Disney Is Now Taking A BIG Loss With Recent Changes

With recent reshuffling at Disney, they are now taking a big loss. Find out what this means for the company in the coming months.

Big Changes for Disney

Disney+ has been streaming for 3 years now. This streaming platform appeared strong at first, but it appears to be showing a few cracks over the past year. Discrepancies with Disney+ earnings were one of the deciding factors for the quick removal of former Disney CEO, Bob Chapek.

This has recently led to a lawsuit including Chapek and several others for the misinformation of the financial success of Disney+. After Bob Iger returned as CEO, Disney+ did not appear to be the giant that it once seemed.

During the First Quarter Earnings Call, Iger shared Disney+ subscription had taken a loss. It appears this downward slope continues for the streaming service. This continued into the Second Quarter Earnings Call.

For the Second Quarter Earnings, Disney+ lost 4 million subscribers – primarily overseas. Nevertheless, big measures are now being taken for Disney+. The company’s response was surprising as Disney CFO, Christine McCarthy shared that they would be removing content from Disney+. Read more about this HERE.

Financial Loss

As promised, Disney started removing original programming that first appeared on Disney+ when it first launched in 2019. You can see a whole list of content to be removed HERE and those titles already removed HERE.

Not only is this disappointing to Disney+ subscribers, but this also comes at a cost. The removal of content comes with a $1.5 billion impairment charge according to a recent SEC filing. This impairment charge will affect the Third Quarter Earnings of the Walt Disney Company.

The cuts do not stop here because the Walt Disney Company plans to continue to make cuts to the Disney+ streaming platform and this could potentially lead to an impairment charge of up to $0.4 billion.

This also leads to the termination of license agreements. “In addition, the Company may terminate certain license agreements for the right to use content on its platforms, which would result in the removal of licensed content from its platforms and lead to impairment and/or contract termination charges as well as cash payments.”

The removal of content comes with a $1.5 billion impairment charge for the Walt Disney Company.

“The Company currently expects that any such charges and payments related to licensed content would be meaningfully less than the impairment charges related to produced content.“

In the end, it appears that the Walt Disney Company sees a greater gain in losing this original content even with this impairment charge.

How Does This Affect Disney Fans

In the meantime, how does this affect the Disney fans who are also Disney+ subscribers? Overall the removed content may or may not affect Disney+ subscribers based on their streaming interests.

What will likely affect all Disney+ subscribers is the promise by the Walt Disney Company to increase pricing tiers. Disney+ will increase the price of the ad-free subscription tier.

Currently, this price is $11 a month or $110 for a year.  By the end of the calendar year, this price will increase according to Iger. Content removed, less content to be produced, and higher prices for the ad-free tier are ways the Walt Disney Company hopes to bring financial success to Disney+

By the end of the calendar year, this price will increase for the ad-free subscription tier according to Iger.

What do you think of this big change? Are you a Disney+ subscriber? Does this affect your plans to subscribe to Disney+? Share your thoughts with us and share this with a fellow Disney pal.