Warner Bros. Discovery, trying to get its balance sheet in order, said it will incur approximately $3.2 billion to $4.3 billion in pre-tax restructuring charges for the third quarter.
The media company, which resulted from the merger of Discovery and WarnerMedia earlier this year, disclosed the expected charges in an SEC filing Monday. “As part of its plan to achieve significant cost synergies, in Q3 2022, the company finalized the framework supporting its ongoing restructuring and transformation initiatives which will include, among other things, strategic content programming assessments, organization restructuring, facility consolidation activities and other contract termination costs,” WBD said.
Per the filing, the charges comprise:
- “Strategic content programming assessments,” leading to content impairment and development write-offs, of approximately $2.0 billion to $2.5 billion;
- Organizational restructuring costs, including severance, retention, relocation and other related costs, of $800 million to $1.1 billion; and
- Facility consolidation activities and other contract termination costs of $400 million to $700 million.
Of the total amounts, the estimated cash expenditures from the organizational restructuring, facility consolidation activities and other contract-termination costs will be between $1.0 billion and $1.5 billion, WBD said.
The company incurred $1 billion of pre-tax restructuring charges in Q2 2022. For the quarter, Warner Bros. Discovery posted a net loss of $3.4 billion on revenue of $9.82 billion.
WBD is scheduled to report Q3 earnings on Thursday, Nov. 3, after the market closes.
Layoffs at Warner Bros. Discovery during the third quarter included about 100 staffers let go in its ad-sales group last month and about 70 HBO/HBO Max employees in August. CEO David Zaslav and the senior management team have told investors they expect to achieve $3 billion in cost-saving synergies in the first two years after the merger, which closed in April.
“While the company’s restructuring efforts are ongoing, including the strategic analysis of content programming which could result in additional impairments… the restructuring initiatives are expected to be substantially completed by the end of 2024,” Warner Bros. Discovery said in the filing.
WBD noted that the estimated charges and costs it detailed Monday “are subject to a number of assumptions” and that actual results “may differ materially as a result of various important factors,” including due to risks and uncertainties it includes in its financial filings.
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