Skydance Targets at Least $6 Billion in Annual Savings Over 3 Years
Key Facts
Skydance is targeting at least $6 billion in annual operating savings over three years, reaching 30% of the target in the first year and 70% by the end of the second year, according to a company filing with the U.S. Securities and Exchange Commission. The plan follows the completion of its acquisition of Warner Bros. Discovery on October 6, 2026, while the acquired company was not included in third-quarter results because the deal closed after the quarter ended. Skydance says consolidated results will begin to appear from the fourth quarter. The company is distributing the cost-cutting program across multiple operating areas as it seeks to manage the expanded entity's costs. The announced timeline reflects savings being realized gradually rather than all at once.
The largest announced package includes cuts of at least $2.2 billion in corporate expenses, real estate and facilities, while the company is targeting at least $1 billion in marketing savings. Technology-related savings are estimated at no less than $1.4 billion. It is also targeting at least $1.4 billion in additional cuts through procurement and vendor management. These items outline the areas from which the company expects the total savings to come, without the filings providing separate timelines for each area. The overall target is to be achieved over the three years set by management.
The importance of controlling costs is linked to the financing burden left by the deal: total debt after closing and related activities was $87 billion, compared with about $10 billion in cash, according to Paramount's investor relations disclosure. The company is targeting a reduction in net leverage to 3.0 times by the end of 2029. At the same time, it said annual content spending exceeds $30 billion and that it will continue investing in content while looking for ways to improve its distribution and monetization. This puts the announced savings alongside substantial post-merger financing and investment commitments. The company did not provide a breakdown directly linking each savings item to its leverage-reduction target in the disclosure.
In streaming, the company plans to offer a bundle combining Paramount+ and HBO Max in early 2027, giving consumers the option to subscribe to both services for greater value, according to an investor relations statement. The company did not announce a price for the bundle. It also aims to align the services' back-end operating systems within a year of completing the deal, a step separate from launching the bundle for subscribers. Paramount+, HBO and HBO Max had a reported combined total of about 203 million subscriptions worldwide. That figure does not represent unique subscribers, as it does not exclude overlap among the services' subscribers.
Paramount Skydance's third-quarter results, which preceded the completion of the Warner Bros. Discovery deal, showed mixed performance across the company's businesses. Direct-to-consumer streaming revenue rose 11% year over year to $2.5 billion, with growth at Paramount+ improving. But the integration of BET+ into Paramount+ in the second quarter, along with a decline at Showtime, together posed a 6-percentage-point drag on the segment's revenue growth in the third quarter. Studio revenue increased 23% to $1.5 billion. Media television revenue fell 7% to $3.0 billion, with advertising revenue down 8% and distribution revenue down 5%.
Looking ahead, Skydance said it expects revenue growth to slow in the fourth quarter and an adverse impact on earnings of up to $200 million compared with its previous expectations, due to the performance of Warner Bros. films. The company said it will provide its full-year 2027 outlook when it reports fourth-quarter 2026 results. It also plans to share more details with investors, partners and consumers at an investor day in the first half of 2027. Skydance shares closed at $7.890 on November 10, down 9.31% from the previous session, after ending trading on November 9 at $8.700 following an 8.61% rise that day. Fourth-quarter results and the anticipated investor-day update are the next two milestones the company has identified for presenting its plans and outlook.