Sphere Entertainment posts huge second-quarter loss as revenue grows
Sphere Entertainment (NYSE: SPHR ), the operator of the Las Vegas Strip's namesake venue, posted a significant loss in its fiscal second quarter, in part due to rising operating costs. This was despite the company's significantly higher sales.
Sphere, which also includes MSG Networks and YES Network, achieved Q2 revenue gains through Grand Prix Las Vegas and U2 Residency. Due to high demand, the band's stay at the venue has been extended several times and is scheduled to end with its 40th show next month.
In the second quarter of fiscal 2024, the company reported revenue of $314.2 million, an increase of $154.6 million from the same period last year. "Additionally, the company reported an operating loss of $159.7 million, an increase of $109.9 million from the year-ago period, and adjusted operating income of $51.4 million, compared with an adjusted operating loss of $13.2 million a year ago."
New York-based Sphere added that its "Postcards from the Earth" Sphere experience, which launched last October, generated more than $1 million in daily ticket sales during the show's run (in U.S. dollars).
Positive reaction to Sphere Entertainment stock
Although Sphere posted a steep loss in its fiscal second quarter, the report didn't seem to unsettle investors. In a rough day for the stock market, Sphere shares were up 5.73% in midday trading on Monday, extending the stock's year-to-date gain to 10.25%.
Sphere Entertainment is a spin-off of Madison Square Entertainment (MSGE). MSGE retains the live entertainment businesses of the previously merged companies. Wall Street may be looking at the varying contributions of Venue Las Vegas and the aforementioned television networks to the company's sales and profits.
"In the second quarter of fiscal 2024, the Sphere segment reported revenue of $167.8 million, an increase of $167.2 million compared to the same period last year. Of the 191 performances in the quarter since its debut on October 6, 2023, performances related to The Sphere Experience Revenues were $92.9 million." "Event-related revenue was $55.2 million, reflecting revenue during the quarter from concerts and, to a lesser extent, a major sporting event at the Las Vegas Sphere. "
In the fiscal second quarter, the company recorded $17.5 million in advertising and suite royalties, driven primarily by ads placed in outer space.
MSG Network Can Be a Burden
MSG Network broadcasts New York Knicks and Rangers games, while YES Network is the local broadcast home for the New York Yankees. All three are enviable sporting rights. However, these networks could impact Sphere's financial results due to declining user growth.
Networks adjusted operating income of $37.3 million decreased $10.4 million, or 22%, compared to the prior year period primarily due to lower revenue and an increase in direct operating expenses, partially offset by an increase in direct operating expenses. Decrease in selling, general and administrative expenses (excluding acquisition-related costs, net of insurance reimbursement and stock-based compensation expense),” the company noted.
Sphere hopes the new streaming company, Gotham Advanced Media and Entertainment (GAME), will go some way to reducing the parent company's exposure to scams.
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Source: www.casino.org
