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The biggest media merger in history is now complete. Paramount and Warner Bros. Discovery are combined in a deal that could transform Hollywood. Paramount closed its transaction to acquire WBD on October 6 as part of a $111 billion pact. To get to this point, the company had to clear several regulatory hurdles dating back to February when the deal was first reached, as well as form alliances with the Trump administration that concerned parts of the creative community.
The new parent company will now be called Skydance. David Ellison, who founded Skydance in 2006 primarily to finance films before starting off on his path toward moguldom, will be the combined company’s chairman. Former Mattel CEO Ynon Kreiz will be co-CEO, and will be tasked with cutting costs as the company looks to pay down roughly $80 billion in debt.
“Today is a historic day, not just for Skydance but for our entire industry,” Ellison said. “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.”
“Our focus now turns to the future: building a company that empowers creatives, entertains audiences and rewards shareholders,” he added. “We couldn’t be more excited to get to work.”
It’s a defining moment for Ellison, the son of Oracle founder Larry Ellison, one that required him to outmaneuver Netflix, which originally had an agreement to buy WBD. Despite his wealth and savvy, there are questions about whether or not Ellison can make a merger of the scale financially viable at a time when the cable business is atrophying, the theatrical film business remains volatile, and the competition for streaming subscribers has never been more fierce. Before buying Paramount and WBD, Skydance produced hits such as “Top Gun: Maverick” and several “Mission: Impossible” films, but the company typically operated at a loss, according to SEC filings.
Ellison will have help as he tries to make his takeover pay off. Skydance announced its full leadership team on Monday. Former HBO and HBO Max chief Casey Bloys will be leading the streaming division of the company following the exit of Cindy Holland. George Cheeks is leading Skydance TV, which encompasses Warner Bros. Television, CBS Studios, and Paramount Television Studios. Dana Goldberg and Josh Greenstein, who currently lead Paramount Pictures, are the Co-Chairs of the Skydance Motion Picture Group, with Warner Bros. Pictures film chiefs Michael De Luca and Pamela Abdy now out. James Gunn and Peter Safran are still leading DC Studios. And Mark Thompson is continuing to lead CNN under Skydance while Bari Weiss will solely lead CBS News and not also have oversight of CNN.
The deal finally came together after overcoming and settling an antitrust lawsuit brought by a coalition of 12 states, led by California Attorney General Rob Bonta. The lawsuit argued that a combined Paramount and Warner Bros. would consolidate too many of the top theatrical releases and too many cable companies all under one roof, thus harming consumers and other companies in their ability to negotiate terms. And while the deal faced enormous pressure from a grassroots coalition of organizations in Hollywood hoping to block the merger altogether, Paramount and Ellison ultimately received the support of stars like Tom Cruise, auteurs like James Cameron, and the leaders of all the major theater chains. But there are concerns that the sale of Warner Bros. will result in rounds of layoffs that could lead to thousands of job losses. Given the history of past media mergers, there’s good reason to be fearful.
The settlement agreement binds a combined Paramount to meet some terms over the course of the first five years of the transaction. Though it wasn’t required to divest anything, it must pay penalties if it fails to release 30 to 32 movies per year as it has promised and must ultimately divest its ownership of film studio Miramax. It also needs to commit to invest $300 million annually in production in the United States, it must sustain its current levels of theatrical and cable terms, and it must even set aside a small amount of funds, $5 million annually, to the acquisition of indie films, among other terms.
The combination of Paramount and Warner Bros. Discovery gives Skydance two legacy film studios, two major streaming services, a plethora of cable channels and sports rights, a broadcast network in CBS, and two news outlets in CNN and CBS News. But Paramount-WBD still pales in comparison to Netflix’s subscribers and in viewing hours spent on YouTube, and the hope is that the new scale will help it compete with the tech giants who have made their way into the media sphere.
Ellison says he has identified $6 billion-plus in synergies over the next three years across the companies. Skydance said merging the media conglomerates will give it nearly $70 billion in revenue. Under the deal, WBD shareholders receive an amount in cash of just over $31 a share. The company’s stock will stop trading on NASDAQ on Tuesday. At the same time, Skydance Class B shares will begin trading on the New York Stock Exchange under the new ticker symbol “SKYD.”
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