Sphere Entertainment Co.

Unique Sphere venue paired with a structurally declining, heavily indebted MSG Networks business.

Strengths

• Explosive revenue growth (128%, 87.5th pct) and strong OCF margin (82.4th pct)
• Differentiated, hard-to-replicate Sphere immersive-venue asset and expansion pipeline

Risks

• Negative operating margin (-18.8%) and high leverage; MSG Networks term-loan foreclosure/bankruptcy risk and secular MVPD subscriber decline
• Negligible ROE (1.5%) and ROA (0.8%); Dolan-controlled governance

Notable findings

• Material weakness• Material weaknesses or adverse findings in our internal control over financial reporting in the future could have an adverse effect on the market price of our common stock
• Chronic dilutionShare count +10%/yr over 4y (dilution, book value/share -29%)