Skydance outlines where $6bn cuts will hit

Skydance has laid out how it plans to cut $6bn from its annual costs, alongside confirmation that HBO Max and Paramount+ would be combined into a bundled offering in early 2027.

The detail came as part of Skydance’s Q3 results, which marked its first as a combined company following the $111bn acquisition of Warner Bros Discovery, creating an entity that spends north of $30bn annually on content.

Chief exec David Ellison described WBD as a company with “mixed results” and pointed to shows such as The Pitt, Half Man and House of the Dragon S3 as highlights, but added that Warner Bros’s film slate had “underperformed” and would hit Skydance’s Q4 results.

A “bundle” of Paramount+ and HBO Max will be rolled out in early 2027, Ellison continued, describing the move as “a first step towards a fully unified offering” that will sit on the same tech platform as Paramount+ and FAST service Pluto TV.

On the subsequent earnings call, Ellison added that the bundled service would reach more than the current 203m combined subscribers.

“It’s important to note that HBO Max and Paramount+ are highly complementary offerings and over-index with different consumer segments in different parts of the country,” he said, adding that details of pricing were being worked out.

Cost cutting vs re-engineering

Ellison said he would replicate the “same playbook” on the WBD business as Skydance had done with its integration of Paramount, “greenlighting more selectively, prioritising profitable streaming growth over subscriber counts, optimising linear, and driving efficiency across the cost structure.”

As part of the push to achieve the promised $6bn annual synergy savings, Skydance has started more than 20 “workstreams” to identify potential areas of cuts.

Around 30% of the savings would be found within the first year of the deal, Skydance said, with a further 70% pencilled in to take effect in the subsequent 12 months.

In a letter to shareholders, Ellison outlined that around 25% would be cut from the company’s $8bn spend on corporate overheads, real estate & facilities, affecting management layers and “consolidating” office space.

Ynon Kreiz, co-chief exec, noted in the subsequent earnings call that Skydance now has five sites in New York, seven in LA and multiple locations in London and Atlanta.

Around 20% will be trimmed from the $5bn marketing budget, $1.4bn will be saved from the annual $4bn tech spend, and the company will use its increased size to reduce its outlay to third-parties from $9bn to $7.6bn

There was little detail on how programme spend would change, although Ellison wrote that Skydance “will keep investing in the content engine that drives our growth.”

The letter added: “With the reach of our combined platforms across streaming, broadcast and cable, each title can work harder for us, and as one company we can make smarter choices about how we distribute and monetise our slate.”

Kreiz added that Skydance’s annual costs of $50bn “give us a lot of room to reduce duplicative costs and optimise how we run the company”, describing the plans to remove costs as “a tech-forward transformation”.

He added: “It’s important to say this is beyond cost savings. This is about re-engineering how we work.”

With the WBD deal only wrapping on 6 October, much of the results were for each standalone business, although Skydance said pro forma revenues from both companies’ DTC operations, including HBO Max and Paramount+, were up 15% year-on-year.

Elsewhere, Skydance revenue (excluding WBD) was up 21% to $7bn, with net earnings of $73m and EBITDA of $1bn.

Annual profits are expected to hits at the upper end of its $3.9bn estimate, with the company adds that Paramount+ revenue had soared 21% in Q3 versus the previous quarter, while studios revenues rose 23%.