Paramount wraps up mega Warner Bros merger to create Hollywood powerhouse Skydance

By Anzar Mehraj and Harshita Mary Varghese

Oct 6 (Reuters) - Paramount Skydance completed its blockbuster $110 billion takeover of Warner Bros Discovery on Tuesday, creating a Hollywood heavyweight that hands CEO David Ellison control of one of the world's largest entertainment and news businesses.

The deal brings together the studios behind "Mission: Impossible," "Harry Potter" and DC Studios alongside major television and streaming networks such as CBS, CNN, Paramount+ and HBO Max — forming an expansive entertainment company spanning film, TV and news.

The merger is a chance "to build the next-generation media and entertainment company, powered by creativity and technology," Ellison said in a memo to employees on Tuesday, outlining his vision. The goal, he added, was not simply to get bigger but "to take on the biggest players in our industry."

The new company, called Skydance, is the latest iteration of a conglomerate once controlled by the late Sumner Redstone that has precipitously shrunk over the years, as audiences flock to news and entertainment delivered by a growing cadre of smaller publishers and creators who are chipping away at once-mighty Hollywood.

Skydance not only faces competition from Netflix, Disney and others, but also from tech companies Apple, Meta, and Amazon, as well as the growing threat of AI.

Ellison said the merger was necessary to better take on these challengers at a time when the media industry had become complacent.

"They allowed Netflix to disrupt their business," he told reporters in a press conference on Tuesday. "They allowed Amazon Prime Video to come and disrupt their business. They didn't transform, and they held on to the past for too long."

Shares of the combined company moved to the New York Stock Exchange from Nasdaq on Tuesday to trade under the ticker "SKYD."

Settlements with a coalition of US states and a Hollywood writers union removed the main legal barriers to the merger, one of the largest in media history. It comes as Hollywood faces declining cable-TV subscriptions, the high cost of competing for streaming audiences and persistent pressure from unions over jobs and creative workers' rights.

TRUMP'S CNN PROBLEM

President Donald Trump expressed approval on Tuesday when asked about the deal. "It's going to be a great company," he told reporters. "That's a great merger. I'm glad they let it go."

Trump has attacked news organizations since his first term, and he recently took the unprecedented step of banning several news outlets from the White House, including CNN. The move came weeks ahead of the November 3 midterm elections in which Trump's fellow Republicans are defending narrow majorities in Congress.

CNN chief Mark Thompson and CBS News Editor-in-Chief Bari Weiss will continue in their respective leadership roles in the new company and each will separately report to Ellison and co-CEO Ynon Kreiz, allaying concerns from critics that Weiss, who took over as CBS News editor-in-chief in 2025, ​would have greater control over all of Skydance's news operations.

The concerns are also fueled by lawmakers' criticism of Ellison for tailoring news coverage at Paramount-owned CBS News to favor Trump. As part of the settlement, Ellison agreed to create an editorial independence board to oversee CNN and CBS. Experts warn that the board will be "toothless."

Ellison said last week the Skydance name was chosen to retain the individual identities of Paramount and Warner Bros studios, rather than combining them under a new brand.

Wall Street analysts, however, said the name reinforces the extent of Ellison's control, highlighting how some of Hollywood's most iconic brands now answer to him and how he has a platform to impose his strategy and culture.

In just 16 years, Skydance has gone from an independent studio to the center of one of Hollywood's biggest power plays. Founded in 2010 by the son of Oracle co-founder Larry Ellison, it built its reputation as a financial backer and producer of Paramount's blockbuster "Top Gun: Maverick."

After merging with Paramount last year, Skydance set its sights on Warner Bros, entering a heated bidding contest with Netflix while drawing interest from other potential suitors, including Comcast.

Warner Bros shareholders received an additional $41.9 million in a "ticking fee," based on the number of days between September-end and the deal-closing, according to a regulatory filing.

BROADER HOLLYWOOD BET

Ellison named Kreiz as Skydance co-CEO to run day-to-day operations and lead the integration, while Ellison oversees creative direction and overall strategy.

Kreiz, former CEO of Mattel, was also appointed to the company's board on Tuesday, alongside former Activision Blizzard CEO Bobby Kotick, and Laurene Powell Jobs, the founder of the Emerson Collective, and publisher of the Atlantic. Former UK Prime Minister Tony Blair will join the company as an adviser, it said.

In bringing on Kreiz, Ellison has signaled the need for a cost-cutter. The duo faces the task of combining two large companies while delivering $6 billion in planned savings, a big part of which Paramount said would come from "non-labor sources."

That includes combining technology and cloud providers of the two companies, but the scale of the cuts is expected to affect jobs across Hollywood.

Skydance plans to combine its streaming services, including HBO Max and Paramount+, into a single service and has pledged to release at least 30 films each in the first two years after closing, rising to 32 a year for the following three.

The combined company is also expected to carry about $80 billion in debt, putting pressure on Ellison to grow streaming, preserve cash flow from cable networks and improve theatrical film performance. Ellison has pledged to spend $30 billion or more each year on content.

Analysts at MoffettNathanson forecast core operating profit, or EBITDA, of $16 billion for 2028, rising to $19 billion in 2030. The research firm also predicted about $67 billion in revenue in 2028, growing to roughly $70 billion in 2030.

Ellison's annual base salary will be $5 million, with a target annual bonus of $5 million, according to the regulatory filing.

The tech scion offered a cold assessment of the deal when Reuters asked how he planned to win over a skeptical Hollywood where many had expressed deep apprehensions over the transaction.

"I understand why everyone felt the way that they did," he said, "but I think if you're intellectually honest, you need to zoom out and to see that the symptoms of this go back a long time, and then you start asking yourself, 'What was the alternative?'"

(Reporting by Anzar Mehraj and Harshita Mary Varghese in Bengaluru, Costas Pitas and Lisa Richwine in Los Angeles; Editing by Joyjeet Das and Maju Samuel in Bengaluru and Edmund Lee and David Gaffen in New York)