David Ellison Has Hollywood Scale. Now He Needs Precision.
Observer ·
David Ellison now controls Paramount, Warner Bros., HBO, CBS, CNN and a sprawling collection of Hollywood brands. The challenge is deciding which ones get the money, attention and room to grow.
To borrow Frodo Baggins after the One Ring is destroyed: “It’s done.” After months of uncertainty, David Ellison finally has Paramount and Warner Bros. under one corporate roof at Skydance . The hard part starts now.
The hierarchy is already beginning to emerge. Paramount streaming chief Cindy Holland exited a week before the deal closed, and HBO ’s Casey Bloys was tapped to oversee original programming and strategy across HBO Max and Paramount+. Ellison also brought in former Mattel CEO Ynon Kreiz as co-CEO, with Kreiz running day-to-day operations and integration while Ellison focuses on long-term strategy, creative direction, technology and capital allocation.
The combination gives Skydance a sprawling collection of film, television, streaming, news, sports and children’s entertainment assets. It also starts the combined company with nearly $79 billion in pro forma net debt and a target of at least $6 billion in run-rate synergies within three years. Not every brand, division or executive can be a priority.
Skydance has more stars than it can keep happy. Its portfolio now includes Paramount, Warner Bros., HBO, HBO Max, Paramount+, Pluto TV, CBS , CNN , CBS Sports, TNT Sports, Nickelodeon, Cartoon Network , MTV , Food Network , BET, HGTV and Comedy Central, among other brands . All now sit inside the same company.
That breadth invites obvious questions. What gets consolidated? What could be sold? What survives intact? For now, the eventual shape of the portfolio remains unsettled.
Disney’s acquisition of 21st Century Fox offers one preview of what consolidation can look like. Disney eventually shuttered animation studio Blue Sky Studios and mid-budget label Fox 2000 and sold the FoxNext game studios to Scopely.
Each Paramount and Warner Bros. brand is now competing internally for a finite amount of capital, promotional power and executive attention. The first decisions about which brands sit at the top of that hierarchy are already being made.
Who will emerge as Marsha Brady and who will get stuck as Jan Brady in this crowded household? (And, yes, The Brady Bunch is just one of the many franchises gasping for air in Skydance’s vault.)
For Ellison and Kreiz, capital allocation is now a series of tradeoffs. Money spent protecting one cable network, building one streaming franchise or expanding one theatrical slate cannot be spent twice. Their first task is determining which businesses fund the company today and which ones are expected to grow it tomorrow.
The numbers help explain why those tradeoffs are difficult.
Over Warner Bros. Discovery ’s four most recently reported quarters before the merger, Global Linear Networks generated about $16.4 billion in revenue, compared with roughly $12 billion from Studios and $11.4 billion from Streaming.
Comparing Paramount over the same period is harder. Beginning this year, the company changed its segment structure, moving its television studio operations into Studios and Paramount+ with Showtime into Direct-to-Consumer. Its filings also caution that results before and after the 2025 Skydance transaction are not directly comparable because the deal established a new accounting basis. In the three months ending June 30, TV Media generated $3.1 billion in revenue, compared with $2.5 billion from Direct-to-Consumer and $1.3 billion from Studios.
Traditional linear TV still generates more revenue than either streaming or studio operations on both sides of the merger. Yet linear TV is fading faster than our holiday diet discipline. It still throws off too much cash—and too much valuable programming—to simply abandon. HBO and CBS are obvious priorities . In separate 2024 analyses, Parrot Analytics found that CBS shows made up 11.8 percent of titles on Paramount+ but drove 24 percent of demand for shows on the platform. HBO originals made up 16.5 percent of series on Max but drove 22.2 percent of demand.
The harder decisions concern the long tail of cable networks whose audiences and economics continue to deteriorate. (Disclosure: I previously worked for Parrot Analytics.)
Streaming presents a different challenge. Both companies reported positive adjusted EBITDA in the relevant segments in their most recent quarters before the merger: $366 million for Paramount’s Direct-to-Consumer business and $512 million for Warner Bros. Discovery’s Streaming segment. The question is no longer simply how to stop streaming from bleeding cash, but how much Skydance is willing to spend to make it more competitive.
Skydance has already said its direct-to-consumer streaming products will unify into a single service over time . HBO has a clearly defined identity; Paramount+ brings CBS, sports and a different programming mix. Folding the technology together may prove easier than deciding how those brands should coexist.
Then there are the studios. Warner Bros. and Paramount give Skydance two of Hollywood’s legacy film operations, deep libraries and some of the industry’s biggest franchises. But theatrical output is one area where Ellison and Kreiz have less room to cut freely. Ellison is also in the blockbuster business. He wants must-see opening-weekend urgency.
It may seem obvious where to funnel funds, but it isn’t. Under the court-approved antitrust settlement tied to the merger, Skydance must release at least 30 films in each of 2027 and 2028, followed by 32 annually from 2029 through 2031. At least half must be produced or jointly produced by the combined company, and at least four each year must be independent films.
At least 20 percent of each year’s slate must also carry combined production-and-acquisition budgets of at least $50 million, adjusted for inflation. Films counted toward the commitment must receive a theatrical window of at least 45 days and cannot reach a subscription streaming service for at least 90 days after their initial theatrical release. That leaves plenty of room for lower-cost acquisitions and specialty releases, but it also puts a floor under how far Skydance can pull back from theaters.
So Ellison and Kreiz still have to balance competing objectives: milk the cash linear TV continues to throw off, meet theatrical commitments while building the global franchises Ellison wants and turn the combined streaming business into a more formidable competitor.
In July, Paramount’s streaming properties accounted for 2.2 percent of U.S. television viewing and Warner Bros. Discovery’s for 1.4 percent, according to Nielsen —about 3.6 percent combined. That still trailed Prime Video at roughly 4.2 percent, Disney’s streaming properties at 4.7 percent and Netflix at 7.8 percent. YouTube alone accounted for 14.2 percent.
Meanwhile, there is still that mountain of debt.
Netflix has built the industry’s most prolific streaming operation. YouTube commands more television viewing than any other individual streaming platform. Disney, despite its many sub-brands, still presents consumers with a relatively coherent identity. Ellison now has more toys to play with than almost any other media CEO. The problem is that they don’t yet add up to an obvious whole.
HBO means something. CBS means something. CNN, DC, Nickelodeon, Paramount and Warner Bros. mean something. But what is Skydance? Its new scale gives Ellison and Kreiz more options than either company had before the merger—but also more ways for money, strategy and executive attention to fragment.
Success hinges on identifying which divisions are growth engines, which exist primarily to generate cash and which brands and properties deserve more investment. As painful as those choices may be, not every network, studio, franchise and executive can receive top billing.
Skydance has the size. Now it needs precision.