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If this is true then it absolutely makes accounting sense to kill off every TV show they can. The accounting rules are mentioned in the article but generally work like this.

I buy Warner for $100. As part of the merger, we need to split up what the assets are worth, what the liabilities are worth and the remainder is goodwill. Let's say in the case of Warner, I'm buying their movie library worth $200, their buildings and stuff worth $100, their inflight projects worth $50. Assets, $350. They have liabilities of $300 (payroll, debt, etc). So the value is $50. That means I'm paying "goodwill", the premium on the price that I think Warner is worth, of $50.

Post-merger, those inflight projects are only worth $20. Now, you'd think recovering anything would be good. But for my company, that now means I have a $30 loss on that stuff, it looks bad to shareholders.

Alternatively, I can tell Warner to shelve that $50 worth of inflight projects and lets say they get a tax credit of $20. That means my purchase now looks like $320 of assets (less the $50 projects, up the $20 credit), $300 liabilities and $80 goodwill. For my first year as a merged company, I get to make use of the $20 tax credit and my profits don't have to include any losses on movies or tv shows, because they were already absorbed in the old company. The more goodwill the better because revaluing goodwill is such a rare event.

Despite common sense saying I should make as much money as possible off these projects, accounting reality is it's much better to bring over as much goodwill as possible and boost my profits in the first year. Because if I'm going to kill HBO Max anyway then what is the value of any TV shows and movies that were good for that platform?

Note: I probably got some of this wrong in this simplification. I am a chartered accountant but not a M&A specialist. But this is why the accounting move makes sense. Plus when you look at sunk costs, if you're releasing on a streaming platform it's hard to judge "revenue" related to a specific item anyway. And if you're going to kill that platform you might as well get the goodwill built up instead.

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Goodwill is a miscellaneous category for intangible assets that are harder to parse individually or measured directly. Customer loyalty, brand reputation, and other non-quantifiable assets count as goodwill.

Goodwill cannot exist independently of the business, nor can it be sold, purchased, or transferred separately. A company's record of innovation and research and development and the experience of its management team are often included, too. As a result, goodwill has an indefinite useful life, unlike most intangible assets.

Goodwill only shows up on a balance sheet when two companies complete a merger or acquisition. When a company buys another firm, anything it pays above and beyond the net value of the target's identifiable assets becomes goodwill on the balance sheet. Say a soft drink company was sold for $120 million; it had assets worth $100 million and liabilities of $20 million. The sum of $40 million that was paid over and above $80 million (the value of the assets minus the liabilities) is the worth of goodwill and is recorded in the books as such.

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