Skydance’s $73 million Paramount profit comes with caveats

By Tom Whitfield

Skydance, newly merged with Warner Bros. Discovery, reported third-quarter revenue of $7.03 billion, up 5% from a year earlier, while the Paramount part of the business swung to $73 million in profit. The figures exclude data from the newly acquired properties because Skydance said the merger closed in October, after the fiscal period ended.

Skydance, which owns CBS, CNN and the Paramount and Warner Bros. movie studios, reported net income of six cents a share. Adjusted for pretax expenses and non-recurring costs, the figure was 45 cents a share.

The company’s operating results split into three trends:

• Traditional television, Skydance’s largest operation, lost 7% of revenue, falling to $3 billion. Advertising revenue dropped 8%, partly because Skydance sold Telefe in October 2025 and Chilevisión in January 2026. Distribution revenue fell 5%, which the company attributed to continued subscriber erosion.
• Direct-to-consumer revenue rose 11% to $2.5 billion. Skydance cited accelerating Paramount+ revenue growth of 21% year over year and subscriber growth of approximately 6%.
• Studio revenue rose 23% to $1.5 billion. Skydance attributed most of the increase to licensing and content produced for third parties.

The studio increase does not isolate the performance of Skydance’s own film slate. Much of the growth came from outside it.

What does this change for audiences?

In its shareholder letter, Skydance said the Warner Bros. studio was not performing as well as Paramount. Skydance said: “We expect the Warner Bros. film slate in Q4 to underperform,” while noting that “Paramount Pictures continues to perform well and is expected to double its output in 2026 with 15 releases.”

The comparison sets up the central caveat: the quarter contains no Warner operating data to test it. Paramount’s release forecast and the merger’s promised efficiencies remain targets, not reported results.

Skydance said it expects to cut costs while continuing to invest. The company reiterated at least $6 billion in run-rate synergies, net of reinvestment across its cost structure, within three years.

Executives linked that target to combining two global streaming services, two film and television studio groups, two television portfolios and overlapping corporate functions. They said the combination could reduce duplicative spending across an expense base of more than $50 billion.

Skydance also disclosed that it will stop reporting streaming subscribers each quarter, beginning with its fourth-quarter report due early next year. The company said the change follows Netflix, Disney and other major streamers.

Paramount+ and HBO Max currently account for some 203 million global subscribers, according to Skydance. The company did not provide a split between the two services. Ending quarterly disclosure will make it harder to track the roughly 6% subscriber growth and 21% Paramount+ revenue growth cited for this quarter.

The shareholder letter was written by David Ellison, Skydance chairman and CEO, and Ynon Kreiz, co-CEO. They described Skydance’s content budget as industry-leading and said annual content spending exceeds $30 billion.

Ellison and Kreiz said content is both an expense and an investment in valuable long-term assets. The company intends to keep investing in what it calls the content engine that drives growth. It also cited a library built over a combined 200-plus years of storytelling.

The executives said Skydance’s combined reach across streaming, broadcast and cable could allow each title to work harder. They also said the merged company could make better choices about distributing and monetizing its slate. The letter did not specify how those choices might affect prices, staffing or creative decisions, and the cost target did not include a timetable for individual cuts.

For audiences, the practical change is a potentially larger Paramount pipeline, with 15 releases expected in 2026, and a stated intention to distribute more titles across more services.

Warner Bros.’ position remains uncertain. Skydance expects its fourth-quarter film slate to underperform, excluded Warner operating data from this quarter and reported no performance figures for the merged studio. The next checkpoint is the fourth-quarter report due early next year, the first test of Skydance’s studio forecast and streaming claims without the quarterly subscriber metric it is dropping.