Disney faces a $1.5 billion writedown fee after its recent content deletion
Following Disney’s unceremonious content purge on Hulu and Disney+ last month, the House of Mouse has officially confirmed it an SEC filing that there is a $1.5 billion impairment charge that can be used as a tax write-off. As the company continues to look to position its streaming strategy going forward, it plans to book this charge in the third quarter “to adjust the carrying amount of these content assets to fair value.” For those who still have a sour taste in their mouth after the first round of cuts, things are expected to get worse as the company is still reviewing its catalog while trying to move towards CEO Bob IgerThe ideal path to profitability.
In total, over 50 series and films have been canceled from Disney+ and Hulu, including some of the biggest titles pasture, The Mysterious Benedict Society, doll face, Great shotsAnd The one and only Ivan. Worse, since many of these titles were closely associated with the company and its intellectual property, some of them are unlikely to be sold to other platforms, leaving no way to watch them outside of the physical releases, assuming you have them. CFO Christine McCarthy and Iger made the move clear in Disney’s latest earnings announcement, revealing that the company plans to take a $1.5 billion to $1.8 billion write-down because of the cuts, even if it means losing the vision of so many artists.
However, with the SEC filing, it appears that the House of Mouse is targeting the high end of that range. Disney anticipates an additional impairment charge in the order of $400 million as the company “currently expects additional produced content to be removed from its DTC and other platforms, largely over the remainder of the fiscal third quarter.” That means more fan-favorite series are likely to end up in the Disney Vault The world according to Jeff Goldblum And Rosaline. Most of the new cuts are expected to come sometime in fiscal third quarter.
The previous purge of Disney content was not well received
Disney has hardly done itself any favors with its first major round of cuts. While the ship needed a course correction as the company wasted money on overpriced shows and lost Disney+ subscribers, the way it was doing it mimicked the coldness of Warner Bros. Discovery’s 2022 cuts. It was precisely the practice of purging to save on remaining balances and tax write-offs that is so upsetting pasture writer John Bickerstaff who described the company’s actions as “absolutely cruel”. However, Iger is banking on the business, and the deals suggest Disney will extend its losses again this quarter after initially trimming them to $659 million in the fiscal second quarter, meaning action is still needed.
That’s not the only step they’re taking to get back on their feet financially, as Iger also anticipates another increase in its ad-free Disney+ subscription plan as the company continues to steer toward profitability. This is all also happening in conjunction with Disney’s announcement of a joint app for Hulu and Disney+, which is expected to launch in the US later this year. While it’s not a full merger of Warner Bros. Discovery’s Max service, it further consolidates the Disney package, especially as Comcast could seek to sell its stake in Hulu.
Stay tuned to Collider here for more on Disney as the company continues to change its streaming strategy.
