Skydance CEO David Ellison Outlines 4 Goals For Merger Success, Company Targets $2B In First-Year Synergies

The combined company has roughly $79 billion in debt and aims to reduce leverage to three times within about three years through revenue growth and cost savings.

• In an interview with CNBC, Ellison said the combined company would invest more in content than its peers while pursuing cost savings and debt reduction.
• He added that HBO Max and Paramount+ were complementary services, noting that their combination would create a streaming business with more than 200 million global subscribers.
• The CEO also stated Skydance plans to release 34 films next year, with the slate also intended to drive streaming engagement through a steady pipeline of theatrical releases.

David Ellison, CEO of the newly formed Skydance (SKYD), outlined four goals on Thursday that he believes would determine the success of the merger between Paramount and Warner Bros. Discovery.

“We need to grow the top line by mid-single digits. We need to grow our speed in pushing our streaming businesses together. We need to grow and scale our studio business, our D2C business. We need to execute on our platform and technological transformation of the company,” Ellison said in an interview with CNBC. “And I believe if we do all of that, we'll be in really good shape.”

Skydance co-CEO Ynon Kreiz added that Skydance expects to meet a third of its synergy target of $6 billion in the first year. 

“We are positioned to win in every single vertical that we operate in,” said Ellison. 

SKYD stock outperformed the broader market drawdown, rising 1.5% in morning trade. On Stocktwits, retail sentiment around the company shifted to ‘neutral’ from ‘bearish’ territory over the past day. 

Skydance Targets $10 Billion In Free Cash Flow By 2030

The combined company faces a substantial debt burden, with roughly $79 billion in debt and a target of reducing leverage to 3x within about three years.

Ellison said Skydance plans to reduce debt through revenue growth and cost savings while continuing to invest in content. “We're going to be investing more in content than any of our peers,” Ellison said. The company is projecting mid-single-digit revenue growth from a business that already generates nearly $70 billion annually.

Management is targeting $6 billion in synergies over three years through technology integration, marketing consolidation, real estate optimization and workforce adjustments. Kreiz said labor would not account for the majority of the savings.

The executives also expect free cash flow to rise to $10 billion by 2030, from a projected $4 billion next year after removing transaction costs. The company is targeting earnings before interest, taxes, depreciation and amortization (EBITDA) margins in the mid-20% range.

Management is targeting $6 billion in synergies over three years through technology integration, marketing consolidation, real estate optimization and workforce adjustments. Kreiz said labor would not account for the majority of the savings.

“We have a clear vision and line of sight to achieve the savings we're aiming towards,” Kreiz said, adding that the company was already executing its integration plan.

HBO Max, Paramount+ Integration To Accelerate Streaming Growth

A central part of the strategy is combining HBO Max and Paramount+, which Ellison said would give the company more than 200 million global streaming subscribers. The company also owns Pluto, its free, ad-supported streaming service, which has 80 million monthly active users.

The combined library includes franchises such as Harry Potter, The Lord of the Rings, the DC Universe, Mission: Impossible and Top Gun: Maverick. Ellison also pointed to the company's sports rights and news brands as advantages in attracting audiences.

“The two services are highly complementary,” Ellison said of HBO Max and Paramount+. He added that subscriber overlap between the platforms was lower than many people might expect, creating an opportunity to serve a broader audience through a combined offering.

Skydance Plans 34 Films Next Year As It Shifts Toward Streaming

Skydance plans to release 34 films next year, combining Paramount's expanded slate with Warner Bros.' planned releases. Ellison said Paramount increased its film output from eight to 15 movies in its first year under Skydance, while Warner Bros. has more than 15 films on its calendar.

“We literally have 34 movies dated for next year,” Ellison said. “We can absolutely handle that volume. It's baked into the business plan.”

The slate is also intended to support streaming engagement. Ellison said the schedule would mean that a film with a theatrical release and marketing campaign would debut on the streaming service roughly every 11 days.

“We're also bullish on the linear business,” he said, pointing to CBS and its broadcast lineup. While acknowledging that cable networks face continued declines, Ellison stated that the businesses remain profitable and generate substantial cash flow.

“By putting these companies together, we can keep that business longer over time, and make sure that we transition to a predominantly studios and streaming business and deliver long-term value,” he said.

The strategy combines continued investment in film and streaming with efforts to preserve cash generation from traditional television. For Skydance, the challenge will be to deliver the promised growth and savings while managing debt and moving the business toward a greater reliance on studios and streaming.

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