Disney is reassessing its expenses and plans, leading to the removal of content from its streaming services. CFO Christine McCarthy mentioned that they are reviewing their DTC (Direct-to-Consumer) services to align with changes in content curation strategy. Consequently, they anticipate incurring an impairment charge of around $1.5 to $1.8 billion. The charge will not be included in their segment results and will mainly be recognized in the third quarter after completing the content review and removal process.
Disney+ has recently decided to cancel the shows Willow and National Treasure after just one season. In light of this, CFO Christine McCarthy stated that they plan to produce a reduced amount of content in line with their strategic shift.
Disney Pulling Some Content Off Streaming In Strategic Rethink
Additional Charge of $180 Million
McCarthy further mentioned that there will be an additional charge of $180 million for the remainder of Disney’s 2023 fiscal year, following a previous charge of $150 million in the last quarter, primarily attributable to severance expenses. Disney Pulling Some Content & is currently in the process of laying off 7,000 employees and remains on track to achieve or surpass their targeted cost savings of $5.5 billion.
The decision to remove content from the service aligns with their objective of creating a smaller content catalog. CEO Bob Iger described it as a more precise approach to content production. He acknowledged that the company had invested significant time and money in creating and promoting content that did not significantly contribute to subscriber growth.
Spending Substantial Sources on Marketing
Iger stated, “When you produce a large amount of content, each item needs to be marketed. Spending substantial resources on marketing content that does not positively impact the bottom line is not a sound strategy due to the associated marketing costs.”
Iger expressed appreciation for theatrical films, particularly blockbuster releases, as effective means of attracting subscribers. However, he acknowledged that their marketing efforts were stretched too thin, resulting in insufficient allocation of resources to promote these films when they were added to the streaming service.
Looking ahead, Iger highlighted upcoming films such as Avatar, Little Mermaid, Guardians of the Galaxy, and Elemental, emphasizing the opportunity to invest more marketing resources into them. This shift involves reallocating funds away from programming that failed to generate significant subscriber growth.