Skydance maps $6 billion cost cut across merged studios

Skydance Media outlined a strategy on Monday to generate at least $6 billion in operational savings over the next three years. The plan relies on merging the business operations of Paramount Skydance and Warner Bros. Discovery. This consolidation targets an expense base that currently exceeds $50 billion.

The company provided a specific breakdown of where the reductions will come from. At least $2.2 billion is expected to be saved by removing redundant back-office functions and management layers. The company also plans to increase the use of artificial intelligence and reduce its physical office footprint. An additional $1 billion will be achieved by streamlining marketing and promotional spending.

Another $1.4 billion in savings will result from unifying streaming services and broadcast technology. The final $1.4 billion portion comes from optimizing third-party spending. Skydance intends to consolidate purchasing decisions into a single centralized group to eliminate overlapping expenses. The company cited its previous success with Paramount as a model for this effort. That prior initiative is on track to deliver over $2.7 billion in run-rate efficiencies by the end of 2026.

Several cost-cutting measures are already in motion. The company began offering voluntary buyouts to employees last month in preparation for official layoffs. It also adopted a policy requiring staff to work in the office five days a week. Eight executives departed in the last week, with four leaving Warner Bros. and four leaving Paramount.

Skydance reiterated its goal to merge Paramount+ and HBO Max into a single platform. The first step will occur early next year when the company offers a bundle of the two services. Co-CEO Ynon Kreiz stated that operating as one entity allows for smarter choices in distributing and monetizing content. The company spends more than $30 billion annually on shows and films.

The theatrical division faces near-term challenges. Skydance expects a $200 million headwind in the fourth quarter due to underperforming titles from Warner Bros. To mitigate production costs, the company plans to use artificial intelligence to speed up the filmmaking process. Co-CEO David Ellison said these tools will help unlock more original storytelling by making budgets more digestible.

The strategic update accompanied third-quarter financial results for the legacy Paramount Skydance company. Revenue came in at $7.03 billion, roughly in line with estimates of $7.04 billion. Adjusted earnings before interest, taxes, depreciation, and amortization reached $1 billion, surpassing the estimated $913.5 million. Adjusted earnings per share stood at 45 cents.

These results do not include the impact of the Warner Bros. Discovery acquisition, which closed after the third quarter ended. Skydance stated it will provide full-year guidance during its fourth-quarter earnings report early next year. The company confirmed it will continue to provide quarterly updates to give investors visibility into near-term progress.