we're starting to see.
Speaker Change: Each of repeat business, which is really a good sign for the media.
Speaker Change: Great. Thank you.
Regina: Operator, we'll take one last caller.
Speaker Change: Operator, we'll take one last caller.
Paul Alexander Golding: Our final question will come from the line of Paul Golding with PCORI Capital. Please go ahead.
Speaker Change: Our final question will come from the line of Paul Golding with Macquarie Capital. Please go ahead.
Paul Alexander Golding: Thanks so much. I was just wondering if there had been any progress in determining the construction cost savings, potentially, that a subsequent venue might yield when thinking about the franchising opportunity, and then, as part of your conversations, any indication that you might be able to share around how much that construction cost figure is driving a decision as to whether to do a venue or where to do it or how large the capacity might be. Thanks so much. Okay, what was the first one?
Paul Alexander Golding: Thanks, So much I was just wondering if theres been any progress in determining the construction cost savings potentially that a subsequent venue.
Yield when thinking about the franchising opportunity and then as part of your conversations.
Paul Alexander Golding: Any indication that you might be able to share around.
Paul Alexander Golding: How much that construction cost figure is driving a decision as to whether to do a venue or where to do it or how.
Paul Alexander Golding: Large the capacity might be thanks, so much.
Paul Alexander Golding: Okay.
James Lawrence Dolan: Okay. What was the first part?
Paul Alexander Golding: Okay.
Paul Alexander Golding: The first part.
Paul Alexander Golding: Charter costs themselves.
Paul Alexander Golding: <unk> first pancake right.
James Lawrence Dolan: Oh, construction costs themselves. So, first, pancake, right? Always, you know, rarely is it the best pancake.
Paul Alexander Golding: Always.
Paul Alexander Golding: Rarely is it the best pancake.
So I do think I mean, if we were in a week every year and we start from the beginning which was a night would be a nightmare for me.
James Lawrence Dolan: So, I do think, I mean, if we were to restart from the beginning, which would be a nightmare for me, in Las Vegas, I think that, you know, we could significantly reduce the construction costs. You know, things like supply chain, COVID, et cetera, you know, those kinds of issues, right? You can't predict.
Paul Alexander Golding: In Las Vegas, I think that we could significantly reduce.
Paul Alexander Golding: The construction costs things like supply chain Covid et cetera.
Paul Alexander Golding: Those types of issues right you can't predict the sort of like injuries sports teams.
James Lawrence Dolan: They're sort of like injuries with sports teams. But, you know, I do think that we can build the same size for less money. I do think that, you know, we put together a portfolio of spheres of different sizes going all the way down to 5,000 seats. So, we can adjust the project according to the size of the marketplace. And, you know, it's really, you know, it's not a cost thing that we're seeing with the people that we talk to, right?
Paul Alexander Golding: Yes.
Paul Alexander Golding: But.
Paul Alexander Golding: I do think that we can.
Paul Alexander Golding: We can build the same size.
Paul Alexander Golding: For less money.
Paul Alexander Golding: I do think that the.
Paul Alexander Golding: We put together a portfolio of spheres of different sizes going all the way down to 5000 seats.
Paul Alexander Golding: So we can adjust adjust the project by the size of the marketplace.
Paul Alexander Golding: And it's.
Paul Alexander Golding: It's really it's.
Paul Alexander Golding: It's not a cost thing that we're seeing with the people that we talk to right now.
James Lawrence Dolan: You know, it's what they're going to do with it. It's, you know, the marketplaces we're talking to are looking for, if they build a sphere, to have a significant impact on the marketplace itself, a lot like back to that SportsCenter analogy. If all of a sudden you landed a major sports franchise in your marketplace, what does that do for the marketplace? I think they're looking at it the same kind of way, that that's what a sphere would do for the marketplace.
Paul Alexander Golding: Yes.
Paul Alexander Golding: Yes.
Paul Alexander Golding: That's what they're going to do with it.
Paul Alexander Golding: <unk>.
Paul Alexander Golding: The marketplaces, we're talking to are looking for.
Paul Alexander Golding: If they build the sphere to have a significant impact on the marketplace itself a lot like back to that sports centers that analogy. If all of a sudden you landed a major sports franchise in Europe and your marketplace. What does that do for the marketplace. I think they are looking at it the same that same kind of way, but that's what our sphere with two four for the <unk>.
James Lawrence Dolan: And so it's not really so much a question of price. And by the way, I think that the sphere is, even at the price that we paid to build Las Vegas, if you take a look at, I won't name names, certain marketplaces that built their own arenas, right, you'll find that those arenas, which, you know, cost a similar amount to sphere, and they obviously can't do anything like what sphere does.
Paul Alexander Golding: Marketplace and so it's not really so much a question of price and by the way.
Paul Alexander Golding: Think that this fear is even at the price that we paid the bill Las Vegas, If you take a look at I won't name names certain marketplaces that built their own arenas right youll find that those arenas switch.
Paul Alexander Golding: Cost of.
Paul Alexander Golding: A similar cost the sphere and they obviously can't do anything like what's fair enough.
Speaker Change: Thanks for that Jim.
Ari Danes: I will now turn the call back to Ari for his closing remarks.
Speaker Change: I will now turn the call back to Ari for closing remarks.
James Lawrence Dolan: Before we close, right, nobody asked the question about technology. But we should, I do want to talk for a minute about a development that happened just these last two weeks, that we were able to acquire the controlling interests and basically all of the equity in a company called HoloPlot these last two weeks.
Ari Danes: Before we close right.
Ari Danes: But he asked the question question about technology.
Ari Danes: Should I do want to talk for a minute about a development that happened.
Ari Danes: Just this last two weeks.
We were able to acquire that.
Ari Danes: Controlling interests in basically all of the equity in a company called our plot.
Ari Danes: This last two weeks.
James Lawrence Dolan: HoloPlot, as you might know, is the sound system that operates inside of the sphere. And the technology is unique. It's patented, and we think that it's called beamforming sound. We think that there's going to be a lot of legs to that company. And you really can't build a sphere without a beamforming component to it. The sound does not work unless you have that technology, and so we're very happy that we were able to acquire this technology, acquire the company, and we see it doing great things for us.
Ari Danes: Hello plot right you might know is the.
Ari Danes: South system that is operates inside of the sphere and the technology is unique.
Ari Danes: It's patented.
Ari Danes: And we think that that.
Ari Danes: Called beam, forming sound, we think that that there is going to be a lot of legs to that company.
Ari Danes: And you really can't build a sphere without.
Ari Danes: Without a beam forming.
Ari Danes: Component to it.
Ari Danes: <unk> does not work unless you do unless you have that technology and so we're very happy that we were able to acquire acquire this technology acquired a company and.
Ari Danes: We see it doing great things for us.
Ari Danes: Thanks, Jim, and thank you all for joining us. We look forward to speaking with you on our year-end call in August. Have a good day.
Speaker Change: Thanks, Kevin and thank you all for joining US we look forward to speaking with you on our year end call in August have a good day.
Regina: That will conclude today's meeting. Thank you all for joining, and you may now disconnect.
Speaker Change: That will conclude today's meeting thank you all for joining and you may now disconnect.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Yes.