By mark.thompson business editor
Following its $110 billion acquisition of Warner Bros. Discovery, Skydance has unveiled a plan to realize at least $6 billion in cost savings over the next three years. The announcement came Monday during the company's first earnings report as a merged entity, as leadership detailed how it intends to use the combined scale of its streaming, film, and television assets to reduce duplicative spending.
In a letter to shareholders, the company stated that by combining two global streaming services, two film and TV studio groups, two television portfolios, and overlapping corporate functions, it can reduce redundant costs across an expense base exceeding $50 billion. Skydance plans to achieve these savings through several distinct channels:
- $2.2 billion from eliminating redundant back-office and corporate functions, which includes reducing management layers and increasing the use of artificial intelligence.
- $1.4 billion from unifying streaming businesses, integrating back-end technology, and streamlining broadcast architecture.
- $1.4 billion by optimizing third-party spending, consolidating purchasing to a centralized group, and eliminating overlapping expenses.
- $1 billion through the streamlining of marketing and promotional spending.
The company is also looking to utilize AI to decrease production costs and speed up the filmmaking process. Co-CEO and chairman David Ellison told investors that these tools could help make budgets more “digestible” to allow for more risk in original storytelling.
As part of its strategy to unify its digital offerings, Skydance announced it will begin offering a bundle of HBO Max and Paramount+ early next year. The bundle is intended to provide even greater value
and serve as a temporary setup to acclimate viewers before the two services eventually converge into a single platform, a process Ellison expects to occur about a year from now.
The two services currently reach a combined 203 million subscribers worldwide, while Pluto TV maintains approximately 75 million monthly active users. While the company has not disclosed specific pricing for the upcoming bundle, the move is seen as a step toward capturing monetization benefits ahead of full integration.
Co-CEO Ynon Kreiz noted that the combined entity can make more efficient choices regarding the distribution and monetization of both new content and existing library assets. The company currently spends more than $30 billion annually on films and shows.
The earnings report provided a look at the legacy Paramount business, which reported third-quarter revenue of $7.03 billion, roughly in line with StreetAccount estimates of $7.04 billion. Legacy Paramount saw a 5% year-over-year revenue growth, while Paramount+ revenue jumped 21%. The company’s adjusted EBITDA for standalone Paramount was $1 billion, exceeding the top end of previous guidance.
However, the report also noted a $200 million headwind for the fourth quarter due to theatrical underperformances from the Warner Bros. studio related to both launched and upcoming titles. Despite reporting an adjusted EPS of $0.45—surpassing consensus estimates—Skydance shares saw volatility. While the stock rose 8.61% during regular U.S. trading hours on Monday to close at $8.70, it fell more than 2% in after-hours trading following the release.
The company’s free cash flow for the quarter was $31 million, which accounted for $174 million in expenses related to restructuring, transactions, and transformation. Looking toward the future, Skydance remains committed to medium-term targets, including mid-single-digit revenue growth and achieving at least $10 billion in free cash flow by 2030.