Warner Bros. Discovery Getting Rid Of Even More Content
Warner Bros. Discovery plans to remove more content due to an increase in its estimated restructuring charges. According to a recent securities filing, the company said write-offs and impairments related to content and development costs will increase from $2.8 billion to $3.5 billion. Total pre-tax restructuring charges are now estimated to be between $4.1 and $5.3 billion, Deadline reports.
These figures are much higher than previous predictions of between $3.2 and $4.3 billion for restructuring as well as between $2 and $2.5 billion for content write-offs. “Restructuring is ongoing and could result in additional impairments above the revised estimates,” Warner Bros. Discovery explained in the SEC filing. The entire initiative is still expected to be completed at the end of 2024.
Although the Warner Bros. Discovery filing did not detail what the increased impairments were related to, the company has scrapped several titles from its services. This includes Love Life, Minx, Westworld, Legendary, The Time Traveler’s Wife, FBoy Island, Raised by Wolves, and The Nevers. High-profile projects like Wonder Woman 3 have also been dumped in favor of James Gunn and Peter Safran’s new plans for DC Studios.
However, most of the series previously housed on the Warner Bros. Discovery-owned HBO and HBO Max will be packaged and sold to third-party, ad-supported, free streaming services. In a statement via The Hollywood Reporter, Westworld creators Jonathan Nolan and Lisa Joy said they are incredibly proud of their show and the remarkable work of its cast and crew. “We are excited to have the opportunity to welcome a whole new audience to our show,” they added.
Warner Bros. Discovery has been aggressively looking to cut costs since the merger was completed earlier this year. After a sobering review of the studio’s finances, Chief Executive David Zaslav told each division to “pretend” each unit is a family business. He essentially wanted them to start from scratch and free cash flow, people familiar with the situation told CNBC.
That directive resulted in thousands of layoffs, along with strategic changes at CNN, the Warner Bros. film studio, and other divisions. According to the publication, the CEO formed his plan after realizing the finances of the newly merged Warner Bros. Discovery were a disaster. AT&T mismanaged WarnerMedia through “neglect and profligate spending,” undisclosed sources revealed.
As such, Warner Bros. Discovery’s total approximate debt of $50 billion was actually billions of dollars more than its market capitalization. CNBC says almost $5 billion of that debt is due by the end of 2024 after paying off $6 billion since the merger closed. If necessary, the studio could push back the maturity of some bonds. But due to rising interest rates, refinancing would be much more expensive.
Although the company can claim a tax benefit on the write-downs, a more profitable option may be re-selling its content. But that largely depends on the status of the project. Meanwhile, shares of Warner Bros. Discovery have fallen by more than 50% since WarnerMedia and Discovery closed its merger deal in April. Its market value currently stands at approximately $26 billion.
