Sphere Entertainment’s MSG Could Be Rescued by Amazon

Sphere Entertainment (NYSE: SPHR) may get relief from the burden of MSG Networks’ debt if the speculation that the regional sports network (RSN) is negotiating with Amazon (NASDAQ: AMZN) is confirmed. 

Referencing unnamed sources knowledgeable about the situation, The New York Post announced late Friday that MSG Networks is negotiating with Amazon regarding a possible agreement that might remove or lessen the RSN’s $829 million debt. That figure is almost 50% of Sphere's market capitalization of $1.67 billion as of yesterday's US market close, indicating that these liabilities have been a burden on the stock. 

When Sphere was separated from Madison Square Garden Entertainment Corp. (NYSE: MSGE) in April 2023, the debt-burdened MSG Networks became part of the newly created organization. The RSN airs games for the New York Knicks and Rangers, but both NBA and NHL teams are managed by James Dolan's MSGE. 

At this time, MSG Networks is engaged in a contract dispute with cable provider Optimum, which affects 1 million residents in the New York area who are Optimum customers, preventing them from watching Knicks and Rangers games. Sources informed The Post that the conflict might motivate the RSN to collaborate with Amazon instead of pursuing another extension to settle its debt. 

Amazon Possesses RSN Expertise 

If Amazon strikes a deal with Sphere’s MSG Networks, it wouldn’t be the first occasion the retailer has rescued a struggling sports network. 

Amazon Prime has a partnership with Diamond Sports to air professional games nationwide. Those watching the gaming industry are aware of Diamond Sports as the RSNs managed by the firm were known as Bally’s Sports before switching to FanDuel branding last year. 

Amazon holds a financial interest in the YES Network — which broadcasts Brooklyn Nets and New York Yankees games. It’s uncertain whether the company’s involvement with the Nets would be a contentious issue in negotiations with MSG Networks. 

Certain analysts have suggested that if Altice, the parent company of Optimum and itself nearing bankruptcy, completely divests from MSG Networks, the RSN may likely fail, indicating that creditors might urge the Sphere unit to collaborate with Amazon. 

Sphere Stock Might Be Reflecting Amazon/MSG Agreement Pricing 

Friday was another deadline for MSG Networks to settle its debt, yet the day passed without any action. Many think that Dolan will not provide financial assistance to the RSN, yet despite this, Sphere's shares increased by 8.55% throughout the week. The stock has increased by 15.58% since the beginning of the year. 

Part of that performance might be linked to the belief that lenders could be inclined to substantially lessen the RSN's commitments this year — conjecture that emerged long before the Amazon rumor. 

The excitement in January surrounding Sphere stock may also stem from the Las Vegas venue announcing notable acts for its 2025 schedule and optimism among investors that the company will disclose expansion strategies this year.