Q3 2025 Sphere Entertainment Co Earnings Call
Speaker #3: Good morning , and thank you for standing by . Welcome to the Sphere Entertainment Co. . Third quarter 2020 Earnings Conference Call . At this time , all participants are in a listen only mode .
Operator: Good morning, and thank you for standing by. Welcome to the Sphere Entertainment Co. Q3 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Investor Relations. Please go ahead.
Speaker #3: After the speaker's remarks , there will be a question and answer session . I would now like to turn the call over to Ari Danes investor Relations .
Speaker #3: Please go ahead .
Speaker #4: Thank you . Good morning and welcome to Sphere Entertainment Co. fiscal 2025 third Quarter Earnings Conference Call . Today's call will begin with our Executive Chairman and CEO , Jim Dolan , who will provide an update on the business .
Ari Danes: Thank you. Good morning, and welcome to Sphere Entertainment Co.'s Fiscal 2025 Q3 earnings conference call. Today's call will begin with our Executive Chairman and CEO, James Dolan, who will provide an update on the business. Robert Langer, our Executive Vice President, Chief Financial Officer, and Treasurer, will review our financial results for the period. After our prepared remarks, we will open up 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 a note of the following. Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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.
Speaker #4: Robert Langer . Our Executive Vice President , Chief Financial Officer and Treasurer will then review our financial results for the period . After our prepared remarks , we will open up the call for questions .
Speaker #4: If you do not have a copy of today's earnings release , it is available in the investor section of our corporate website . Please take a note of the following .
Speaker #4: Today's may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 . 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 .
Speaker #4: Please refer to the discussion . The company disclaims any obligation to update any forward looking statements that may be discussed during this call .
Ari Danes: Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. 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 or AOI, a non-GAAP financial measure. With that, I'll now turn the call over to Jim.
Speaker #4: 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, or AOI.
Speaker #4: A non-GAAP financial measure . And with that , I'll now turn the call over to Jim .
Speaker #5: Thank you , Ari , and good morning , everyone . For today's call , I'd like to focus on two important areas to the spear business model .
James Dolan: Thank you, Ari, and good morning, everyone. For today's call, I'd like to focus on two important areas to the Sphere business model: the technology that powers Sphere and the opportunities it creates for our company, and our progress in expanding the Sphere venue footprint around the world. Behind virtually every aspect of what we do is the proprietary technology we have developed. This is reflected in what audiences experience at Sphere in Las Vegas to the work taking place at Sphere Studios in Burbank. We own key technology component providers to Sphere and have a portfolio of over 60 patents in the US spanning across Sphere, venue design, audio delivery, video capture and display, 4D technologies, and more. We have also continued to secure international patents to protect our innovations around the world.
Speaker #5: The technology that powers spear and the opportunities it creates for our company and our progress in expanding the sphere of venue footprint around the world .
Speaker #5: Behind virtually every aspect of what we do is the proprietary technology we have developed . This is reflected on what audiences experience at Spear in Las Vegas , to the work taking place at Sphere Studios in Burbank .
Speaker #5: We own Key technology component providers to sphere and have a portfolio of over 60 patents in the US , spanning across sphere , venue design , audio delivery , video capture and display board technologies , and more .
Speaker #5: We have also continued to secure international patents to protect our innovations around the world , and we are not standing still as we continue to invest in technology and content to extend our leadership position .
James Dolan: We are not standing still as we continue to invest in technology and content to extend our leadership position. The use of these technologies is also not limited to Sphere venues. For example, this year we introduced our advanced audio system, Sphere Immersive Sound, at Radio City Music Hall, transforming the audio experience in nearly a one-hundred-year-old venue. We're now exploring additional commercial opportunities for Sphere Immersive Sound, as well as other aspects of our technology portfolio. In terms of original content, The Wizard of Oz at Sphere utilizes advanced technologies like generative AI in ways that haven't been done before. As we look ahead, we intend to use these AI tools in partnership with Google for additional Sphere experience projects. We are also actively pursuing opportunities to utilize these AI tools for content on other distribution platforms.
Speaker #5: The use of these technologies is also not limited to sphere venues . For example , this year we introduced our advanced audio system sphere Immersive Sound at Radio City Music Hall , transforming the audio experience in nearly a 100 year old venue .
Speaker #5: And we're now exploring additional commercial opportunities for Sphere immersive sound , as well as other aspects of our technology portfolio . In terms of original content , The Wizard of Oz sphere utilizes advanced technologies like generative AI in ways that haven't been done before .
Speaker #5: As we look ahead , we intend to use these AI tools in partnership with Google for additional sphere experience projects . We are also actively pursuing opportunities to utilize these AI tools for content on other distribution platforms .
Speaker #5: We expect to have more to share in the months ahead . Turning to our venue expansion plans in Abu Dhabi , we are nearing completion of pre-construction phase with the Department of Culture and Tourism .
James Dolan: We expect to have more to share in the months ahead. Turning to our venue expansion plans. In Abu Dhabi, we are nearing completion of the pre-construction phase with the Department of Culture and Tourism. We also have discussions with a significant number of domestic and international markets, as well as potential financing partners. These discussions span across small, medium, and large-scaled Spheres. Our designs include seating capacities of approximately 3, 6, and 18,000. Behind each venue design is an economic model that we believe will generate an attractive return on investment. We look forward to updating you on our progress. With that, I will now turn the call over to Robert, who will take you through our financial results.
Speaker #5: We also have discussions with the significant number of domestic and international markets , as well as potential financing partners . These discussions span across small , medium and large scale spheres .
Speaker #5: Our designs include seating capacities of approximately three , six and 18,000 , and behind each venue . Design is an economic model that we believe will generate an attractive return on investment .
Speaker #5: We look forward to updating you on our progress. And with that, I will now turn the call over to Robert, who will take you through our financial results.
Speaker #6: Thank you , Jim , and good morning , everyone . For the September quarter , we generated total company revenues of $262.5 million and adjusted operating income of $36.4 million .
Robert Langer: Thank you, Jim. Good morning, everyone. For Q3, we generated total company revenues of $262.5 million and adjusted operating income of $36.4 million. Our Sphere segment generated revenues of $174.1 million, an increase of 37% against the prior year period. This growth was mainly driven by higher revenues from The Sphere Experience and reflects approximately 1-month impact from The Wizard of Oz at Sphere, which launched on 28 August and has seen strong demand since its opening. As a result, in mid-October, the production passed 1 million tickets sold and achieved over $130 million in ticket sales already.
Speaker #6: Our sphere segment generated revenues of $174.1 million , an increase of 37% against the prior year period . This growth was mainly driven by higher revenues from the sphere experience and reflects approximately one month impact from the Wizard of Oz at Sphere , which launched on August 28th and has seen strong demand since its opening .
Speaker #6: As a result , in mid-October , the production passed 1 million tickets sold and achieved over $130 million in ticket sales . Already .
Speaker #6: In addition to higher revenues from the sphere experience this past quarter , we also saw revenue growth from concert residencies , exosphere advertising and sponsorship , and our efforts to bring the world's sphere to Abu Dhabi .
Robert Langer: In addition to higher revenues from The Sphere Experience this past quarter, we also saw revenue growth from concert residencies, Exosphere advertising and sponsorship, and our efforts to bring the world's second Sphere to Abu Dhabi. Overall revenue growth was only partially offset by the absence of a marquee sporting event and a corporate event held in the prior year quarter, as well as other revenue decreases. Q3 adjusted operating income for our Sphere segment was $17.1 million as compared to an adjusted operating loss of $26.3 million in the prior year quarter. This reflected the increase in revenues as well as lower SG&A expenses, partially offset by higher direct operating expenses.
Speaker #6: Overall revenue growth was only partially offset by the absence of a marquee sporting event and a corporate event held in the prior year's quarter, as well as other revenue decreases.
Speaker #6: Third quarter adjusted operating income for our sphere segment was $17.1 million . As compared to an adjusted operating loss of $26.3 million in the prior year quarter .
Speaker #6: This reflected the increase in revenues as well as lower G&A expenses , partially offset by higher direct operating expenses . The increase in direct operating expenses includes higher expenses associated with the sphere experience , mainly due to the impact of the Wizard of Oz at Sphere .
Robert Langer: The increase in direct operating expenses includes higher expenses associated with The Sphere Experience, mainly due to the impact of The Wizard of Oz at Sphere. It also reflects the increase in the number of concerts held at Sphere compared to the prior year quarter, which was partly offset by lower other event-related expenses. SG&A expenses for the September quarter were $92.7 million, a decrease of $12.3 million year over year. This includes the impact of the company's focus on driving cost efficiencies this year. Turning to MSG Networks, the segment generated $88.4 million in revenues and $19.3 million in AOI in the September quarter. This compares to $100.8 million in revenues and $16.1 million in AOI in the prior year period.
Speaker #6: It also reflects the increase in the number of concerts held at sphere compared to the prior year quarter , which was partly offset by lower other event related expenses .
Speaker #6: SG&A expenses for the September quarter were $92.7 million , a decrease of $12.3 million year over year . This includes the impact of the company's focus on driving cost efficiencies this year .
Speaker #6: Turning to MSG networks , the segment generated $88.4 million in revenues and $19.3 million in A.Y. in the September quarter . This compares to $100.8 million in revenues and $16.1 million in ROI in the prior year period .
Speaker #6: These results reflect an approximately 13.5% decrease in subscribers , as well as the impact of recent amendments to MSG networks . Media rights agreements with MSG sports , and certain other professional teams .
Robert Langer: These results reflect an approximately 13.5% decrease in subscribers, as well as the impact of recent amendments to MSG Networks media rights agreements with MSG Sports and certain other professional teams. Turning to our balance sheet, as of 30 September, our Sphere business had net debt of approximately $205 million. This reflected approximately $329 million of unrestricted cash and cash equivalents, $259 million in convertible debt, and a $275 million credit facility related to Sphere in Las Vegas. In addition, as of 30 September, MSG Networks had net debt of approximately $144 million. This included $200 million outstanding on the MSG Networks term loan, which, as a reminder, is debt that is recourse only to MSG Networks.
Speaker #6: Turning to our balance sheet , as of September 30th , our sphere business had net debt of approximately $205 million . This reflected approximately $329 million of unrestricted cash and cash equivalents , $259 million in convertible debt , and a $275 million credit facility related to Sphere in Las Vegas .
Speaker #6: In addition , as of September 30th , MSG networks had net debt of approximately $144 million . This included $200 million outstanding on the MSG network term loan , which , as a reminder , is that that is recourse only to MSG networks following the end of the quarter .
Robert Langer: Following the end of the quarter, MSG Networks repaid an additional $31 million from the term loan using cash on hand at MSG Networks, bringing the current principal outstanding to approximately $169 million. During the quarter, we repurchased $50 million or approximately 1.1 million shares of our Class A common stock. Following these repurchases, we now have approximately $300 million remaining under our current buyback authorization. With that, we'll now open the call for questions.
Speaker #6: MSG networks repaid an additional $31 million on the term loan using cash on hand at MSG networks , bringing the current principal outstanding to approximately $169 million .
Speaker #6: During the quarter . We repurchased $50 million , or approximately 1.1 million shares of our class A common stock . Following these repurchases .
Speaker #6: We now have approximately $300 million remaining under our current buyback authorization . And with that , I'll now open the call for questions .
Speaker #3: At this time , I would like to remind everyone , in order to ask a question , press star . Then the number one on your telephone keypad .
Operator: At this time, I would like to remind everyone, in order to ask a question, press star then 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brandon Ross with Lightshed Partners. Please go ahead.
Speaker #3: We will pause for just a moment to compile the Q&A roster . Your first question comes from the line of Brandon Ross with light shed .
Speaker #3: Partner . Please go ahead .
Speaker #7: Good morning . Thanks for taking the questions . Jim , I want to let you enjoy the odd success you're having . I guess especially this quarter .
Brandon Ross: Good morning. Thanks for taking the questions. Jim, I want to let you enjoy the Oz success you're having, I guess especially this quarter. Wanted to ask you about the original content program beyond Oz. To that end, what have you learned from Oz's success, and do you expect it to influence the original content program going forward from here? I know From The Edge is next, but afterwards, are you going to lean more into known movie IP like you did with Oz?
Speaker #7: But wanted to ask you about the original content program Beyond Oz and to that end , what have you learned from Oz success and do you expect it to influence the original content program ?
Speaker #7: Going forward ? From here ? I know edge or from the Edge is next , but afterwards , are you going to lean more into known movie IP like you did with us ?
James Dolan: Okay. Well, let's see. What have we learned? The first thing is we learned is there's no place like home. Look, The Wizard of Oz really is the first piece of content that unlocks the medium itself. You know, I think probably one of the things we learned content-wise from Wizard is that the 4D effects actually are even more important to the content than what we originally thought. We obviously thought the screen and the sound was gonna be important. 4D has turned out to be even more important with our customer base.
Speaker #5: Okay , well , let's see , what have we learned ? The first thing is we learned is there's no place like home .
Speaker #5: But look , the The Wizard of Oz really is the first piece of content that unlocks the the medium itself . The . And , you know , I think probably one of the things we learned content wise from Wizard is that the 4D effects actually are even more important to the to the content than what we originally thought .
Speaker #5: We obviously thought the screen and the sound was going to be important . The . But 4D has turned out to be even more important with with our customer base .
James Dolan: But look, there is still a lot more to go in terms of exploring the medium, and From The Edge should do that, should help us to delve further into it. Primarily because it is a completely different way than The Wizard of Oz of approaching the medium. Wizard is a remake of a 1939 classic. From The Edge. With Wizard, we just basically took that content and we, you know, you know what we did with it. But the content already existed and so all the work was primarily done in editing, studios, AI, et cetera. With From The Edge, we now get into live capture. And we start to use our Big Sky system, right, to create these environments and experiences.
Speaker #5: But look , there's still a lot more to go in terms of exploring the medium . And from the edge . Should do that , should help help us delve further into it , primarily because it's a completely different way than Wizard of Oz , of approaching the medium .
Speaker #5: Wizard is a remake of a 1939 classic from the Edge , and it's . And there are no with the . We just basically took that content and we , you know , you know , what we did with it .
Speaker #5: The but the content already existed and the and so all the work was primarily done in , in editing studios , AI , etc.
Speaker #5: . The with From the Edge . We now get into live capture and we start to use our big sky system right to , to create these environments and experiences .
Speaker #5: That and that's a completely different way of creating content than what we did . It was a device . So we're I'm anxious to see how it does the having said that , after From the Edge , I mean , I think we'll probably look to see what else we can do to push the media , right , to create even more experience for our for our customers , because that's clearly what they're interested in .
James Dolan: That's a completely different way of creating content than what we did at The Wizard of Oz. I'm anxious to see how it does. Having said that, after From The Edge, I mean, I think we'll probably look to see what else we can do to push the medium, right? To create even more experience for our customers, 'cause that's clearly what they're interested in.
Speaker #7: Great . And then in the prepared you , you started off talking about the value of your technology . And I was hoping you could give us a little more like what ?
Brandon Ross: Right. Then in the prepared, you started off talking about the value of your technology. I was hoping you could give us a little more. What tech in the portfolio beyond audio do you think has third-party value? What are the use cases? Over time, do you expect licensing this technology is going to be a real meaningful contributor to revenue and more importantly, AOI?
Speaker #7: What tech in the portfolio beyond audio , do you think has third party value ? What are the use cases ? And over time , do you expect licensing this technology is going to be a real meaningful contributor to revenue .
Speaker #7: And more importantly , ROI .
Speaker #5: Well , it's serves multiple purposes . So your question sort of has two parts to it . But in terms of the platforms , right .
James Dolan: Well, it serves multi purposes. Your question sort of has two parts to it. In terms of the platforms, right? Remember, if you in my comments, I talked about taking the technology and migrating it to other platforms. One of the things that we did with Wizard of Oz was we worked very closely with Google. We did set up a process and a pipeline to handle AI. Over the 2 years that it took us to make Wizard of Oz, we got pretty good at it. We got pretty good at things like not only just using the AI, but transferring the data from place to place, being able to work on it, that whole infrastructure.
Speaker #5: Remember if you in my comments I talked about about taking the technology and and and migrating it to other platforms , one of the things that we did with Wizard of Oz was we worked very closely with Google , but we did set up a a process the and a pipeline to handle AI and over the two years that it took us to make Wizard of Oz , we got pretty good at it .
Speaker #5: We got pretty good at things like not only just using the AI , but transferring the data from place to place , being able to work on it .
Speaker #5: That whole infrastructure . So when was it ? A vase finished ? The the we were sitting with this already built infrastructure that processes AI quite well .
James Dolan: When The Wizard of Oz finished, we were sitting with this already built infrastructure that processes AI quite well. We're now exploring how to utilize that infrastructure beyond Sphere. We'll have, as I said in my comments, more to say about it during this next quarter. That is a technological advance that Sphere Studios has that I think that we're going to be able to monetize. I think we'll have some interesting announcements over the next three months on that.
Speaker #5: And so we're now exploring how to utilize that infrastructure beyond the sphere . And we'll have , as I said in my comments , we'll have more to say about it during this next quarter .
Speaker #5: But that that is a technological advance that that Sphere Studios has , that I think that we're going to be able to monetize .
Speaker #5: And I think we'll have some interesting announcements over the next over the next three months on that . Other technologies beyond , I mean , sphere sound , I have to tell you , I'm I don't want to wax on this too much , but I mean , the I know that we did a full orchestra test yesterday in at Radio City .
James Dolan: Other technologies beyond, I mean, at Sphere Immersive Sound, I have to tell you, I don't want to wax on this too much, but I mean, I know that we did a full orchestra test yesterday in Radio City. Don't underestimate what a great sound experience will mean for a venue. I mean, all you gotta do is go to any big stadium and listen to the announcers or try and go to a concert at a big stadium, and you know that the sound is muddled, you know. Changing that dynamic in the live experience is significant. I do think that we're gonna be able to monetize it, maybe even to the level where it gets to the home.
Speaker #5: Don't underestimate the what a great sound experience will mean for a venue . The I mean , all you got to do is go to any big stadium and and listen to the announcers or try and go to a concert at a big stadium .
Speaker #5: And , you know that the sound is muddled . You know , the changing that dynamic in the live experience is significant . And I do think that we're going to be able to monetize it , maybe even to the level where it gets to the home , the but what I'm excited about , what's going to happen at Radio City .
James Dolan: But I'm excited about what's gonna happen at Radio City. I'm excited to see what, whether, you know, whether our customer base recognizes the improvement in the quality and sees it as a real feature that makes our content even more attractive.
Speaker #5: And I'm excited to see what whether you know , whether our customer base recognizes the improvement in the quality and sees it as a real feature that makes our content even more attractive .
Speaker #7: Thank you very much , Jim .
Brandon Ross: Thank you very much, Jim.
Speaker #3: Your next question comes from the line of David Kowalski with JP Morgan . Please go ahead .
Operator: Your next question comes from the line of David Karnovsky with JPMorgan. Please go ahead.
Speaker #8: Hey , thank you Jim , with Wizard of Oz . Wanted to see how you're thinking about optimizing revenue from here in terms of price .
David Karnovsky: Hey, thank you. James Dolan, with The Wizard of Oz, wanted to see how you're thinking about optimizing revenue from here in terms of price, show count, or adding sections. Then maybe as a follow-up to a prior question, assuming Oz demand remains strong through 2026, when would be the right time to launch From The Edge, which I believe you've announced for the next calendar year?
Speaker #8: Show count or adding sections , and then maybe as a follow up to a prior question , assuming Oz demand remains strong through 2026 , when would be the right time to launch from the edge , which I believe you've announced for the next calendar year ?
Speaker #5: So we're we're from the edge . First off , is not finished yet , so it's got it's got a ways to go .
James Dolan: We're From The Edge, first off, is not finished yet. It's got a ways to go. I expect that it will be ready by the end of the summer. That doesn't mean that we'll launch it at the end of the summer. It can, it will stay fresh. You know, we plan on basically running Wizard of Oz till we see demand starts to fall off. That could be a lot longer than a year. In addition, we're planning what would you call it? We're going to Wizard of Oz 2.0, right?
Speaker #5: I expect that it will be ready by the by the end of the summer , but that doesn't mean that we'll launch it at the end of the summer .
Speaker #5: The it can it will stay fresh . No , the and we plan on basically running Wizard of Oz until we see demand to start to fall off .
Speaker #5: That could be a lot longer than a year . In addition , the we're planning a an what would you call it ? We're going to Wizard of Oz 2.0 , right .
Jen: Enhanced.
Speaker #5: And enhanced version that we would launch on the anniversary of the premiere . And this is likely going to include some , some new features to the to the film , such as we might just take you for a ride on a witch's broom , the the during the show , the and you know how much more life that will breathe into into Wizard of Oz .
James Dolan: An enhanced version that we will launch on the anniversary of the premiere. This is likely going to include some new features to the film, such as we might just take you for a ride on a witch's broom during the show. You know, how much more life that will breathe into The Wizard of Oz, you know, I'm not really sure, but I think it might be pretty good. You know, I always tell my team, you know, Cirque du Soleil's O has been running for 30 years in Las Vegas. It's basically the same show. I mean, what's the lifespan of The Wizard of Oz?
Speaker #5: You know I'm not really sure , but I think I think it might be pretty good . You know , I always tell my team , you know , the the Cirque du Soleil's O has been running for 30 years .
Speaker #5: That at in Las Vegas . It's basically the same show . So , I mean , what's the what's the lifespan of Wizard of Oz ?
Speaker #5: I wouldn't surprise me if we were , you know , if we were showing Wizard of Oz ten years from now , the .
James Dolan: It wouldn't surprise me if we were, you know, if we were showing The Wizard of Oz 10 years from now. The other thing, you know, right now we're creating for one venue. What's great is that, you know, we can monetize that content just with the one venue. We want to build more venues, and we are building more venues. That will help us take things like content costs and overhead costs, right, and spread them out against more revenue streams. That should make the company much more profitable.
Speaker #5: But the other thing that that , you know , right now , we're creating for one venue and it's and what's great is that , you know , we can monetize that content just with the one venue .
Speaker #5: But we want to build more venues , and we are building more venues . And the and that will help us take things like content costs and overhead costs .
Speaker #5: Right . And spread them out against more revenue streams . The and should make the company much more profitable .
Speaker #8: All right . Thank you .
David Karnovsky: Great. Thank you.
Speaker #3: Your next question comes from the line of Steven Lazarczyk with Goldman Sachs . Please go ahead .
Operator: Your next question comes from the line of Steven Laszczych with Goldman Sachs. Please go ahead.
Speaker #9: Hey , great . Thanks for taking the question , Jim . Maybe just following up on that , that last point there , you've had this incredibly successful debut of Wizard of Oz over the last few months , and it certainly seems to be surpassing postcards in a lot of ways .
Steven Laszczych: Hey, great. Thanks for taking the question. Jim, maybe just following up on that last point there. You've had this incredibly successful debut of The Wizard of Oz over the last few months, and it certainly seems to be surpassing Postcards in a lot of ways. I would just be curious, as you look ahead into 2026, to get your thoughts on what you think the trajectory of Oz could look like from a business and performance perspective. To what extent you think this momentum that we're seeing in adding show count and in some of the higher sell-through that we've seen over the last couple of months can continue into the next 12 months?
Speaker #9: It would just be curious , as you look ahead into 2026 to get your thoughts on what you think the trajectory of was could look like from a business and performance perspective , to what extent you think this momentum that we're seeing in adding show count and some of the higher sell through that we've seen over the last couple of months , can continue into the into the next 12 months , or perhaps a framework you're thinking about as it compares to postcards as you you look out into 26 and try to gauge how meaningful and successful this piece of content can be .
Steven Laszczych: Perhaps a framework you're thinking about as it compares to Postcards as you look out into 2026 and try to gauge how meaningful and successful this piece of content can be.
Speaker #5: Well , postcards was what we called the first pancake . And so , you know , it wasn't perfect . The it did an okay job of of of showcasing the medium to start off with Wizard of Oz took it to the to to the next level .
James Dolan: Well, Postcards was what we called the first pancake. You know, it wasn't perfect. It did an okay job of showcasing the medium to start off with. The Wizard of Oz took it to the next level. You know, how long can it go for? I think it can go a long time. I don't You know, I mean, in terms of demand on the marketplace, you know, Las Vegas is a great market. I'd love to clone that market. With over 40 million visitors every year, right? There's a lot to be plunked.
Speaker #5: You know , how long can it go for ? I'm I think it can go a long time . The the I don't you know , I mean in terms of demand on the marketplace , you know Las Vegas is a great market .
Speaker #5: I love the clone that market the with over 40 million visitors every year . Right . The . There's there's a lot to be plumbed .
James Dolan: I think one of the reasons that O was as successful as it was is because, you know, it stands up with that 40 million people coming in. Pretty much everybody over the years has seen O who's gone to Vegas. I think Wizard of Oz can perform the same way, but I'm hoping that we, you know I mean, that's one of the beauties of the Sphere. I mean, when you look at shows like O, there was a huge capital investment in the beginning, and they're running it out. I think they did a refresh here and there. But it's basically the same show. We can change the show, right?
Speaker #5: And I think one of the reasons that always successful as as it was is because , you know , it stands up with that 40 million people coming in pretty much .
Speaker #5: Everybody over the years has seen , oh , who's gone to gone to Vegas ? I think Wizard of Oz can perform the same way .
Speaker #5: But I'm hoping that we , you know , I mean , that's one of the beauties of the spheres . I mean , when you look at shows like , oh , there was a huge capital investment in the beginning and they're just and they're running it out .
Speaker #5: I think they did a refresh here and there , but it's basically the same show . We can change the show , right ?
Speaker #5: That we can do Wizard of Oz , right at at 1:00 in the afternoon . Right . And from the edge at 5:00 in the afternoon , the and we can add more , etcetera .
James Dolan: We can do The Wizard of Oz, right, at 1:00 in the afternoon, right, and From The Edge at 5:00 in the afternoon. We can add more, etc. The idea of keeping the Sphere filled and in demand, I mean, I think that with the way we've designed the technology, etc., you know, we can keep the Sphere going to keep it filled for a long time to come.
Speaker #5: So the , the idea of keeping the sphere filled and in demand , I mean , I think that with , with the way we've designed the technology , etc.
Speaker #5: , we can keep , you know , we can keep the sphere going , to keep it filled for a long time to come .
Speaker #9: Thank you very much , Jim .
Steven Laszczych: Thank you very much, Jim.
Speaker #3: Your next question comes from the line of Peter Supino with Wolfe Research . Please go ahead .
Operator: Your next question comes from the line of Peter Supino with Wolfe Research. Please go ahead.
Speaker #10: Hi, this is Logan on for Peter. Jim, you mentioned in an interview that you hoped to have a small Sphere announcement by the end of the year.
Logan Angress: Hi, this is Logan Angress on for Peter. Jim, you mentioned in an interview that you hope to have a small Sphere announcement by the end of the year. I'm curious if you can share any insight into expectations for that venue. Specifically, is the expectation that it will be capital free, or do you expect to be a minority investor in that venue or in venues to come?
Speaker #10: I'm curious if you can share any insight into expectations for that venue and specifically is the expectation that it will be capital free , or do you expect to be a minority investor in that venue or in venues to come ?
James Dolan: Well, let's see. Do I expect to be capital free? We have a model that where we are capital free and, you know, I think that is a preferred model. Would we invest? Well, look, I think it's a really good investment. you know, the economic models that we've built around all of the different versions of Sphere have really good ROIs. I mean, as we have free cash to invest, etc., you know, that is something that, you know, that you probably I would think we'll do some things.
Speaker #5: Well , let's see the do we expect to be capital free ? We have a model that we're where we are capital free and the you know , I think that's that is a preferred model .
Speaker #5: Would we would we invest ? Well , look , I think it's a really good investment that the , you know , the economic models that we've built around , around all of the different versions of sphere have really good ROI .
Speaker #5: So , I mean , as we have free cash to invest , etc. , you know , that is something that , you know , that the that you probably , I would think will do some things that plus , you know , I mean , the , you know , it does show a level of confidence , right , that the company has in the project .
James Dolan: The plus, you know, I mean, you know, it does show a level of confidence, right, that the company has in the project when you know, when you say take 10% of the equity, right? It also helps the lending model, etc. I think we're flexible in that way. I think that kind of answers your question. Oh, you wanna know if we're gonna announce when we're gonna announce something and where. Well, that's what announcements are for.
Speaker #5: When you , you know , you say take 10% of , of the equity , right ? The it also helps the lending model , etc.
Speaker #5: . So , so I you know , I think we're flexible in that way . And I think that kind of answers your question .
Speaker #5: Oh , you want to know if we're going to if we're going to announce when we're going to announce something and where . Well , that's what announcements are for now .
Speaker #10: Got it . And then a quick follow up . You mentioned you're in conversations with a bunch of different potential partners . I'm curious how , if at all , the success of Wizard of Oz has changed those conversations with those potential franchisees ?
Logan Angress: Got it. A quick follow-up. You mentioned you're in conversations with a bunch of different potential partners. I'm curious how, if at all, the success of Wizard of Oz has changed those conversations with those potential franchisees.
Speaker #5: Oh , I you know , I think Wizard of Oz , you know , opened up the floodgates , at least from the , you know , from our phone ringing .
James Dolan: I think The Wizard of Oz, you know, opened up the floodgates, at least from the, you know, from our phone ringing. Although people's phones don't actually ring anymore. Emails and texts. We're hearing from all over the world, domestically, internationally, right? I mean, what we're doing in Abu Dhabi is really kind of interesting. We're not gonna reveal exactly the locations, but I will tell you that they have taken Sphere and put it into a much larger plan for the entire marketplace that they have. Sphere is like the diamond sitting in the top of the ring.
Speaker #5: Although people's phones don't actually ring anymore emails and and texts , the we're hearing from all over the world domestically , internationally . Right , that the I mean , what we're doing in Abu Dhabi is really is really kind of interesting the I'm we're not going to we're we're not going to reveal exactly the location , but I will I will tell you that the they have taken sphere and and put it into a much larger plan for the , for the entire marketplace that they have .
Speaker #5: And sphere is like the diamond sitting in the top of the ring . The , the and so it has that kind of impact on , on urban development .
James Dolan: It has that kind of impact on urban development, et cetera. When you look around the world, you look at who's developing their marketplaces, who's developing their urban structure, infrastructures, et cetera, particularly when it comes to entertainment, et cetera, Sphere just fits so nicely into all of those plans. I think that what The Wizard of Oz did was woke people up to that fact. That's why we're seeing so much interest.
Speaker #5: Et-cetera . And so when you look around the world , you look at who's developing their marketplaces , who's developing their urban structure , infrastructures , etc.
Speaker #5: , particularly when it comes to to entertainment and etc. sphere , just fits . So nicely . The into all of those plans .
Speaker #5: And I think that what The Wizard of Oz did was woke people up to that to that fact . And so that's why we're seeing so much interest .
Speaker #10: Got it . Thanks so much .
Logan Angress: Got it. Thanks so much.
Speaker #3: Your next question comes from the line of Ryan Segal with Craig-hallum . Please go ahead .
Operator: Your next question comes from the line of Ryan Sigdahl with Craig-Hallum. Please go ahead.
Speaker #11: Hey good morning Jim . You mentioned in an interview with New York Post in late August that sphere had booked up until September 20th , 27 with a residency pipeline .
Ryan Sigdahl: Good morning, Jim. You mentioned in an interview with New York Post in late August that Sphere had booked up until September 2027 with a residency pipeline. This implies that pipeline continues to build extremely well with lots of kind of artists that want to play there. Realizing there's a healthy competition with, or I guess, for the Sphere space. My question is ultimately, do you expect more concerts in 2026 versus 2025? How do you think about the upper limit for the number of concerts per year within the Sphere?
Speaker #11: So implies that pipeline continues to build extremely well with with lots of kind of artists that want to play there . But realizing there's a healthy competition with or I guess for the sphere space .
Speaker #11: But my question is , ultimately , do you expect more concerts in 2026 versus 2025 ? And then how do you think about the upper limit for the number of concerts per year within the sphere ?
Speaker #5: It's interesting you asked that question because we just had a discussion about this yesterday , about what the optimum combination is on a day that the in the sphere and what we came out with is the the , the best combination is , you know , a concert like the Eagles or , or Zac Brown or whatever in the evening that the with at least 2 to 3 shows of like The Wizard of Oz right in the afternoon that generates the most amount of of cash flow , etcetera .
James Dolan: It's, it's interesting you ask that question because we just had a discussion about this yesterday, about what the optimum combination is on a day that the in the Sphere. What we came out with is the, the best combination is, you know, a concert like the Eagles or Zac Brown or whatever in the evening that the, with at least two to three shows of like, The Wizard of Oz, right, in the afternoon. That generates the most amount of cash flow, et cetera, in a day. Honestly, the problem that we're having, and it's what my old manager used to call a first-class problem, right, is that the, we're trying to find, you know, more opportunity to put more into the, into the Sphere.
Speaker #5: In a day . Honestly , the problem that that that we're having and it's what my old manager used to call first class problem .
Speaker #5: Right , is that the we're trying to find , you know , more opportunity to to put more into the , into the sphere .
James Dolan: I mean, I do think that concerts and those kinds of things are important to the Sphere. I mean, particularly if you're, you know, if you're coming to Las Vegas to see a concert at the Sphere, and then at the same time, the next day you get up and in the afternoon you go see The Wizard of Oz, et cetera, it's, you know, that's a pretty good formula. Nothing has slowed down in terms of artists who want to play the Sphere. In fact, that's one of the things that we're juggling is how do we, you know, how do we get all these artists in?
Speaker #5: So I mean , I do think that that concerts and those kinds of things are important to the sphere . I mean , particularly if , if you're , you know , if you're you're coming to Las Vegas to see a concert at the sphere and then at the same time the next day , you , you get up and in the afternoon you go see The Wizard of Oz , the cetera .
Speaker #5: It's , you know , you know , that's a pretty good formula . But we're having we're we're nothing has slowed down in terms of of artists who want to play this sphere .
Speaker #5: In fact , that's one of the things that we're juggling is how do we how do we , you know , how do we get all these artists in ?
Speaker #5: I definitely got a lot more demand than than I do capacity at this point .
James Dolan: I've definitely got a lot more demand than I do capacity at this point.
Speaker #12: Thanks for the question , Ryan . We have time for one last caller .
Ari Danes: Thanks for the question, Ryan.
Ryan Sigdahl: Thanks, Jim.
Ryan Sigdahl: I'll mute you. We have time for one last caller.
Speaker #3: Your last question comes from the line of Peter Henderson with Bank of America . Please go ahead .
Operator: Your last question comes from the line of Peter Henderson with Bank of America. Please go ahead.
Speaker #13: Thank you for taking the questions . So just two , if I may , one on sphere and one on MSG networks . First on sphere .
Peter Henderson: Thank you for taking the questions. Just two, if I may. One on Sphere, one on MSG Networks. First on Sphere, regarding the Exosphere and sponsorship, just wondering if you can give us an update on the go-to-market approach, the, you know, the forward demand outlook and progress in establishing a recurring book of business. Then, you know, on MSG Networks, just wondering if you have any updated thoughts around a possibility for strategic action. Thank you.
Speaker #13: Regarding the sphere and sponsorship , just wondering if you could give us an update on the go to market approach . You know , the forward demand outlook and progress in establishing a recurring book of business .
Speaker #13: And then on MSG Networks. Just wondering if you have any updated thoughts around a possibility for strategic action? Thank you.
Speaker #5: Okay , I'm actually going to give that first one . You ready ? Jen , the you take you take that first one okay .
James Dolan: Okay. I'm actually gonna give that first one. You ready, Jen? If the You take that first.
Jen: Sure. I think the excitement and the interest that James Dolan was talking about coming from our live residencies and The Wizard of Oz isn't just kind of opening the floodgates when we think about additional Sphere, Spheres and expanding our physical footprint. We're seeing a lot of renewed interest and incremental interest when it comes to advertising and sponsorships with the Sphere. We've talked about it, this has been a year of transition for us, right? We've, you know, adjusted our go-to-market strategy. We've brought in our sales team in-house as of September. That sales team's largely in place. We're seeing positive results already. This past quarter, we had double-digit percentage increase when it comes to our sponsorship and Exosphere sales. I think, you know, we've got a strong start to next year already.
Speaker #5: .
Speaker #14: I think the excitement and the interest that Jim was talking about coming from our live residencies in Wizard of Oz isn't just kind of opening the floodgates when we think about additional spheres and expanding our physical footprint , we're seeing a lot of renewed interest in incremental interest when it comes to advertising and sponsorships .
Speaker #14: With this beer . We've talked about it . This has been a year of transition for us , right ? We've adjusted our go to market strategy .
Speaker #14: We've brought in our sales team in-house as of September , that sales team's largely in place , and we're seeing positive results already this past quarter , we had double digit percentage increase .
Speaker #14: When it comes to our sponsorship and exosphere sales . And I think , you know , we've got a strong start to next year already .
Speaker #14: Part of our go to market strategy adjustment was to really lean into tentpole events . And if I look at what we're seeing ahead for CES , we've got strong growth year over year for that conference , and it is part of our key strategy to lean in the conferences that are in town .
Jen: Part of our go-to-market strategy adjustment was to really lean into tentpole events. If I look at what we're seeing ahead for CES, we've got strong growth year-over-year for that conference. It is part of our key strategy to lean in the conferences that are in town. We're also leaning into the creation of these multi-year sponsorships. We've recently announced a few of those with Lenovo and Zoox. We will be announcing a few more in the coming months. I think we continue to build a really solid base when it comes to Exosphere advertising and sponsorships, and I think during the next calendar year, it's a high barrier of growth for us.
Speaker #14: We're also leaning into the creation of these multi-year sponsorships , and we've recently announced a few of those with Lenovo and Zoox , and we will be announcing a few more in the coming months .
Speaker #14: So I think we continue to build a really solid base when it comes to exosphere advertising and sponsorships . And I think during the next calendar year , it's a great area of growth for us .
Speaker #5: And the second part of the question , what was the second network ? Well , networks , before I get to that , Jen , by the end of the day tomorrow , how many tickets do you think we'll have sold The Wizard of Oz ?
James Dolan: The second part of the question, what was the second part?
Jen: Networks.
James Dolan: Oh, networks. Before I get to that, Jen, by the end of the day tomorrow, how many tickets do you think we'll have sold The Wizard of Oz?
Speaker #14: 1.2 million .
Jen: $1.2 million.
Speaker #5: 1.2 . So it's not slowing down .
James Dolan: 1.2. It's not slowing down.
Speaker #14: It's not at all .
Jen: Not at all.
Speaker #5: As far as networks goes , the you know , you know , we were able to put to to pay down some of the debt again .
James Dolan: As far as networks goes, you know, you know, we were able to pay down some of the debt again. That was good. Look, regional sports is a very powerful product. The problem in that business is that because of the shift from linear over to streaming, right? The monetization of that product, right, has took a real hit, it's still figuring out its way. The good news is that the product itself hasn't, you know, lost any luster with the marketplace. I mean, the opening game for the Knicks, I think had over 50,000 streams.
Speaker #5: So that was , that was good . The look regional sports is a very powerful product . The problem in that business is that the because of the shift from linear over to streaming , right .
Speaker #5: The monetization of that product , right . Has has took a real hit and it's still it's still figuring out its way . But the good news is , is that the that the product itself hasn't , you know , lost any luster with the , with the marketplace .
Speaker #5: I mean , the opening game for , for the Knicks , I think had over 50,000 streams . The . And you know , if you value those streams at $10 , you know , a , a stream that that's a half $1 million for one game .
James Dolan: You know, if you value those streams at $10, you know, a stream, that's half a million dollars for one game. You add that to the linear revenue, et cetera. You know, it's, you know, the point is, I guess, is that the business is still finding itself, but it's still got a very strong product. Strategically, you know, what I'd like to see, is I'd like to see the marketplace come together with all of its teams, to have a single seamless right offering to the consumers in the New York market for all of their teams. You know, obviously other than football, because that's all national. Every other team.
Speaker #5: The , the yeah . Add that to the linear revenue , etc. . And you know , it's , you know , the point is I guess is that the business is still finding itself , but it's still got a very strong product .
Speaker #5: And strategically , you know , the what I'd like to see is I'd like to see the marketplace come together with all of its teams , that to have a single seamless right offering to , to , to consumers in the New York market for all of their of the teams , you know , other obviously , other than football , because that's all national .
Speaker #5: But every other team , the having said that , we're not there yet . We are we are partners with with the Yankees .
James Dolan: Having said that, we're not there yet. We are partners with the Yankees, we have the Nets, we added them into, you know, we're getting there. I think in terms of the business, that's probably the future of the business. That's the way to make the business really strong. It's got quite a ways to go. What M&A and machinations happen between now and getting to that product, it would only be a guess on my part.
Speaker #5: And we have the nets and we added them into , you know , and so we're we're getting there . But I think in terms of the business that's probably the future of the business .
Speaker #5: That's the way to make the business really strong . But it's got quite a ways to go . And what M&A and machinations happen between now and getting to that product .
Speaker #5: It would only be a guess on my part .
Speaker #13: All right . Thank you .
Ari Danes: All right. Thank you.
Speaker #3: That concludes our Q&A session . I will now turn the call back over to Ari Danes for closing remarks .
Operator: That concludes our Q&A session. I will now turn the call back over to Ari Danes for closing remarks.
Speaker #12: Thank you all for joining us . We look forward to speaking with you on our next earnings call . Have a good day .
Ari Danes: Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day.
Operator: Ladies and gentlemen, thank you all for joining, and you may now disconnect. Everyone, have a great day.