How much content has Warner Bros. Discovery dropped since the WarnerMedia merger just a few months ago? Worth $825 million.
The company announced in a regulatory filing on Friday that it took an $825 million writedown on content following the deal. This number includes a $496 million content impairment and $329 million in content development amortization.
“Content impairments and development writedowns result from a global post-merger strategic content review,” the company wrote in the filing.
The impairment and amortization figures were split between the company’s studio business (which includes the film and television studios), network business (which includes the linear TV stations), and DTC business, which includes streaming services like HBO Max and Discovery+. The content impairments affected programs that were already in production or in production, and the development write-downs affected content that was still in development.
And that dramatic number probably doesn’t include Batgirl or Scoob!: Holiday Haunt, two films due to debut on streaming platform HBO Max by this week. (Those films will most likely be accounted for in the next quarter.) However, it would include an amortization related to the film Wonder Twins, another DC project for HBO Max that was in pre-production and was canceled in May before Q2 ended.
Batgirl filmmakers were told the project would not be moving forward earlier this month, although it is already in post-production. Company sources said there were plans to shelve the film for tax reasons and the write-downs announced on Friday would support that.
The second-quarter writedown likely includes a number of programs canceled at TBS and TNT, as well as 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 during the quarter.
TBS and TNT have significantly reduced programming since the merger, instead focusing on sports and unscripted fares. TBS cut the comedies Chad (which had wrapped up production earlier in its season), Full Frontal With Samantha Bee and Tracy Morgan’s The Last OG, while TNT announced an end date for Snowpiercer. Scripted development was paused on both networks, and the company chose not to renew its contract to air the SAG Awards.
At the company’s earnings call on Thursday, WBD streaming chief JB Perrette said that children’s and animation content for linear and streaming, direct-to-stream movies and shows for TBS and TNT were the most responsible for the content recalibration, “especially for content spend [Turner] shows that there was no way to generate sufficient reviews or additional monetization potential.”
WBD, led by CEO David Zaslav and CFO Gunnar Wiedenfels, has said it is targeting around $3 billion in cost savings related to the merger over the next few years. Those savings will come in the form of merging tech systems and offices, as well as layoffs, although rethinking how and where money is spent on content is of course also part of the plan.
“Owning content that people really resonate with is much more important than just having lots of content,” Zaslav said on the company’s earnings call Thursday.
“We will continue to make solid investments in content, but as these two content portfolios come together, we see intelligent ways to do so at a much more measured pace than previous plans,” Perrette added. “These are tough decisions, but we are committed to working with discipline through a framework that guides our content investments for maximum return.”