Skydance Media, the newly formed company created by the merger of Paramount Global and Warner Bros. Discovery, has outlined a $6 billion cost-cutting plan and announced a 2027 timeline for merging its streaming services, HBO Max and Paramount+.
Skydance reports first post-merger earnings. The company disclosed its third-quarter earnings Monday, its first financial report since completing the $111 billion acquisition of Warner Bros. Discovery on October 6. Paramount Global, now part of Skydance, reported net earnings of $73 million and adjusted EBITDA of $1 billion for the quarter, with revenue of $7 billion, a 5% year-over-year increase. The company met revenue projections and exceeded adjusted earnings estimates, though shares initially surged before dropping 2% in after-hours trading.
Skydance details $6 billion in planned savings. In a shareholder letter, the company outlined its cost-reduction strategy, targeting at least $6 billion in savings over three years. The plan includes $2.2 billion from eliminating redundant corporate functions, $1 billion from streamlined marketing, $1.4 billion from unified streaming and broadcast operations, and $1.4 billion from optimized third-party spending. The company has already begun implementing changes, including voluntary buyouts and a five-day in-office policy, with eight executives departing last week.
Streaming services to merge in early 2027. Skydance announced that HBO Max and Paramount+ will be offered as a bundled service starting in early 2027, with a unified backend platform expected within 11 months. The company did not disclose pricing for the bundle, though separate subscriptions currently cost $20 per month with ads or $32.48 without ads. Skydance aims to leverage AI tools to accelerate the integration process, citing its prior experience merging Paramount+ and Pluto TV over 18 months.
Debt load remains a key concern. Skydance carries more than $80 billion in debt, a central challenge as the company seeks to improve its balance sheet. Executives have committed to reducing expenses by at least $6 billion, though some analysts question whether the savings will be sufficient to address the debt burden. The company’s stock has experienced volatility, rising over 8.5% on October 7 before falling more than 11% from pre-merger levels.
Workforce reductions expected. While the company has not provided a total number of planned layoffs, reports indicate that workforce reductions are part of the cost-cutting measures. Skydance has already begun offering voluntary buyouts to employees, with additional reductions anticipated as the integration progresses.
Company executives express confidence in long-term growth. In an internal memo, CEO David Ellison and co-CEO Ynon Kreiz thanked employees for their contributions to the company’s first post-merger earnings report. They reiterated Skydance’s three primary goals: establishing itself as a global content leader, accelerating its direct-to-consumer platform, and optimizing its linear TV portfolio, which includes CBS, CNN, and other assets. The executives emphasized the company’s scale and library as competitive advantages against tech giants like Netflix and YouTube.
Industry analysts remain divided on Skydance’s outlook. While the company’s earnings report and cost-cutting plan have been met with cautious optimism, some investors remain skeptical about its ability to manage debt and achieve profitability. The stock’s recent volatility reflects ongoing uncertainty about Skydance’s long-term strategy and execution.