Skydance’s Hollywood Cost-Cutting Push Is Bigger Than Planned, and Layoffs Are Coming

Few companies have reshaped the entertainment business as fast as Skydance over the past year or so. David Ellison’s company bought Paramount Global, then pulled off a far larger deal for Warner Bros. Discovery, and the combined group now controls everything from CBS and Paramount+ to HBO, CNN and Warner Bros. Studios. A deal of that size comes with an obvious question about what happens to the people and programs that overlap.

The answer has been building for some time. When the Paramount merger closed, Skydance said it was hunting for $2 billion in savings, and after the first wave of cuts the company raised that goal while it began laying off employees. The Warner Bros. Discovery acquisition added a new target of more than $6 billion in savings within 3 years, along with roughly $80 billion in debt.

Now fresh reporting suggests the original Paramount-side savings could land even higher. Variety’s cover story says Skydance insiders expect the savings from the Paramount Global acquisition to blow past the anticipated $2 billion and approach $3 billion. It adds that the bloodletting will come through layoffs expected by the end of 2026 and extending into the first quarter of 2027, along with what it calls ruthless efficiency targets.

Skydance’s leaders have not hidden that more cuts are coming. In a memo to staff when the Warner Bros. Discovery deal closed, Ellison and co-CEO Ynon Kreiz acknowledged that integrating the 2 companies would bring difficult decisions affecting the workforce, and they pledged to handle the process thoughtfully and respectfully. The company has not said how many jobs will go.

The history helps explain the anxiety. Last fall, Paramount laid off around 1,000 employees, with about the same number expected to follow, and roughly 600 people took voluntary severance rather than comply with a 5-day return-to-office rule. A Los Angeles County report issued in August warned the Warner Bros. merger could eliminate some 4,500 film and TV jobs in the city over 3 years.

Smaller divisions are already feeling it. Skydance Games said it has scaled down some projects and that roles were affected, and former staff at Paramount Games and Skydance Interactive have said publicly that they were let go.

One of the more eye-catching details in the reporting is that Skydance is scrutinizing its financial commitments to major sporting events like the Olympics. Variety says that came out of a recent team meeting on the Warner Bros. lot. The details of which rights are under review are not public, so it is too early to say what, if anything, will change.

Sports are central to the combined business. Between its streaming services, the group holds rights to the NFL, MLB, the NHL, March Madness, the Masters, NASCAR, UFC and several major college conferences, according to Front Office Sports. That makes any review of big-ticket commitments worth watching for fans as well as investors.

Skydance is also trying to sell the story that cuts and investment can coexist. Chief financial officer Dennis Cinelli told Variety that “content is our asset,” pushing back on the idea that the company’s content spend, which he put at more than $30 billion, is merely an expense.

The company’s first quarterly report as a combined business, issued Nov. 9, gave that argument some support. Revenue rose 5% to about $7 billion, net earnings reached $73 million, and Paramount+ revenue grew 21%. Skydance also said it will launch a bundle of Paramount+ and HBO Max in early 2027 and aim to align the backend technology of both services within a year of closing.

It is worth being careful with the headline figures, because several have changed. Paramount publicly lifted its post-merger savings goal from $2 billion to at least $3 billion last November, so the latest reporting appears to describe results nearing that raised level rather than a brand-new target. The separate Warner Bros. Discovery goal of more than $6 billion is on top of that.

Either way, the direction is clear. The people who made the deals now need to make the numbers work, and the layoffs expected over the coming months will show how deep those efficiency targets really go.

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