Jim Dolan: As far as the business itself goes, we’ve been saying for quite some time, and I think everybody is very aware, that the monetization mechanisms for content are impaired. That would be a kind way of putting it. With the move from traditional cable linear business to streaming business, right, that the — I think that it’s not only the MSG Networks, but sports and entertainment in general are all challenged by the model. Having said that, MSG Networks has some — has great content. The consumers very much want it. And it’s just the question about how are you going to monetize it? It is still up in the air. But I do think that the progress that Andrea is making, right, in terms of developing streaming platforms, et cetera, are certainly part of the answer.
And we just have to continue along. But that is a very strong product, right? But how long a transition takes from linear to streaming and how the consumers consume it and what they pay for it, right, are key issues yet to be resolved.
Brandon Ross: Thank you.
Operator: We’ll move next to Paul Golding at Macquarie Capital.
Paul Golding: Thanks so much. This is for either Jim or Dave. Just after seeing this quarter that you grossed over $1 million in average daily ticket sales for The Sphere Experience, I’m wondering if you could speak to whether you have a clear indication of the life cycle of an original attraction now at Sphere and if this informs subsequent Sphere Experience content that you might generate to keep that momentum going?
Jim Dolan: It’s a good question. Around here, we talk about it like what we call the first pancake. It’s never perfect, but the demand is robust. Las Vegas is a great market for this as it renews itself almost every week with fresh customers. But how long will The Sphere Experience last? I think that it will — first off, you don’t go a set amount of time and then cut it off. What happens is that — what our plan is that — is to replace it, right, but still run it and keep building up a library of content, right, that, of course, when we open up new Spheres, they’ll have a whole — they won’t be dealing with the first pancake syndrome. So the other part of it, that’s probably hard to quantify, but they — are our consumers coming in for — to see Postcard from Earth and the current Sphere Experience or are they just coming to see the Sphere?
How much does the content draw versus just the pure medium or the technology? And I’d say it’s a mix of both. Right? But over time, it will move closer to content, and we’re preparing for that.
Paul Golding: Thanks, Jim. That’s a great point. And then I wanted to circle back on the venue itself. As you continue to engage in these substantive conversations with potential partners, is the construction cost estimate of potential subsequent venues becoming clearer relative to what the original venue cost as we think about what the ROI might be for a run rate model of franchising these venues? Thanks.
Jim Dolan: Well, I mean it is a franchising model, right, which means that we don’t carry the heaviest loads capital into it. However, we do think we can deliver new Spheres on a less costly basis than the first one, again, sort of that first pancake thing. We learned a lot. We’re already in the midst of looking at the new designs and taking costs out of it, making the construction go faster, be more efficient. And hopefully, over time, we’ll get really, really good at that. But it shouldn’t go up. It should go down because of everything that we’ve learned.
Paul Golding: Great. Thanks so much.
Operator: We’ll go next to Ben Swinburne at Morgan Stanley.
Ben Swinburne: Thanks, good morning. Jim, you guys have a pretty full residency calendar this year. I’m just wondering if you think this is the right mix of residency versus experiences. I think you’re kind of run-rating around almost 100 a year now in residents when we look at U2, Phish, and Dead & Co. And then maybe just sticking with the pancake, how long do you think it will take to build the next pancake? Do you think it’s going to — the construction timeline is shorter under the — as you move forward with your partner or partners? And do you anticipate generating any revenue until that new venue opens for you guys? Thanks.
Jim Dolan: Yes. Well, let me — how do I parse apart your question? What part would you like answered first?
Ben Swinburne: Residencies and then pancake costs — or timeline, sorry.
Jim Dolan: Okay. So residencies, right, the — we’ve already announced the next two acts to come. I can tell you without telling you who that pretty much our calendar is full for this calendar year, that we don’t have room, beyond what we’ve already committed to do anything more significant. But the demand from artists is continuing to grow, and we expect to have ‘25 be another full year. I will say that the — what has surprised us with this is, like U2, which started off committing to around 20 shows and ended up with 40, right, we’re seeing the same time of demand for tickets for Phish and Dead, et cetera. And so these residencies looks like they’re going to go longer than we initially anticipated because of ticket demand. So, that’s a good thing, that the — so does that answer your residency question?
Ben Swinburne: Yeah, absolutely.
Jim Dolan: And then you want to know — what else?
Ben Swinburne: How long — we’re trying to think about when your company could start benefiting, from a cash flow point of view, from additional Spheres. Obviously, you need some time to build, so curious if you have an updated thought on time line?
Jim Dolan: So I mean, it’s a franchise model. So that the — and we have a construction development division that services that franchise model. They don’t work for free. And so, yes, they will be generating revenue right from the start to support the build and construction process. So we’re — there’s different revenue streams that go along with the franchise model, but the construction model has revenue associated with it. And essentially, our minimal goal here is to — that there won’t be any losses associated with Sphere with construction. Most likely, there will be profits. But then beyond construction, there’s the ongoing servicing and providing of content, which will provide a revenue stream like a franchise model that is ongoing.
Ben Swinburne: Got it. Great. Thank you so much.
Operator: We’ll move to our next question from David Karnovsky at JPMorgan.
David Karnovsky: Hi, thanks. Jim, just following up on the residency question, interested in how you think about the venue in Vegas as a destination not just for residencies but maybe for music touring generally? Is it feasible for an artist to consider Sphere as a one or two-night stop for a tour when they’re in Vegas?
Jim Dolan: Not at this time. The investment that the artist has to make in order to create the show and do the content, right, requires more than just one or two shows. I mean, when an artist is on tour, they’re playing 40 markets, they build a show and they amortize their show investment over the 40 markets. With The Sphere, because of how unique it is, what they build for Sphere really doesn’t move into a touring model, or at least most of it doesn’t. So, they need to justify it based on the run that they have at The Sphere. So one or two shows doesn’t do it.
David Karnovsky: Okay. And then on networks, following up on the term loan expiration question, I’m just wondering how you’re thinking about potential costs that you could still take out of the business as far as programming, SG&A, or even amended rights fees? And then separately, with the game JV with YES, do you view this purely as a technology tie-up, or is there opportunity down the line to bundle content and go to market together in the New York area?
Andrea Greenberg: I’ll take that, David. Hi. Well, as you know, a significant percentage of our costs are fixed. That includes the right fees that we pay our teams. That said, we’re always looking for ways to run our business more efficiently. And considering the pressures facing all similar companies, that is and will remain a big focus of ours. We previously mentioned, I think, on our last call that we had renewed our Devils rights agreement. That renewal did reflect the realities of the current landscape. At the same time, we do expect to see operating efficiencies and screening coming from our new venture with the YES Network. As to your second question about a potential larger deal with YES, the deal that we announced related to the streaming venture and only to the streaming venture, but as always, we’re open to exploring opportunities that make strategic and financial sense for us.
