Item 1A. Risk Factors In addition to the other information set forth below, you should carefully consider the factors discussed under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q and our Form 10-KT and other filings we may make from time to time with the SEC. Any of these risks could have a material adverse effect on our business, operating results and financial condition, which could cause you to lose all or part of your investment. Additional risks and uncertainties not currently known to us or that we deem immaterial also may affect our business and operations. As such, you should not consider this list to be a complete statement of all potential risks and uncertainties. Risks Related to Our MSG Networks Business If MSG Networks Is Unable to Generate Sufficient Operating Cash Flows to Repay Outstanding Borrowings Under its Term Loan Facility When They Become Due, it is Expected That the Outstanding Debt Thereunder Would Be Accelerated and the Lenders Could Foreclose Upon the MSG Networks Business. On June 27, 2025, MSG Networks and certain of its subsidiaries, including MSGN L.P., as borrower, entered into the AR MSGN Credit Agreement providing for the MSGN Term Loan Facility, which matures on December 31, 2029. See Part I Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Recent Developments MSG Networks Debt Restructuring. As of June September 30, 2025, the principal balance outstanding under the MSGN Term Loan Facility was $210 million. $200 million, which was further reduced to $169 million in October 2025 following a $31 million mandatory cash sweep payment based on excess cash as of September 30, 2025. Under the terms of the MSGN Term Loan Facility, amortization payments of $10 million are due each quarter commencing on September 30, 2025. If MSG Networks is unable to generate sufficient operating cash flows to make the required quarterly amortization payments or repay the remaining outstanding borrowings under the MSGN Term Loan Facility when they become due, MSG Networks may need to refinance the MSGN Term Loan Facility or secure alternative sources of funding. In the event MSG Networks is unable to repay or successfully refinance the MSGN Term Loan Facility or secure alternative sources of funding on acceptable terms or at all, the lenders would have the right to exercise their remedies under the MSGN Term Loan Facility, which would include, but not be limited to, declaring an event of default and foreclosing on the MSG Networks business. MSG Networks may also decide to seek bankruptcy protection prior to the lenders exercising their rights. If lenders exercise remedies or foreclose on the MSG Networks business, or if MSG Networks decides to seek bankruptcy protection, Sphere Entertainment Co. may no longer be entitled to any value in, or results of operations from, the MSG Networks business. Our MSG Networks Business Depends on Media Rights Agreements With Professional Sports Teams That Have Varying Durations and Terms and Include Significant Obligations, and Our Inability to Renew Those Agreements on Acceptable Terms, or the Loss of Such Rights for Other Reasons, May Have a Material Negative Effect on Our MSG Networks Business and Results of Operations. Our MSG Networks business is dependent upon media rights agreements with professional sports teams. On June 27, 2025, in connection with the MSG Networks debt restructuring (see Part I Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Recent Developments MSG Networks Debt Restructuring), the media rights agreements between MSG Networks, on the one hand, and the Knicks and the Rangers, on the other hand, were amended to (among other things) reduce the rights fees payable by MSG Networks and reduce the term of those agreements to expire after the 2028-29 NBA and NHL seasons, respectively, subject to a right of first refusal in favor of MSG Networks. The rights agreements with the other professional sports teams have varying expirations over the next six NBA/NHL seasons. Upon expiration, we may seek renewal of these agreements and, if we do, we may be outbid by competing programming networks or others for these agreements or the renewal costs could substantially exceed our costs under the current agreements. In addition, one or more of these teams may seek to establish their own programming offering or join one of our competitors offerings and, in certain circumstances, we may not have an opportunity to bid for the media rights. Even if we are able to renew our media rights agreements, the Companys results could be adversely affected if our obligations under our media rights agreements prove to be outsized relative to the revenues our MSG Networks segment is able to generate. Our media rights agreements with professional sports teams have varying terms and include significant obligations without regard to the number of subscribers to our programming networks or the level of our affiliation and/or advertising revenues. If we are not able to generate 59 sufficient revenues, including due to a loss of any of our significant Distributors, a decrease in the number of subscribers, or failure to 58 renew affiliation agreements on terms as attractive as our existing agreements, we may be unable to renew media rights agreements on acceptable terms, or to perform our obligations under our existing media rights agreements, including making payments thereunder, which could lead to a default under those agreements and the potential loss of such media rights, which could materially negatively affect our business and results of operations. In recent years, certain regional sports networks have experienced financial difficulties. For example, Diamond Sports Group, LLC (now Main Street Sports Group, Diamond), which licenses and distributes sports content in a number of regional markets, filed for protection under Chapter 11 of the bankruptcy code in March 2023 and completed its reorganization in January 2025. In connection with Diamonds bankruptcy proceedings and reorganization plan, a number of Diamonds pre-existing media rights agreements with NHL, NBA and MLB teams were either rejected, substantially modified or expired without renewal. As a result, Diamond emerged from its bankruptcy proceedings controlling the media rights to 29 teams (compared to 42 teams prior to its bankruptcy). Moreover, the value of our media rights agreements may also be affected by various league decisions and/or league agreements that we may not be able to control, including a decision to alter the number of games played during a season or the number of team games that can be selected by national broadcasters (which could reduce the number of games available for exclusive broadcast by our networks). The value of our media rights could also be affected, or we could lose such rights entirely, if a team is liquidated, undergoes reorganization in bankruptcy or relocates to an area where it is not possible or commercially feasible for us to continue to distribute games. Any loss or diminution in the value of rights could impact the extent of the sports coverage offered by us and could materially negatively affect our business and results of operations. In addition, our affiliation agreements generally include certain remedies in the event our networks fail to include a minimum number of professional event telecasts, and, accordingly, any loss of rights could materially negatively affect our business and results of operations. Risks Related to Our Indebtedness, Financial Condition, and Internal Control We Have Substantial Indebtedness and Are Highly Leveraged, Which Could Adversely Affect Our Business. We are highly leveraged with a significant amount of debt and we may continue to incur additional debt in the future. As of June September 30, 2025, the balance of our consolidated debt outstanding was approximately $889.3 $874.9 million. As a result of our indebtedness, we are required to make interest and principal payments on our indebtedness, including mandatory quarterly amortization payments pursuant to the terms of the AR MSGN Credit Agreement, that are significant in relation to our revenues and cash flows. See Risks Related to Our MSG Networks Business If MSG Networks Is Unable to Generate Sufficient Operating Cash Flows to Repay Outstanding Borrowings Under its Term Loan Facility When They Become Due, it is Expected That the Outstanding Debt Thereunder Would Be Accelerated and the Lenders Could Foreclose Upon the MSG Networks Business . These payments reduce our earnings and cash available for other potential business purposes. Furthermore, our average borrowing rate has increased and could in the future increase if interest rates increase because our indebtedness bears interest at floating rates, if we are in default and have to pay a higher rate or to the extent we refinance existing debt with higher cost debt, which occurred in connection with the refinancing of MSG Networks indebtedness. This leverage also exposes us to significant risk by limiting our flexibility in planning for, or reacting to, changes in our business (whether through competitive pressure or otherwise), the entertainment and video programming industries and the economy at large. Although our cash flows could decrease in these scenarios, our required payments in respect of indebtedness would not decrease. Certain subsidiaries of MSG Networks, including MSGN L.P., had senior secured credit facilities pursuant to the Prior MSGN Credit Agreement providing for (i) an initial $1.1 billion term loan facility and (ii) a $250 million revolving credit facility. The outstanding principal amount under the Prior MSGN Credit Agreement of $829.1 million matured without repayment on October 11, 2024, and an event of default occurred pursuant to the Prior MSGN Credit Agreement due to MSGN L.P.s failure to make payment on the outstanding principal amount on the maturity date. After a series of forbearances from the lenders under the Prior MSGN Credit Agreement, on June 27, 2025, MSG Networks and certain of its subsidiaries, including MSGN L.P., as borrower, entered into the AR MSGN Credit Agreement providing for the $210 million MSGN Term Loan Facility, which matures on December 31, 2029. All obligations under the AR MSGN Credit Agreement are guaranteed by the MSGN Guarantors and secured by the MSGN Collateral. None of the Company, Sphere Entertainment Group or the subsidiaries of Sphere Entertainment Group are parties to the MSGN Term Loan Facility. See Part I Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Recent Developments MSG Networks Debt Restructuring. On December 22, 2022, MSG LV, entered into a credit agreement providing for the LV Sphere Term Loan Facility, a five-year, $275 million senior secured term loan facility. All obligations under the LV Sphere Term Loan Facility are guaranteed by Sphere Entertainment Group. None of the Company, MSG Networks, MSGN L.P. or any of the subsidiaries of MSGN L.P. are parties to the LV Sphere Term Loan Facility. 59 60 On December 8, 2023, the Company completed a private unregistered offering of approximately $259 million in aggregate principal amount of its 3.50% Convertible Senior Notes. Our ability to have sufficient liquidity to fund our operations, including the creation of content, and to service our indebtedness is dependent on the ability of Sphere to generate significant positive cash flow. There can be no assurance that guests, artists, promoters, advertisers and marketing partners will continue to embrace this platform and that Sphere will generate revenue and adjusted operating income in line with our expectations. Original immersive productions, such as Postcard From Earth, V-U2 An Immersive Concert Film , The Wizard of Oz at Sphere and From The Edge , have not been previously pursued on the scale of Sphere, which increases the uncertainty of our operating expectations. To the extent that our efforts do not result in viable shows, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may not generate the cash flows from operations necessary to fund our operations. Our future operating performance, to a certain extent, is subject to general economic conditions, recession, fears of recession, financial, competitive, regulatory and other factors that are beyond our control. To the extent we do not realize expected cash flows from operations from Sphere, we would have to take several actions to improve our financial flexibility and preserve liquidity, including significant reductions in both labor and non-labor expenses as well as reductions and/or deferrals in capital spending. Therefore, while we currently believe we will have sufficient liquidity from cash and cash equivalents and cash flows from operations (including expected cash flows from operations from Sphere) to fund our operations, no assurance can be provided that our liquidity will be sufficient in the event any of the preceding uncertainties facing Sphere are realized over the next 12 months. In addition, our ability to make payments on, or repay or refinance, our debt, and to fund our operating and capital expenditures, also depends upon our ability to access the credit markets. If we are unable to generate sufficient cash flow to service our debt and meet our other commitments, we may need to refinance all or a portion of our debt, sell material assets or operations, or raise additional debt or equity capital, which may be dilutive to our stockholders. We cannot provide assurance that we could effect any of these actions on a timely basis, on commercially reasonable terms or at all, or that these actions would be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt agreements may restrict us from effecting certain or any of these alternatives. Even if our future operating performance is strong, limitations on our ability to access the capital or credit markets, including as a result of general economic conditions, unfavorable terms or general reductions in liquidity may adversely and materially impact our business, financial condition, and results of operations. The failure to make payments when due, satisfy the covenants, including any inability to attain a covenant waiver, and comply with other requirements under each credit agreement could trigger (and, with respect to the Prior MSGN Credit Agreement, triggered) a default thereunder, which could result in an acceleration of the outstanding debt thereunder and a demand for payment by the respective guarantors. Additionally, the LV Sphere Term Loan Facility restricts MSG LV from making cash contributions to us unless certain financial covenants are met and the AR MSGN Credit Agreement restricts MSG Networks and MSGN L.P. from making cash distributions to us, subject to certain limited exceptions. Any failure to make payments when due or satisfy the covenants under the LV Sphere Term Loan Facility and the MSGN Term Loan Facility (together, the Credit Facilities) could negatively impact our liquidity and could have a negative effect on our businesses. The terms of the indenture governing the 3.50% Convertible Senior Notes (the Indenture) do not restrict us from incurring additional indebtedness, including secured indebtedness. As of June September 30, 2025, (i) the principal balance of the Companys indebtedness (excluding subsidiaries) was approximately $258.8 million under the 3.50% Convertible Senior Notes and (ii) the balance of indebtedness of the Companys subsidiaries was $639.0 million , $623.8 million, all of which is senior secured indebtedness. If we incur secured indebtedness and such secured indebtedness is either accelerated or becomes subject to a bankruptcy, liquidation or reorganization, our assets would be used to satisfy obligations with respect to the indebtedness secured thereby before any payment could be made on the 3.50% Convertible Senior Notes that are not similarly secured. The Indenture also does not restrict our subsidiaries from incurring additional debt, which would be structurally senior to the 3.50% Convertible Senior Notes . If new debt or other liabilities are added to our current debt levels, the related risks that we now face could intensify. Our Credit Facilities restrict the ability of our subsidiaries to incur additional indebtedness, including secured indebtedness, but if the facilities mature or are repaid, our subsidiaries may not be subject to such restrictions under the terms of any subsequent indebtedness. In addition, we have made investments in, or otherwise extended loans to, one or more businesses that we believe complement, enhance or expand our current business or that might otherwise offer us growth opportunities and may make additional investments in, or otherwise extend loans to, one or more of such parties in the future. For example, we had previously invested in and extended financing to Holoplot in connection with Spheres advanced audio system, and on April 25, 2024, we completed the acquisition of the remaining equity interest in Holoplot that we did not previously own. To the extent that such parties do not perform as expected, 60 61 including with respect to repayment of such loans, it could impair such assets or create losses related to such loans, and, as a result, have a negative effect on our business and results of operations. Material Impairments in The Value of Our Long-Lived Assets and Goodwill Could Negatively Affect Our Business and Results of Operations. We regularly review our long-lived assets and goodwill for potential impairment. Long-lived assets, including property and equipment, right-of-use lease assets and intangible assets that are amortized, are reviewed when there is an indication of potential impairment. We currently test goodwill annually for impairment as of August 31st and at any time upon the occurrence of certain events or substantive changes in circumstances. We perform our goodwill impairment tests at the level of our two reporting units, Sphere and MSG Networks. In assessing the carrying value of our long-lived assets and goodwill, we make estimates and assumptions regarding a variety of factors, including, but not limited to, projected future cash flows, discount rates, cost-based assumptions and appropriate market comparables. These estimates are made at a specific point in time, based on relevant information, are subjective in nature and involve significant uncertainties and judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. There are inherent uncertainties related to these factors and managements judgment in applying these factors, and, if these estimates or related assumptions change in the future, we may be required to record impairment charges related to our long-lived assets. For example, in connection with the performance of the Companys annual goodwill impairment test as of August 31, 2025, th e Company recorded a non-cash goodwill impairment charge of $65.4 million for the MSG Networks reporting unit as a result of the projected declines in the reporting units business . See Part I Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Recently Issued Accounting Pronouncements and Critical Accounting Estimates Impairment of Goodwill. In addition, changes to our business, unexpected significant declines in our operating results, further deterioration in the business environment for regional sports networks or the outlook for our regional sports networks or changes in our strategic goals or business direction could require us to evaluate the recoverability of our goodwill or our long-lived and indefinite lived-assets prior to our next annual assessment. These types of events have in the past resulted, and could again in the future result, in impairment charges, which have in the past negatively affected, and could in the future negatively affect, our results of operations. For example, on December 31, 2024, MSG Networks affiliation agreement with Altice, one of its major Distributors, expired, subsequent to which, the Companys networks were no longer being carried by Altice. The Company and Altice entered into a multi-year renewal of the MSG Networks affiliation agreement on February 22, 2025. In connection with the preparation of the financial statements included in the Form 10-KT, and in light of changes affecting the MSG Networks reporting unit and the programming industry, the Company concluded that a triggering event had occurred for the reporting unit as of December 31, 2024, and performed an interim quantitative impairment test. As a result, the Company recorded a non-cash impairment charge of $61.2 million as of December 31, 2024 within the MSG Networks reporting unit. The Company continues to closely monitor the performance and fair value of its MSG Networks reporting unit. A significant adverse change in market factors or the business outlook for the MSG Networks reporting unit could further negatively impact the fair value of our MSG Networks reporting unit and result in a goodwill impairment at that time. During the second quarter of Fiscal Year 2024, we recorded an impairment charge of $116.5 million in connection with our decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom. Impairments could be an indicator of significant declines in the expected performance of our reporting units and could negatively affect our business. For more information on the valuation of long-lived and goodwill, see Part I Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Recently Issued Accounting Pronouncements and Critical Accounting Estimates Impairment of Goodwill.