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Discontinued Operations

12 Months Ended

Jun. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

MSG Entertainment

On April 20, 2023, the Company completed the MSGE Distribution. The Company analyzed the quantitative and qualitative factors relevant to the MSGE Distribution and determined that the conditions for discontinued operations presentation were met during the fourth quarter of Fiscal Year 2023. As such, the results of the MSG Entertainment business previously owned and operated by the Company through its MSG Entertainment business segment, as well as transaction costs related to the MSGE Distribution, have been classified in the accompanying consolidated financial statements as discontinued operations for all periods presented. No impairment loss was recognized in connection with the reclassification to discontinued operations and no gain or loss was recognized in connection with the MSGE Distribution.

Indirect corporate and administrative costs do not qualify for discontinued operations presentation, and these costs are included in continuing operations for all periods presented through April 20, 2023. After the MSGE Distribution Date, these corporate and administrative services are provided to the Company by MSG Entertainment under a Transition Services Agreement (“MSGE TSA”), with the related costs included in continuing operations from April 21, 2023 through June 30, 2023. As noted above, results from continuing operations, prior to the MSGE Distribution Date, include certain corporate overhead expenses that the Company did not incur in the period after the completion of the MSGE Distribution, and the Company does not expect to incur such expenses in future periods.

Tao Group Hospitality

On May 3, 2023, the Company completed the Tao Group Hospitality Disposition. The Company analyzed the quantitative and qualitative factors relevant to the Tao Group Hospitality Disposition and determined that the criteria to classify the assets and liabilities of Tao Group Hospitality as held for sale, along with the related operations as a discontinued operation, had been satisfied as of the third quarter of Fiscal Year 2023. As such, the historical financial results of the Tao Group Hospitality segment have been reflected in the accompanying consolidated financial statements as discontinued operations for all periods presented. In connection with the Tao Group Hospitality Disposition, the Company recognized a loss, net of taxes, of $23,984 as a result of a change in estimate and a gain of $212,857, net of taxes of $1,020, for Fiscal Years 2024 and 2023, respectively, which are presented as income from discontinued operations.

The tables below sets forth, for the periods presented, the operating results of the disposal groups. Amounts presented below differ from historically reported results for the MSG Entertainment and Tao Group Hospitality business segments in order to reflect discontinued operations presentation.

																								Year Ended June 30, 2023
																								MSG Entertainment						Tao Group Hospitality						Eliminations (a)						Total
			Revenues																								$	731,299					$	447,929					$	(1,761)					$	1,177,467
Direct operating expenses																								(421,440)						(263,200)						1,371						(683,269)
Selling, general, and administrative expenses																								(119,032)						(151,271)						(195)						(270,498)
Depreciation and amortization																								(49,423)						(23,236)						—						(72,659)
Impairment and other gains, net																								4,361						473						—						4,834
Restructuring charges																								(7,435)						—						—						(7,435)
Operating income																								138,330						10,695						(585)						148,440
Interest income																								2,880						149						—						3,029
Interest expense																								(1,031)						(2,551)						—						(3,582)
Other income, net																								11,456						665						—						12,121
Income from discontinued operations before income taxes																								151,635						8,958						(585)						160,008
Income tax expense																								(5,517)						(33,695)						—						(39,212)
Income (loss) from discontinued operations, net of taxes																								146,118						(24,737)						(585)						120,796
Gain on disposal before income taxes																								—						213,877						—						213,877
Income tax expense																								—						(1,020)						—						(1,020)
Gain on disposal, net of taxes																								—						212,857						—						212,857
Net income from discontinued operations																								146,118						188,120						(585)						333,653
Less: Net income attributable to redeemable noncontrolling interests																								—						3,925						—						3,925
Less: Net loss attributable to nonredeemable noncontrolling interests																								(553)						(464)						—						(1,017)
Net income from discontinued operations attributable to Sphere Entertainment Co.’s stockholders																								$	146,671					$	184,659					$	(585)					$	330,745

																								Year Ended June 30, 2022
																								MSG Entertainment						Tao Group Hospitality						Eliminations (a)						Total
			Revenues																								$	632,612					$	484,649					$	(2,698)					$	1,114,563
Direct operating expenses																								(417,108)						(270,728)						2,077						(685,759)
Selling, general, and administrative expenses																								(110,288)						(154,923)						—						(265,211)
Depreciation and amortization																								(69,564)						(32,503)						—						(102,067)
Impairment and other gains, net																								—						2,800						—						2,800
Restructuring charges																								(1,286)						—						—						(1,286)
Operating income																								34,366						29,295						(621)						63,040
Interest income																								612						23						—						635
Interest expense																								(25,453)						(1,702)						—						(27,155)
Other expense, net																								(84,690)						(82)						—						(84,772)
(Loss) income from operations before income taxes																								(75,165)						27,534						(621)						(48,252)
Income tax benefit (expense)																								14,069						(18,114)						—						(4,045)
Net (loss) income																								(61,096)						9,420						(621)						(52,297)
Less: Net income attributable to redeemable noncontrolling interests																								—						7,739						—						7,739
Less: Net loss attributable to nonredeemable noncontrolling interests																								(2,864)						(627)						—						(3,491)
Net (loss) income from discontinued operations attributable to Sphere Entertainment Co.’s stockholders																								$	(58,232)					$	2,308					$	(621)					$	(56,545)

_________________

(a)    Prior to the MSGE Distribution and Tao Group Hospitality Disposition, the Company’s consolidated results of operations included a number of intercompany transactions between MSG Entertainment and Tao Group Hospitality which were presented in the Company’s segment reporting disclosures. As such, these transactions are eliminated for purposes of this disclosure as they will not continue in periods subsequent to the MSGE Distribution and Tao Group Hospitality Disposition, respectively.

As permitted under ASC Subtopic 205-20-50-5b(2), the Company has elected not to adjust the consolidated statements of cash flows for the years ended June 30, 2024, 2023 and 2022 to exclude cash flows attributable to discontinued operations. The table below sets forth, for the periods presented, significant selected financial information related to discontinued activities included in the accompanying consolidated financial statements:

			2023												2022
			MSG Entertainment						Tao Group Hospitality (a)						MSG Entertainment						Tao Group Hospitality
Non-cash items included in net income (loss):
Depreciation and amortization						$	49,423					$	23,236					$	69,564					$	32,503
Impairments and other gains, net						(4,361)						(214,350)						—						(2,800)
Share-based compensation expense						4,710						7,224						8,480						7,647
Cash flow from investing activities:
Capital expenditures, net						12,832						17,488						15,797						23,309
Non-cash investing activities:
Capital expenditures incurred but not yet paid						780						817						1,585						119
Investments and loans to nonconsolidated affiliates						—						113						—						791

_________________

(a)    Impairments and other gains, net is inclusive of gain on Tao Disposition.

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- References

No definition available.

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- Definition

The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 805
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/805/tableOfContent

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 205
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/205-20/tableOfContent

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