Discovery of Warner Bros. updated its estimate of restructuring charges related to Discovery’s acquisition of WarnerMedia, and said content impairment and development impairment charges could reach $3.5 billion, or $1 billion from more than before.
The media company made the disclosure in a Filing with the SEC Wednesday. WBD said it has “revised certain estimates related to its restructuring and transformation initiatives” which he previously disclosed in October. The company said it now expects to incur total pretax restructuring charges of $4.1 billion to $5.3 billion, down from $3.2 billion to $4.3 billion previously.
The new estimate includes $2.8 billion to $3.5 billion in content write-downs and development write-downs. Warner Bros. Discovery said it was not revising previously disclosed estimates for organizational restructuring costs, facility consolidation activities and other contract termination costs or cash expenses. That said, the company noted that “restructuring efforts are ongoing and may result in additional impairments beyond revised estimates.” Warner Bros. Discovery said its restructuring initiatives are still expected to be “substantially complete” by the end of 2024.
Since closing the deal earlier this year, Warner Bros. Discovery is looking to cut costs. This included several layoffs at the merged company. The company has also made a series of content cuts aimed at cutting expenses, including set aside “Batgirl” from Warner Bros. and more recently cancellation of the HBO Max original series “Minx” (cancellation of its renewal of season 2) and the removal of HBO “The Nevers”.
Separately on Wednesday, the company announced plans to license certain content airing on HBO Max, including “Westworld,” “The Nevers,” “Raised by Wolves,” “FBoy Island,” “Legendary,” “Finding Magic Mike.” , “Class Leader” and “The Time Traveler’s Wife” — for Third-party free and ad-supported streaming TV (FAST) partners. Each title will leave HBO Max in the coming days as WBD prepares to transfer them to third-party distribution deals.
When releasing third-quarter results last month, the CEO of Warner Bros. Discovery, David Zaslav said the company is targeting $3.5 billion in savings over three years thanks to the Discovery-WarnerMedia merger, up from $3 billion previously.
The company reported Q3 revenue of $9.82 billion, down 8% year-over-year, and a net loss of $2.3 billion, which included $1.92 billion of amortization of intangible assets related to acquisition and $1.52 billion of restructuring charges, including content write-downs and write-offs.
Warner Bros. Discovery is aiming to launch a combined HBO Max/Discovery+ streaming service in the US next spring. In the third quarter, its global direct-to-consumer subscriber base increased by 2.8 million worldwide on HBO, HBO Max, Discovery+ and smaller DTC streaming services, to 94.9 million. The direct-to-consumer unit’s EBITDA loss doubled year-over-year from $309 million in the third quarter of 2021 (on a pro forma basis) to $634 million in the last trimestre. DTC segment revenue decreased 7% (on a pro forma basis) to $2.32 billion.
Zaslav also told analysts on the third quarter call that WBD will “aggressively attack” the bottom of the streaming market with its own FAST offering to be launched sometime in 2023. “As a company with the largest film and TV library in the industry, we have a unique opportunity to grow our addressable market and drive real value, and we plan to act quickly,” said the CEO.
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