As Sphere Entertainment transitions to a fiscal year ending in December, the company reported financial results for the last three months that resulted in total revenue of $308.3 million, down 5.9% from the previous year. Revenue attributable to MSG Networks, the regional sports network that televises games for the New York Knicks, New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres, finished at $139.3 million, which was down 5% on the year. Yet the media entity reported a loss of $35 million in operating income as an estimate from LightShed Partners contends the network is contributing “$300-$400 million of negative equity value.”
Total operating loss at Sphere Entertainment for the quarter was $142.9 million, an improvement from the previous year but nonetheless still in the red. When adding depreciation, amortization and impairment charges within adjusted operating income, the MSG Networks segment finished in the green with $33.7 million, down 3.7% from the previous year. Within the six months ended December 31, 2024, the network earned $49.8 million in this metric, illustrating a 128% year-over-year decline.
Sphere Entertainment and its lenders have reached various forbearance agreements in recent months due to MSG Networks being unable to refinance its debt. The $829 million debt outstanding was due last October, but the deadline has been extended multiple times, most recently to March 26 of this year. Earlier in February, the company made a $25 million principal repayment that reduced the debt outstanding to $804 million.
“If MSG Networks is not successful in negotiating a refinancing or work-out of its indebtedness, the company believes it is probable that MSG Networks and/or its subsidiaries would seek bankruptcy protection or the lenders would foreclose on the MSG Networks collateral securing the credit facilities,” Sphere Entertainment wrote in its financial results.
MSG Networks recently reached a new carriage agreement with Altice USA that restored the platforms on Optimum, which are delivered to about 1 million cable television customers, according to an Altice spokesperson. According to a report filed by John Ourand of Puck in January, Altice accounts for approximately 33% of the distribution revenue for MSG Networks.
In an earrings call earlier in February, MSG Sports executives divulged that the RSN “approached us to negotiate our local media rights agreement, including a potential reduction in our rights fees.” MSG Networks is in the midst of a 20-year deal to air Knicks and Rangers games at the regional level, and it paid $175.3 million to MSG Sports in 2024. The number is expected to rise to $187 million in 2025, although the status of a potential abatement in the rights fee remains unknown.
