How much content does Warner Bros. Discovery axed since the WarnerMedia merger just a few months ago? 825 million dollars worth.
The company disclosed in a regulatory filing on Friday that it has taken an $825 million write-down on content following the deal. This figure includes a $496 million impairment charge on content, as well as a $329 million content development write-off.
“Content reduction and development write-offs were the result of a global strategic review of content following the merger,” the company wrote in the filing.
The impairment and amortization figures were spread across the company’s studio business (which includes its film and television studios), its network business (which includes linear TV networks) and its DTC business, which includes streaming services such as HBO Max and Discovery+. The content impairments involved programs that had already been produced or were in production, and the development write-offs were for content that was still under development.
And the dramatic number probably does not include Bat girl or Scoob!: Holiday Haunt, two films that until this week were set to debut on the HBO Max streaming platform. (These films will most likely be accounted for next quarter.) However, it will include a write-down related to the film Wonder twinsanother DC project for HBO Max that was in pre-production, and was shelved in May, before Q2 was over.
The filmmakers to Bat girl was told the project would not go ahead earlier this month, despite being well underway in post-production. Sources at the company indicated that it planned to shelve the film for tax purposes, and the write-downs announced Friday would support that.
The Q2 write-down likely includes a number of programs that were discontinued on TBS and TNT, and also costs related to CNN+, the ill-fated streaming service that WBD shut down just weeks after it launched. The filing also noted that the company had $208 million in employee termination costs in the quarter.
TBS and TNT have cut back significantly on programming since the merger, instead leaning toward sports and unscripted fare. TBS cut comedies Chad (which had already completed production on the season), Full frontal with Samantha Beeand Tracy Morgan’s The last OGwhile TNT announced an end date for Snow piercings. Script development on both networks was put on hold, and the company chose not to renew its agreement to air the SAG Awards.
On the company’s earnings call Thursday, WBD head of streaming JB Perrette said kids and animated content for linear and streaming, direct-to-streaming movies and shows for TBS and TNT were most responsible for the content recalibration, “especially content consumption on [Turner] shows that did not have a path to generate sufficient ratings or incremental monetization potential.”
WBD, led by CEO David Zaslav and CFO Gunnar Wiedenfels, has said it is seeking about $3 billion in cost savings over the next few years related to the merger. These savings will come in the form of merging technology systems and offices, as well as layoffs, although rethinking how and where it spends money on content is clearly also part of the plan.
“Having the content that really resonates with people is much more important than just having a ton of content,” Zaslav said on the company’s earnings call Thursday.
“We will continue to have healthy content investments, but with these two content portfolios together, we see smart opportunities to do this at a much more measured pace than in the previous plans,” Perrette added. “These are difficult decisions, but we are committed to being disciplined in terms of a framework that guides our content investment for maximum return.”