Paramount completes Warner Bros takeover, creating Skydance

Paramount finalized its acquisition of Warner Bros. Discovery on Tuesday, merging two iconic Hollywood studios under the leadership of David Ellison. The resulting company, Skydance, will encompass Paramount Pictures, Warner Bros. Pictures, CBS News, CNN, HBO, and CBS television networks. Ellison intends to eventually unify Paramount+ and HBO Max streaming platforms.

David Ellison, whose family has close ties to former US President Donald Trump, expressed excitement about the historic merger. However, critics have raised concerns that the new media giant may align its news coverage with the White House's agenda. Trump himself endorsed the merger while leaving the White House on Tuesday.

The newly formed corporation faces significant challenges, including the rapidly evolving entertainment landscape where streaming services and YouTube are siphoning viewers from traditional TV and movie theaters. Skydance's shares dropped 2.7 percent on the New York Stock Exchange following the deal's approval.

The acquisition, which closed just days after a federal judge in California approved a settlement between Paramount and 12 US states over antitrust concerns, saw the entertainment giant bid against Netflix in February. The US government approved the deal in June, without mandating changes to the business structure.

Skydance, projected to generate over US$70 billion in annual revenue, aims to cut costs by more than US$6 billion within three years. Ellison will serve as chairperson and chief executive officer, while Ynon Kreiz, formerly of Mattel, will co-lead as CEO, focusing on day-to-day operations and integration.

In their memo to employees, Ellison and Kreiz warned of difficult decisions impacting the workforce. The company is committed to handling the process with care and respect, according to the memo. The deal was backed by US$47 billion in new equity, led by the Ellison family, private equity firm RedBird Capital, and sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.

Prominent investor Larry Ellison, David's father and co-founder of Oracle, provided crucial funding and loan guarantees. The Ellison family holds the majority equity position in Skydance.

Opponents in the film and media sectors have voiced concerns about potential job cuts in an already pressured Hollywood industry, as well as the potential erosion of CNN's editorial independence. The settlement with the US states includes provisions to protect CNN's journalistic integrity.