Spectacle observed, reportedly (5)
I believe the answer is:
scene
'spectacle' is the definition.
(I've seen this in another clue)
'observed reportedly' is the wordplay.
'observed' becomes 'seen' (synonyms).
'reportedly' shows a homophone (sound like).
'seen' sounds like 'SCENE'.
(Other definitions for scene that I've seen before include "Spectacle" , "bit of an act" , "Subdivision of a drama" , "Pleasant view or public quarrel" , "Landscape; part of act" .)