By Lisa Richwine and Harshita Mary Varghese
LOS ANGELES, Nov 9 (Reuters) – Skydance on Monday detailed plans to deliver $6 billion in cost savings from its Warner Bros Discovery acquisition and said it would launch a streaming bundle of HBO Max and Paramount+ early next year.
Shares of the company dropped about 2% to $8.50 in after-hours trading.
The merger created one of the world’s largest entertainment and news companies under the name Skydance, led by CEO David Ellison and co-CEO Ynon Kreiz. The combined entity includes Hollywood studios Warner Bros and Paramount, the CBS broadcast network, CNN and a host of cable channels.
In its third-quarter earnings statement, Skydance said it would offer full-year guidance for the combined company when it reports its results for the December quarter.
For the Paramount business, Skydance reported a 5% revenue increase to $7 billion for the quarter that ended in September, before it completed the purchase of Warner Bros Discovery last month.
The newly merged business will rely heavily on its streaming products for growth, and Paramount+ revenue jumped 21% in the third quarter.
When combined with premium cable channel HBO and the streamer HBO Max, the services reach 203 million subscribers globally. The planned bundle is an interim step while the company works to merge HBO Max with Paramount+. Ellison said the goal is to complete that within roughly a year.
“The challenge now is turning this scale into sustainable growth and profitability,” PP Foresight analyst Paolo Pescatore said. He said the $6 billion in cost savings was “ambitious but achievable,” though the size of the debt left little room for error.
“Content remains the lifeblood of the business, and Skydance cannot afford to compromise its ability to invest in compelling programming,” Pescatore said.
Skydance said it will stop disclosing quarterly subscriber figures, following the lead of streaming giant Netflix as the industry shifts its focus toward profitability and engagement as measures of growth.
The Warner Bros acquisition has left Skydance with $87 billion of gross debt and about $10 billion in cash.
The new company faces competition from Netflix, Walt Disney and other media giants as well as YouTube, TikTok and other platforms drawing audience attention.
Skydance is confident it can reach the $6 billion in promised cost cuts over three years, Ellison and Kreiz said in a letter to shareholders.
The company expects to realize 30% of the savings in the first year. It expects to cut at least $2.2 billion from corporate overhead and real estate, and $1 billion, or 20%, from marketing costs. About $1.4 billion will come from reducing technology costs.
THE PARAMOUNT PLAYBOOK
In a conference call with analysts, Ellison pointed to progress made since Skydance merged with Paramount in 2025.
“Last year, we took over an underperforming business and made significant improvements through better content, more disciplined investment and a focus on efficiency,” Ellison said. “We beat our initial guidance and raised it throughout the year.”
“This team is going to apply the same playbook to Skydance,” Ellison said, “and we are confident we’re going to deliver.”
Earlier in the day, Skydance announced a stunning set of executive changes as James Gunn and Peter Safran stepped down as heads of DC Studios and were replaced by Marvel veteran Jeremy Latcham as president and chief creative officer. Gunn and Safran will return to creative work at the company.
Skydance said underperformance of Warner Bros’ film slate would impact fourth-quarter profit by up to $200 million.
Tom Cruise’s latest movie, the Warner Bros big-budget dark comedy “Digger,” has struggled at the box office, finishing fifth on US and Canadian charts in its opening weekend in October.
(Reporting by Lisa Richwine and Harshita Mary Varghese; Editing by Sriraj Kalluvila)
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