Skip to content
AnalystLens

Walt Disney Co 8-K Report, Material Impairment (Jun 2, 2023)

Reports
Financial Events·Exhibits & Filings
Filing Date
Filed June 2, 2023
Period End
May 26, 2023
Security
DIS
In the record · 2019–202610-K910-Q238-K106

DIS filed 9 annual reports (10-K), 23 quarterly reports (10-Q) and 106 current reports (8-K) between 2019 and 2026.

  1. Deal closed8-K · Aug ’19Aug ’19
  2. Leadership change8-K · Sep ’22Sep ’22
  3. Leadership change8-K · Mar ’26Mar ’26

01—Abstract

Summary

Summary of the 8-K filed June 2, 2023. Cited figures are marked; the original filing is the authoritative source.

The Walt Disney Company (DIS) has filed an 8-K report detailing significant impairment charges related to content on its direct-to-consumer (DTC) services.

The company is strategically reviewing and removing certain produced content from its platforms as part of a shift in content curation. This action will result in a non-cash impairment charge of approximately $1.5 billiona in the fiscal third quarter. Furthermore, Disney anticipates additional produced content removals in the remainder of the third fiscal quarter, potentially leading to further impairment charges of up to $0.4 billion.

The company also notes the possibility of terminating certain license agreements for content, which could incur additional impairment, contract termination charges, and cash payments, though these are expected to be less significant than the charges for produced content. Importantly, Disney states that these impairment charges for produced content are not expected to involve material cash expenditures.

02—Key points

Key Highlights

  1. Disney will record a $1.5 billion non-cash impairment charge in Q3 fiscal 2023 due to content removal from DTC platforms.
  2. The impairment charge is a result of a strategic review and removal of certain produced content from its direct-to-consumer services.
  3. Additional impairment charges of up to $0.4 billion are anticipated for produced content removals in the remainder of Q3.
  4. The company is also considering terminating license agreements for content, which may lead to further charges and cash payments, but these are expected to be less than impairment charges for produced content.
  5. The impairment charges for produced content are not expected to involve significant cash expenditures.

03—Questions

Frequently Asked Questions

  1. What is the primary reason for the reported impairment charge?

    The primary reason is Disney's strategic decision to review and remove certain produced content from its direct-to-consumer (DTC) platforms as part of a change in content curation strategy. This leads to adjusting the carrying value of these content assets.

  2. How much is the total estimated impairment charge?

    The company will record an initial impairment charge of $1.5 billion in its fiscal third quarter. Additionally, it anticipates further impairment charges of up to approximately $0.4 billion for produced content, bringing the potential total related to produced content to around $1.9 billion.

  3. Will these impairment charges impact Disney's cash flow?

    Disney has stated that it does not expect any material cash expenditures in connection with the impairment charges related to produced content. However, potential termination of license agreements could involve cash payments.

  4. What is the potential impact of terminating licensed content agreements?

    Terminating license agreements for content could result in impairment and/or contract termination charges, as well as cash payments. However, Disney expects these costs to be meaningfully less than the impairment charges related to produced content.

04—Continue

← View all 8-K filings