According to Deadline, Disney plans to remove content from streaming services as a strategic way to rethink its cost. They are looking at a content impairment charge of 1.5 billion to 1.8 billion as they remove content from the streaming platform. On a company post-earning call CFO Christine McCarthy gave further information on the strategic rethink.
McCarthy said, “We are in the process of reviewing the content on our DTC services to align with the strategic changes in our approach to content curation.”
She continued to say, “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 third quarter as we complete our review and remove the content. Going forward, we intend to produce lower volumes of content in alignment with this strategic shift.”
According to Deadline, McCarthy did not specify any programs that would be taken out. It is currently known that Disney+ recently canceled Willow and National Treasure after only one season. She also noted an upcoming 180 million dollar charge for the rest of the company’s 2023 fiscal year which ends in September. This is following a hit they took last quarter due mostly to severance pay which amounted to 150 million dollars. Disney is also currently laying off 7,000 staffers and said it is on track to exceed its planned cost saving of 5.5 billion.
Due to the company not making as much money as it was taking to produce and market content, Disney CEO Bob Iger stated that the company will be “getting much more surgical about what we make.”
Iger said, “When you make a lot of content, everything needs to be marketed. You’re spending a lot of money marketing things that are not going to have an impact on the bottom line, except negatively due to the marketing costs.”
Iger also stated, “But we were spreading our marketing costs so thin that we were not allocating enough money to even market them when they came onto the service. Coming up, Avatar, Little Mermaid, Guardians of the Galaxy, Elemental, etc.. where we actually believe we have an opportunity to lean into those more, put the right marketing dollars against it, allocate more basically away from programming that was not driving any subs at all.”