After nearly a year in pursuit, regulatory hurdles and a stand-off with 12 US states and Writers Guild of America who raised antitrust concerns, David Ellison has closed the $111bn merger of Paramount and Warner Bros Discovery (WBD).
Some 14 months after Ellison’s Skydance acquired Paramount, the 43-year-old mogul’s new entity – called Skydance – presents a rival in size to Netflix and Disney with its two storied film studios, cable, streaming, and news operations.
However it comes at a cost. Ellison and his team will need to service a debt load of approximately $80bn. He will also need to make $6bn in synergies, which will include lay-offs, despite a push-back last week by Gerry Cardinale, the founder and managing partner of RedBird Capital and a Skydance board director, who said a large chunk of savings will come from changes to technology architecture and marketing spend.
Ellison’s co-CEO Ynon Kreiz oversees day-today operations and integration of the combined businesses and will be the integral figure in carring out cosst savings
Skydance will begin trading on the New York Stock Exchange today, WBD shareholders have received cash equal to $31 per share and will receive a ticking fee of $7m per day that kicked in on October 1, while former WBD CEO David Zaslav is receiving his giant payout.
In line with a consent decree filed by the states and Paramount last week and approved by a judge, the new combined entity has committed to release 30 films a year in the first two years, rising to 32 in the following three years with a minimum 45-day exclusive theatrical window, and more than 180+ television shows. The company emphasised its entertainment portfolio spans Top Gun and Harry Potter, White Lotus and SpongeBob SquarePants.
The combined company has said it will also ensure separate cable carriage negotiations by Paramount and WBD’s cable channels, and will establish an editorial independence board overseeing the two news divisions CNN and CBS News.
Skydance’s film division will be led by Paramount executives Dana Goldberg and Josh Greenstein, who each become co-chair of Skydance Motion Picture Group.
The consent decree includes a mandate to release four loosely-defined independent films each year and establish an independent acquisitions fund allocating $5m per year for five years. Independent sources have called the concessions “insulting” and await further clarification. Skydance sources have not responded to requests to elaborate.
Skydance chairman and CEO Ellison said, “Today is a historic day, not just for Skydance but for our entire industry. From the start, our ambition was to bring these two storied studios together and create a stronger competitor, with the talent, resources, and reach to tell great stories in every genre, on every platform, for audiences everywhere. Now that ambition is a reality.
“We’re grateful to everyone who made this possible – the employees, creative talent, and production teams of both companies, who worked tirelessly to get us here and inspire audiences around the world every day, as well as the advisors and partners who guided this transaction to completion. Our focus now turns to the future: building a company that empowers creatives, entertains audiences and rewards shareholders. We couldn’t be more excited to get to work.”
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