Skydance (NYSE:SKYD) executives outlined plans to combine streaming services, cut costs and reduce debt following the launch of the combined company, while warning that an underperforming Warner Bros. film slate will weigh on fourth-quarter results.
On its third-quarter earnings call, the company said standalone Paramount revenue rose 5% year over year, while Paramount+ revenue increased 21%. Paramount generated $1 billion in adjusted EBITDA, above the top end of its guidance, Chief Financial Officer Dennis Cinelli said.
Warner Bros. Films Weigh on Outlook
Cinelli said Warner Bros. was on track with management’s full-year underwriting plans, except for its near-term film slate. The studio’s performance is expected to create a $200 million adjusted EBITDA headwind in the fourth quarter, more than offsetting continued strength in Paramount’s film slate.
As a result, Skydance expects slower fourth-quarter revenue and adjusted EBITDA growth for the combined studio segment than it had previously anticipated. The estimate includes films already released in the quarter and those still to come, Cinelli said.
Standalone Paramount remains on track for its prior 2026 guidance, including the high end of its profitability range at $3.9 billion in adjusted EBITDA, he said. On a pro forma basis, combined Warner Bros. and Paramount direct-to-consumer revenue grew 15% in the third quarter.
For 2027, Cinelli said the company expects continued strong streaming revenue growth, higher studio revenue and an increase in total company adjusted EBITDA. Skydance also expects cash flow to be break-even or better next year, including the costs of achieving synergies.
The company is moving from quarterly to annual guidance and plans to provide its full 2027 outlook on its next earnings call. It also plans to publish pro forma financials before that call.
Cost Savings and Integration
Co-CEO Ynon Kreiz said more than 20 work streams are underway as Skydance combines streaming services, studios, television portfolios and corporate functions. Management identified four major areas of expected annual run-rate savings:
- At least $2.2 billion in corporate overhead, real estate and facilities.
- At least $1 billion in marketing.
- At least $1.4 billion in technology.
- At least $1.4 billion in vendor and procurement management.
Cinelli said Skydance expects to reach 30% of its run-rate synergy target by the end of 2027 and 70% by the end of 2028. Actual savings recognized within each year will be lower than those run rates because initiatives will take effect throughout the year, he said.
The program is expected to cost $4 billion in cash to achieve, including $1.5 billion to $2 billion in 2027. Separately, Cinelli said Paramount’s pre-combination efficiency program is on track to reach $2.7 billion in run-rate savings by the end of 2026, with the remainder of its $3 billion target expected in 2027.
Kreiz also described potential revenue benefits from content licensing, advertising, distribution and streaming. President Andy Gordon said those revenue synergies were not included in the company’s business plan or underwriting case.
Streaming and Content Strategy
Ellison said Paramount+ and HBO Max reach a combined 203 million subscribers worldwide, while Pluto TV has roughly 75 million monthly active users. He said Skydance aims to bring the two paid services onto the same technology stack in roughly a year, after moving Pluto onto the Paramount+ platform and integrating BET+ into Paramount+.
Management did not announce bundle pricing. Ellison said the company would phase in pricing plans with consumer feedback and balance direct distribution against the additional reach offered by third-party platforms.
Asked about commitments under a consent decree, Ellison said they were already incorporated into Skydance’s plans and would not negatively affect them. The company is producing more than 30 films for release in 2027, he said.
Debt and Long-Term Targets
Skydance reaffirmed its medium-term targets of mid-single-digit revenue growth, adjusted EBITDA margins in the mid-20% range and at least $10 billion in free cash flow in 2030. Ellison said the company expects to reduce net leverage below three times by the end of 2029.
Cinelli said excess cash beyond business reinvestment and the current dividend will go toward debt repayment until the leverage target is reached. He added that the operating plan does not require additional capital or asset sales, although the company will review its portfolio and consider opportunities to monetize non-core assets.
Skydance plans to hold an investor day in the first half of 2027.
About Skydance (NYSE:SKYD)
Skydance Corporation is a global media and entertainment company formerly known as Paramount Skydance Corporation.
