Due to the elimination of 76 movies and television series from its streaming services, Disney+ and Hulu, the company will incur a $1.5 billion impairment charge in the current quarter.
A “strategic change in approach to content curation” was cited as the reason for the write-off, which can be used to offset gains for tax purposes.
In a filing with the SEC, Disney also stated that it anticipates additional produced content will be removed from its direct-to-consumer and other platforms, resulting in a further $400 million impairment charge.
In addition to financial payments, the removal of licensed content from its platforms could result in impairment and/or contract termination fees.
Disney CFO Christine McCarthy stated on the company’s earnings teleconference on May 10 that she anticipates a $1.5 billion to $1.8 billion impairment charge for the forthcoming content removal. “Consistent with this shift in strategy, we intend to produce fewer pieces of content in the future,” she added.
Disney Removes Content from Platforms.
Disney is not alone in removing content, as many media companies are under economic pressure to reduce expenses. In the past few months, Disney has concluded three cycles of layoffs, a total of 7,000 positions.
Disney ended the March quarter with 206 million total streaming subscriptions between Disney+ (including Disney+ Hotstar) and Hulu despite the elimination of content. ESPN+ has contributed an additional 25,3 million subscriptions.
“Willow,” “Y: The Last Man,” and “The Mysterious Benedict Society” are among the more well-known series that Disney+ has canceled. The complete list of removed programming is available on Disney+ and Hulu.
McCarthy had already indicated at the $1.5 billion impairment charge during the earnings call, so Wall Street should not be surprised by it. It is unknown how many additional programs and films will be removed from Disney’s platforms as the company continues to evaluate its content.