Warner Bros Discovery now expects to incur total pre-tax restructuring charges of $4.1 – $5.3 billion, which includes $2.8 – $3.5 billion of content impairment and development write-offs as it takes a hatchet to its programming. That’s well above the merged company’s initial announcement of charges for $3.2 – $4.3 billion related to its restructuring and transformation initiatives, which included $2 – $2.5 billion on th content side.
Restructuring is ongoing and “could result in additional impairments above the revised estimates,” WBD noted in an SEC filing Wednesday.
The restructuring initiatives are still expected to be substantially completed by the end of 2024.
The company is not revising the previously disclosed estimates for organization restructuring costs, facility consolidation activities and other contract termination costs, or cash expenditures.
Two other original scripted series, Westworld and The Nevers, are coming off HBO Max. Unlike others that we have reported on, Lionsgate TV’s Minx and Love Life and Sony TV’s Gordita Chronicles — all comedies — Westworld and The Nevers are high-end Warner Bros. Discovery drama productions for HBO proper, and I hear they are likely to resurface on other company platforms.
In August, WBD detailed its charges for the June quarter that included a combined $825 million hit on the content side, including $496 million for content impairment and $329 million for content development write-downs, as well as $208 million for employee terminations for the three months ended June. High-profile cancellations then across streaming and linear include a hit from pulling the plug on CNN+. Wonder Twins for HBO Max was shut down in May. Batgirl and Scoob: Holiday Haunt movies also set for the streamer, were scrapped. HBO decided last month not to move forward with J.J. Abrams’ HBO series Demimonde. TBS axed The Big D and Kill the Orange Bear. HBO Max canceled Ellen DeGeneres’ preschool series Little Ellen HBO and Gordita Chronicles. WBD said it would cut kids and animation content across both streaming and linear networks.
In October, the company led by David Zaslav warned of a hit of between $1.3 billion and $1.6 billon in pre-tax restructuring charges for the third quarter ended in September as part of the ongoing merging of its operations, primarily from content write-downs. And it said then that total charges should in coming in between $3.2 billion-$4.3 billion including includes “strategic content programming assessments” leading to total content and development write-offs of approximately $2 billion-$2.5 billion.
The headlines have continued to flow from across divisions, including a rethinking and layoffs at CNN. Most recently Deadline reported that two WB original scripted series, Westworld and The Nevers are coming off HBO Max.
The company officially completed its merger last April, leaving it with heavyweight status but a also a heavy debt load. It has promised $3 billion in cost savings. Zaslav and his longtime CFO Gunnar Wiedenfels have indicated that Warner Media’s financial position was shakier than they’d realized, requiring decisive action. They’re also facing a backdraft by Wall Street against the previous era of loss-making streaming economics that’s pushing media companies to take a closer look at contend spending.
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