Paramount closed its $110 billion takeover of Warner Bros. Discovery on October 6, creating a new company called Skydance that now owns two of Hollywood’s five biggest film studios, the Paramount+ and HBO Max streaming services, and networks from CBS and CNN to TNT and Food Network. Skydance expects close to $70 billion in yearly revenue, putting it on a scale closer to Netflix, Disney and Amazon. That scale is the whole point. David Ellison, who merged Skydance Media with Paramount only last year, argues that one bigger company with franchises like Harry Potter, Game of Thrones, the DC heroes and Top Gun can spend more on content, cut duplicate costs and compete in streaming. Management is targeting more than $6 billion in yearly savings within three years, mostly from combining technology, marketing, suppliers and property, and expects free cash flow above $10 billion by 2030.
#A Hard Fought Deal
Getting here was not cheap. Paramount beat Netflix in a bidding war in February, paying the $2.8 billion fee Warner Bros. owed Netflix for walking away and promising shareholders extra cash if the deal ran late. Lawsuits from 12 states and the Writers Guild of America delayed closing until both were settled.
Those settlements came with strings. Skydance must release at least 30 films a year in cinemas and set up a board to protect the editorial independence of CBS News and CNN.
#The Debt Is the Real Story
To pay for the deal, Paramount raised about $52 billion in new loans and bonds. Fitch estimates total debt at about $87.5 billion and cut both companies’ credit ratings after closing, pointing to higher borrowing and the risk of merging two large businesses.
Skydance’s own estimates put net debt near $80 billion, or about seven times a year of adjusted earnings in 2026 and 2027. Its goal is to bring that down to three times by the end of 2029. To get there, management is targeting more than $6 billion in yearly savings within three years, mainly from combining technology, marketing, suppliers and office space, and expects free cash flow to top $10 billion by 2030.
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#What Could Go Wrong
The plan leaves little room for slippage. Savings have to arrive on schedule while traditional TV keeps losing viewers and advertising, and the 30 film commitment limits how far content spending can be cut. Much of Hollywood also fears the savings will come from jobs, which could make the merger harder to manage.
Investors gave a cautious welcome. The shares slipped 2.5% to $9.53 on the first day of trading. The first full quarter of combined results, due early next year, will be the first real look at whether the savings are showing up and whether the debt is starting to shrink.