David Ellison’s Skydance Corp. is setting the stage for big changes in 2027.
Since Skydance closed its $111-billion deal for Warner Bros. Discovery last month, Ellison’s team has been scouring the vast Skydance portfolio for cuts and efficiencies as executives work to integrate the operations of the two legacy entertainment companies in the coming months.
On Monday, the company said it would offer HBO Max and Paramount+ together as a bundle early next year, which is part of Skydance’s plan to prioritize streaming as the company moves forward as one. The price of the service was not disclosed.
But in a letter to shareholders to report Paramount’s third-quarter earnings, Ellison and Co-Chief Executive Ynon Kreiz said customers would enjoy “an even greater value” for the bundled offering when compared to signing up for the two streaming services separately.
Because Skydance closed its purchase of Warner Bros. Discovery on Oct. 6, the company only released numbers for the Paramount half of the enterprise.
Paramount Skydance Q3 net earnings was $73 million and adjusted EBITDA was $1 billion, a 14% margin on revenue of $7 billion, which grew 5% year-over-year. Paramount remains on track for the high end of its 2026 profitability outlook at $3.9 billion.
One of the combined company’s highest priorities is to get its balance sheet in order. The company now has more than $80 billion in debt, and Ellison has promised investors that he and his team would eliminate $6 billion in expenses. On Monday, the executives signaled they were looking to exceed that sum.
The workforce is expected to shrink, although the company hasn’t identified the magnitude of those cuts or timetable. Instead, Ellison and Kreiz said the company had “identified multi-billion dollar opportunities” for cost-savings in four key areas: corporate expenses, marketing, technology and procurement.
This year, the combined company spent about $8 billion on corporate overhead, real estate and facilities. It plans to shave at least $2.2 billion in expenses from that bucket “by consolidating redundant back-office and corporate functions, reducing management layers, using shared services … scaling AI workflows, and shifting to lower-cost support functions,” Ellison and Kreiz said.
“In addition, we are rationalizing our office footprint (while keeping our production lots),” the executives wrote.
The combined company expects to shell out about $5 billion this year in marketing costs. It is aiming to reduce that spend by $1 billion “by streamlining and optimizing our enterprise-wide spend, as well as strategic utilization of our expanded global portfolio to promote our key projects and initiatives.”
Skydance plans to consolidate its media buying functions and promotional campaigns to better take advantage of its girth.
The company also will spend about $4 billion this year on technology, and is planning to reduced that expenditure by about $1.4 billion. The savings will be achieved by “unifying our enterprise tech stack, streaming ecosystem, and broadcast architecture, merging parallel technology functions, leveraging AI coding tools, and integrating platforms and systems.”
Skydance will spend about $9 billion on procurement and vendor management activities, and figures that it can reduce that amount by at least $1.4 billion. “Our combined purchasing levels will give us economies of scale by consolidating purchasing decisions into one centralized group,” the executives said in their letter.
In the letter, Skydance said the Warner Bros.’ film slate in the fourth-quarter would “underperform” expectations.
Earlier in the day, Skydance ushered out two big-named executives — James Gunn and Peter Safran, who have led the DC Comics unit for four years.
“As we integrate the businesses, we are applying the playbook we ran at Paramount: testing earlier, tailoring our marketing and release strategy to the size of each opportunity, enhanced with real-time market data, and strengthening the slate we greenlight,” Ellison and Kreiz wrote.
“That approach served us well at Paramount,” they wrote, adding that Paramount’s 2026 slate was on track to generate a half-billion dollars more in profit compared to 2025’s film mix.
“We are building this great company with ambition, discipline, and an unwavering belief in the power of great storytelling combined with world-class technology,” Ellison and Kreiz said.
Skydance shares closed up 8.6%, or 69 cents, to $8.70.
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