Paramount closes $110 billion mega Warner Bros takeover; creates Hollywood powerhouse Skydance

Paramount Skydance on Tuesday completed its $110 billion takeover of Warner Bros Discovery, creating one of Hollywood’s biggest entertainment companies and putting CEO David Ellison in control of a sprawling portfolio spanning film studios, television networks, streaming platforms and news businesses.

The combined company, named Skydance, brings together Paramount and Warner Bros studios, whose franchises include “Mission: Impossible”, “Harry Potter” and DC Studios, along with CBS, CNN, Paramount+ and HBO Max. Its shares began trading on the New York Stock Exchange on Tuesday under the ticker “SKYD”, after moving from Nasdaq.

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The merger closes one of the biggest deals in media history after settlements with a coalition of US states and a Hollywood writers union cleared the main legal hurdles. The transaction comes as the entertainment industry grapples with falling cable-TV subscriptions, escalating streaming costs and continuing pressure from unions over employment and creative workers’ rights.

For Ellison, the deal marks a dramatic expansion of Skydance’s influence in Hollywood. The company, founded in 2010, started as an independent studio and became a financial backer and producer of Paramount blockbusters including “Top Gun: Maverick”. Skydance merged with Paramount last year before turning its attention to Warner Bros Discovery in a bidding contest that also drew interest from Netflix and Comcast.

$6 billion savings target, $80 billion debt load

The immediate challenge for Ellison and co-CEO Ynon Kreiz, the former Mattel chief, will be integrating two large entertainment businesses while delivering $6 billion in planned cost savings. Paramount has said a significant portion of those savings would come from “non-labor sources”, including combining the companies’ streaming technologies and cloud providers.

The integration is nevertheless expected to have an impact on jobs across Hollywood, adding to the pressure on a sector already dealing with a difficult operating environment.

The combined company is also expected to carry about $80 billion in debt, raising the stakes for its streaming strategy, theatrical film performance and ability to maintain cash flow from traditional cable networks.

Ellison will oversee the company’s creative direction and broader strategy, while Kreiz is set to manage day-to-day operations and the integration of the two businesses.

Also read: Paramount-HBO Max streaming combination may give you more content, but at what cost?

Hollywood brands, one corporate umbrella

The new company retains the Paramount and Warner Bros studio identities rather than consolidating them under the Skydance name. Ellison said the choice was intended to preserve the individual identities of the two studios.

The portfolio gives Skydance control over some of Hollywood’s most recognisable entertainment properties and a broad distribution footprint across film, television, streaming and news.

CNN chief Mark Thompson and CBS News Editor-in-Chief Bari Weiss are expected to remain in their respective leadership roles.

The transaction leaves Ellison with the task of turning the expanded portfolio into a more efficient business while navigating the structural decline of traditional television and the increasingly expensive fight for streaming audiences.

(With inputs from Reuters)