Last month, Disney removed dozens of movies and shows from Disney+ and Hulu. According to an SEC filing Friday afternoon, The Walt Disney Company will incur a $1.5 billion impairment charge in its fiscal Q3 “financial statements to adjust the carrying value of these content assets to fair value.”
Disney said they continue to review content on its streaming platforms and “anticipates additional produced content will be removed from its direct-to-consumer and other platforms, largely during the remainder of its third fiscal quarter.” The company estimates additional impairment charges of around $400 million.
During last month’s earnings call, Disney CFO Christine McCarthy stated that “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.” Writing down the value of the content assets makes it so Disney is able to remove those assets from its balance sheet hence reducing its tax bill.
The full SEC reads as follows:
As previously announced, The Walt Disney Company (together with the subsidiaries through which its various businesses are actually conducted, the “Company”) is in the process of reviewing content, primarily on its direct-to-consumer (“DTC”) services, for alignment with a strategic change in approach to content curation and as a result is removing certain content from its platforms. On May 26, 2023, the Company removed certain produced content from its DTC services. As a result, the Company 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. The Company is continuing its review 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, the Company currently estimates it may incur further impairment charges of up to approximately $0.4 billion related to produced content. The Company does not expect any material cash expenditures in connection with the impairment charges related to produced content. In addition, 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.sec.gov
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