Disney is going to be taking a $1.5 billion impairment charge for the June quarter after pulling dozens of titles from Disney+ and Hulu. The news came from an FEC filing that The Walt Disney Company made on Friday. The filing said that the company removed content from its streaming services on May 26, 2023, and because of that, Disney will record a $1.5 billion impairment charge in its fiscal third-quarter financial statements. This will be “to adjust the carrying value of these content assets to fair value.”
The filing also revealed that the content that was removed on May 26th may not be the only content that is pulled. Disney is continuing to review content on its various streaming services and “currently anticipates additional produced content will be removed from its DTC and other platforms, largely during the remainder of its third fiscal quarter.” This could lead to future impairment charges of up to $400 million related to produced content.
The filing came as no surprise for those who have been following Disney’s financials. Last month on an earnings call, Disney’s CFO Christine McCarthy said that Disney would be expecting to take a write-down during the third quarter of $1.5 billion-$1.8 billion. This will allow Disney to remove the value of the write-down from its balance sheet and lower its taxes.
There were around 50 titles removed from Disney+ and Hulu in May. Some of these were met with some dismay by fans, including Willow, The Mysterious Benedict Society, and The One and Only Ivan. May also saw Disney finish its final major round of layoffs in its efforts to cut its workforce by 7,000 employees. This has been completed with just a few international positions still possibly being removed over the course of the summer.
As of the last earnings call, Disney CEO Bob Iger shared that he thought Disney was on the right path and seemed optimistic for the future. Only time will tell how all of the cost-cutting this year will impact Disney’s bottom line in the long term.
Daps Magic will continue to follow this story and provide updates as they become available.
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