A week ago, Disney yanked 76 movies and TV series from streaming services Disney+ and Hulu. Now, in a Friday filing with the SEC, the company said it will record a $1.5 billion impairment charge in the ongoing quarter due to the “strategic change in approach to content curation.” In layman’s terms, Disney is writing off the value of the removed programming as a non-recoverable loss. The loss can be used to offset gains for tax purposes.
And, oh yeah, Disney’s probably not done deleting shows and films, per the filing. The company is “continuing its review and currently anticipates additional produced content will be removed from its [direct-to-consumer] and other platforms.” That will “largely” happen by the end of June; the removal of additional programming is expected to result in a further $400 million impairment charge.
Additionally, Disney “may terminate certain license agreements for the right to use content on its platforms, which would result in the removal of licensed content from its platforms and lead to impairment and/or contract termination charges as well as cash payments.” Any related charges there would be “meaningfully less” than the $1.9 billion above, it continued.
That’s a big number, sure, but not one that should take Wall Street by surprise. On the company’s May 10 earnings call, Disney CFO Christine McCarthy said she expects the company to take an impairment charge of $1.5 billion to $1.8 billion on the coming content removal. “Going forward, we intend to produce lower volumes of content, in alignment with this strategic shift,” she added.
“Willow,” “Y: The Last Man,” and “The Mysterious Benedict Society” were some of the better-known series scrapped from Disney+ in the Warner Bros. Discovery-like move. Find the full Disney+/Hulu list here.
Disney is not alone in feeling economic pressure to cut costs — and content removal is just one of the tools it and other media companies have used. Disney recently completed three rounds of layoffs, totaling 7,000 jobs cut in just the past few months.
The Walt Disney Company ended the March quarter with 206 million total streaming subscriptions between Disney+ (including Disney+ Hotstar) and Hulu. ESPN+ chipped in another 25.3 million subscriptions.
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