Skydance Staff Brace for Cuts After $110bn Warner Deal
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"It feels like the calm before the storm," says an executive at Skydance, the media company formed from the merger of Paramount and Warner Bros Discovery. "David has got what he wanted, but now there is a price to pay."
Earlier this month David Ellison, Skydance's chief executive, sealed the $110bn deal. It joins two Hollywood studios that are each more than a century old with the TV networks HBO, MTV and Discovery and the news outlets CBS and CNN. Ellison told employees the process, which met political and industry opposition and saw off a rival bid from Netflix, was at times "downright ugly".
Debt and savings targets
The company aims to cut a debt load of more than $80bn in three years, and Ellison is targeting $6bn in savings over the same period. For Skydance's more than 53,000 employees, what matters is what gets cut, sold and restructured. Executives and financial backers are steering away from sweeping job losses, but a management memo earlier this month warned of "difficult decisions that affect our workforce".
"It is business as usual but, to be honest, everyone is worried about what happens next," says another Skydance executive. "Cuts inevitably mean jobs."
Fears in the news division have been stoked by events at Paramount before the merger. It cancelled the long-running Late Show with Stephen Colbert after its host said the company had paid a "big fat bribe" to settle a $16m lawsuit with Donald Trump. Christiane Amanpour, CNN's international anchor, has warned that changes and cuts could lead to the "destruction" of 60 Minutes. This week she announced she was leaving CNN after 43 years, though her exit is not thought to be linked to the new ownership.
CNN staff were relieved when Skydance, shortly after closing the deal, kept Mark Thompson as chair and chief executive. Reports this week that Elon Musk has invested $1bn for a stake in the group raised fresh concerns about outside influence. "The preservation of editorial independence is a growing concern among media consumers," said Mike Proulx, an analyst at Forrester.
What stays and what may go
HBO is left to keep producing the hits the business needs. Ellison extended the contract of its boss, Casey Bloys, and gave him oversight of Paramount+ and HBO Max as well.
Some cable and TV channels face longer-term questions, among them MTV, Nickelodeon, Channel 5 in the UK and Network 10 in Australia. They are in decline but still account for 70% of profits, according to CreditSights. Brian Wieser, chief executive of the consultancy Madison and Wall, said selling physical broadcast assets should be a natural consideration, but that Skydance might be better served holding on given the cash flow they make. Ellison pledged to keep Channel 5 free-to-air until at least the end of 2034, although sources say the commitment does not rule out a later sale.
Skydance says it will spend about $30bn a year on content, and Ellison has promised at least 30 major films a year until 2031. Tom Harrington, a media analyst at Enders, expects a drop afterward: "After the 2031 deal ends there will be fewer films, obviously." Skydance declined to comment.
Source: The Guardian