Disney made it official with an SEC filing after the markets closed Friday, confirming it would take $1.5 billion in write-downs associated with removing streaming programming from its platforms.
The number came in on the low end of a range provided by the company last month when it released its quarterly earnings. (Read the new filing HERE.) Like other media companies, Disney has been looking to trim expenses in the once-fevered streaming arena, and removing programming has been one means of reaching that goal. Rival service Max, the outlet recently rebranded by Warner Bros Discovery, has also drawn scrutiny for shedding a number of high-profile titles, though the removals are part of the larger reckoning with the daunting economics of streaming. The long-promised nirvana for consumers of a nearly endless storehouse of available titles has collided with the reality of how much that costs to sustain, both in terms of technology and payouts to stakeholders in the programming.
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Along with pulling individual film and TV titles offline, the company also plans to bring Hulu titles onto Disney+ by the end of the year. Among the dozens of series removed from global streaming circulation on Disney+ are Willow, Big Shot, Turner & Hooch, The Mighty Ducks: Game Changers, Just Beyond, Diary of a Future President, The Mysterious Benedict Society and The World According to Jeff Goldblum. Hulu, meanwhile, is sidelining Y: The Last Man, Dollface, The Hot Zone, Maggie, Pistol and Little Demon.
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“We are in the process of reviewing the content on our [direct-to-consumer] services to align with the strategic changes in our approach to content curation,” CFO Christine McCarthy said on May quarterly call. “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 [fiscal] third quarter as we complete our review and remove the content.”
The take-downs took effect on May 26, according to the filing. A review of remaining streaming fare is continuing. Disney said it expects more programming to be removed from direct-to-consumer and other platforms, largely during the rest of the company’s fiscal third quarter. About $400 million in further impairment charges will result, Disney projects.
In addition, the filing goes on to say, “the company 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. The company currently expects that any such charges and payments related to licensed content would be meaningfully less than the impairment charges related to produced content.”
The period of streaming austerity comes as CEO Bob Iger, back since last November for a second tour as CEO, is steering the company through a significant belt-tightening effort. The company recently completed layoffs affecting about 7,000 employees, or roughly 3% of its global workforce, a key part of achieving $5.5 billion in cost savings.
Although Iger selected Bob Chapek as his CEO replacement in 2020, he wound up becoming critical of his successor’s approach to streaming. A flurry of new film and TV projects, introduced by Chapek at an investor day in late-2020, worsened the financial profile of the streaming division and reflected an all-out push to attract new subscribers. Iger earlier this year reflected in an interview with CNBC that the company “got intoxicated by our own sub growth” after a fast start with Disney+. Rather than pure subscriber growth, Iger said retaining “loyal” subscribers was becoming the new priority.