Skydance said it plans to achieve at least $6 billion in cost savings over the next three years following its merger with Warner Bros. Discovery, drawing on an efficiency program it ran at its predecessor company. The company outlined the breakdown of those reductions in a shareholder letter released Monday as part of Paramount Skydance's third-quarter earnings announcement. Skydance said the savings would come from combining duplicate operations across two streaming services, two film and television studio groups, two television portfolios, and overlapping corporate functions within an expense base exceeding $50 billion.
The largest component of the plan involves eliminating redundant back-office and corporate functions, which Skydance expects will generate at least $2.2 billion in savings. Those cuts will include eliminating management layers, increasing use of artificial intelligence, and reducing office space. The company also projects at least $1 billion from streamlining marketing and promotional spending, and around $1.4 billion from combining its streaming businesses and integrating technology infrastructure. An additional $1.4 billion will come from consolidating third-party spending and centralizing purchasing decisions. Skydance said it is confident in these targets based on a previous efficiency program at Paramount, which the company said is on track to deliver over $2.7 billion in run-rate savings by the end of 2026.
The company began offering voluntary employee buyouts last month and implemented a five-day-per-week office requirement. Eight executives departed last week, split between the Warner Bros. and Paramount operations. Skydance also plans to move forward with combining its Paramount+ and HBO Max streaming platforms, with the first step being a bundled offering early next year. Co-CEO Ynon Kreiz told investors the combined company can make better decisions about distributing content across its services, while co-CEO David Ellison said the company will use artificial intelligence to speed up film production and reduce costs.
In third-quarter results for the legacy Paramount Skydance company, revenue came in at $7.03 billion, roughly matching StreetAccount estimates of $7.04 billion. Adjusted earnings before interest, taxes, depreciation and amortization reached $1 billion, exceeding StreetAccount estimates of $913.5 million. These figures do not reflect the Warner Bros. Discovery acquisition, which closed after the quarter ended. Skydance expects a $200 million headwind in the fourth quarter from theatrical underperformance at Warner Bros., related to already-released titles and upcoming releases. The company said it will provide full-year guidance during its fourth-quarter earnings report early next year and will shift to annual guidance going forward to prioritize long-term value creation.
For savers and investors, the cost-cutting plan signals Skydance's focus on profitability and long-term value over near-term growth following a transformative merger that doubled the scale of the combined entertainment company.