Skydance Targets at Least $6 Billion in Annual Savings Over 3 Years
Key Facts
Skydance said in its shareholder letter published on November 9 that it is targeting at least $6 billion in annualized synergies, net of reinvestment, over 3 years. The company added that work has begun on more than 20 workstreams to carry out the plan. The initiative aims to eliminate duplicative spending across the combined company, including labor and non-labor costs. Management said the expense base exceeds $50 billion and that it had identified billions of dollars in opportunities across key areas. The announcement puts savings at the center of Skydance's plan to integrate its business with Warner Bros. Discovery, linking them to the company's debt-reduction goals.
The company identified four main areas for savings, with the largest targeted share in overhead, real estate and facilities. Targeted annual savings in this area are at least $2.2 billion. The plan also targets at least $1.0 billion in marketing savings and at least $1.4 billion in technology savings. A further at least $1.4 billion is expected from procurement and vendor management. These figures show the breakdown of targeted savings sources, while the broader plan comprises more than 20 execution workstreams.
Skydance aims to deliver 30% of the savings in the first year and reach 70% cumulatively by the end of the second year. The company said it will announce milestones as work progresses. This phased schedule is part of the goal to achieve the savings over 3 years, with the announced figure calculated net of reinvestment. In parallel, the company said a separate efficiency program at Paramount is on track to deliver more than $2.7 billion in annualized run-rate savings by the end of 2026. It raised that program's target to more than $3 billion and said it had achieved more than $1 billion in run-rate savings from the start of 2026 through November 9, with the remaining savings due in 2027 and incremental to the Skydance program.
The company aims to reduce net leverage to 3.0 times by the end of 2029 and achieve investment-grade credit metrics within about 3 years of completing the deal. Reuters said the acquisition left Skydance with total debt of $87 billion and about $10 billion in cash. In this context, the savings plan includes one-time cash costs of between $1.5 billion and $2 billion in 2027. The company expects annual free cash flow to exceed $10 billion in 2030. These targets place cost reductions alongside lower debt and increased cash generation over the coming years.
Skydance clarified that its third-quarter 2026 results are for Paramount Skydance and do not include Warner Bros. Discovery, because the acquisition closed after the quarter ended. It said consolidated financial reporting for the combined company will begin in the fourth quarter. For the near-term outlook, the company projected slower revenue growth and a negative impact of up to $200 million on fourth-quarter earnings, compared with its previous expectations, due to the performance of Warner Bros.' film slate. By contrast, it expects continued strong growth in direct-to-consumer streaming revenue and higher studio revenue in 2027. It also said Paramount's 2026 film slate could generate lifetime gross profits more than $500 million higher than the previous year's slate.
In streaming, the company plans to launch a bundle combining HBO Max and Paramount+ in early 2027, Reuters reported. Skydance said its reported total subscriber count includes Paramount+, HBO and HBO Max, and that the figure does not exclude overlap among subscribers. Reuters also reported that the company will stop publishing quarterly subscriber counts. In the stock market, EL7 data showed Skydance shares closed at $8.70 on November 9, compared with a close of $8.01 on November 6. A Reuters report showed the shares up 8.61% in the trading snapshot accompanying its report on November 9.