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Of all the things keeping David Ellison up at night, the countdown to 2028 may be the most pressing. At least that’s what many media observers and Hollywood insiders believe. Ellison’s anxiety, they say, isn’t fueled
by the forthcoming presidential election or the Olympic Games that will descend on Los Angeles, where Ellison now owns two iconic studio lots. Instead, his agita is arising from the 8 movies he still needs to acquire or produce in 2028 to reach the magic number of 30 — that’s the benchmark Skydance pledged to meet annually in order to close the $111 billion acquisition that made his company a content behemoth.
Between Paramount and Warner Bros. Pictures, 22 films have been dated for 2028 so far. A large number of those — like “Gremlins 3,” Baz Luhrmann’s rumored Joan of Arc biopic and an untitled movie from the Duffer brothers — have yet to start production. And, of course, Hollywood is keeping a close watch on how the new regime handles the urgent task of closing deals with Margot Robbie and Greta Gerwig for a “Barbie” follow-up.
Despite Skydance’s other pledge — to streamline costs via cutting-edge technology — feature films remain one of the most expensive gambles in the business (and that’s if audiences respond). The challenge before Ellison and his team is to churn out hits fast — not just to prove their hotly debated merger will be viable in the long run but to generate the cash needed to pay down the combined company’s staggering $80 billion debt.
Five weeks in, if Team Ellison is losing sleep about the operational challenges ahead, it’s not letting that on to the media. “People are viewing our $30 billion-plus content spend as an expense, but content is our asset,” Skydance chief financial officer Dennis Cinelli told Variety, speaking ahead of the company’s third-quarter earnings report. “Whether it’s for our theatrical or TV business, both of our streaming platforms, third-party sales, the networks portfolio — we’re investing in content because it has proved tremendously valuable. We’re confident we can drive growth and increase profitability and cash flow.”
On Nov. 9, as Skydance unveiled its first quarterly earnings report as a combined company, leadership said a big push will come in early 2027 to offer consumers a bundle of the streaming services now under the Skydance roof: HBO Max and Paramount+. The price will come at a competitive discount designed to allow Skydance to gain market share among subscribers, one source says. Skydance plans to offer a fully integrated service that puts both brands on a single platform — which will make it easier for the company to keep viewers moving around its streaming universe — by 2029. There is much speculation that the company will eventually retire the Paramount+ moniker, given that HBO is the more powerful consumer brand.
Meanwhile, Skydance is touting the power of its portfolio: A combined 205-million streaming subscribers in more than 100 global territories, a library of roughly 15,000 films and more than 100,000 hours of TV series. Hollywood’s new colossus has a content library larger than its studio rivals’ by a significant factor, even if its stewards change, as James Gunn and Peter Safran found out the hard way this week. (The DC Studios chiefs made it just five weeks into the Skydance regime before Ellison announced on earnings day that he would replace the pair with producer Jeremy Latcham, an early architect of Marvel Studios.) Superman, Batman and many other characters in the Skydance vault represent a treasure trove of the kind of IP that can yield new adaptations and spinoffs for decades. The chance to buy Warner Bros.’ vault was so attractive that last year even Netflix, the leader in global streaming, was driven to give up its build-not-buy philosophy regarding big acquisitions to chase Warner Bros. and HBO — until Ellison stuck his foot in the door and refused to leave without a deal.
Streaming is the engine of the future for Skydance. But in the short term, the company’s fate will be determined by that of its linear cable channels. With the merger, Skydance hasn’t just doubled down on this sector — it has tripled down; Skydance has by far the industry’s collection of linear cable channels. Its TV portfolio is anchored by CBS and spans some 55 cable networks, including CNN, TNT, TBS, Cartoon Network, TCM, Nickelodeon, Comedy Central, BET, Discovery, TLC, Food Network and HGTV.
But the traditional business of cable television is deteriorating; subscribers are slowly but surely giving up on linear cable services in favor of streaming platforms. The erosion of once-reliable cable TV profits has bedeviled Hollywood’s majors for more than a decade and has been a catalyst for the latest round of merger mania.
As was the case for Paramount and WBD when they were separate companies, the enlarged Skydance remains heavily dependent on linear TV for cash flow and profits — and the cable and satellite biz remains a steadily melting iceberg. In the second quarter of this year, for example, Paramount’s TV business revenue slid 9% to $3.1 billion, but the segment still delivered all of the company’s adjusted $1.1 billion earnings for the quarter.
Skydance’s ability to meet its post-merger financial targets hinges on whether the TV business crumbles faster than Ellison and his financial engineers have projected, and whether streaming sees commensurate growth to make up for it. That’s a lot to leave to fate.
Here’s the quandary: Skydance must slash costs while investing in content and paying down its immense $80 billion in net debt. The numbers may not add up. “[W]e are concerned more aggressive cost-cutting measures in TV media could leave the segment vulnerable to a faster-than-expected rate of revenue declines,” MoffettNathanson analyst Robert Fishman wrote in an Oct. 23 research note.
Industry veterans have watched the creation of Skydance with wonderment. More so than Disney’s acquisition of 21st Century Fox, the union of Paramount and Warner Bros. feels like a milestone transition for the motion picture business that emerged in the 1910s and ’20s around silent films. Both iconic studios were foundational brand names for entertainment back then, and there is great hope among the many industry insiders who have worked across both that those proud logos and studio lots will endure for another century.
After finally closing the WBD acquisition, Skydance leadership opened themselves up to a media firing squad on the Paramount lot in early October. Ellison and team addressed burning questions about real estate, cash flow, layoffs and more. Yet inside the company, rank-and-file employees across both operations feel left in the dark. Conversations with staffers in many corners of the Skydance business yielded a feeling of “radio silence,” as one person put it, from the top as pink slips loom and anxiety around greenlights and general spending persists. On balance, another source inside the company deadpanned: “It’s been about a month” since the two entertainment giants combined (Skydance had no comment on the matter).
Who can blame them, as the town places bets on whether Ellison will have the cash to pay back his lenders. Skydance’s interest expenses are expected to be more than $6 billion next year. According to financial projections, the company intends to reduce that debt load from a figure that is seven times larger than its adjusted annual earnings to a number that is three times larger than adjusted net earnings, which is a more typical debt ratio for large companies.
If that model doesn’t hold, Ellison will need to find additional sources of capital. Will his father, billionaire Oracle co-founder Larry Ellison, whose Ellison Family trust committed $14 billion in equity financing for the WBD takeover, be willing to pump even more money into his son’s gambit to create one of Hollywood’s biggest conglomerates? That remains to be seen. There have also been rumors that David is hunting for more big-money backers to keep Skydance afloat — including Elon Musk. Cinelli told Variety that Skydance is not seeking any additional capital at this time. (Skydance and Musk declined to comment on the tech mogul’s possible involvement.)
Skydance’s pledged $30 billion annual spend on new content towers over those of rivals Netflix ($20 billion annually) and Disney ($24 billion in 2026), but investment and prayer alone will not make a meaningful dent in the company’s tremendous liabilities. To that end, bloodletting will come in the form of layoffs (expected by the end of the year and extending into the first quarter of 2027) and ruthless efficiency targets.
Insiders at Skydance say cost savings from the company’s acquisition of Paramount Global will blow past an anticipated $2 billion in cuts and approach $3 billion. That’s after only a year in control of the former Shari Redstone empire. Fat-trimming opportunities from the inherited Warner Bros. Discovery books also abound, three sources say. A recent team meeting on the Warner Bros. lot revealed that Skydance will be looking closely at its financial commitments to sporting events like the Olympics.
Unexpected (and eyebrow-raising) expenses have been discovered, like trifling luxury costs that amount to “tens of millions” of dollars, per two sources, on hospitality hospitality splurges like dining, travel and gifts. The former WBD regime spent in ways big and small — like stacks of receipts for sandwiches and green juices from the gourmet grocery store Erewhon. There will also be “millions” saved by combining or reducing spends on outside vendors, studio services, redundant marketing budgets and more (one source even suggests press junkets will be revamped. Sorry, journalists: No more sushi at the Four Seasons.
And Ellison’s executive table prides itself on its strong, effective characters. Co-CEO Ynon Kreiz, a respected operator and the former CEO of Mattel, has claimed daily operations as his purview. President Andy Gordon and CFO Cinelli will mind people and the purse, respectively. HBO golden child Casey Bloys sits atop the entire streaming operation with JB Perrette. Dana Goldberg and Josh Greenstein are now at the molten core of the movie business, controlling both Paramount, WB and DC Studios. Former CBS chief George Cheeks now runs all of linear TV and news. And what about David?
“There’s a lot of talk about David Ellison. Not since Walt Disney have you had an owner-operator running a major Hollywood company,” says Cinelli. “David is uniquely well-positioned to lead. He’s someone who loves the creative aspect of the business, and wants to spend his time making films and shows with passion. But he also grew up in Silicon Valley. His mentors and most valuable lessons come from that place, and that’s exactly what Skydance needs to succeed in the future.”
As any Hollywood executive knows, all the strength in the world cannot account for the exercise in pain that is managing creative budgets. Take the juicy fallout around “Barbie 2” as a case study.
As Ellison toiled for almost a year to win WBD, that company was stuck in tense negotiations for a sequel to Warner Bros.’ highest-grossing movie ever: “Barbie.” Director Gerwig and co-screenwriter Noah Baumbach dangled a concept for a sequel in front of now-axed WB film chiefs Michael De Luca and Pamela Abdy. They would not, however, allow a new movie into development until new deals were struck for themselves, producer-star Robbie and her A-list Ken doll Ryan Gosling that reflected the runaway success of the first film. So the negotiations, led by the creative team’s all-powerful CAA agent Bryan Lourd, broke down.
The creatives were demanding equal pay, which one person familiar with the deal pegs at around $25 million each for Gerwig, Robbie and Gosling (Baumbach would share in the writing fee with Gerwig, and he conveniently received a new overall deal at Warners while the “Barbie” negotiations were churning). Team “Barbie” also requested increased pieces of the back end, at which point then-WBD CEO David Zaslav balked — shutting down the talks as the studio’s licensing rights to the famous toy faced a year-end deadline for renewal.
Ellison, Keisz and Lourd are keen to make the “Barbie 2” deal happen by the end of the year, two sources say, and Kreiz is obviously close to the property as Mattel’s former chief executive. But for a company with an $80 billion debt tab, how does a decreased profit margin make sense?
In the view of former Warner Bros. CEO Barry Meyer, the key thing that the new owners need to remember is to invest in creativity. At the end of the day, it’s all about the movies and shows. “Creating value with the content is very, very important. Distribution is usually a lot more commoditized than content,” says Meyer, who spent 41 years at Warner Bros., capped by a 14-year run as CEO. “Content is creative. Content is unique. Streaming is how you get it there, but the content is where the value is.”
Todd Spangler and Jennifer Maas contributed to this report.
