Paramount closes Warner Bros deal to form industry giant Skydance

Paramount Skydance PSKY-Q on Tuesday completed its blockbuster US$110-billion takeover of Warner Bros Discovery, creating a Hollywood heavyweight called Skydance and handing CEO David Ellison control of one of the world’s largest entertainment companies.

The deal brings together the studios behind Mission: Impossible, Harry Potter and DC Studios alongside major television and streaming networks such as CBS, CNN, Paramount+ and HBO Max – forming an expansive entertainment company spanning film, TV and news.

Shares of the combined company moved to the New York Stock Exchange from Nasdaq on Tuesday to trade under the ticker “SKYD.”

Settlements with a coalition of U.S. states and a Hollywood writers union removed the main legal barriers to the merger, one of the largest in media history. It comes as Hollywood faces declining cable-TV subscriptions, high cost of competing for streaming audiences and persistent pressure from unions over jobs and creative workers’ rights.

Ellison retains Thompson as CNN chief, unveils Skydance leadership team

Ellison said last week the Skydance name was chosen to retain the individual identities of Paramount and Warner Bros studios, rather than combining them under a new brand.

Analysts, however, said the name reinforces the extent of Ellison’s control, highlighting how some of Hollywood’s most iconic brands now answer to him and how he has a platform to impose his strategy and culture.

In just 16 years, Skydance has gone from an independent studio to the centre of one of Hollywood’s biggest power plays. Founded in 2010 by the son of Oracle co-founder Larry Ellison, it built its reputation as a financial backer and producer of Paramount’s blockbuster “Top Gun: Maverick.”

After merging with Paramount last year, Skydance set its sights on Warner Bros, entering a heated bidding contest with Netflix while drawing interest from other potential suitors, including Comcast.

Warner Bros shareholders received an additional US$41.9-million in “ticking fee,” based on the number of days between September-end and the deal-closing, according to a regulatory filing.

Broader Hollywood bet

Ellison named Mattel’s former CEO Ynon Kreiz as Skydance co-CEO to run day-to-day operations and lead the integration, while Ellison oversees creative direction and overall strategy.

The duo faces the task of combining two large companies while delivering US$6-billion in planned cost savings, a big part of which Paramount said would come from “non-labor sources” – by combining streaming technologies and cloud providers of the two companies. However, the scale of the cuts is expected to affect jobs across Hollywood.

Skydance plans to combine its streaming services, including HBO Max and Paramount+, into a single service and has pledged to release at least 30 films each in the first two years after closing, rising to 32 a year for the following three.

The combined company is also expected to carry about US$80-billion in debt, putting pressure on Ellison to grow streaming, preserve cash flow from cable networks and improve theatrical film performance.

Analysts at MoffettNathanson forecast EBITDA of US$16-billion for 2028, rising to US$19-billion in 2030. The brokerage also predicted about US$67-billion in revenue in 2028 for the company, growing to roughly US$70-billion in 2030.

CNN chief Mark Thompson and CBS News Editor-in-Chief Bari Weiss will continue in their respective leadership roles.

Ellison’s annual base salary will be US$5-million, with a target annual bonus of US$5-million, according to the filing.