- Paramount reported $7 billion in revenue and a profit of 6 cents per share, compared to $7.04 billion in revenue and a profit of 20 cents per share expected by Wall Street analysts
- Paramount+, HBO and HBO Max reached 203 million total subscribers worldwide. Starting in the fourth quarter, it will stop disclosing subscribers on a quarterly basis
- HBO Max and Paramount+ will launch a bundle in early 2027 and will be merged onto the same backend within the first year of the merger’s closing
In its highly-anticipated first earnings report since closing the $110 billion Paramount-Warner Bros. Discovery merger, Skydance shared new details about its plans to generate at least $6 billion in cost savings in areas including real estate, labor, technology, marketing and procurement.
Executives also said they would focus on more selective greenlighting, prioritizing profitable streaming growth over subscriber counts and “optimizing” their linear TV portfolio as they look to grow the combined business moving forward. That growth plan also includes launching a Paramount+-HBO Max bundle in 2027.
“We’ll apply the same playbook we did at Paramount,” CEO David Ellison told analysts on Monday. “We’ve proven it works and we’re confident it will work again, starting from a position of extraordinary libraries, franchises, and creative talent.”
But lower than expected third-quarter results caused shares of the David Ellison-led media giant to fall more than 2% in after-hours trading on Monday. Paramount reported a profit of $73 million, or 6 cents per share, with revenue climbing 5% to $7 billion as growth in its streaming and studios business was weighed down by the continued linear TV declines.
Since the WBD merger did not close until the fourth quarter, Skydance did not include its consolidated results in this report.
Linear TV declines weigh down Skydance’s streaming, studios growth
Paramount+ grew revenue 21% to $2.13 billion as the streamer added added 600,000 subscribers for a total of 82.2 million. Engagement on the platform also increased 20% year over year. Meanwhile, Pluto TV has as approximately 75 million monthly active users.
When combined, HBO, HBO Max and Paramount+ reach 203 million aggregate subscribers worldwide, though that figure excludes Discovery+ and other WBD streaming services. Starting in the fourth quarter, Skydance will stop disclosing streaming subscribers on a quarterly basis.
Overall, the direct-to-consumer business posted a profit of $225 million and saw revenue grow 11% to $2.5 billion as it recognized higher costs from planned investment in its programming schedule in the quarter, including the UFC and ongoing investment in original programming.
Studios was also a bright spot, with a profit of $129 million and revenue growth of 23% to $1.5 billion, reflecting a strong quarter for secondary market licensing and content produced for third parties. Theatrical releases during the quarter included David Ayer’s “Heart of the Beast” starring Brad Pitt and “PAW Patrol: The Dino Movie.”
Paramount Pictures is expected to double its output in 2026 with 15 releases. Skydance’s releases through the end of 2026 include “The Cat in the Hat,” Johnny Depp’s “Ebenezer,” “Focker-in-Law,” “Dune: Part Three,” “The Angry Birds Movie 3,” and the David Corenswet and Isabel May-led “Mr. Irrelevant.”
But the TV Media unit was a drag on Paramount’s overall earnings. Despite posting a $1 billion profit, revenue fell 7% to $3 billion due to an 8% drop in ad revenue and 5% decline in affiliate revenue. The declines were driven by cord-cutting and the absence of Telefe and Chilevision, which were sold in October 2025, offset by higher political ad revenue.
“Our goal is to manage the combined portfolio to optimize long-term profitability and cash flow as the industry gradually shifts towards streaming,” Skydance co-CEO Ynon Kreiz told analysts on Monday. “We are seeing that decline in linear television has moderated slightly over the last few quarters, and while we continue to conservatively plan for a structural decline of this business, we believe it can continue to be highly profitable and cash generative as we grow our DTC and studio business.”
Skydance outlines cost savings plan
Skydance said it would realize 30% of its merger-related cost savings within the first year and 70% within two years as it looks to service nearly $80 billion in net debt. Those savings include:
- At least $2.2 billion in cost savings from consolidating redundant back-office and corporate functions, reducing management layers, using shared services, implementing a single enterprise resource planning system, scaling AI workflows, and shifting to lower-cost support functions.” It is also rationalizing its real estate footprint while keeping the Paramount and Warner Bros. studio lots.
- At least $1 billion in savings from streamlining its company-wide spend on marketing, including unifying media planning and buying and coordinating cross-business unit campaigns
- At least $1.4 billion in technology spending from unifying its enterprise tech stack, streaming ecosystem and broadcast architecture, merging parallel technology functions, leveraging AI coding tools and integrating platforms and systems
- At least $1.4 billion in savings from procurement and vendor management
Skydance has already offered some employees voluntary buyouts ahead of the formal layoffs and is shifting to a mandatory in-office policy of five days per week. At least 25 people have also been impacted by a reorganization in the Skydance Games division.
Additionally, Skydance executives said they see an opportunity to generate cost savings through content and making smarter choices about how it distributes and monetizes its slate.
When asked specifically about whether it would drop or sublicense anything from its portfolio of 36 premium sports rights, Ellison said the company reviews each package on a case-by-case basis based on its audience size, engagement and advertising value, economics and whether it fills a gap in its sports calendar.
“As it relates to future rights, we’ll be disciplined. Every right has to earn its place, but we’re really happy with the portfolio we have,” Ellison added. “We also feel we’re well positioned to be great partners to all of our sports leagues that we have the privilege of being in business with.”
Skydance expects to incur roughly $1.5 billion to $2 billion in costs to achieve its merger-related savings in 2027 and $4 billion throughout its transformation, with 60% to 70% to impact 2027 and 2028.
Skydance to launch Paramount+-HBO Max bundle, host Investor Day in 2027
Looking ahead, Paramount remains on track for the high end of its 2026 profitability forecast at $3.9 billion.
In the fourth quarter, Skydance expects continued streaming revenue growth and TV unit trends to remain consistent with recent quarters, adjusted for seasonality around politics and sports. It also anticipates improved Paramount film slate results to be offset by the underperformance of the Warner Bros. film slate, with slower studios revenue growth and a profit impact of up to $200 million versus the prior year quarter.
Going forward, Skydance will provide guidance on an annual basis, but will provide certain forward-looking commentary where applicable on a quarterly basis. It will provide a full-year outlook for 2027 during its fourth quarter earnings.
In early 2027, Skydance will launch an HBO Max-Paramount+ bundle and expects to bring the two services on the same backend systems within a year of closing. It will also host an investor day in the first half of the year.
Skydance is on track to release over 30 theatrical films and produce more than 180 TV and streaming series in 2027.
Its 2027 film slate includes “Children of Blood and Bone,” “K-Pop: The Debut,” “Sonic the Hedgehog 4,” “A Quiet Place Part III,” “Godzilla x Kong: Supernova,” “Man of Tomorrow” and “A Minecraft Movie Squared,” the “Ocean’s Eleven” prequel starring Bradley Cooper and Margot Robbie” and “The Lord of the Rings: The Hunt for Gollum.”
Skydance says asset sales, raising new capital not needed to hit leverage target
By 2030, Skydance expects mid-single-digit annualized revenue
growth, mid-20% adjusted EBITDA margins and more than $10 billion in free cash flow. It also expects to transition the majority of its revenue and profit from the declining linear TV business to the streaming and studios businesses.
Additionally, the company plans to invest more than $30 billion in content annually and lower its leverage ratio — a measure of a company’s debt relative to its earnings — to 3x in 2029.
Skydance expects to achieve that leverage target without raising additional capital or divesting assets, but said it would review its portfolio as it integrates the two companies and be “opportunistic” around monetizing non-core assets.
