Paramount closes deal for Warner Bros. Discovery, creating media behemoth
By BENJAMIN MULLIN
Paramount closed its deal to acquire Warner Bros. Discovery earlier this week, putting tech scion David Ellison in control of a vast media empire that oversees many of Hollywood’s most valuable properties.The deal immediately catapults the combined company, now called Skydance, to the front rank of competitors alongside streaming titans like Netflix and YouTube, just behind giants like Disney and Amazon.
“Today is a historic day, not just for Skydance but for our entire industry,” Ellison said in a statement Tuesday. “We couldn’t be more excited to get to work,” he added.
There were signs that Ellison was moving at lightning speed to take control of his new empire. Warner Bros. employees who opened their laptops Tuesday morning saw them suddenly emblazoned with the new company’s logo over a field of stars. A link to a “global town hall” meeting, scheduled for 1 p.m., popped up. And an 1,705-word memo titled “Day 1” from Ellison and his co-CEO, Ynon Kreiz, landed in their inboxes.
“We’re proud to write this next chapter with you,” they wrote. “Now the real work begins. Let’s go!”
The new company is a hard-fought prize. Ellison wrested Warner Bros. Discovery from a rival bidder, Netflix, after a monthslong tug-of-war that prompted him to make nine offers for the company.
A coalition of state attorneys general sued to block the deal on antitrust grounds but settled after extracting a series of concessions, including the establishment of an editorial independence board to safeguard the integrity of CNN and a promise from Ellison to spend an additional $1.5 billion on movies over the next five years.
Hundreds of Hollywood insiders said the deal would sharply consolidate corporate power, leading to job losses and further stagnation in Hollywood. Skydance has argued the merger is a necessary counterweight to Big Tech.
The new company, which owns two major movie studios in Warner Bros. and Paramount Pictures, news networks including CNN and CBS News, and streaming services HBO Max and Paramount+, is making its debut in an industry navigating profound change.
Cable television, one of the biggest cash cows in media, is still profitable but in terminal decline. Streaming still hasn’t replaced those profits. Trust in the news business is in the basement. And tech companies like Amazon and Apple are muscling in on movies, TV shows and sports rights, driving up content costs.
Those challenges will pose a major test for Ellison, 43, who until last year had never run a public media company. He and his team must convince Wall Street that the new company can manage those challenges while it pays down $82 billion in debt, a staggering sum for a traditional media company. He must also rally tens of thousands of employees at Warner Bros. and Paramount; both companies have undergone nearly annual layoffs in recent years.
There were some signs of early turbulence on the horizon. On Tuesday, ratings agency Fitch said it was downgrading the combined company to reflect increased debt as well as “significant execution and integration risks.”
And Ellison and Kreiz alluded to the prospect of looming layoffs in their memo. They must deliver $6 billion in cost-cutting over the next three years — a target they are likely to hit, in part by eliminating thousands of jobs.
“Integrating two companies will bring change, including difficult decisions that affect our workforce,” they wrote. “We are committed to handling this process thoughtfully and respectfully.”
Elsewhere at the company, corporate leaders sought to reassure employees amid the uncertainty caused by the deal. Bari Weiss, editor-in-chief of CBS News, reminded journalists on a call Tuesday morning that they had become accustomed to carrying out their duties despite “a lot of things going on in the press.”
“Nothing right now is going to change,” Weiss said. “This is a process that’s going to unfold under time.”
Further complicating the situation is Ellison’s relationship with President Donald Trump, which has unsettled some employees at CNN. This spring, Ellison held a dinner “honoring the Trump White House” before the annual White House Correspondents’ Association dinner and later joined Trump at an Ultimate Fighting Championship bout at the White House. (Paramount holds media rights for the UFC.)
Ellison has assuaged some of those concerns by retaining Mark Thompson as chair of CNN. In a memo to employees Monday, Thompson said he had spoken to Ellison and came away convinced that executives at Skydance would support the “independent news that CNN has always stood for.”
Ellison further addressed the anxieties about CNN’s independence during a town hall meeting Tuesday, where he and Kreiz were interviewed by CNN anchor Anderson Cooper.
“We believe in complete editorial independence,” Ellison said. “We trust Mark, we trust the team.”
“You’re pledging not to interfere with news coverage of CNN?” Cooper interjected.
“Correct,” Ellison said. “We’ve been very clear.”
During the interview, Ellison also affirmed that he supported CNN’s efforts to fight Trump’s White House press ban.
