The Walt Disney Company will record a $1.5 billion impairment charge as a result of removing content from its streaming services Disney+ and Hulu.
In a filing to the US Securities and Exchange Commission (SEC), Disney said that it removed “certain produced content” from its direct-to-consumer streaming services in May.
As a result, the company will record a $1.5 billion impairment charge in its fiscal third quarter to adjust the carrying value of these content assets to fair value.
Disney said it 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.”
Disney explained that it 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.”
By writing down the value of the content assets, Disney can remove that from its balance sheet and reduce its tax bill.
Variety reported that Disney has removed more than 50 titles from Disney+ and Hulu including series Willow, The Mysterious Benedict Society and Dollface, and movies such as The One and Only Ivan.
Disney is cutting the overall volume of content produced for its streaming platforms as it deals with a challenging macroeconomic environment.
CEO Bob Iger is pushing through measures to implement $5.5bn in savings. The company recently concluded a three-part wave of redundancies that cut some 7,000 of staffers, or 3% of the global workforce.