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Bloomberg Television8 min

Skydance to release New Paramount+, HBO Max Bundle

Geetha Ranganathan, Carol, Gita, Tim

Interview
  • David Ellison's strategy for the new Paramount-Warner bundle mirrors Disney's pricing model, with expectations that the combined service will be priced 30% to 35% cheaper than purchasing Max and Paramount+ separately.
  • Following the merger announcement, shares experienced volatility, rallying initially before settling down approximately 1.7%.
  • Investors are scrutinizing the feasibility of achieving $6 billion in synergies, specifically fearing the company may miss EBITDA targets.
  • The company's stated financial roadmap aims to grow EBITDA from $12 billion to $20 billion and generate $10 billion in free cash flow by 2030.
  • Current leverage stands at 6.5 times with over $80 billion in debt, requiring a reduction to three times leverage by 2030.
  • A structural risk remains as 70% of current profits are derived from the secularly declining linear television business.
  • The merged entity is led by two CEOs: David Ellison and Enon Christ (formerly of Mattel).
  • A consent decree prevents immediate radical consolidation of the CBS and CNN news networks, limiting potential cost reductions to marketing, R&D, technical, and real estate duplications.
  • Cross-network leverage across Warner and Paramount portfolios is restricted for approximately five years due to the consent decree, shifting the burden to streaming profits to offset linear TV losses.
  • Historical precedent from the Warner Bros. Discovery merger suggests skepticism, noting that despite hitting synergy targets, their underlying business deteriorated with EBITDA falling from $15 billion to $9.5 billion.
  • Market speculation exists regarding a potential future divestiture of assets to Netflix, though current deals were hindered by price disagreements.
  • Warner Bros. Studio performance has shown a sharp decline from a successful 2025 to a difficult 2026, cited by examples of major budget failures.
  • Specific production losses are highlighted, including the $300 million budget failures of Supergirl and The Mummy (referred to as "The Dagger" or "The Digger" in the transcript), where The Dagger generated only $30 million globally.
  • The new leadership has committed to releasing 30 movies in theaters, but performance expectations are dampened by recent box office flops.
  • Skydance has signaled a significant fourth-quarter loss specifically attributable to the studio business.