Paramount completes $111bn WBD merger

Paramount completes $111bn WBD merger | News | Screen

After nearly a year in pursuit, regulatory hurdles and an antitrust tussle with 12 US states and Writers Guild of America, David Ellison has closed the $111bn merger of Paramount and Warner Bros Discovery (WBD).

Some 14 months after Ellison’s Skydance acquired Paramount, the 43-year-old mogul’s new entity – called Skydance – presents a rival in size to Netflix and Disney with its two storied film studios, cable, streaming, and news operations.

However it comes at a cost. Ellison and his team will need to service a debt load of approximately $80bn. He will also need to make $6bn in synergies, which will include lay-offs, despite a push-back last week by Gerry Cardinale, the founder and managing partner of RedBird Capital and a Skydance board director, who said a large chunk of savings will come from changes to technology architecture and marketing spend.

Ellison’s co-CEO Ynon Kreiz oversees day-today operations and integration of the combined businesses and will be the integral figure carrying out cost savings.

Skydance will begin trading on the New York Stock Exchange today, WBD shareholders have received cash equal to $31 per share and will receive a ticking fee of $7m per day that kicked in on October 1, while former WBD CEO David Zaslav is exiting with a giant payout of at least $550m.

In line with a consent decree filed by the states and Paramount last week and approved by a judge, the new combined entity has committed to release 30 films a year in the first two years, rising to 32 in the following three years with a minimum 45-day exclusive theatrical window, and more than 180 television shows. The company emphasised its entertainment portfolio spans films and television ranging from Top Gun and Harry Potter to White Lotus and SpongeBob SquarePants.

The combined company has said it will ensure separate carriage negotiations by Paramount and WBD’s cable channels, and will establish an editorial independence board overseeing the two news divisions CNN and CBS News. Speaking to Anderson Cooper at a town hall on the Warner Bros lot on Tuesday, Ellison reportedly said he supported CNN’s independence and head Mark Thompson, and supported the news organisation’s efforts to restore presidential access after a ban by Donald Trump. Ellison’s father, Oracle co-founder Larry Ellison, is a friend of the US president.

Skydance’s film division will be led by Paramount executives Dana Goldberg and Josh Greenstein, who each become co-chair of Skydance Motion Picture Group. 

The consent decree includes a mandate to release four loosely-defined independent films each year and establish an independent acquisitions fund allocating $5m per year for five years. Independent sources have called the concessions “insulting” and await further clarification. Skydance sources have not responded to requests to elaborate.

Skydance chairman and CEO Ellison said, “Today is a historic day, not just for Skydance but for our entire industry. 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. Now that ambition is a reality.

“We’re grateful to everyone who made this possible – the employees, creative talent, and production teams of both companies, who worked tirelessly to get us here and inspire audiences around the world every day, as well as the advisors and partners who guided this transaction to completion. Our focus now turns to the future: building a company that empowers creatives, entertains audiences and rewards shareholders. We couldn’t be more excited to get to work.”

From films to streaming prices - how the Warner Bros deal could affect you

Francisco Velasquez, Business reporter, Reporting from New York and Regan Morris, Reporting from California

It has been months in the making but Paramount Skydance has finally completed its $110bn (£82.8bn) merger with Warner Bros Discovery.

The deal welds two legacy Hollywood powerhouses, uniting franchises like Harry Potter and Game of Thrones, into an entertainment behemoth named Skydance.

Yet behind this milestone lies strict rules about what the combined business can and cannot do - from how many films it must produce a year to the editorial independence of its newsroom.

Here are four ways this could affect you and the movies, TV and news you watch.

1. Streaming prices may rise

HBO Max is the company behind Euphoria, a series starring Zendaya

Warner Bros owns HBO Max, home to The Sopranos, House of the Dragon and Euphoria among others. Meanwhile, Paramount Skydance has Paramount+, which streams the likes of Yellowstone, Parks and Recreation and NCIS.

Combining HBO Max and Paramount+ into a single platform or bundle will likely squeeze subscribers' wallets over time.

While existing subscribers to both might enjoy short-term savings, analysts expect overall prices to rise as the combined giant seeks profitability.

The merged company, Skydance, carries a massive $80bn in debt from the deal, even as executives target $6bn in annual cost savings.

Analysts warn that consumers will ultimately bear the financial burden of the $110bn deal.

Mike Proulx, research director at Forrester, noted that with streaming services constantly raising fees to increase profitability and Skydance saddled with massive debt, price increases are likely to come.

While viewers will gain access to a broader catalog, as Skydance shifts toward a Paramount+ and HBO Max bundle rather than a single app, Proulx warns that "it's far-fetched to think it'll prevent downstream price hikes".

2. More film releases

As part of a settlement deal with US states who had objected to the merger, Paramount Skydance has agreed to release a set number of films every year for the next five years.

For the first two years, that's 30 movies annually, and for the remaining period it has to release 32 films each year.

That's 156 movies in total - and the majority have to be "wide releases," meaning they must be shown in cinemas.

The merged studio must also release at least four independent films each year.

If Skydance misses its movie quota, it could be forced to sell its 49% stake in Miramax – the studio co-founded by disgraced Hollywood mogul Harvey Weinstein.

Breanne Gilliam, a corporate lawyer at Maddin Hauser, said the film commitment is meaningful, even if it comes with an expiration date.

"Once those obligations expire, the company will have far more flexibility," she said.

"Temporary rules cannot permanently fix a structural market shift".

Once the five-year deal ends, Skydance could follow rivals like Disney and Netflix by prioritizing streaming over cinema.

As Disney's $71bn buyout of 21st Century Fox in 2019 proved, mega-deals can lead to fewer films in cinemas.

Before the acquisition, 20th Century Fox routinely released 12 to 17 movies annually in theatres, but under Disney that slate scaled down to just three to six a year.

Paramount and Warner Bros are coming together to form Skydance

3. Hollywood jobs could be hit

Members of the film and TV industry protested outside Paramount Studios in LA

For those working behind the scenes, the merger of two historic studios has been described as a "disaster" by those on the ground.

Actors and writers recently gathered at Paramount Studios in Los Angeles to oppose the deal, accusing regulators of failing to protect industry livelihoods.

Criminal Minds star Kirsten Vangsness told the BBC she was "heartbroken".

"It's people that make this city," she said. "It's people that make entertainment, it's the everyday creatives that this industry is built on - this is who it hurts."

A report by consultancy CVL Economics for LA County estimated the merger could eliminate roughly 4,500 direct film and TV jobs, while causing $1.26bn in lost wages over three years.

The blow could hit a region that has already lost roughly a third of its film and TV workforce, about 50,000 jobs, since 2022.

Syleecia Thompson, a business professor at National University, said that "it hits small businesses, vendors, caterers and local communities".

She warned that Hollywood may become less of a "single location" and more of a "dispersed network."

Although the settlement establishes a workforce fund to retrain displaced workers, lawyers note it does not block job cuts.

"Nothing in the settlement limits layoffs," attorney Gilliam added.

4. CNN and CBS could change

CNN White House correspondent Betsy Klein reports from outside the building

To address concerns over journalistic independence at CNN and CBS, the settlement creates a news editorial independence board that will be appointed directly by Paramount.

The $110bn deal brings two major US television news operations under a single corporate roof. Before the deal, Paramount owned CBS News, and Warner Bros. owned CNN.

Both networks have faced intense political pressure - CNN was one of a handful of news organisations banned from the White House by President Donald Trump - as well as leadership shifts amid broader industry consolidation.

Paramount chief executive David Ellison has asked CNN boss Mark Thompson - the former director general of the BBC - to remain at the helm after the takeover closes. CBS News's editor-in-chief Bari Weiss will remain in her role.

Yet as Paramount targets billions in cost cuts across the merged company, staff fear the consolidation will trigger significant job losses at CNN and CBS.

Beyond potential workforce reductions, media advocates and legal experts remain deeply skeptical about whether it can ensure newsroom freedom.

Seth Stern, chief of advocacy at Freedom of the Press Foundation, described the Paramount-appointed board as "worthless".

"The board creates the same First Amendment problems it claims to solve, the government meddling in news," Stern said.

Gilliam agrees paper promises mean little without real authority. "An oversight board only has as much power as the agreement gives it. Oversight without authority is just observation," she said.

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