Meridian Markets
Skydance, the entertainment company formed by Paramount’s acquisition of Warner Bros. Discovery, began trading as a single entity on Tuesday, closing a deal valued at $110 billion after a settlement with state attorneys general cleared the final regulatory hurdle roughly a week earlier.
The combined company is led by chief executive David Ellison, chairman of Skydance Media and the architect of Paramount’s pursuit of Warner Bros. Discovery, with Ynon Kreiz serving as co-CEO overseeing integration. Together the merged studios bring Paramount+ and HBO Max under one roof, alongside CBS, CNN, MTV, BET and the Warner Bros. film library, giving the streaming arm more than 200 million subscribers worldwide.
That scale comes with a heavy balance sheet. The newly formed Skydance carries roughly $79–80 billion in debt, a legacy of financing the takeover that will weigh on the company’s finances for years. Ellison and Kreiz have said they aim to bring leverage down to three times earnings within about three years and have set a target of $6 billion in cost synergies over the same period. Those are steep targets for a company whose stock fell 8% the day after the merger closed, an early signal that investors are not yet convinced the integration will go smoothly.
The debt load is only part of what the new company must manage. Warner Bros. Discovery arrives with its own unresolved pressures — a sprawling mix of linear television networks in secular decline, a streaming business still being knit together with Paramount+, and a film studio now obligated, under the terms of the antitrust settlement, to release at least 30 to 32 titles in theaters annually through 2031. Meeting that commitment while also wringing out billions in synergies and paying down debt leaves little room for error, and the assets Warner brings — CNN and its cable networks chief among them — face the same audience erosion that has squeezed the rest of the industry for years.
A contested path to closing
The deal followed a drawn-out bidding war. Warner Bros. Discovery had initially struck a studio and streaming agreement with Netflix (NFLX) in December. Paramount returned with a higher offer of $31 per share in late February, prompting Netflix to withdraw and the two companies to sign a merger agreement. The transaction then drew sustained opposition inside Hollywood: in April, thousands of industry figures, including actress Jane Fonda, signed an open letter opposing the merger, while actor Tom Cruise appeared in a promotional video backing Paramount’s side of the fight.
A lawsuit from state attorneys general over antitrust concerns delayed completion for months before a settlement was reached in late September, under which Skydance agreed to the theatrical release commitments now binding its film slate through the end of the decade.
Ellison and Kreiz outlined their post-merger plan in a CNBC interview two days after closing, framing the debt reduction and synergy targets as the measures of whether the merger succeeds. Whether Warner Bros. Discovery’s older, debt-burdened assets can be turned around fast enough to hit those marks remains the central question hanging over the newly formed company.