Key takeaways:
- David Ellison and former Mattel chief Ynon Kreiz will lead the combined company as co-chief executives.
- A settlement with U.S. states includes film-production commitments, protections for the Los Angeles studio lots and an editorial independence board for CNN and CBS.
- Ellison says the company is targeting $6 billion in cost savings.
Paramount Skydance completed its $110 billion acquisition of Warner Bros. Discovery on Tuesday, bringing two major Hollywood studios, rival streaming services and the newsrooms of CNN and CBS News under one company. The combined business will be called Skydance.
David Ellison, who led the takeover as Paramount Skydance’s chief executive, will run the company with co-chief executive Ynon Kreiz, the former head of Mattel. “Today is a historic day, not just for Skydance but for our entire industry,” Ellison said in a statement reported by CBS News.
The merger joins the studios behind The Godfather and the Harry Potter films. It also brings Paramount+ and HBO Max into the same company, alongside networks and brands including Nickelodeon, Comedy Central, Showtime, TBS, TNT, DC Studios and Food Network. Warner Bros. shareholders will receive the cash equivalent of roughly $31 a share, CBS News reported.
The deal followed a bidding contest in which Netflix, which initially had an agreement to buy part of Warner Bros. Discovery, walked away after Paramount Skydance entered the race. It also faced legal challenges. A coalition of 12 state attorneys general and the Writers Guild of America sued on antitrust grounds, according to CBS News. The states argued the merger could weaken competition, raise consumer prices and harm movie theaters, cable distributors and audiences.
Paramount reached a settlement with the states last month, clearing a path for the takeover. The Writers Guild agreed to settle its lawsuit after the states’ agreement, CBS News reported. Under the state settlement, Paramount pledged to produce 30 films in each of the first two years and not to sell or close either studio’s Los Angeles lot for at least five years, according to CBS News.
The BBC reported that the agreement requires at least 30 film releases each year and would force Paramount to sell its 49% stake in Miramax if it misses its annual quota. It also reported restrictions intended to prevent the company from meeting the target with low-budget or AI-generated films. Under the agreement, 20% of film production must take place in the United States for the first two years, rising to more than 30% over the following three years, the BBC reported.
Paramount also agreed to create an editorial independence board for CNN and CBS. Mark Thompson will remain chairman and editor-in-chief of CNN Worldwide, and Bari Weiss will remain editor-in-chief of CBS News, the BBC reported.
The company faces the task of combining its operations while reducing costs. Ellison said it is targeting $6 billion in savings, according to CBS News. “Integrating two companies will bring change, including difficult decisions that affect our workforce,” Ellison and Kreiz told employees in an email.
Casey Bloys, who has led HBO and Max content, will serve as co-chair and chief content officer for direct-to-consumer content, the BBC reported. Forrester Research’s Mike Proulx told the BBC that Bloys could face pressure to find savings that affect content quality. Dan Coatsworth of AJ Bell also warned that the combined company carries high debt at a time of high interest rates.
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