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

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

Warner Bros. Discovery’s restructuring costs are beginning to take shape.

On Monday the company said in a securities filing that it expects to take $3.2 billion to $4.3 billion in pre-tax restructuring charges tied to its WarnerMedia acquisition, including writedowns related to content of between $2 billion to $2.5 billion.

WBD has been engaged in what it has called a “global strategic review of content” since the WarnerMedia deal closed, canceling projects, nixing development and shelving unproductive library content. In its first quarter after the deal closed, it disclosed an $825 million writedown on content, and a substantially similar number is expected in in its Q3 report.

Related Stories

Among the projects scrapped were the nearly-completed Batgirl movie (which was developed for HBO Max), a Wonder Twins movie, and TV shows like Full Frontal with Samantha Bee.

In addition to the high-profile content cancelations and abandoned development, the company has also been laying off employees on a rolling basis, with different departments seeing cuts in recent months. The Warner Bros. TV Group was impacted earlier this month.

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

Critically, the WBD filing suggests that around 70 percent of that $3.2 billion-$4.3 billion figure has been taken since the acquisition, meaning that it is mostly done with its strategic review of the company’s business, though it adds that its write-down and restructuring efforts are “expected to be substantially completed by the end of 2024.”

And the company also plans to save costs by merging its streaming services Discovery+ and HBO Max next year, which will enable the company to reduct the number of service providers it uses, and consolidate some technical costs. It will also consolidate office space, though specifics of its future footprint in New York (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 restructuring efforts being undertaken by the company, which originally promised $3 billion in cost savings from the merger.

The $2 billion-plus content writedown is particularly eye-opening, and likely includes writedowns not just to the canceled and abandoned film and TV projects, but also WBD’s decision to remove some library programming from HBO Max.

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

At a town hall last month, WBD CEO David Zaslav and other top executives acknowledged the “disruption” and “difficulty all media companies are facing” in the current environment, and also the “challenges” in integrating WarnerMedia and Discovery.

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