Tucked within an SEC filing on Wednesday that Roku would be laying off 10 percent of its workforce, or about 300 people, is another surprise, which is that even Roku is getting in on the trend of removing content from its streaming service for taxes purposes.
Roku will incur an impairment charge of between $55-65 million “related to removing select existing licensed and produced content from Company-operated services on its TV streaming platform.” So like Max, Disney+, Paramount+, and others before it, Roku will permanently remove licensed and original content from its streaming platform The Roku Channel.
The filing did not say which content would be removed or how much, but it’s part of a “strategic review of its content portfolio” and an overall “continuing evaluation of its operations.”
As IndieWire has previously articulated, the trend of taking content write downs during a restructure is different than rotating in and out licensed content. A company does it to remove fees it pays to a producer or studio from the balance sheet and accelerate the amortization of content that isn’t producing value. And that content isn’t coming back without some fancy accounting maneuvers.
Some companies, like Warner Bros. Discovery, removed HBO content such as “Westworld” in order to move it to a FAST channel that can live on a place like Roku. Others may license some of that content elsewhere where it can create more value. So where does Roku’s original content go once it disappears? Maybe nowhere.
Roku’s stock jumped as much as 11 percent at the news of the cuts, but at time of writing it sits at $84.73, about one percent above its prior close.
Roku last November cut another 200 jobs. At that point, Roku was making a bigger push into original content and had itself a hit with the release of “Weird: The Weird Al Yankovic Story,” and the company brought in former Fox executive Charlie Collier as president of its media division. But Roku is finding more growth on the back of its manufacturing of streaming gateway devices and even now TVs.
Roku won’t be the last streaming service to evaluate its content library and make some tough cuts. Disney indicated back in June it wasn’t done removing content after already pulling 76 different shows from Disney+ and Hulu.