A week ago, Disney snatched 76 movies and TV shows from streaming services Disney+ and Hulu. Now, in a filing Friday with the SEC, the company said it will post a $1.5 billion impairment charge in the current quarter due to the “strategic shift in the approach to content curation.” Put simply, Disney is writing off the value of the removed programming as an irrecoverable loss. The loss can be used to offset capital gains for tax purposes.
And, oh yeah, Disney probably isn’t done axing shows and movies, according to the filing. The company “is continuing its review and currently expects additional produced content to be removed from its (direct-to-consumer) and other platforms.” This will happen “mostly” by the end of June; the removal of the additional programming is expected to result in an additional $400 million impairment charge.
In addition, Disney “may terminate certain licensing agreements for the right to use content on its platforms, which would result in the removal of the licensed content from its platforms and incur costs of depreciation and/or termination of the agreement, as well as cash payments “. Any related charges would be “significantly lower” than the $1.9 billion above, it continued.
It’s a large number, sure, but not enough to surprise Wall Street. During the company’s May 10 earnings call, Disney CFO Christine McCarthy said she expects the company to take on a $1.5 billion to $1.8 billion write-down charge on the upcoming content removal. “Going forward, we plan to produce lower volumes of content in line with this strategic shift,” she added.
“Willow,” “Y: The Last Man,” and “The Mysterious Benedict Society” were some of the best-known series axed from Disney+ in the Warner Bros. Discovery-like move. Find the full Disney+/Hulu list here.
Disney isn’t alone in feeling the economic pressure to cut costs, and removing content is just one tool it and other media companies have used. Disney recently completed three rounds of layoffs, resulting in a total of 7,000 job cuts in the past few months alone.
The Walt Disney Company ended the March quarter with 206 million total streaming subscriptions across Disney+ (including Disney+ Hotstar) and Hulu. ESPN+ earned another 25.3 million subscriptions.