Paramount completes $110bn WBD merger

According to the company, Skydance now has the largest theatrical output in the industry, more than 200 million streaming subscribers across platforms, and a franchise portfolio spanning Top Gun and Harry Potter to White Lotus and SpongeBob SquarePants. Overall, it now has nearly $70bn in revenue and expects to generate more than $10bn in free cash flow by 2030.

Nevertheless, Paramount Studios and Warner Bros. Studios are targeting more than $6bn in "run-rate synergies" over the next three years. These cost savings will reportedly come from technology, integration and procurement, marketing and real estate rationalisation – freeing investment in the stories, creators, and technology while reducing net leverage to its 3.0x target by the end of 2029.

Ellison also recently revealed that the company will be named “Skydance”. According to Ellison’s X post, this decision was made to “give the combined company an identity of its own while allowing Paramount and Warner Bros… to remain in the spotlight.”

However, Reuters analysts have rejected the claim, instead asserting that the name “reinforces the extent of Ellison's control, highlighting how some of Hollywood's most iconic brands now answer to him and how he has a platform to impose his strategy and culture”.

The deal brings together Paramount Pictures, Warner Bros. Pictures, Paramount Television, Warner Bros. Television, CBS, CBS News, CBS Sports, CNN, HBO, HBO Max, TNT, TBS, Discovery, HGTV, Food Network, Nickelodeon, Cartoon Network, MTV, BET, Comedy Central, Showtime, Paramount+, Pluto TV, and Skydance Animation, Film, Television, Interactive/Games, and Paramount Sports Entertainment.

When making the announcement, Skydance stated: "[The] pro forma content spend of more than $30bn for the last 12-month period will be disciplined and strategic, prioritising audience reach and long-term value creation."

Looking to the future, Paramount Studios and Warner Bros. Studios will each reportedly produce a minimum of 15 high-quality feature films per year, for a total of at least 30 films annually across the group. Beyond this, each film is due to receive a full theatrical release, with a minimum 45-day window globally before becoming available on paid video-on-demand (VOD), with the intention of 60-90 days or more. Likewise, HBO will continue to operate independently under the new company’s ownership.

Skydance has also committed to continuing to support the independent production sector by commissioning content from independent studios and licensing its own content to third parties, creating more opportunities and more jobs for creatives, both in front of and behind the camera.

The consolidation follows Paramount Skydance’s settlement with 12 other US states, regulatory scrutiny from nearly 70 jurisdictions worldwide, and heated competition from Netflix.

Reuters also found that the combined company is also expected to carry about $80bn in debt, and Ellison's annual base salary will be $5m, ​with a target annual bonus of $5m.

To lead Ellison's new organisation, Ynon Kreiz, CEO, Mattel, will become Co-CEO and focus on the day-to-day management and integration of the combined businesses, while Ellison will focus on the company's long-term strategy, creative vision and direction, including its talent relationships, strategic partnerships, technology and capital allocation. The pair will be supported by a new CEO Leadership Team (CLT), which includes Andy Gordon, Casey Bloys, Mark Thompson, and Bari Weiss.

David Ellison, Chairman, CEO, Skydance, said: "Today is a historic day, not just for Skydance but for our entire industry. 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. We're grateful to everyone who made this possible – the employees, creative talent, and production teams of both companies, who worked tirelessly to get us here and inspire audiences around the world every day, as well as the advisors and partners who guided this transaction to completion. Our focus now turns to the future: building a company that empowers creatives, entertains audiences and rewards shareholders. We couldn't be more excited to get to work."

In total, the transaction included $47bn of new equity investment in Class B Common Stock, led by the Ellison Family, RedBird, Public Investment Fund (PIF), Abu Dhabi Developmental Holding Company (L'IMAD), Qatar Investment Authority (QIA) and LionTree, which was priced at $12.00 per share. Under the terms of the agreement, WBD shareholders received an amount in cash equal to $31.02 per share. 

Gerry Cardinale, Founder, Managing Partner, RedBird Capital, and Skydance Board Director, added: "This is a defining moment for the industry. By applying our owner-operator model to Paramount and WBD's unmatched portfolio of iconic franchises, premium original programming, and live sports rights, we can protect that legacy while building for a media landscape that's undergoing transformational change. David, our Co-CEO Ynon Kreiz, and the rest of our world-class Skydance team have the vision and track record to lead through this change. We're proud to back them as we build a stronger Hollywood, expand opportunities for talent, and create long-term value for our shareholders."

To reflect the changing media market, the US Federal Communications Commission (FCC) recently voted to repeal its 39% national television multiple ownership rule and replace it with a case-by-case review. Discover more here.