The cancellation of “Batgirl” was just the tip of the iceberg. Warner Bros. Discovery in an SEC filing on Monday announced that it had written off between $2 billion and $2.5 billion worth of content in the July-September quarter — a pretty bright Bat Signal to Wall Street that underlines the company’s commitment to cost cutting.
What Warner Bros. Discovery’s army of accountants called “content impairment and development write-offs” are part of greater “pre-tax restructuring charges” recognized in its fiscal third quarter, totaling between $3.2 billion and $4.3 billion. The difference comes from other restructuring costs, like the severance packages that accompany mass layoffs, and the consolidation of offices and other facilities.
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That’s one way to balance the balance sheet. WBD performed what it called “strategic content programming assessments” to come up with the $2 billion-plus in write-offs of TV series and movies. And there could be more in Q4.
“While the Company’s restructuring efforts are ongoing, including the strategic analysis of content programming which could result in additional impairments above the estimate provided above, the restructuring initiatives are expected to be substantially completed by the end of 2024,” WBD added in its filing.
All told, the estimated cash expenditures from the organization restructuring, facility consolidation activities, and other contract termination costs will be in the range of approximately $1 billion to $1.5 billion, the company said. This all comes one quarter after Warner Bros. Discovery racked up roughly $1 billion of pre-tax restructuring charges, including quite a bit related to content. None of this has turned the struggling WBD stock around.
The moves are part of Warner Bros. Discovery’s plan to achieve cost synergies and trim up to $3 billion in debt in its first two years following Discovery’s merger with WarnerMedia back in April. One of the more high-profile cuts last quarter was the HBO Max film “Batgirl,” which cost roughly $80 million and was near completion before it was ultimately focused. It wasn’t a popular move, but as IndieWire reported at the time, it wasn’t a one-off. The write-offs also led to the removal of films such as “An American Pickle” and “Charm City Kings” from HBO Max. Other underperforming shows and movies were also taken down; decluttering the service was an added benefit.
Warner Bros. Discovery has also been cutting costs by cutting staff. The company laid off 125 from its TV group earlier this month, roughly 100 employees in its ad-sales group last month, and another 70 from its HBO and HBO Max staff back in August.
David Zaslav & co. will report Q3 earnings next Thursday on Nov. 3.
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