Paramount completes $111bn deal for WBD to create Skydance

David Ellison’s Paramount Skydance has formally completed its $111bn acquisition of Warner Bros Discovery, creating a US giant named Skydance.

Completion of the deal follows a 10-month-long battle for the control of HBO and CBS owner WBD, which was initially set to become part of Netflix in December before Ellison and Paramount won out in February.

The deal then had to jump through numerous regulatory hurdles in the US and abroad, as well as a legal challenge for California’s Rob Bonta and 11 other states.

That was settled last month, paving the way to the deal’s completion today and meaning Paramount only paid $49m to WNBD shareholders, following its ‘ticking fee’ promise that kicked in 1 October.

Ahead of the formal greenlight, Ellison named his senior team for the enlarged company earlier this week and confirmed it would be called Skydance.

Skydance will house film studios Paramount and Warner Bros, streamers HBO Max and Paramount+, AVOD services including Pluto TV, broadcast network CBS, and an array of cable networks ranging from CNN, HBO and Nickelodeon, to MTV and Discovery Channel.

Outside of the US, it is home to 5 in the UK and Network 10 in Australia, while on the production side assets include Warner Bros. Television, Warner Bros International TV Studios, Paramount TV Studios and CBS Studios, the latter having an international base in London.

Content under the Skydance banner include many of entertainment’s best-known IP, from Top Gun and Harry Potter to The Sopranos, White Lotus and SpongeBob SquarePants.

Ellison’s company lays claim to more than 200m streaming subscribers across platforms, and has promised to deliver at least 30 theatrical films annually, each with a minimum 45-day theatrical window. Its combined TV slate stretches to more than 180 shows in production.

What happens now?

Skydance will hold its first global townhall at 6pm BST, when details of the broader company’s structure and strategy - including international operations - are expected to emerge.

Shares in the combined entity have started trading on the Nasdaq in New York today, with WBD shares discontinued, and the combined company expects to bring in nearly $70bn in annual revenue.

It also aims to make $6bn in ‘synergy savings’ over the next three years, coming primarily from technology, integration and procurement, marketing and real estate deals, Skydance said.

Analysts have previously told Broadcast International they expect those savings are likely to hit back office roles and will be felt in the short term.

More than $10bn in free cash flow is then expected by 2030, with Skydance adding that content spend had hit more than $30bn over for the last 12 months. Future spending will “be disciplined and strategic, prioritising audience reach and long-term value creation,” the Ellison-owned firm said today.

The company starts life with around $80bn in debt, while the Ellison Family and RedBird Capital Partners hold the largest equity stakes in Skydance’s Class A Common Stock and all of the combined company’s voting shares.

A further $47bn of new equity investment has come via Class B Common Stock, led by the Ellison Family, RedBird, Public Investment Fund (PIF), L’IMAD, Qatar Investment Authority (QIA) and LionTree.

Skydance said its aim “is to build the next-generation global media and entertainment company powered by creativity and technology”.

Ellison said: “Today is a historic day, not just for Skydance but for our entire industry. From the start, our ambition was to bring these two storied studios together and create a stronger competitor, with the talent, resources, and reach to tell great stories in every genre, on every platform, for audiences everywhere. Now that ambition is a reality.

“We’re grateful to everyone who made this possible – the employees, creative talent, and production teams of both companies, who worked tirelessly to get us here and inspire audiences around the world every day, as well as the advisors and partners who guided this transaction to completion.

“Our focus now turns to the future: building a company that empowers creatives, entertains audiences and rewards shareholders. We couldn’t be more excited to get to work.”

Skydance board member Gerry Cardinale, founder and managing partner of RedBird Capital - which supported the deal - added: “This is a defining moment for the industry. By applying our owner-operator model to Paramount and WBD’s unmatched portfolio of iconic franchises, premium original programming, and live sports rights, we can protect that legacy while building for a media landscape that’s undergoing transformational change.

“David, our Co-CEO Ynon Kreiz, and the rest of our world-class Skydance team have the vision and track record to lead through this change. We’re proud to back them as we build a stronger Hollywood, expand opportunities for talent, and create long-term value for our shareholders.”