As reported earlier today, Disney will shortly be removing content from its streaming service in an effort to cut costs and rethink its strategy.
Now some further details have emerged. The Mouse House is reportedly looking at a content impairment charge of $1.5 billion to $1.8 billion.
That’s effectively half as much as the $2.8 billion to $3.5 billion in cuts that Warner Bros. Discovery racked up in content impairment charges and development write-offs at HBO Max in late 2022/early 2023.
In its post-earnings call today, CFO Christine McCarthy says:
“We are in the process of reviewing the content on our DTC services to align with the strategic changes in our approach to content curation.
As a result, we will be removing certain content from our streaming platforms and currently expect to take an impairment charge of approximately $1.5 to $1.8 billion.
The charge, which will not be recorded in our segment results, will primarily be recognized in the third quarter as we complete our review and remove the content.”
McCarthy didn’t specify any programming that would be cut, though the news has stirred obvious concern about a repeat of what happened at HBO Max with the slash and burn of content at that streamer.
McCarthy says: “Going forward, we intend to produce lower volumes of content in alignment with this strategic shift”, which suggests fewer original series are going to be made. CEO Bob Iger says the plan is for Disney to get “much more surgical about what we make”.
Specifically the company is intent on producing and marketing content that will actually move the needle in terms of subscribers. Iger says:
“When you make a lot of content, everything needs to be marketed. You’re spending a lot of money marketing things that are not going to have an impact on the bottom line, except negatively due to the marketing costs.”
The news follows in the wake of the service recently cancelling its “Willow” and “National Treasure” series both after a single season each.
Disney is presently laying off 7,000 staffers and is on track to meet or exceed planned cost savings of $5.5 billion.
Source: Deadline
