Skydance is preparing a major restructuring of its entertainment business, targeting at least $6 billion in annualised cost savings within three years following its acquisition of Warner Bros. Discovery. The company plans to achieve these savings by consolidating overlapping corporate operations, combining technology platforms, reducing marketing expenses and centralising procurement. The strategy is designed to improve profitability across the newly combined entertainment group, which brings together Paramount, Warner Bros., HBO, CBS, CNN and several major streaming and television businesses.
The restructuring also includes a major change to the company’s streaming strategy. Skydance plans to introduce a bundle combining HBO Max and Paramount+ in early 2027, offering customers access to both services through a single subscription package. The combined platforms and HBO reach approximately 203 million subscribers globally. The company expects to realise around 30% of its targeted savings during the first year, with the remaining efficiencies achieved over the following two years. However, the restructuring comes with significant financial pressure: the acquisition has left Skydance with approximately $87 billion in gross debt and around $10 billion in cash.
Key Takeaways
- Skydance is targeting at least $6 billion in annualised cost savings within three years.
- The savings plan follows its October 6, 2026, acquisition of Warner Bros. Discovery.
- Around 30% of the targeted savings are expected during the first year.
- Corporate overhead and real estate reductions are expected to contribute at least $2.2 billion.
- Marketing expenses are targeted for a $1 billion reduction.
- Technology consolidation is expected to generate approximately $1.4 billion in savings.
- Centralised procurement and vendor management could deliver another $1.4 billion.
- HBO Max and Paramount+ will launch a combined streaming bundle in early 2027.
- The combined streaming platforms and HBO have approximately 203 million global subscribers.
- Skydance has approximately $87 billion in gross debt following the acquisition.
Why Is Skydance Targeting $6 Billion in Cost Savings?
The $6 billion savings programme is part of Skydance’s plan to integrate two large entertainment businesses and improve their combined financial performance.
Before the acquisition, Paramount and Warner Bros. Discovery operated separate film studios, streaming platforms, television networks, technology systems and corporate departments.
Running these businesses independently created overlapping expenses.
For example, both companies maintained separate marketing teams, technology infrastructure, corporate offices, procurement departments and streaming platforms.
After combining the businesses, Skydance believes it can eliminate some of these duplicated costs while maintaining the entertainment brands and content libraries.
The company expects to achieve at least $6 billion in annualised run-rate synergies within three years.
An annualised run-rate saving refers to the expected yearly reduction in expenses once the relevant cost-saving measures are fully implemented. It does not mean the company will immediately receive $6 billion in cash or generate that amount in additional profit.
According to its shareholder letter, the company expects approximately 30% of the savings in the first year, with around 70% achieved through the second year.
Breakdown of Skydance’s $6 Billion Savings Plan
Skydance has identified four major areas where it expects to reduce operating expenses.
<text weight=”medium” color=”secondary” size=”xs”>TARGETED ANNUALISED SAVINGS</text>
| Business area | Target savings |
|---|---|
| Corporate overhead and real estate | At least $2.2 billion |
| Marketing | Approximately $1 billion |
| Technology | Approximately $1.4 billion |
| Procurement and vendor management | Approximately $1.4 billion |
| Total | At least $6 billion |
The breakdown shows that Skydance intends to reduce costs across its entire business rather than relying only on streaming and studio consolidation.
1. Corporate Overhead and Real Estate: $2.2 Billion
The largest portion of the savings programme will come from reducing corporate expenses and property costs.
Skydance estimates that the combined business will spend approximately $8 billion on corporate overhead, real estate and facilities during 2026.
The company plans to reduce at least $2.2 billion from this category.
Potential measures include:
- Consolidating overlapping corporate departments.
- Reducing management layers.
- Combining administrative and back-office functions.
- Expanding shared services across business divisions.
- Using artificial intelligence to automate selected workflows.
- Reducing office space and property-related expenses.
The company has also indicated that it intends to rationalise its office footprint while retaining its production lots.
This suggests that the restructuring will focus more heavily on duplicated corporate infrastructure rather than eliminating the physical production capabilities required to make films and television programmes.
The planned reductions could also affect employment, although Skydance has not disclosed the full number of positions expected to be eliminated.
2. Marketing Expenses: $1 Billion
Skydance plans to reduce marketing costs by approximately $1 billion.
The combined company expects to spend around $5 billion on marketing during 2026.
A significant portion of the savings could come from combining promotional campaigns and media-buying operations.
Before the acquisition, Paramount and Warner Bros. Discovery maintained separate marketing organisations.
Both companies promoted films, streaming releases, television programmes and entertainment franchises across multiple platforms.
By combining these operations, Skydance believes it can reduce duplicated spending and negotiate more efficiently with advertising and media partners.
For example, a major film release could be promoted across the combined company’s television networks, streaming platforms and entertainment properties.
This could reduce the need for separate promotional campaigns targeting overlapping audiences.
However, the company will still need to invest in marketing its major film and television releases.
The objective is to improve efficiency rather than eliminate promotional spending.
3. Technology Consolidation: $1.4 Billion
Technology is another major part of Skydance’s restructuring strategy.
The company expects to reduce approximately $1.4 billion in annual technology expenses by combining systems and eliminating duplicated infrastructure.
The combined business currently operates multiple technology platforms supporting streaming, broadcasting, enterprise operations and content distribution.
Maintaining separate systems can increase software licensing, engineering, infrastructure and maintenance expenses.
Skydance plans to unify its enterprise technology stack, streaming ecosystem and broadcast architecture.
The company also intends to combine overlapping technology teams and integrate platforms across the business.
Artificial intelligence coding tools could play a role in improving software development productivity and reducing certain engineering costs.
The longer-term objective is to build a more unified technology infrastructure that supports streaming, live television and traditional broadcasting.
This could also make it easier to introduce new features across HBO Max and Paramount+.
4. Procurement and Vendor Management: $1.4 Billion
Skydance expects another $1.4 billion in annualised savings from consolidating procurement and vendor management.
The combined company estimates that its procurement and vendor-management spending will reach approximately $9 billion during 2026.
Both Paramount and Warner Bros. Discovery purchase services and equipment from hundreds of external suppliers.
These include technology providers, production vendors, marketing agencies, infrastructure companies and other business-service providers.
By combining purchasing decisions under a centralised organisation, Skydance expects to negotiate better commercial terms.
The larger combined business could also benefit from economies of scale when purchasing equipment and services.
The strategy is intended to reduce duplicated contracts, improve supplier negotiations and standardise purchasing across departments.
HBO Max and Paramount+ Will Be Bundled in 2027
Streaming consolidation is one of the most visible parts of Skydance’s new strategy.
The company plans to launch a bundle combining HBO Max and Paramount+ in early 2027.
The two services will initially be offered together through a bundled subscription package.
Skydance has described this as an interim step towards combining the streaming services more fully within approximately a year.
The company has not yet disclosed the bundle’s final pricing, subscription tiers or complete technical details.
However, the combined offering could give customers access to a much larger entertainment library through one package.
What Content Could the Combined Streaming Business Offer?
Paramount+ and HBO Max bring together several well-known entertainment properties.
| Platform or brand | Major content areas |
|---|---|
| HBO Max | HBO original programming, Warner Bros. films and television content |
| Paramount+ | Paramount films, original series and live sports in selected markets |
| HBO | Premium television programming and established entertainment franchises |
| Warner Bros. | Major film and television libraries |
| CBS | Television programming, news and sports-related content |
The combination creates opportunities to distribute content across a larger subscriber base.
It could also give Skydance more flexibility in deciding where films, television programmes and other entertainment properties are released.
For consumers, the main attraction could be access to a broader content library without maintaining two entirely separate subscriptions.
However, the final customer experience will depend on the bundle’s pricing, availability and the extent of the eventual platform integration.
Combined Streaming Reach Stands at 203 Million Subscribers
The combined streaming business has a substantial international audience.
Paramount+, HBO and HBO Max together reach approximately 203 million subscribers globally, according to Skydance’s November 9 announcement.
This figure illustrates the scale of the entertainment portfolio following the acquisition.
However, it should not be interpreted as 203 million unique subscribers to the proposed bundle.
It represents the combined reported reach of the services and does not establish how many customers subscribe to more than one platform.
The company believes its combined content library and distribution capabilities can improve its position against major streaming competitors.
These include Netflix, Disney+ and other digital entertainment platforms.
Skydance Will Stop Reporting Quarterly Subscriber Numbers
Another important change involves how the company measures streaming performance.
Skydance announced that it will stop disclosing quarterly subscriber totals.
The company is following a broader industry shift towards financial and engagement-related measurements rather than relying exclusively on subscriber additions.
Instead, investors will be encouraged to focus more on revenue growth, profitability, customer engagement and the overall financial performance of streaming operations.
This approach is similar to the reporting strategy adopted by Netflix, which stopped regularly disclosing quarterly subscriber totals.
Why Did Skydance Acquire Warner Bros. Discovery?
Skydance completed its acquisition of Warner Bros. Discovery on October 6, 2026.
The transaction brought together two major entertainment businesses under a single corporate structure.
The combined company includes:
- Warner Bros. film and television studios.
- Paramount Pictures.
- HBO and HBO Max.
- Paramount+.
- CBS.
- CNN.
- Cable television networks.
- Major film and television content libraries.
- Sports and entertainment programming assets.
The acquisition also brought together several globally recognised franchises.
These include Harry Potter, the DC Universe, Mission: Impossible, Top Gun and SpongeBob SquarePants.
The combined company has the opportunity to distribute these properties across theatrical releases, streaming services, television networks and other licensing arrangements.
Skydance’s stated strategy is to build a global entertainment business combining content production, technology and distribution.
The company has also committed to a minimum of 30 theatrical films annually and more than 180 television shows and series as part of its combined output commitments.
The $87 Billion Debt Challenge Behind the Merger
Although the acquisition gives Skydance a significantly larger entertainment portfolio, it has also created a substantial financial burden.
Following the Warner Bros. Discovery acquisition, the combined company reported approximately $87 billion in gross debt and around $10 billion in cash.
The transaction was financed through a combination of new equity and debt.
The scale of the borrowing makes cost reduction a major financial priority.
Reducing expenses could help the company improve operating profitability and generate more cash to manage its debt obligations.
Skydance has also set a medium-term objective of reducing its net leverage ratio to 3.0 times by the end of 2029.
Net leverage measures a company’s debt relative to its earnings, adjusted for cash.
A lower leverage ratio generally indicates that a company has less debt relative to its earnings capacity.
The company is targeting more than $10 billion in free cash flow by 2030, alongside mid-single-digit annualised revenue growth and mid-20% adjusted EBITDA margins.
These are management targets rather than guaranteed financial outcomes.
Paramount’s Latest Financial Performance Provides an Early Indicator
Skydance’s November 9 shareholder letter also included financial results for the Paramount business before the Warner Bros. Discovery acquisition closed.
For the third quarter of 2026, Paramount reported revenue of approximately $7 billion, representing 5% year-over-year growth.
Net earnings reached $73 million, while adjusted EBITDA was approximately $1 billion.
Paramount+ revenue increased 21%, its fastest quarterly growth rate during 2026, while average revenue per user increased approximately 14%.
| Paramount Q3 2026 metric | Reported result |
|---|---|
| Revenue | $7 billion |
| Revenue growth | 5% |
| Net earnings | $73 million |
| Adjusted EBITDA | $1 billion |
| Paramount+ revenue growth | 21% |
| Paramount+ ARPU growth | Approximately 14% |
These results cover the Paramount business before the Warner Bros. Discovery acquisition was completed.
Starting with the December quarter, Skydance plans to report consolidated results for the combined company.
The performance of Paramount+ provides an indication of streaming growth, but the company will need to demonstrate that the combined streaming operation can generate sustainable profitability.
Warner Bros. Film Performance Creates Another Challenge
Skydance also warned that Warner Bros. Discovery’s film slate had underperformed expectations during the fourth quarter.
The company expects the weaker-than-anticipated performance of the Warner Bros. film slate to reduce fourth-quarter profit by as much as $200 million compared with previous expectations.
This highlights another challenge for the newly combined entertainment group.
Large film studios face considerable uncertainty because box-office performance depends on audience demand, competition, release schedules and production costs.
Skydance intends to use its existing Paramount operating strategy to improve film performance.
The company has discussed testing projects earlier, adjusting marketing spending according to the commercial potential of individual releases and using market data to make more informed distribution decisions.
However, the long-term success of the combined studio business will depend on producing films and television programmes that attract audiences.
Cost reductions alone cannot guarantee stronger entertainment revenue.
How Skydance Plans to Compete With Netflix and Disney
The entertainment industry has become increasingly competitive as streaming platforms fight for subscribers, advertising revenue and exclusive content.
Netflix, Disney and other major companies have invested heavily in original programming, technology and international distribution.
Skydance believes the combination of Warner Bros. and Paramount can create a larger content portfolio and improve its ability to compete.
The strategy has three major components.
1. A larger content library
Combining the Warner Bros. and Paramount libraries gives the company access to a broader range of films, television programmes and entertainment franchises.
2. A unified streaming platform
The planned HBO Max and Paramount+ bundle could make the combined offering more attractive to customers.
A more integrated technology platform could also reduce operating costs and improve the user experience.
3. Better use of marketing and distribution
The company can promote content across its television networks, streaming platforms and film businesses.
This could improve the commercial value of individual releases.
However, the company will need to balance cost reductions with investment in original content and creative talent.
The Bigger Picture
Skydance’s $6 billion savings target illustrates how consolidation is becoming an important strategy for traditional media companies competing in the streaming era. By combining Warner Bros. Discovery and Paramount, the company has created a much larger entertainment portfolio, but it has also inherited overlapping corporate structures, technology platforms and operating expenses. The planned reductions across administration, marketing, technology and procurement are intended to improve efficiency while creating a more unified business.
The streaming bundle could become one of the most important parts of this transformation. Combining HBO Max and Paramount+ gives Skydance a larger content offering and a stronger platform for competing with established streaming services. However, the company must deliver its savings targets while managing approximately $87 billion in gross debt, maintaining content investment and attracting subscribers. Its ability to turn a larger entertainment portfolio into sustainable cash flow will determine whether the merger delivers the financial benefits management has promised.
Frequently Asked Questions
1. How much money does Skydance plan to save?
Skydance is targeting at least $6 billion in annualised cost savings within three years following its acquisition of Warner Bros. Discovery.
2. Why is Skydance cutting costs?
The company is combining two large entertainment businesses and wants to eliminate duplicated operations, reduce expenses and improve profitability while managing significant acquisition-related debt.
3. Where will Skydance generate the $6 billion savings?
The planned savings include at least $2.2 billion from corporate overhead and real estate, $1 billion from marketing, $1.4 billion from technology and $1.4 billion from procurement and vendor management.
4. When will HBO Max and Paramount+ be bundled?
Skydance plans to launch a combined HBO Max and Paramount+ streaming bundle in early 2027.
5. Will HBO Max and Paramount+ become one platform?
The company plans to introduce a bundle first, followed by a more complete integration of the services within approximately a year. Final technical and commercial details have not yet been disclosed.
6. How many subscribers do the combined streaming services reach?
Paramount+, HBO and HBO Max together reach approximately 203 million subscribers globally. This is a combined reach figure, not necessarily the number of unique subscribers.
7. How much debt does Skydance have after acquiring Warner Bros. Discovery?
The combined company reported approximately $87 billion in gross debt and around $10 billion in cash following the acquisition.
8. Who owns Skydance?
Skydance is led by CEO David Ellison and Co-CEO Ynon Kreiz following the combination of Paramount and Warner Bros. Discovery.
9. Will Skydance reduce its workforce?
The company has identified corporate consolidation, reduced management layers and shared services as cost-saving measures. Workforce reductions are expected to be part of the restructuring, but the full number of affected positions and timetable have not been disclosed.
10. How will the savings affect Skydance’s profitability?
If achieved, the savings could reduce operating expenses and improve adjusted EBITDA and cash generation. The financial benefit will depend on implementation costs, revenue performance and the company’s ability to maintain content quality and customer engagement.
Looking Ahead
Skydance’s next major test will be delivering its cost-saving programme while integrating the businesses acquired through Warner Bros. Discovery. The company expects to realise around 30% of the targeted annualised savings during the first year, making progress on corporate consolidation, technology integration and procurement a key focus. The early 2027 HBO Max and Paramount+ bundle will also provide an important test of customer demand and the company’s ability to combine its streaming assets.
Over the longer term, Skydance must demonstrate that its larger content library and global distribution network can generate stronger cash flow without weakening its investment in films, television and original programming. The approximately $87 billion debt burden makes execution particularly important. If the company achieves its savings targets while growing streaming revenue and improving studio performance, the merger could reshape its position in the global entertainment industry. If integration costs or weaker content performance undermine those targets, the financial benefits could take longer to materialise.
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