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 Ellison called “the first step,” in Skydance’s plan to prioritize streaming. 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 with signing up for the two streaming services separately.
Because Skydance closed its purchase of Warner Bros. Discovery on Oct. 6, the company released numbers for only the Paramount half of the enterprise.
“We’re moving quickly, and it’s definitely been a busy month,” Ellison told analysts on an earnings call.
Paramount Skydance’s third-quarter net earnings were $73 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $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 company’s highest priorities is to get its balance sheet in order. The company has more than $80 billion in debt, and Ellison has promised investors that he and his team would eliminate $6 billion in expenses within three years.
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 or timetable of those cuts. Instead, Ellison and Kreiz said the company “identified multibillion-dollar opportunities” for cost savings in four key areas: corporate expenses, marketing, technology and procurement.
“This is not just about cutting cost but also how we work,” Kreiz told analysts. “We’re looking to transform and re-engineer the business so that we will do an even better job going forward.”
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 company expects to shell out about $5 billion this year in marketing costs. It is aiming to reduce that 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 reduce that 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,” the executives said in their letter.
Skydance will spend about $9 billion on procurement and vendor management activities and figures it can reduce that 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.
Skydance is planning to spend $30 billion a year on content.
“We believe creativity and technology working together will shape the future of entertainment,” Ellison told analysts. “In a world of AI slop, we think there will always be a premium for truly handcrafted storytelling.”
In the letter, Skydance acknowledged the Warner Bros. film slate in the fourth quarter would “underperform” expectations. Earlier in the day, Skydance ushered out two big-name executives — James Gunn and Peter Safran, who led the DC Comics unit for four years.
They were replaced by Marvel Entertainment veteran Jeremy Latcham.
“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 with 2025’s film mix.
“Even though Skydance has pledged to produce 30 theatrical movies a year, we expect the company to take a disciplined approach to content spending that will result in a contraction in the amount of money put toward content,” Emarketer senior analyst Ross Benes wrote in a note.
“This could entrench austerity in an industry that’s already struggling,” Benes wrote.
Skydance shares closed up 8.6%, or 69 cents, to $8.70. In after-hours trading, shares declined.
