Skydance Breaks Down $6 Billion Cost-Savings Plan, Citing AI and Back-Office Cuts

The company published the breakdown in a letter to shareholders on Monday, released with Paramount Skydance's third-quarter results. "By combining two global streaming services, two film and TV studio groups, two television portfolios, and overlapping corporate functions, we can reduce duplicative spend across an expense base of more than $50 billion," it wrote.

The largest piece, at least $2.2 billion, is to come from removing "redundant back-office and corporate functions." The company said this includes eliminating management layers, using artificial intelligence more widely and "rationalizing" its office space. The plan makes the merged company one of the largest US media groups to name AI as a lever in post-deal cost cuts.

At least $1 billion is expected from streamlining marketing and promotion. About $1.4 billion is to come from unifying the streaming businesses and broadcast architecture and integrating back-end technology. A further $1.4 billion is tied to "optimizing third-party spend", which means removing overlapping expenses and moving purchasing decisions to a single central group.

"We are confident in achieving these savings, drawing on our playbook from Paramount," the company wrote, adding that the earlier Paramount programme "is on track to achieve over $2.7 billion in run-rate efficiencies by the end of 2026."

Some of the cuts are already under way. Last month Skydance began offering voluntary buyouts to employees ahead of formal layoffs and moved to a five-day office week, and eight executives left last week, four from Warner Bros. and four from Paramount.

The company has said it will eventually merge Paramount+ and HBO Max into a single streaming platform. On Monday it said the first step would come early next year with a bundle of the two services offered "at an even greater value."

The quarterly figures cover the legacy Paramount Skydance only, because the Warner Bros. Discovery acquisition closed after the quarter ended. Revenue was $7.03 billion, roughly in line with the StreetAccount estimate of $7.04 billion. Adjusted earnings before interest, taxes, depreciation and amortisation were $1 billion, above the $913.5 million estimate. CNBC said adjusted earnings per share of 45 cents could not immediately be compared with StreetAccount estimates.

Skydance set out the combined company's business units as studios, direct-to-consumer and TV. It will move to annual guidance, with the first full-year outlook due alongside its fourth-quarter results early next year.