Warner Bros. Discovery to Take $2B-Plus Writedown on Content and Development Amid Restructuring – The Hollywood Reporter

Discovery of Warner Bros.Restructuring costs are starting to take shape.

The company said in a securities filing on Monday that it expects to take between $3.2 billion and $4.3 billion in pretax restructuring charges related to its acquisition of WarnerMedia, including content-related writedowns of between 2 and 2.5 billion dollars.

WBD has engaged in what it called a “global strategic content review” since the deal was struck with WarnerMedia, canceling projects, canceling development and shelving unperforming content from the library. During the first quarter following the closing of the transaction, it disclosed $825 million impairment on content, and a substantially similar number is expected in its third quarter report.

Among the abandoned projects were almost finished bat girl movie (which was developed for HBO Max), a wonder twins movie and tv shows like Full frontal with Samantha Bee.

In addition to high-profile content cancellations and abandoned development, the company has also been laying off employees on an ongoing basis, with various departments seeing cuts in recent months. The Warner Bros. television group. was impacted earlier this month.

To that end, WBD says it expects organizational restructuring costs of between $800 million and $1.1 billion and facility consolidation and other contract savings of between $400 million and $700 million.

Critically, the WBD filing suggests that about 70% of that $3.2-4.3 billion figure has been taken since the acquisition, meaning it’s mostly its strategic review of company’s operations, though it adds that its write-down and restructuring efforts should “be substantially completed by the end of 2024.”

And the company also plans to cut costs by merging its Discovery+ and HBO Max streaming services next year, which will allow the company to reduce the number of service providers it uses and consolidate some technical costs. It will also consolidate office space, although details of its future New York footprint (where it has offices in both Hudson Yards and Park Avenue South) remain to be seen.

Monday’s filing is the clearest picture yet of the company’s restructuring efforts, which originally promised $3 billion in savings from the merger.

The $2 billion+ content writedown is particularly telling and likely includes writedowns not only for canceled and discontinued film and TV projects, but also WBD’s decision to remove certain library programming from HBO Max.

Of course, the company will also continue to spend around $20 billion on content each year, though executives have told analysts they expect to spend that money “smartly” and “drive for the highest level of financial discipline here to ensure that every dollar spent is useful and measured,” according to CFO Gunnar Weidenfels.

To town hall last monthCEO of WBD David Zaslav and other senior executives acknowledged the “disruption” and “difficulty that all media companies face” in the current environment, as well as the “challenges” associated with the integration of WarnerMedia and Discovery.

However, he reiterated that the company is “absolutely not for sale” and expects to be competitive as a pure-play content company with its current assets.

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