Skydance outlined plans to achieve at least $6 billion in cost savings over three years following its combination with Paramount Skydance and Warner Bros. Discovery.
The company projects at least $2.2 billion from eliminating redundant back-office and corporate functions, including management layer reductions and increased artificial intelligence use. An additional $1 billion will come from streamlining marketing and promotional spending. Skydance expects $1.4 billion from unifying streaming businesses and integrating back-end technology, and another $1.4 billion from optimizing third-party spend and consolidating purchasing.
The cost-cutting effort has already started. Last month, Skydance offered voluntary buyouts to employees and adopted a five-day-per-week in-office policy. Last week, eight executives departed, four from each legacy company.
Co-CEO Ynon Kreiz said the combined entity can make smarter choices on content distribution and monetization. The company spends more than $30 billion annually on shows and films. Co-CEO and chairman David Ellison stated AI tools will speed up film production and decrease costs while enabling riskier original storytelling.
Skydance plans to bundle Paramount+ and HBO Max streaming services early next year before merging them into a single platform. The company expects a $200 million headwind in the fourth quarter from Warner Bros. theatrical underperformances.
For the third quarter, Paramount Skydance reported revenue of $7.03 billion, roughly in line with StreetAccount estimates of $7.04 billion, and adjusted EBITDA of $1 billion, topping StreetAccount's $913.5 million estimate. The Warner Bros. Discovery acquisition closed after the quarter ended.
Skydance said it previously achieved over $2.7 billion in run-rate efficiencies from a Paramount cost program and will provide full-year guidance during its fourth-quarter earnings report early next year.