Disney to Take $1.5 Billion Content Write-Off Charge in June Quarter
Disney, after removing dozens of shows and movies from Disney+ and Hulu last week, said it will incur a $1.5 billion impairment charge for the June quarter.
In an SEC filing Friday, the company said that on May 26, 2023, it removed “certain produced content” from its direct-to-consumer streaming services. As a result, Disney will record a $1.5 billion impairment charge in its fiscal third quarter financial statements “to adjust the carrying value of these content assets to fair value.”
Disney said it’s continuing to review content on streaming platforms and “currently anticipates additional produced content will be removed from its DTC and other platforms, largely during the remainder of its third fiscal quarter.” As a result, Disney currently estimates it may incur further impairment charges of up to about $400 million related to produced content.
On Disney’s earnings call last month, CFO Christine McCarthy had said the company expected to take a write-down in the June quarter of $1.5 billion-$1.8 billion from removing content from its streaming platforms. By writing down the value of the content assets, Disney can remove that from its balance sheet and reduce its tax bill.
In its content purge last week, the media company pulled off more than 50 titles from Disney+ and Hulu, including series “Willow,” “The Mysterious Benedict Society” and “Dollface,” and movies such as “The One and Only Ivan.”
On Disney’s earnings call, CEO Bob Iger said he was “confident that we’re on the right path for streaming’s long-term profitability” and that as part of that the company would be “rationalizing the volume of the content we make and what we’re spending.” He also said the company expects to raise the price of Disney+ without ads later this year “to better reflect the value of our content offerings.”
In addition, according to Iger, the company will launch an integrated Disney+/Hulu “one-app experience” in the U.S. by the end of 2023 for subscribers of both services. Comcast chief Brian Roberts said “I think it’s more likely than not” that his company will end up selling its 33% ownership stake in Hulu to Disney within the next year. “I’m pretty certain if and when we sell our Hulu stake, it will be for more than what we have in it,” Roberts said.
Source: Variety
