They do explain "why", but not in much detail or context.
> it was axed as a cost-cutting exercise.
>In May, Disney+ announced a content removal plan designed to cut US$1.5bn worth of content, meaning it substantially reduces the company’s value, giving it a lot less tax to pay.
Cost-cutting doesn't make sense if it also cuts your revenue to the same degree. I also don't know of any tax that is based purely on the value of the company. Income tax is based on income -- if you make a profit and pay tax, you are still ahead compared to not doing so.
More importantly, why do the shareholders tolerate this? Why would they want to "substantially reduce the company's value"?
I think the article phrased it sloppily. I think what’s happening is that the studios write off the cost of the production as a loss and they can only do that if they don’t have them available to stream where they could in theory generate revenue in the future. The phrase about “the company’s value” is just sloppy/mistaken here.
The reason it makes sense for the studios to remove these shows for the minimal benefit represented by a lowered tax burden is that the shows generate shockingly little viewership let alone revenue. The mechanism for the relationship between those things is pretty fuzzy in a subscription-based world in the first place, Did a single viewer signup for Netflix or decide not to cancel their subscription because of The Irishman, for example? That movie cost Netflix something upwards of $160 million. It made $8 million in its theatrical release. Is there any world where the remaining cost was made up for by new or retained streaming customers? I highly doubt it.
This is why the whole streaming industry is moving to ad-supported and low cost reality content. And why the services are fighting the WGA demands to release streaming viewership numbers as part of paying writers residuals. It’s not the cost of the residuals. It’s the numbers. If streaming viewership numbers were public Netflix stock would go to 0 the next day.
> it was axed as a cost-cutting exercise.
>In May, Disney+ announced a content removal plan designed to cut US$1.5bn worth of content, meaning it substantially reduces the company’s value, giving it a lot less tax to pay.
Cost-cutting doesn't make sense if it also cuts your revenue to the same degree. I also don't know of any tax that is based purely on the value of the company. Income tax is based on income -- if you make a profit and pay tax, you are still ahead compared to not doing so.
More importantly, why do the shareholders tolerate this? Why would they want to "substantially reduce the company's value"?