Paramount closes its $110B Warner Bros. Discovery deal, creating Skydance

A huge share of what you watch.

Streaming: Paramount+ and HBO Max, two major streaming platforms, now sit under one roof. Capital Brief reports the combined company has more than 200 million subscribers across its platforms.

TV networks: CBS, CNN, MTV, TBS, Comedy Central and Food Network, among others, along with a sports portfolio, according to TechCrunch and Capital Brief.

Studios and franchises: two major film studios behind franchises including The Lord of the Rings, Game of Thrones, the DC Universe, Yellowstone, Harry Potter, Mission: Impossible, Top Gun and SpongeBob, according to TechCrunch, Reuters and Capital Brief.

The money: Skydance says the combined company will have annual revenue of nearly $70 billion. Its Class B shares began trading on the New York Stock Exchange on Tuesday under the ticker SKYD, moving from Nasdaq, Reuters reports via NBC News.

David Ellison leads Skydance. He completed the merger of his Skydance Media with Paramount last year, TechCrunch notes. The Ellison family is the company's largest shareholder, backed by the fortune of Larry Ellison, David's father and co-founder of Oracle.

Ynon Kreiz, Mattel's former CEO, is co-CEO. He runs day-to-day operations and leads the integration, while Ellison oversees creative direction and overall strategy, according to Reuters.

News divisions: CNN chief Mark Thompson and CBS News editor-in-chief Bari Weiss will keep their roles, Reuters reports.

"Today is a historic day, not just for Skydance but for our entire industry," Ellison said in a statement. "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."

Ellison said last week the Skydance name was chosen to keep the individual identities of the Paramount and Warner Bros. studios, rather than combining them under a new brand, Reuters reports.

Analysts saw it differently. They said the name reinforces the extent of Ellison's control, highlighting how some of Hollywood's most iconic brands now answer to him, according to Reuters.

Skydance was founded in 2010 and built its reputation as a backer and producer of Paramount's "Top Gun: Maverick." In 16 years, it went from an independent studio to the center of one of Hollywood's biggest power plays.

The combined company has a big cost-cutting target.

The goal: Skydance aims to find $6 billion or more in savings over the next three years and generate more than $10 billion in free cash flow by 2030, Capital Brief reports.

Where it comes from: Paramount said a big part of the savings would come from "non-labor sources," by combining the two companies' streaming technologies and cloud providers, Reuters reports. Running Paramount+ and HBO Max on separate tech stacks is exactly the kind of duplication a merger like this aims to remove.

Jobs: even so, the scale of the cuts is expected to affect jobs across Hollywood, according to Reuters.

The debt: the company is expected to carry about $80 billion in debt, putting pressure on Ellison to grow streaming, preserve cash flow from cable networks and improve theatrical performance.

It wasn't easy.

The bidding war: Paramount announced in February that it would acquire Warner Bros. after a bidding battle with Netflix, which had previously agreed to buy Warner Bros.' film and TV studios and streaming business, excluding its cable networks, TechCrunch reports. Comcast was also interested, Reuters notes.

Sweeteners: Paramount paid $31 per share in cash. It sweetened its bid by promising shareholders extra cash if the deal didn't close by a set deadline, and agreed to cover the breakup fee Warner Bros. owed Netflix. Capital Brief puts that Netflix termination fee at $2.8 billion, alongside a $7 billion regulatory termination fee Paramount agreed to pay if regulators blocked the deal.

The pushback: the deal faced criticism from lawmakers and Hollywood talent over media consolidation, The Verge reports.

Paramount cleared its last major hurdle last month when it settled with 12 states that sued to block the deal over antitrust concerns, The Verge reports. It also settled with a Hollywood writers' union, TechCrunch notes.

Under the state settlement:

• Skydance must release a minimum number of theatrical films over the next five years, starting with 30 films a year in years one and two.
• It must spend at least $300 million more on US production than the two companies spent last year combined.

Capital Brief describes the commitments as a minimum of 30 films in theaters and 180 TV shows each year.

More of the terms, as reported by Fortune and Al Jazeera:

• Film schedule: 30 films a year in the first two years and 32 a year in the following three, plus at least four independent films a year and a $25 million, five-year fund to buy independent films.
• A penalty: if Skydance doesn't make the required number of films, it would have to sell Miramax and pay $30 million to union health and retirement funds, Fortune reports.
• Workers: a $47.5 million fund for training laid-off workers, and a commitment to honor existing union contracts.
• Cable: for five years, negotiations with TV providers for Paramount and Warner Bros. basic cable channels must be kept separate.
• Newsrooms: a five-member panel to safeguard the editorial independence of CNN and CBS. Al Jazeera notes Ellison appoints its members.

A federal judge approved the settlement on September 30, calling it a "fair, reasonable, and good faith approach to address the competitive harms," Al Jazeera reports. The Trump administration had approved the deal without changes in June.

On the price tag: Fortune describes the deal as an $81 billion acquisition, while Paramount and most other outlets cite about $110 billion.

For your wallet: "Resoundingly consumers are concerned about price hikes and they are preparing for price hikes," Forrester research director Mike Proulx told Fortune.

The merger comes as Hollywood faces declining cable subscriptions, the high cost of competing for streaming audiences and persistent pressure from unions over jobs and creative workers' rights, Reuters notes.

Combining two streaming services, two studios and a stack of cable networks is Skydance's bet that scale is the answer.

• If you subscribe to Paramount+ or HBO Max: both are now owned by the same company. Nothing has changed in the apps yet, but combining streaming tech is part of the savings plan.
• If you watch CNN or CBS News: both now sit under Skydance, with their current leaders staying on.
• If you go to the movies: Skydance has committed to releasing at least 30 theatrical films a year for the first two years.