Skydance Opens the Books on Its $6 Billion Cost-Cut Plan

Skydance pulled back the curtain Monday on how it plans to carve at least $6 billion in savings out of the freshly combined Paramount Skydance and Warner Bros. Discovery. In a letter to shareholders attached to third-quarter earnings, the company said merging two streaming services, two film and TV studio groups, two television portfolios and overlapping corporate functions lets it cut duplicate spending across an expense base of more than $50 billion. The program runs over the next three years.

The biggest slice — at least $2.2 billion — comes from wiping out redundant back-office and corporate roles, thinning management layers, leaning harder on artificial intelligence and shrinking the company's office footprint. Streamlining marketing and promotion is penciled in for at least $1 billion. Another $1.4 billion comes from unifying the streaming businesses and broadcast architecture and stitching together back-end technology, with a final $1.4 billion from reining in third-party spend and pushing purchasing decisions through one centralized group.

Skydance is pointing to its Paramount playbook as proof it can hit the target, saying that earlier program is on track for more than $2.7 billion in run-rate efficiencies by the end of 2026. The cuts have already drawn blood. Last month the company offered voluntary buyouts ahead of official layoffs and switched to a five-day-a-week in-office policy, and last week eight executives walked out the door — four from Warner Bros. and four from Paramount.

On streaming, Skydance said it will take its first step early next year by offering a bundle of Paramount+ and HBO Max, which it previously said will eventually be folded into one platform. The pitch to shareholders: the bundle will come 'at an even greater value.'

For the legacy Paramount Skydance, the quarter delivered $7.03 billion in revenue, just shy of the $7.04 billion StreetAccount estimate, and $1 billion in adjusted EBITDA, comfortably above the $913.5 million analysts expected. Adjusted earnings per share came in at 45 cents, which the company said wasn't immediately comparable to StreetAccount's estimate. None of it includes Warner Bros. Discovery, since that deal closed after the quarter ended.

The combined company laid out its business units as studios, direct-to-consumer and TV, and said full-year guidance will land with fourth-quarter earnings early next year. From then on, guidance goes annual. 'We will continue to provide quarterly updates, including certain forward-looking commentary where applicable, which will give investors visibility into our near-term progress of the business,' the company told shareholders.