It Begins: Disney to Take $1.5 Billion Write-Off Charge in June Quarter

4,654 Views | 58 Replies | Last: 11 mo ago by BTKAG97
captkirk
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When is the write-down of Pixar and Lucasfilm coming?
Quote:

Disney, after removing dozens of shows and movies from Disney+ and Hulu last week, said it will incur a $1.5 billion impairment charge for the June quarter.

In an SEC filing Friday, the company said that on May 26, 2023, it removed "certain produced content" from its direct-to-consumer streaming services. As a result, Disney will record a $1.5 billion impairment charge in its fiscal third quarter financial statements "to adjust the carrying value of these content assets to fair value."

Disney said it's continuing to review content on streaming platforms and "currently 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, Disney currently estimates it may incur further impairment charges of up to about $400 million related to produced content.

On Disney's earnings call last month, CFO Christine McCarthy had said the company expected to take a write-down in the June quarter of $1.5 billion-$1.8 billion from removing content from its streaming platforms. By writing down the value of the content assets, Disney can remove those from its balance sheet to avoid having to pay ongoing residuals and to reduce its tax bill.

In its content purge last week, the media company pulled off 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."

https://www.yahoo.com/entertainment/disney-1-5-billion-content-204715614.html
Rapier108
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"If you will not fight for right when you can easily win without blood shed; if you will not fight when your victory is sure and not too costly; you may come to the moment when you will have to fight with all the odds against you and only a precarious chance of survival. There may even be a worse case. You may have to fight when there is no hope of victory, because it is better to perish than to live as slaves." - Sir Winston Churchill
CDUB98
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Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?
Rebel Yell
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I am not convinced they get the message.

We will see if they begin to produce age appropriate content again or if they continue to sacrifice earnings at the alter of woke.
MouthBQ98
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Too many crap products not generating revenue, mostly because too many elements of them were influenced by various elements of woke culture but also just lazy poor effort.
Houstonag
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It sure does have to do with their wokeness.
dreyOO
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CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?
Well someone over at Disney is impaired, so that much sounded right.
No Spin Ag
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I get the strong feeling a lot of people are going to get rich AF once they bounce back after all of this mess they're in. Their CEO doesn't seem the type to come back and put his rep on the line for nothing.
There are in fact two things, science and opinion; the former begets knowledge, the later ignorance. Hippocrates
aggiehawg
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And you can be sure if they are admitting to that much of a write down, there are much more to come.

That shareholders derivative lawsuit alleges Disney was cooking the books on Disney+. IDK if that is true but have to wonder.
Bubblez
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CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?
This has all been known for some time already. Disney is getting their streaming business profitable by paring back the mountains and mountains of content it currently has available.
Squadron7
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Houstonag said:

I sure does have to do with their wokeness.

I think it a whipsaw of woke and mediocre talent right now.

Even if they tried to not be woke their woke-based hires may not be all that talented.

Premium
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AG
Seems like a lawsuit to sign up yearly subscription customers and decrease the value of the product you sold them.
AggieVictor10
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CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?


Doesn't matter. The more this company gets hurt, the better. Less money to use to spread their woke messaging is always a reason to celebrate. **** em.

Why not spread traditional, family friendly content like they used to?
Less virtue signaling, more vice signaling.

Birds aren’t real.

RFK/brain worm 2024
aglaes
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They mentioned a few titles as examples, but I have no idea what those are about.

Are you sure they are not removing older content, that by their new woke standards is no longer "politically correct".
aggie93
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I think part of it is Wokeness but I think the bigger issue is they aren't actually focused on what their customers want and making money. Disney could make a dozen projects that are just good, family friendly entertainment and people would lap it up. They could make ESPN about sports. They could write stories for Star Wars and other franchises based around compelling and interesting topics true to the original storylines. They could stop trying to fight with the State of Florida over what they teach their kids in Elementary school.

I mean that all makes way too much sense though so they should just keep up the other garbage until eventually it all crashes down. No brand is invincible.
"The most terrifying words in the English language are: I'm from the government and I'm here to help."

Ronald Reagan
Definitely Not A Cop
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Will be interested to see stock price between their summer movie slate not performing well so far, and the massive check they are about to cut to Comcast to own the last 1/3rd of Hulu.
captkirk
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aglaes said:

They mentioned a few titles as examples, but I have no idea what those are about.

Are you sure they are not removing older content, that by their new woke standards is no longer "politically correct".
Willow was a Lucasfilm project that came out last year. It was so bad they are pulling it down
No Spin Ag
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AggieVictor10 said:

CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?


Doesn't matter. The more this company gets hurt, the better. Less money to use to spread their woke messaging is always a reason to celebrate. **** em.

Why not spread traditional, family friendly content like they used to?


"Traditional" is relative. I mean, at one time females being shown as "working girls" or divorced would've been seen as "woke" or not traditional. Most of our resident females would've been seen in that light not more than a few generations ago.


Disney's biggest mistake wasn't in showing certain people in a prominent way, but they cranked it to 11, when things have shown to work best when things get moved up one notch at a time. They won't make this mistake again. They also won't stop having this people on their content, just like TV shows didn't stop having POC, women, etc. on their content when a segment of the population didn't like the way things were moving.

This too shall pass.
There are in fact two things, science and opinion; the former begets knowledge, the later ignorance. Hippocrates
TheCurl84
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You hate to see it.
ABATTBQ11
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aggiehawg said:

And you can be sure if they are admitting to that much of a write down, there are much more to come.

That shareholders derivative lawsuit alleges Disney was cooking the books on Disney+. IDK if that is true but have to wonder.


It is to an extent. What they were doing, supposedly and IIRC, was developing content for the Disney Channel and recording the cost there or cost sharing for shared content, but then pulling the content from the Disney Channel and pushing it to D+. In that way, D+ got the content and could assign revenue to it from viewers, but the cost was incurred to the Disney Channel. The result was D+ looking better financially because it got free or discounted content.
J. Walter Weatherman
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Could be remembering wrong but I thought I heard a podcast a few weeks ago about them and the other streaming networks doing this - I believe this is just a tax/accounting move similar to getting rid of furniture, real estate, etc to save on the carrying costs. Only difference is these are digital assets, just ones they aren't worried about people missing on Disney+.
aggiehawg
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ABATTBQ11 said:

aggiehawg said:

And you can be sure if they are admitting to that much of a write down, there are much more to come.

That shareholders derivative lawsuit alleges Disney was cooking the books on Disney+. IDK if that is true but have to wonder.


It is to an extent. What they were doing, supposedly and IIRC, was developing content for the Disney Channel and recording the cost there or cost sharing for shared content, but then pulling the content from the Disney Channel and pushing it to D+. In that way, D+ got the content and could assign revenue to it from viewers, but the cost was incurred to the Disney Channel. The result was D+ looking better financially because it got free or discounted content.
Thanks. I couldn't quite remember how they were placing expenses on a different P&L. Just that it was the allegation.

Appreciate the clarification.
deddog
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Owlagdad
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MouthBQ98 said:

Too many crap products not generating revenue, mostly because too many elements of them were influenced by various elements of woke culture but also just lazy poor effort.


Amen. The woke think hard work is four letter word. Riches are supposed to be given to them- because, because of who they are!
Pinochet
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CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?

That's not how an impairment works. An impairment is a charge now that presumably would have been amortized over time or was related to an unamortizable intangible/goodwill. Based on the way movies are produced and financed, this could also be an attempt to accelerate tax losses under the worthless stock rules.
ABATTBQ11
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aggie93 said:

I think part of it is Wokeness but I think the bigger issue is they aren't actually focused on what their customers want and making money. Disney could make a dozen projects that are just good, family friendly entertainment and people would lap it up. They could make ESPN about sports. They could write stories for Star Wars and other franchises based around compelling and interesting topics true to the original storylines. They could stop trying to fight with the State of Florida over what they teach their kids in Elementary school.

I mean that all makes way too much sense though so they should just keep up the other garbage until eventually it all crashes down. No brand is invincible.


I think this is pretty close. TLDR, they're creatively lost.

Their biggest issue is that they have essentially caved to their creators and are letting them create art instead of mass market content. At Pixar, that used to be a good model and was a big part of how they made their name. The problem is that the artists have changed. 20 years ago they had artists and creators who were liberal, but they wanted to create emotional films that were appealing and relatable to everyone. Toy Story, A Bugs Life, Finding Nemo, Cars, etc were all movies that everyone could relate to and find enjoyable. Beyond that though, they were all incredibly well made. Now they have very woke artists and creators that want to create edgy films for specific audiences without appreciating that Pixar is still a business: Unlike a starving artist, it can't crash on someone's couch when their edgy art isn't widely appreciated and bought. If you're in the business of art, your art had better be good enough to sell.

Disney is running into much of the same issues. They have lost focus on mass appeal and creating something for everyone in lieu of letting their artists and creators make things for more specific audiences and tastes. They've also run into the problem of beating franchises to death. Marvel has been worn out, and they've done themselves no favors with how she of it has been cast and written. I straight up stopped watching Agents of SHIELD after a couple of seasons because it fell into all of the woke tropes and became unwatchable. I haven't seen a Marvel movie since End Game because of the laughable, "She's got help," scene that was so iconically bad it was parodied in The Boys.

And look at how badly Star Wars had been managed. The hyper focus on inclusion and the complete lack of vision, continuity, and consistency in the sequel trilogy really damaged the brand until The Mandalorian rescued it, but then they started trying to make 20 different Star Wars projects and made a laughingstock of themselves. So far all they've gotten right, IMO, is Andor.

Now they've made another Indiana Jones no one asked for, and surprise surprise it is not doing so great. It may not recover its budget, much less all the other associated costs. A lot of their projects lately reek of desperation because they're basically recycling older, successful IP or throwing everything at even the mildest success.

Beyond all that, their messaging and branding on D+ has seriously made me question my choice to continue a subscription. I simply don't have the need or desire for a platform with groupings and categories for black history month, her story, pride month, etc. I don't care that the movies or content in these categories exist, I just don't see any personal utility in having them thrown in my face by being defaults that I have to wade through. Classics, Star Wars, Shorts, Pixar, etc are far more useful and entirely objective/neutral.
ABATTBQ11
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Pinochet said:

CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?

That's not how an impairment works. An impairment is a charge now that presumably would have been amortized over time or was related to an unamortizable intangible/goodwill. Based on the way movies are produced and financed, this could also be an attempt to accelerate tax losses under the worthless stock rules.


You guys may be talking different things. Depends on individual contracts, but by pulling content they may be reducing residuals. Essentially, they'd owe someone anytime that content was viewed, so they can't owe anyone if it's never viewable. It's a true recurring expense. They don't see a charge now, but save on potential residuals hitting them down the road.

They could also be doing exactly what you're saying and clearing things from their books that would normally be amortized.
aggiedata
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fullback44
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aggiedata said:


whats the saying

GET WOKE GET BROKE
Definitely Not A Cop
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I will never criticize Disney for pretending that Indy 4 didn't happen. That movie and Shia Labouf was terrible for that franchise.
Demosthenes81
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New press release from their marketing department:
Quote:

Disney is a bombad company and knows what isa do. Desa will be successful now and into dha future.
one MEEN Ag
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A good question I saw a while back was, "What even is Disney anymore?" It seems to be a mediocre management company of popular IP it had to buy instead of create.

What was the last IP that disney created that was purely under Disney's name? Not a remake. Not marvel, lucasfilm, or pixar.

Another thing is, the barriers to entry into digital animations get lower every year and where kids see new characters, thoughts and ideas is changing considerably.

Back in Disney's heyday there was only a few main outlets to consume kids media. ABC's One Saturday Morning, Cartoon Network, and the Disney Channel. If you wanted to buy a branded toy you went to the Toy Store. Movies were big deals.

That whole value chain has been disrupted. Kids get kid focused media from every streaming platform, infinite tv channels. Also social media is the cool thing that kids want to be a part of that eats mental real estate. streaming platforms have created non-movies, non-tv shows. Youtube has created 10 minute video series as well. Toys are bought online.

captkirk
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ABATTBQ11 said:

Pinochet said:

CDUB98 said:

Not sure this specific write down has to do with their wokeness.

Maybe tied together via a reduction in net working capital, so they needed to offload some recurring expenses?

That's not how an impairment works. An impairment is a charge now that presumably would have been amortized over time or was related to an unamortizable intangible/goodwill. Based on the way movies are produced and financed, this could also be an attempt to accelerate tax losses under the worthless stock rules.


You guys may be talking different things. Depends on individual contracts, but by pulling content they may be reducing residuals. Essentially, they'd owe someone anytime that content was viewed, so they can't owe anyone if it's never viewable. It's a true recurring expense. They don't see a charge now, but save on potential residuals hitting them down the road.

They could also be doing exactly what you're saying and clearing things from their books that would normally be amortized.


They are doing both
Pinochet
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Future recurring residuals would not have been capitalized. This is the problem with people jumping to conclusions without understanding what's going on.
TexAgs91
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Disney, this Bud's for you
America the Beautiful
1776 - 2020
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