Sphere Entertainment 8-K: $210M refinancing, major RSN cost savings

Rhea-AI Filing Summary

Sphere Entertainment Co. (NYSE: SPHR) filed an 8-K to disclose the closing of a comprehensive debt restructuring and related agreements for its wholly-owned subsidiary MSG Networks Inc. and the direct borrower MSGN Holdings, L.P. $210 million senior secured term loan maturing December 2029 that replaces the 2019 credit facility in its entirety. The new loan carries interest at SOFR + 5.00% and requires fixed amortization of $10 million per quarter beginning Q3-25, plus a 100% excess-cash sweep each quarter. SPHR contributed $15 million of equity on the 27 June 2025 effective date, allowing the Borrower to make an $80 million cash payment to lenders on closing.

The facility is backed by guarantees from the holding entities and all existing and future domestic subsidiaries of the Borrower, with a full security package that pledges equity interests and other assets. Sphere Entertainment Group and its non-credit subsidiaries are expressly excluded from repayment obligations and collateral pledges.

Covenants are broadly restrictive, limiting additional debt, liens, dividends, affiliate transactions, asset sales and other corporate actions, while allowing voluntary prepayments at par

Parallel agreements were executed to bolster liquidity and align incentives:

• Investor Agreement: SPHR forgives intercompany service balances through 30 June 2025, will continue to provide shared services at a reduced rate through 2029 and formally includes the Borrower in SPHR’s consolidated U.S. tax group.
• Amended LPA: Lenders received Contingent Interest Units that, after the term loan is fully repaid, give them 50% of excess cash $100 million through 2029.
• Media-rights amendments: Annual rights fees to the New York Knicks and New York Rangers are reduced by 28% and 18%, respectively, escalators are removed, and contract terms now end after the 2028-29 season with MSG Networks retaining a right of first refusal.
• MSG Networks issued penny warrants to MSG Sports covering 19.9% of its common stock.

Overall, the transaction extends debt maturities by roughly four and a half years, injects fresh equity, lowers near-term cash interest on a smaller principal balance, and meaningfully reduces sports-rights cash outflows, albeit at the cost of tighter covenants, a high spread over SOFR, and potential future cash sharing and equity dilution.

Positive

• Debt maturity extended to December 2029, eliminating near-term refinancing risk.
• $80 million upfront principal pay-down and mandatory $10 million quarterly amortization quickly reduce leverage.
• Rights-fee reductions of 18-28% for Knicks and Rangers plus eliminated escalators lower operating expenses.
• $15 million equity infusion from parent improves subsidiary liquidity.
• Borrower now benefits from shared services at reduced rates through 2029.

Negative

• High interest cost at SOFR + 5.00% increases sensitivity to rate spikes.
• 100% excess-cash sweep and Contingent Interest Units divert future free cash flow to lenders (up to $100 million).
• Penny warrants for 19.9% of MSG Networks dilute parent’s economic interest.
• Shortened media-rights term increases renewal risk after 2028-29 season.
• Comprehensive negative covenants restrict strategic flexibility and dividend capacity.

Insights

Financial Analyst

TL;DR: 2025 refinancing extends maturity to 2029, cuts rights fees, but adds tight covenants and future cash-sharing; net moderately credit-positive.

The new $210 million term loan removes refinancing risk that loomed over the 2019 facility and provides a clear amortization schedule through 2029. A front-end $80 million pay-down and quarterly $10 million amortization lower leverage quickly, while the SOFR + 5% rate is in line with current single-B pricing. Debt is now entirely term-loan based, improving certainty versus a revolver that could be non-renewed.

Operationally, the 18-28% reductions in Knicks and Rangers rights fees and elimination of escalators materially cut the largest variable expense line for MSG Networks, giving headroom to service debt and fund content. The right-of-first-refusal clause preserves long-term platform optionality despite the shorter contract tenor.

Credit negatives include a 100% quarterly excess-cash sweep and obligatory Contingent Interest Units, effectively creating a synthetic PIK toggle that siphons cash after debt repayment. The penny warrant for 19.9% equity is dilutive to SPHR’s stake and signals bargaining leverage held by MSG Sports. Still, because SPHR itself is not a guarantor and its assets are unpledged, holding-company risk is limited.

On balance, the transaction is incrementally positive for SPHR credit profile by eliminating near-term maturity risk and reducing cash burn, though equity upside is partially capped by dilution and cash-sharing mechanisms.

Media Industry Specialist

TL;DR: Rights-fee concessions slash content costs, but shorter contracts add renewal risk; net neutral-to-positive for cash flow.

MSG Networks secured double-digit cuts to marquee NBA and NHL rights fees and removed inflators, immediately easing margin pressure in an era of cord-cutting. Comparable RSN deals rarely achieve such large nominal reductions, underscoring the leverage created by lenders’ restructuring deadline.

However, moving the expiry to 2028-29 brings the renegotiation cycle two years forward, exposing the network to uncertain future pricing dynamics. The right-of-first-refusal clause mitigates but does not eliminate that risk. Issuing 19.9% warrants to the teams’ parent, MSG Sports, further entwines the entities but also dilutes future valuation at the network level.

Overall, the lower rights expense outweighs the medium-term renewal uncertainty, giving MSG Networks a clear path to improve EBITDA and meet debt service requirements.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 27, 2025

SPHERE ENTERTAINMENT CO.

(Exact Name of Registrant as Specified in Charter)

Nevada		001-39245		84-3755666
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Two Pennsylvania Plaza, New York, NY		10121
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (725) 258-0001

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)).

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Class A Common Stock		SPHR		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Explanatory Note

As previously disclosed, on April 24, 2025, Sphere Entertainment Co. (the “Company”), MSG Networks Inc., a wholly-owned subsidiary of the Company (“MSG Networks”), MSGN Holdings, L.P., a wholly-owned subsidiary of MSG Networks (the “Borrower”), MSGN Eden, LLC, a wholly-owned subsidiary of MSG Networks and the general partner of the Borrower (“MSGN Eden”), Regional MSGN Holdings LLC, a wholly-owned subsidiary of MSG Networks and the limited partner of the Borrower (“Regional MSGN”), certain subsidiaries of the Borrower, the Lenders and the Teams (each as defined below) entered into a Transaction Support Agreement (the “Transaction Support Agreement”) with respect to (i) the restructuring of the debt of subsidiaries of MSG Networks and (ii) amendments to the media rights agreements between subsidiaries of MSG Networks, on the one hand, and New York Knicks, LLC and New York Rangers, LLC (collectively, the “Teams”), each a wholly-owned subsidiary of Madison Square Garden Sports Corp. (“MSG Sports”), on the other hand (the “Transactions”). The Transactions were subject to the execution of definitive documents containing terms consistent with those set forth in the Transaction Support Agreement (including the term sheet attached thereto as Exhibit A). On June 27, 2025 (the “Effective Date”), the Transactions contemplated by the Transaction Support Agreement were consummated, as further described below.

Item 1.01. Entry into a Material Definitive Agreement.

On the Effective Date, the Borrower, MSG Networks, MSGN Eden, Regional MSGN, Rainbow Garden Corp., a wholly-owned subsidiary of MSG Networks (“Rainbow Garden Corp.” and, collectively with MSG Networks, MSGN Eden and Regional MSGN, the “Holdings Entities”), and certain subsidiaries of the Borrower entered into a second amended and restated credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the “Lenders”). The Credit Agreement amends and restates the Borrower’s prior credit agreement, dated as of October 11, 2019 (as amended, supplemented and otherwise modified prior to the date hereof, the “Existing Credit Agreement”), in its entirety. The terms of the Credit Agreement are consistent with those contemplated by the Transaction Support Agreement.

The Facility

Pursuant to the Credit Agreement, the Borrower’s existing credit facility has been replaced with a new $210 million term loan facility (the “New Term Loan Facility”), which matures in December 2029. The outstanding borrowings under the New Term Loan Facility bear interest at a rate per annum equal to SOFR plus 5.00%. On the Effective Date, the Borrower made a cash payment of $80 million (including a $15 million capital contribution from the Company to MSG Networks) to the Lenders.

Guarantees and Security

All obligations under the Credit Agreement are guaranteed by the Holdings Entities and the Borrower’s existing direct and indirect domestic subsidiaries that are not designated as unrestricted subsidiaries and any of the Borrower’s future direct and indirect subsidiaries (the “Subsidiary Guarantors” and, together with the Holdings Entities, the “Guarantors”). All obligations under the Credit Agreement, including the guarantees of those obligations, are secured by certain of the assets of the Borrower and each Guarantor, including, but not limited to, a pledge of the equity interests of the Borrower held directly by the Holdings Entities and the equity interests in each Subsidiary Guarantor held directly or indirectly by the Borrower. The Company, Sphere Entertainment Group, LLC (“Sphere Entertainment Group”) and the subsidiaries of Sphere Entertainment Group (collectively, the “Non-Credit Parties”) are not legally obligated to repay the outstanding borrowings under the New Term Loan Facility, nor are the assets of the Non-Credit Parties pledged as security under the New Term Loan Facility.

Prepayments

The New Term Loan Facility has a fixed amortization of $10 million per quarter, beginning with the quarter ending September 30, 2025. The Borrower is required to make mandatory prepayments pursuant to a mandatory cash sweep, determined at the end of each fiscal quarter, that requires 100% of the Borrower and its Subsidiary Guarantors’ excess balance sheet cash over certain thresholds (subject to certain exclusions) to be used to repay the principal amount outstanding. The Borrower is further required to make mandatory prepayments in certain circumstances, including from the net cash proceeds of certain dispositions of assets or casualty insurance and/or condemnation awards (subject to a threshold below which payments are not required, as well as certain reinvestment, repair and replacement rights) and upon the incurrence of indebtedness (subject to certain exceptions).

Subject to customary notice and minimum amount conditions, the Borrower may voluntarily prepay outstanding loans under the Credit Agreement at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Term Benchmark (as defined in the Credit Agreement) loans).

Representations and Warranties, Covenants and Events of Default

The Credit Agreement and the related security agreement contain certain customary representations and warranties, affirmative covenants and events of default.

The Credit Agreement contains certain restrictions on the ability of the Borrower and the Subsidiary Guarantors to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the Credit Agreement, including without limitation the following: (i) incurring additional indebtedness and contingent liabilities; (ii) creating or granting liens on certain assets; (iii) making investments, loans or advances in or to other persons, (iv) paying dividends and distributions or repurchasing capital stock; (v) changing its lines of business; (vi) engaging in certain transactions with affiliates; (vii) amending specified agreements; (viii) with respect to restricted subsidiaries, issuing shares of stock such that the Borrower’s ownership of any such restricted subsidiary is reduced; (ix) merging, dissolving, liquidating, consolidation, or disposing of all or substantially all of its assets; (x) making certain dispositions; (xi) making certain changes to its accounting practices; (xii) entering into agreements that restrict the granting of liens; (xiii) requesting any borrowing the proceeds of which are used in violation anti-corruption laws or sanctions; (xiv) engaging in a liability management transaction; and (xv) limiting certain operating expenses incurred by the Borrower and the Guarantors. The Holdings Entities are subject to the restrictions described in the foregoing clauses (iv) and (xv), as well as customary passive holding company covenants.

The Credit Agreement has been filed as Exhibit 10.1 to this Current Report on Form 8-K and the description of the agreement contained herein is qualified in its entirety by reference to the agreement which is incorporated into this Item 1.01 by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 above is hereby incorporated by reference into this Item 2.03.

Item 8.01. Other Events.

In connection with the Transactions, as of the Effective Date, certain parties to the Transaction Support Agreement have entered into certain other agreements, as described herein.

Investor Agreement

On the Effective Date, MSG Networks, the Borrower, MSGN Eden, Regional MSGN, Rainbow Garden Corp. and the Company entered into an Investor Agreement (the “Investor Agreement”), pursuant to which (i) the Company made a capital contribution to MSG Networks in an amount equal to $15 million; (ii) the parties thereto agreed that the Borrower will be a part of the same affiliated group of which the Company is the common parent that files U.S. federal income tax returns on a consolidated basis; (iii) the Company agreed to forgive any outstanding balances owed by the Borrower or Holdings Entities and their subsidiaries in respect of shared services provided by or on behalf of the Company to the Borrower or Holdings Entities and their subsidiaries through June 30, 2025; and (iv) the Company agreed to provide shared services to the Borrower and Holdings Entities and their subsidiaries at a reduced rate until December 31, 2029.

Limited Partnership Agreement of the Borrower

On the Effective Date, the Limited Partnership Agreement of the Borrower was amended to provide for the issuance of contingent interest units (the “Contingent Interest Units”) to the Lenders. Beginning with the fiscal calendar year-end following the repayment in full of the New Term Loan Facility, the Contingent Interest Units entitle the Lenders to receive annual payments in an amount equal to 50% of the difference between the Borrower’s balance sheet cash and certain minimum cash balances, specified with respect to the applicable measurement date, until the earlier of (i) December 31, 2029 and (ii) payment of $100 million in the aggregate to the Lenders. The Contingent Interest Units are also entitled to receive 50% of the proceeds of a merger and/or acquisition event related to MSG Networks and its subsidiaries occurring prior to December 31, 2029, subject to an aggregate cap of $100 million considered together with the annual payments of excess cash described in the previous sentence.

Amendments to Media Rights Agreements

The media rights agreements between subsidiaries of MSG Networks, on the one hand, and the Teams, on the other hand, were amended, effective as of January 1, 2025, as follows:

• New York Knicks:

• a reduction of 28% in the annual rights fee;

• an elimination of the annual rights fee escalator; and

• a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks;

• New York Rangers:

• a reduction of 18% in the annual rights fee;

• an elimination of the annual rights fee escalator; and

• a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks.

MSG Networks also entered into amendments with certain other professional sports teams that provide for, among other matters, reductions in the annual rights fees payable to such teams.

Warrant for Common Stock of MSG Networks

MSG Networks issued penny warrants to MSG Sports exercisable for 19.9% of the common stock of MSG Networks.

Mutual Release Agreement

The parties to the Transaction Support Agreement entered into a Mutual Release Agreement providing for a customary mutual release of claims among the parties thereto.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

10.1		Second Amended and Restated Credit Agreement, dated as of June 27, 2025, by and among MSG Networks Inc., MSGN Holdings, L.P., MSGN Eden, LLC, Regional MSGN Holdings LLC, Rainbow Garden Corp., certain subsidiaries of MSGN Holdings, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SPHERE ENTERTAINMENT CO.
(Registrant)
By:		/s/ Mark C. Cresitello
Name:		Mark C. Cresitello
Title:		Senior Vice President, Deputy General Counsel & Secretary

Dated: June 27, 2025

FAQ

What is the size and maturity of Sphere Entertainment's new term loan facility?

The facility is $210 million and matures in December 2029.

How much did Sphere Entertainment contribute in equity as part of the 2025 refinancing?

SPHR made a $15 million capital contribution to MSG Networks on 27 June 2025.

What interest rate applies to the new SPHR term loan?

Borrowings bear interest at SOFR plus 5.00% per annum.

How were the Knicks and Rangers media-rights fees changed?

Annual fees were reduced by 28% for the Knicks and 18% for the Rangers, and escalators were eliminated.

Do Sphere Entertainment’s non-credit subsidiaries guarantee the new loan?

No. Sphere Entertainment Group and its subsidiaries are not guarantors and their assets are not pledged.

What equity dilution results from the transaction?

MSG Networks issued penny warrants covering 19.9% of its common stock to MSG Sports.