Discovery of Warner Bros.trying to get its balance sheet in order, said it would incur between $3.2 billion and $4.3 billion in pretax restructuring charges related to Discovery’s acquisition of WarnerMedia.
The media company disclosed the expected ranges for the charges in a filing with the SEC Monday. For the third quarter of 2022, WBD estimates it will incur between $1.3 billion and $1.6 billion in restructuring charges.
“As part of its plan to realize significant cost synergies, in the third quarter of 2022 the company finalized the framework supporting its ongoing restructuring and transformation initiatives which will include, among other things, strategic content programming assessments , organizational restructuring, facility consolidation activities and other contracts. termination fees,” WBD said.
According to the filing, the total charges — to be incurred over multiple quarters, from Q2 2022 through Q4 2024 — are expected to include:
- “Strategic Content Programming Evaluations,” resulting in content write-downs and development write-offs, from $2.0 billion to $2.5 billion;
- Organizational restructuring costs, including severance, retention, relocation and other related costs, from $800 million to $1.1 billion; and
- Facility consolidation activities and other contract termination costs of $400 million to $700 million.
Of these amounts, estimated cash expenditures for organizational restructuring, facility consolidation activities and other contract termination costs will be between $1.0 billion and $1.5 billion, WBD said.
The company had engaged $1 billion in pre-tax restructuring charges in the second quarter of 2022. For the second quarter, Warner Bros. Discovery posted a net loss of $3.4 billion on revenue of $9.82 billion.
WBD is expected to release its third quarter results on Thursday, November 3, after the market closes.
Layoffs at Warner Bros. Discovery during the third trimester inclusive about 100 staff members were laid off in its ad sales group last month and approximately 70 HBO/HBO Max employees in August (a move that included disbanding HBO Max’s reality programming team). CEO David Zaslav told investors the company expects to realize $3 billion in cost-cutting synergies in the first two years after the merger. completion in April.
“While corporate restructuring efforts are underway, including strategic analysis of content programming that could lead to additional deficiencies…restructuring initiatives are expected to be substantially complete by the end of 2024. “said Warner Bros. Discovery in the folder.
Content write-offs include “Batgirl,” the $90 million Warner Bros./DC movie starring Leslie Grace in the title role, which WBD removed after determining that taking a tax deduction for “Batgirl” made more sense financially than airing it commercially. (WBD CFO Gunnar Wiedenfels said the backlash on “Batgirl” was “overdone”.)
The media company also canceled several HBO Max projects, including Greg Berlanti’s “Strange Adventures” DC Series and one Action movie “Wonder Twins”. HBO Max too removed other content, including the teen drama series “Generation”, the animated anthology series “Infinity Train” and the children’s show “Summer Camp Island”, as well as 200 older episodes of “Sesame Street”.
WBD noted that the estimated fees and costs it described on Monday “are subject to a number of assumptions” and that actual results “may differ materially due to a variety of important factors,” including risk and uncertainties that it includes in its financial documents. .