Paramount completes $111b Warner Bros takeover to create media giant Skydance

New York: Paramount completed its roughly $111 billion acquisition of Warner Bros Discovery on Tuesday, creating one of the world’s largest entertainment companies and bringing two of Hollywood’s most storied studios, along with CNN, CBS News and HBO, under the same owner.

The transaction, valued at about $81 billion in equity and close to $111 billion including debt, closes after a protracted bidding contest and months of legal challenges over the concentration of power in the film and television business.

The combined company will operate under the Skydance name and trade on the New York Stock Exchange under the ticker SKYD.

David Ellison, the founder of Skydance Media and son of Oracle co-founder Larry Ellison, will lead the company alongside Ynon Kreiz, the former chief executive of Mattel, who becomes co-chief executive with responsibility for day-to-day operations and integration.

The deal combines Paramount Pictures and Warner Bros, two of the remaining major traditional Hollywood studios, with a sprawling portfolio that includes HBO, HBO Max, Paramount+, CBS, CNN, Discovery networks and franchises ranging from “Harry Potter” and DC superheroes to “Mission: Impossible” and “Top Gun”.

The consolidation leaves Skydance competing on a vastly larger scale with companies including Walt Disney, Comcast’s Universal, Sony and streaming services such as Netflix.

Ellison called the completion of the transaction a historic moment for the company and the wider entertainment industry, saying the combination was intended to create a stronger competitor with greater resources and global reach.

But getting the deal across the line required significant concessions.

California, New York and 10 other states had sued to block the takeover, arguing that further consolidation could reduce competition in film and television and harm workers and consumers.

A federal judge approved a settlement on September 30, clearing one of the final obstacles to the transaction. Under the agreement, the combined company must release at least 30 films theatrically each year during the initial period of the settlement, invest an additional $1.5 billion in US production over five years and maintain its historic Paramount and Warner Bros studio lots.

The company must also establish a five-member News Editorial Independence Board within 180 days to oversee certain disputes involving CNN and CBS News, including questions of reporting fairness, bias and adherence to editorial principles. An independent monitoring structure will track compliance with the wider settlement.

Those provisions have done little to eliminate concerns over the future of the two news organisations.

Bringing CNN and CBS News under the same corporate owner gives Ellison control over two of the most prominent US television news operations. Critics have questioned whether an oversight board will provide sufficient protection against interference, particularly because its members will ultimately be appointed by the combined company’s board.

The scrutiny has also extended to Ellison’s family ties.

His father, Larry Ellison, one of the world’s wealthiest technology executives, has supported US President Donald Trump financially. The Wall Street Journal reported this year that the Oracle co-founder gave roughly $45 million to a political nonprofit supporting Trump’s 2024 presidential campaign.

The merger nevertheless gives the younger Ellison a media empire of a scale rarely assembled under a single Hollywood owner.

Skydance said the combined group plans to produce at least 30 theatrical films a year and more than 180 television shows and series, while using technology and a much larger library of intellectual property to compete for viewers globally.

The financial challenge will be substantial. Reuters reported that the enlarged company will carry about $80 billion in debt while pursuing about $6 billion in anticipated cost savings, raising expectations of restructuring across the business.

The deal also closes a volatile chapter for Warner Bros Discovery, which emerged from the 2022 combination of WarnerMedia and Discovery only to confront heavy debt, a difficult transition from traditional television and fierce competition in streaming.