Skydance bets big on AI-driven content

Earlier this month, Paramount Skydance completed its $110 bn acquisition of Warner Bros Discovery, creating a debt-laden Hollywood giant whose focus will now be on cutting costs. This was the reason the deal was opposed widely in courts. But Skydance boss David Ellison says he's planning to lower costs through tech synergies, and not by laying off employees. Skydance Corp, which now houses a sprawling collection of film, TV and news organisations, has committed to film release pledges for 5 yrs and an editorial independence board for news channels CNN and CBS. These assurances follow concerns expressed over how media concentration throttles content, and Donald Trump accusing the group's news channels of bias. Ellison is betting big on content to take on tech giants like Apple, Amazon and Meta that are amping up competition for Hollywood's iconic studios.

Skydance has built up an impressive arsenal with this merger. It now owns the studios Warner Bros and Paramount Pictures, streaming services HBO Max, Discovery+ and Paramount+, and news channels CNN and CBS News. It also has a large collection of cable networks and live sports and entertainment franchises. Ellison's empire faces declining cable TV subscription, rising costs of streaming services, and audiences shifting to creator content for news and entertainment.

Pace of consolidation in the Hollywood entertainment industry has been breathtaking. Skydance acquired Paramount and Warner Bros a little over a year apart. Mergers make sense when the competition is with the vast resources and reach of Netflix, Amazon, Google, Apple, Meta and ByteDance. But efficiencies of media concentration derive from creating less content with fewer people. Streaming video platforms have overtaken cable TV, and social media has outrun video-on-demand. AI is chipping away at the cost structure of studio production, largely by replacing humans. Ellison will have to pull a few rabbits out of the hat from a conglomerate that owns Mission Impossible, Harry Potter and the DC superheroes.