Skydance Targets Over $6 Billion in Cuts After Warner Bros. Deal

Paramount Skydance said on Monday it aims to cut more than $6 billion in expenses as it integrates Warner Bros., and it began the shake-up by ousting DC Studios leaders James Gunn and Peter Safran.

The announcement came one month after David Ellison's Skydance Corp. closed its $111-billion acquisition of Warner Bros. Discovery on October 6. Executives have spent the weeks since scouring the combined portfolio for cuts. On Monday they signaled the total would exceed the $6 billion Ellison had already promised investors.

The company carries more than $80 billion in debt. Fixing the balance sheet ranks among its highest priorities.

"We are building this great company with ambition, discipline, and an unwavering belief in the power of great storytelling combined with world-class technology," Ellison and Co-Chief Executive Ynon Kreiz wrote in a letter to shareholders.

Where will the cuts come from?

The executives said they had "identified multi-billion dollar opportunities" across four areas:

• Corporate expenses. The company will spend roughly $8 billion this year on corporate overhead, real estate and facilities. It plans to shave at least $2.2 billion by "consolidating redundant back-office and corporate functions, reducing management layers, using shared services ... scaling AI workflows, and shifting to lower-cost support functions."
• Marketing. About $5 billion in annual spend will be reduced by $1 billion through streamlined enterprise-wide buying and consolidated promotional campaigns.
• Technology. Roughly $4 billion in annual spend falls by about $1.4 billion, via "unifying our enterprise tech stack, streaming ecosystem, and broadcast architecture, merging parallel technology functions, leveraging AI coding tools, and integrating platforms and systems."
• Procurement. Of about $9 billion in procurement and vendor management, at least $1.4 billion goes, with purchasing decisions consolidated into one centralized group.

"In addition, we are rationalizing our office footprint (while keeping our production lots)," Ellison and Kreiz wrote.

The workforce is expected to shrink. The company has not specified the scale or timetable of job cuts, and instead of numbers it offered staff buyouts, according to the report.

What does this change for viewers?

Streaming moves to the center. The company said it will offer HBO Max and Paramount+ together as a bundle early next year, at an undisclosed price. Customers would enjoy "an even greater value" compared with subscribing to the two services separately, Ellison and Kreiz said.

The merger braids together two major film studios housing nine film labels, four streaming services, three TV production studios, three animation units and more than 50 television networks, including two prominent news organizations.

DC leadership exits

Earlier on Monday, Skydance ushered out Gunn and Safran, who led the DC Comics unit for four years. Marvel veteran Jeremy Latcham will replace them.

On the film side, the letter said Warner Bros.' fourth-quarter slate would "underperform" expectations.

"As we integrate the businesses, we are applying the playbook we ran at Paramount: testing earlier, tailoring our marketing and release strategy to the size of each opportunity, enhanced with real-time market data, and strengthening the slate we greenlight," the executives wrote. They added that Paramount's 2026 slate was on track to generate a half-billion dollars more in profit than the 2025 film mix.

The numbers behind the plan

Because the Warner Bros. deal closed on October 6, Monday's report covered only the Paramount half of the enterprise. Third-quarter net earnings reached $73 million. Adjusted EBITDA hit $1 billion, a 14% margin on revenue of $7 billion, which grew 5% year over year. Paramount remains on track for the high end of its 2026 profitability outlook at $3.9 billion.

Investors rewarded the plan. Skydance shares closed up 8.6%, or 69 cents, at $8.70. Several prominent Warner Bros. Discovery executives will move to the merged company.

With buyouts now on the table and the bundle launching early next year, the first test of Ellison's consolidation playbook will come in 2027, the year the company has set for big changes.