Skydance details cost cuts, sets streaming bundle for early next year
By Lisa Richwine and Harshita Mary Varghese
LOS ANGELES, Nov 9 (Reuters) - Skydance SKYD.N on Monday detailed plans to deliver $6 billion in cost savings from its Warner Bros Discovery acquisition and said it would launch a streaming bundle of HBO Max and Paramount+ early next year.
The merger created one of the world's largest entertainment and news companies under the name Skydance, led by CEO David Ellison and Co-CEO Ynon Kreiz, and the combined company includes Hollywood studios Warner Bros and Paramount, the CBS broadcast network, CNN and a host of cable channels.
In its third-quarter earnings statement, Skydance said it would offer full-year guidance for the combined company when it reports its results for the December quarter.
For the Paramount business, the company reported a 5% revenue increase to $7 billion for the quarter that ended in September, before it completed the purchase of Warner Bros Discovery last month.
The newly merged business will rely heavily on its streaming products for growth, and Paramount+ revenue jumped 21% in the third quarter.
When combined with premium cable channel HBO and the streamer HBO Max, the services together reach 203 million subscribers globally.
Skydance said it will stop disclosing quarterly subscriber figures, following the lead of streaming giant Netflix NFLX.O as the industry shifts its focus toward profitability and engagement as measures of growth.
The Warner Bros acquisition left Skydance with $87 billion of gross debt and about $10 billion in cash, as its leaders work to integrate the companies and achieve cost savings.
The new company faces competition from Netflix, Walt Disney DIS.N and other media giants as well as YouTube GOOGL.O, TikTok and other platforms drawing audience attention.
Skydance is confident it can reach the $6 billion in promised cost cuts over three years, Ellison and Kreiz said in a letter to shareholders.
The company expects to realize 30% of the savings in the first year. It expects to cut at least $2.2 billion from corporate overhead and real estate, and $1 billion, or 20%, from marketing costs. About $1.4 billion will come from reducing technology costs.
Earlier in the day, Skydance announced a stunning set of executive changes as James Gunn and Peter Safran stepped down as heads of DC Studios and were replaced by Marvel veteran Jeremy Latcham as president and chief creative officer. Gunn and Safran will return to creative work at the company.
Skydance said underperformance of Warner Bros' film slate would impact fourth-quarter profit by up to $200 million.
Tom Cruise's latest movie, the Warner Bros big-budget dark comedy "Digger," has struggled at the box office, finishing fifth on US and Canadian charts in its opening weekend in October.