Sphere Entertainment's MSG Goodwill Charge Widens Loss

The Tip Desk · November 7, 2026 · 4 min read

Third-quarter revenue was $274.3 million as Sphere Entertainment posted a $240.6 million operating loss after a $177.6 million MSG Networks goodwill impairment.

Sphere Entertainment Co. (SPHR) reported third-quarter revenue of $274.3 million, up 4% from a year earlier, as year-over-year growth slowed for a second consecutive quarter after 11% growth in the second quarter and 38% growth in the first.

The operating loss widened to $240.6 million, up 47% from the year-ago quarter, after a 22% year-over-year increase in the second quarter and a $7.2 million operating income in the first quarter. The widening was concentrated in MSG Networks, which recorded a $173.6 million operating loss, up $94.9 million from the year-ago quarter. Results included a non-cash goodwill impairment charge of $177.6 million at MSG Networks, versus $98.8 million in the year-ago quarter after the company restated prior-period figures as immaterial errors related to the misallocation of deferred tax liabilities. Adjusted operating income, which excludes the impairment, was $39.2 million, up 8% from a year earlier.

The Sphere segment, the company’s experiential venue business, generated $198.9 million of revenue, up 14% from the year-ago quarter, after 29% growth in the second quarter and 69% growth in the first. Sphere Experience revenue rose $13.1 million year over year on more performances and, to a lesser extent, higher per-show revenue, after a $53.8 million year-over-year increase in the second quarter that the company attributed primarily to higher per-show revenue. The Sphere Experience reflected 241 performances of The Wizard of Oz versus a combined 220 performances of The Wizard of Oz, Postcard from Earth and V-U2 in the year-ago quarter. Sponsorship, Exosphere advertising and suite license fees increased $6.2 million, and event-related revenues increased $6.1 million, primarily from three additional concert residency shows.

Sphere’s operating loss improved to $67.0 million, a 21% year-over-year improvement, after a 17% improvement in the second quarter. Adjusted operating income at Sphere was $32.4 million, up 90% from a year earlier. Direct operating expenses were $83.8 million, up 6%, on $7.6 million higher Sphere Experience costs from higher per-show expenses and more performances. Selling, general and administrative expenses were $98.3 million, up 6%, from higher employee compensation and other costs, partially offset by mark-to-market on share-based awards after the stock-price decline.

MSG Networks revenue was $75.4 million, down 15% from a year earlier, after an 18% year-over-year decline in the second quarter and a 2% decline in the first. Distribution revenue decreased $12.8 million, primarily reflecting a decrease in total subscribers of approximately 15.5%. Adjusted operating income at MSG Networks was $6.8 million, down $12.5 million from a year earlier. Direct operating expenses were $59.3 million, up 2%, and selling, general and administrative expenses were $10.0 million, up 43%, from $3.5 million higher employee compensation and other costs, partly offset by $1.6 million lower advertising and marketing.

Net loss attributable to stockholders was $176.0 million, or $4.84 a share, versus $125.7 million, or $3.47 a share, a year earlier. Cash, cash equivalents and restricted cash were $527.3 million at September 30.

In late September the company debuted enhanced 4D effects for The Wizard of Oz and said the production had exceeded half a billion dollars in ticket sales with over four million tickets sold since its August 2025 debut. Production is underway on The Rocky Horror Picture Show, which the company expects will debut by the end of March 2027. Metallica began a new residency in October, with 24 concerts planned through March 2027. Backstreet Boys and the Eagles have extended residencies to 63 and 74 planned nights, respectively, and Oprah Winfrey and John Mayer each announced new residencies for 2027. Executive Chairman and CEO James L. Dolan said the Sphere segment remains on track to deliver substantial growth this calendar year.