Skydance Closes Warner Bros. Discovery Deal
Paramount Skydance posted $7.0 billion of third-quarter revenue, up 5%, as Paramount+ revenue rose 21% to $2.13 billion.
Skydance (SKYD) completed its acquisition of Warner Bros. Discovery on October 6, 2026, and said Paramount Skydance as a standalone remains on track for the high end of its 2026 profitability outlook at $3.9 billion.
The combined media company is targeting at least $6 billion of annualized run-rate synergies within three years, with more than 20 workstreams already underway. It is executing a plan to reduce its net leverage ratio to 3.0x by the end of 2029 and to reach investment-grade credit metrics.
Third-quarter results exclude Warner Bros. Discovery, because the deal closed after the period ended. Total revenue was $7.0 billion, up 5% from $6.7 billion a year earlier, led by Studios and Direct-to-Consumer and offset by a decline in TV Media. Adjusted EBITDA was $1.0 billion, a 14.2% margin, which the company described as stable year-over-year. Operating income was $368 million, a 5.2% margin, including $187 million of restructuring and transaction-related costs.
Paramount+ revenue grew 21% to $2.13 billion, the fastest quarterly growth of the year, with ARPU up approximately 14% and subscribers up approximately 6% to 82.2 million. The company said monetization improved on previous price adjustments and accelerating advertising growth. DTC revenue growth improved to 11% year-over-year to $2.5 billion. BET+ integration and Showtime declines amounted to a six-percentage-point headwind to total DTC growth. DTC adjusted EBITDA was $225 million, a 9.0% margin, on higher planned programming costs including UFC and Originals.
On a pro forma basis that assumes the Warner Bros. Discovery merger occurred on January 1, 2025, DTC revenue grew 15% year-over-year. Paramount+, HBO and HBO Max combined reach 203 million aggregate subscribers worldwide.
Studios revenue increased 23% to $1.5 billion, reflecting secondary-market licensing and content produced for third parties. Studios adjusted EBITDA was $129 million, an 8.6% margin.
TV Media revenue declined 7% to $3.0 billion. Advertising was down 8%, including an approximate three-percentage-point headwind from the absence of Telefe and Chilevisión, which were sold in October 2025 and January 2026, offset by higher political advertising. Affiliate revenue decreased 5%, which the company said was consistent with continued pay TV subscriber erosion while rates remain resilient. TV Media adjusted EBITDA was $1 billion, a 34.0% margin, benefiting from cost savings initiatives.
The company said it will report Skydance results on a consolidated basis starting in the fourth quarter. For that period it expects continued strong DTC revenue growth and TV trends consistent with recent quarters. It also expects slower Studios revenue growth and a profit impact of up to $200 million versus prior expectations as the Warner Bros. film slate underperforms, including films already released quarter-to-date.
Beginning with fourth-quarter results, the company will no longer provide quarterly subscriber disclosures, instead highlighting milestones and KPIs such as engagement. It is planning to launch a bundled offering of HBO Max and Paramount+ in early 2027.
The Paramount cost program is on track for over $2.7 billion in run-rate efficiencies by the end of 2026, with the target raised to more than $3 billion; more than $1 billion has been realized year-to-date. The company said it expects to achieve at least $6 billion in run-rate synergies for Skydance, with 30% realized in year one and 70% through year two.
Looking ahead to 2027, the company expects continued strong growth in DTC revenue, higher Studios revenue, and an increase in pro forma total company adjusted EBITDA year-over-year based on underlying growth and the ramp of the $6 billion-plus synergies program. Its medium-term outlook is mid-single-digit annualized revenue growth, mid-20% adjusted EBITDA margins, and more than $10 billion in free cash flow by 2030.