David Ellison on Tuesday cemented his role as a Hollywood magnate with the close of Paramount’s $111bn takeover of Warner Bros Discovery, a deal that hands the son of one of the world’s wealthiest people the keys to some of the biggest media and entertainment assets. The combined company, now known as Skydance, is a Hollywood colossus, but Ellison faces a challenge as he takes a collection of mostly old-media assets into battle against deep-pocketed technology companies such as Netflix and YouTube. “Today is a historic day, not just for Skydance but for our entire industry,” Ellison said in a statement. Ellison, son of Oracle founder Larry Ellison, saw off Netflix in his bid for Warner — besting the streaming behemoth after a bruising takeover fight in February.
But he now faces a harder task: knitting together a collection of movie studios, cable TV and streaming businesses while labouring under an exorbitant debt load. He has the reins of businesses that generated $65bn in revenues over the past year and which counted more than 200mn subscribers to their direct-to-consumer offerings, according to documents shared with lenders. It spans the HBO, CBS, CNN and MTV television networks, the Harry Potter, Batman and Star Trek franchises and both the namesake Warner and Paramount studios, with the companies employing more than 53,000 people at the end of 2025.
The company estimates it spends more than $30bn on content annually, producing films and TV shows such as The White Lotus and House of the Dragon. Many in Hollywood believe David Ellison’s goal of distributing 30 films a year is ambitious. Critically, Ellison must find a way to wring $6bn of promised cost savings out of the business while still attracting Hollywood’s top actors and directors.
After years of cost-cutting following the Discovery-Warner merger in 2022, Warner veterans are girded for more job losses. Those cost savings are needed to help Skydance shoulder a mammoth debt load, with the company earning junk bond ratings from major credit agencies after it borrowed more than $50bn to fund the takeover of WBD. Analysts at S&P Global warned that its leverage ratio, which measures the amount of debt the company owes compared with its profitability, would climb to an eye-watering 7.6 earnings in the wake of the transaction and stay near those heights through 2027.
By contrast, typical blue-chip companies that earn investment-grade ratings often have a leverage ratio closer to 2. “The most important point is to get the debt down,” Laura Martin, a senior media analyst at Needham & Co, said. “They are overleveraged and because they were delayed [in closing the deal], they raised capital at a three-year interest rate high. They are stuck with it [the debt].” While Martin said she expected there would be substantial savings within the teams that distribute and sell Warner’s film and TV catalogue, Ellison will be restricted from gutting the company’s film budget. As part of a deal he reached with 12 state attorneys-general that had sued to block the deal with Warner, Skydance must distribute at least 30 films a year in cinemas over the next five years and spend an additional $1.5bn on film and TV production in the US over that period.
Many in Hollywood believe Ellison’s goal of distributing 30 films a year is ambitious. Ellison is expected to lay out his vision to employees and investors on Tuesday. Much of the leadership team has been drawn from within Paramount, with the group’s chief financial, legal and communications officers increasing their remit as part of the takeover.
Source: Financial Times Companies · Summarized by HeadlinesBriefing