Paramount Skydance Expects Impact of Up to $200 Million From Warner Bros Films
Key Facts
Paramount Skydance expects weak performance from Warner Bros’ film slate in the fourth quarter to reduce earnings by up to $200 million compared with its previous expectations, a warning issued alongside its results announcement on November 9. The company said in its filing that studio revenue growth would slow and that fourth-quarter films, including titles already released by the time of the announcement, had underperformed expectations. The reported results cover Paramount Skydance’s operations before Warner Bros. Discovery’s results were consolidated, as the acquisition was completed on October 6. The third-quarter figures therefore do not represent the combined company’s performance after the deal. Market data published on Reuters’ page via Investing.com on November 9 showed SKYD shares down 8.79%, while Netflix shares were down 1.93% and Disney shares were down 0.76%.
Paramount Skydance’s third-quarter revenue was about $7.0 billion, up 5% year over year from $6.7 billion in the same period of 2025. The company reported adjusted earnings before interest, taxes, depreciation and amortization of $1.0 billion, with a 14.2% margin, as profitability remained stable compared with the previous year. Studio revenue rose 23% to $1.5 billion, supported by content licensing in secondary markets and production of titles for third parties. But the company said its outlook for the rest of the year had changed amid a weak Warner Bros film slate in the fourth quarter. The impact on earnings could reach $200 million compared with previous expectations, while studio revenue growth slows.
On the other hand, television and media segment revenue fell 7% to $3.0 billion in the third quarter. Advertising revenue declined 8% year over year, while distribution and subscription revenue fell 5%. In direct-to-consumer streaming, revenue rose 11% to $2.5 billion, with Paramount+ revenue growth accelerating to 21%. The company attributed the service’s growth to an increase of about 6% in subscribers and a rise of about 14% in average revenue per user. Reuters reported that Paramount+, HBO and HBO Max together reached 203 million subscribers worldwide, putting streaming growth against the decline recorded in television and media businesses.
The weakness in the film slate was illustrated by Digger, Warner Bros’ big-budget black comedy starring Tom Cruise, which ranked fifth at the U.S. and Canadian box office during its opening week in October, according to Reuters. The Associated Press also reported before the deal was completed that Warner Bros had not produced a film that year with domestic revenue exceeding $100 million, while the report forecast that Dune: Part III would surpass that level when it is released in December 2026. The warning on films comes as the company seeks to carry out a broad cost-cutting plan. Skydance said it is targeting at least $6 billion in annual operating savings over three years. It is also targeting a reduction in net leverage to 3.0 times by the end of 2029.
Debt presents an additional challenge after the acquisition and related activities; the company reported total debt of $87 billion, against cash liquidity of about $10 billion. It said that, had Paramount remained an independent entity, it would still be on track to reach the top end of its 2026 earnings guidance range of $3.9 billion. Skydance also announced that it would provide annual guidance for 2027 when it releases fourth-quarter 2026 results. The company said it expects strong continued growth in direct-to-consumer streaming revenue during 2027, alongside higher studio revenue and an annual increase in combined adjusted earnings. A bundle combining HBO Max and Paramount+ is scheduled to launch in early 2027, Reuters reported, citing the company.