At first, it seemed like a bizarre anomaly: In August, Warner Bros. Discovery president and CEO David Zaslav decided to shelve the already-finished HBO Max “Batgirl” movie — forever. Many more projects were not only canceled but also removed from their services, ranging from already-renewed series fresh off of their first seasons and in production on the second (like “Minx”) and others that were supposed tentpoles (like “Westworld”).
Dozens of culled shows and movies later, HBO Max had a hastily dug graveyard strewn with existing content mowed down by accountants. It looked like bean-counters gone wild — but when WBD currently holds nearly $47 billion in net debt, every dollar counts.
More from IndieWire
“We’re done with that chapter,” WBD CFO Gunnar Wiedenfels said last week of the barrel-burn. He referred to 2022 as “a year of restructuring” and 2023 as “a year of relaunching and building.”
WBD may be done right-sizing its pipeline — but the industry is not. With five weeks before production began, today Paramount+ revoked its greenlight on the movie adaptation of 2011-2017 Comedy Central series “Workaholics” (per creator Adam Devine, “P+ told us [we] don’t fit their new ‘global’ strategy,” he said via Instagram). Also today: Netflix un-renewed Season 2 of animated show “Inside Job.” Last week, Starz removed “Dangerous Liaisons,” “Becoming Elizabeth” and “Step Up” from its service. All three were previously canceled, with “Dangerous Liaisons” as a Season 2 un-renewal.
Also last week, AMC Networks un-renewed a second season of “Moonhaven,” canceled completed second seasons of both “61st Street” and “Pantheon,” and killed the first season of “Invitation to a Bonfire” with four of six episodes produced. The in-production sci-fi comedy series “Demascus,” from Emmy-winning “Breaking Bad” and “Better Call Saul” exec producer Mark Johnson, was also shut down at the network.
While Zaslav seemed to open a Pandora’s box by canceling “Batgirl” last August, back in summer 2020 Netflix cited pandemic complications and canned already-renewed second seasons of teen shows “I Am Not Okay With This” and “The Society,” as well as the fourth and final season of beloved comedy “GLOW.” Last July, Paramount+ canceled a renewed Season 3 of Marc Cherry series “Why Women Kill.”
While none of this is exactly new, the scale, the down economy, and streaming’s tempered reality has placed the practice in vogue. What initially looked like an opportunistic but crude way to cut costs now appears as an acceptable strategy — though perhaps not to the cast and creatives of shelved projects. We’re even seeing completed series, both those that aired and those that may never, disappear. Why?
One person from a prominent streaming service told IndieWire for this story that the pandemic led to a surge in un-renewals and cancellations. For a period, nearly all production ceased; some were shuttered longer than others due to local-area outbreaks, strict ordinances, or positive cases on set.
This newfound reality made it more reasonable to cut bait on fringe renewals or for those with particularly tricky (read: huge casts, multiple locations, overseas sets) production plans. Starz series “Dangerous Liaisons” — shot entirely in France with locations that included Chateau de Neuville north of Paris and Théâtre Montansier in Versailles was canceled after being picked up for a Season 2, before Season 1 aired. When it did air, Starz felt its optimism was misplaced when the series struggled to find an audience. (Starz took a page from HBO Max’s book in pulling “Liaisons” from streaming along with other canceled shows.)
That, along with the sudden realization that streaming is not a bulletproof business, has turned the industry’s spending spree into a cost-cutting race. A source from a network group described writing down underperforming series — or those that appear they will be — as “financially expedient.” Write-downs get costs off the books all at once as opposed to utilizing an amortization schedule in which one realizes costs across several years. If a cost never realizes revenue, it can offset other gains.
AMC signaled its intent when it filed an 8-K with the SEC on December 1 that laid out a plan to reduce expenses. “The Plan encompasses initiatives that will include, among other things, strategic programming assessments and organizational restructuring costs,” the filing reads. “As a result of the Plan, the programming assessments pertain to a broad mix of owned and licensed content, including legacy television series and films that will no longer be in active rotation on the Company’s linear or digital platforms. The Company may realize some future licensing and other revenue associated with some of the owned titles.”
AMC said it expects to incur $350 million-$475 million in pre-tax restructuring charges, the majority of which would come from “programming assessments.” That’s what’s trickling out now.
Movie producers are familiar with the “busted theatrical” — a once-promising project that a studio later decides isn’t worth the cost of a theatrical release. Such films are rarely shelved altogether; they usually find a home on streaming or VOD. For TV producers, the best-case scenario is finding another buyer for your suddenly homeless series — if the deal between network and studios allows it.
Whether film or TV, the bottom line is the literal bottom line on a company’s income statement. In addition to one-time tax benefits, taking a show off streaming could save on residuals and cloud-storage costs. These networks don’t want to throw good money after what they’ve determined is a poor investment, but every network is unhappy in its own way. For AMC, its cancellations follows a series of major financial issues including upcoming layoffs and financial shortfalls from cord cutting.
AMC has the option to license most of its scrapped stuff elsewhere — but that’s not the real motivation, one person with knowledge of the situation told IndieWire. The late-2022 programming write-downs are an accounting practice that needed to be completed by the end of the year.
“Batgirl” and other cut WBD content represented Bruce Wayne money: That was a major piece of the $3.2-$4.3 billion in restructuring charges the company recognized in its most-recently reported quarter. (Q3 2022; Q4 financials have yet to be reported.) The corporation faced a post-merger tax loophole that closed by the end of the calendar year.
Is this version of cancel culture here to stay? The answer is, probably. It certainly would cost networks and streamers less to decline a project in the first place, but this is the town that invented ghosting: Hollywood is well known for being much easier to get a “maybe” than a “no.” And finding a new way to save money is the next best thing to a revenue stream; it’s unlikely to give up that privilege. If there’s anything this year proved, it’s that just because people are in the middle of making a show, that doesn’t oblige you to finish or release it.
Best of IndieWire