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

Paramount Skydance is aiming to cut more than $6 billion in costs as it integrates Warner Bros. Discovery, exceeding the savings target David Ellison originally promised investors, the company said Monday.

The company closed its $111-billion acquisition of Warner Bros. Discovery on Oct. 6. Since then, Ellison's team has scoured the combined portfolio for cuts and efficiencies ahead of a full operational integration in 2027.

What did the earnings show?

Paramount Skydance reported third-quarter net earnings of $73 million. Adjusted EBITDA reached $1 billion, a 14% margin on revenue of $7 billion — revenue that grew 5% year over year. Because the Warner Bros. Discovery deal closed mid-quarter, the figures cover only the Paramount half of the enterprise.

Paramount remains on track for the high end of its 2026 profitability outlook of $3.9 billion, the company said.

Investors rewarded the update. Skydance shares closed up 8.6%, or 69 cents, at $8.70.

How big is the debt problem?

The merged company carries more than $80 billion in debt, making balance-sheet repair one of its highest priorities. Ellison promised investors he would eliminate $6 billion in expenses. On Monday, executives signaled they intend to beat that figure.

The workforce is expected to shrink, though the company has not specified the scale or timing of layoffs. Instead, Ellison and Co-Chief Executive Ynon Kreiz said the company had "identified multi-billion dollar opportunities" across four areas: corporate expenses, marketing, technology and procurement.

Where will the savings come from?

The company laid out the arithmetic in its shareholder letter accompanying Q3 earnings:

• Corporate overhead, real estate and facilities: roughly $8 billion of spend this year, with at least $2.2 billion in targeted savings "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 this year, with a $1 billion reduction planned "by streamlining and optimizing our enterprise-wide spend, as well as strategic utilization of our expanded global portfolio to promote our key projects and initiatives."
• Technology: about $4 billion this year, cut by roughly $1.4 billion by "unifying our enterprise tech stack, streaming ecosystem, and broadcast architecture, merging parallel technology functions, leveraging AI coding tools, and integrating platforms and systems."
• Procurement and vendor management: about $9 billion this year, reduced by at least $1.4 billion. "Our combined purchasing levels will give us economies of scale by consolidating purchasing decisions into one centralized group," the executives said.

The combined sums reach at least $6 billion. That matches the original commitment — and executives said they are looking to go beyond it.

"In addition, we are rationalizing our office footprint (while keeping our production lots)," Ellison and Kreiz wrote. Skydance also plans to consolidate media buying functions and promotional campaigns to exploit its new scale.

What happens to streaming?

Skydance will offer HBO Max and Paramount+ together as a bundle early next year, part of its plan to prioritize streaming for the combined company. Pricing was not disclosed.

Ellison and Kreiz told shareholders the bundle would deliver "an even greater value" than subscribing to the two services separately.

The integration task is vast. Ellison must braid 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.

Who is out at DC Studios?

Earlier Monday, Skydance ousted James Gunn and Peter Safran, the executives who led the DC Comics unit for the past four years. Marvel veteran Jeremy Latcham will replace them.

Skydance also disclosed that Warner Bros.' fourth-quarter film slate would "underperform" expectations.

The film strategy will follow the Paramount template, the executives wrote: "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."

"That approach served us well at Paramount," they said, noting that Paramount's 2026 slate is on track to generate a half-billion dollars more in profit than 2025's film mix — a measure of what the merged studio expects to replicate at Warner Bros.

Several prominent Warner Bros. Discovery executives will move to the merged company.

"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 Kreiz said.

The pace of change sets up 2027 as the year the merged operation either proves the $6-billion-plus savings thesis or exposes the cost of fusing two legacy entertainment giants under one balance sheet.