The work ahead is significant, and so is the opportunity. And we’ve already begun to act: new
leadership teams are in place, integration work is underway, and we are executing on our plan to realize at least $6 billion in run-rate synergies within three years.
We expect to reach our medium-term financial outlook of mid-single-digit annualized revenue growth, mid-20% adjusted EBITDA margins, and more than $10 billion in free cash flow by 2030, while transitioning a meaningful majority of revenue and profit from TV to our streaming and studios businesses.
We are building this great company with ambition, discipline, and an unwavering belief in the power of great storytelling combined with world-class technology, and we are doing it together, with deep respect for the talent and dedication of our people.
To leverage our assets and capitalize on our strengths, we are organized into three segments: Skydance Studios, Skydance Direct-to-Consumer, and Skydance TV.
Skydance Studios
Skydance Studios include our motion picture and television production businesses. Our motion picture group brings together two of the most iconic studios in Hollywood’s history, Warner Bros. Pictures and Paramount Pictures, as well as the highly acclaimed New Line Cinema, DC Studios and Skydance Animation. Our television group includes well-established industry leaders Warner Bros. Television Group, CBS Studios, Paramount Television Studios and Skydance Sports Entertainment. In addition, Skydance owns a deep library of more than 15,000 films and hundreds of thousands of series hours, which we distribute on our own platforms and license to third parties.
Our goal is to establish Skydance as the premier global content engine and the home for the world’s leading storytellers. Our strategy is anchored by the strength of our franchises and quality of the content made by our world class studios, and we expect that demand for premium content and global franchises will continue to increase. Collectively, our studios have created approximately forty franchises that have generated at least $1 billion in revenue across platforms over the past 15 years and continue to resonate with audiences today. We are now one of the largest producers and suppliers of original live-action TV content to both our platforms and third-parties in the world.
Paramount Pictures continues to perform well and is expected to double its output in 2026 with 15 releases. In the third quarter,
PAW Patrol: The Dino Movie grossed more than $160 million worldwide and drove revenue across multiple lines of business, including consumer products. David Ayer’s original film
Heart of the Beast, starring Brad Pitt, has grossed more than $180 million globally.
In the final two months of the year, we have six film releases across Paramount Pictures and Warner Bros. Pictures, starting with
The Cat in the Hat, which opened last Friday.
Ebenezer, starring Johnny Depp, arrives in theaters this Friday, followed by
Focker-in-Law on November 25, with Paramount Pictures distributing internationally. On December 18, audiences return to Arrakis for
Dune: Part Three.
The Angry Birds Movie 3 premieres December 23, followed on Christmas Day by
Mr. Irrelevant, starring David Corenswet and Isabel May, which is the first theatrical release under Skydance Sports’ partnership with the NFL.
We expect the Warner Bros. film slate in Q4 to underperform. As we integrate the businesses, we are applying the playbook we ran at Paramount: testing earlier, tailoring our marketing and release strategy to the size of each opportunity, enhanced with real-time market data, and strengthening the slate we greenlight. That approach served us well at Paramount where our 2026 slate is expected to generate more than $500 million more in lifetime profit than last year’s.
2027 is shaping up well for our motion pictures group, with a lineup that runs from beloved
franchises to fresh stories. At Paramount, we start the year with Children of Blood and Bone in
January and
K-Pop: The Debut in February, followed by
Sonic the Hedgehog 4 in March, starring Jim Carrey, Keanu Reeves and others, and
A Quiet Place Part III in July. At Warner Bros., we are building on our biggest franchises, with
Godzilla x Kong: Supernova arriving in March, and
Man of Tomorrow and
A Minecraft Movie Squared in July. And we have even more amazing stories coming with the
Ocean’s Eleven prequel starring Bradley Cooper and Margot Robbie premiering in June, and a return to Middle-earth with
The Lord of the Rings: The Hunt for Gollum in December.
To leverage our scale and at the same time continue to strengthen quality and talent relationships, our motion picture group is now integrated under one leadership team, while each studio has its own dedicated creative teams.
Our Television Studios achieved another strong quarter, with hits across broadcast, streaming and cable, for our own platforms and for third-party partners. In Q3, 11 of the top 20 streaming programs were owned and produced by our studios. CBS Studios continues to drive CBS' network leadership, most recently highlighted by the successful debut of NCIS: New York, the latest addition to television's #1 franchise. The series debuted in October as the season’s #1 new broadcast series, drawing more than 10 million viewers, up 58% from last year’s time-period premiere (NCIS: Origins). This adds to the success of the NCIS franchise which after 24 years on air is still a top 5 show on streaming and broadcast and has generated $10 billion of lifetime revenues across platforms. Paramount Television Studios built on its momentum with three of the top four streaming original series in September:
Reacher, Neagley and Lioness.
The ambition of our Studios business is to create and tell great stories for audiences wherever they watch: in theaters, on broadcast and cable, and on streaming, across our distribution platforms and third-party partners. With the creative talent, production scale and global franchises, we are on track to release over 30 theatrical films and produce more than 180 television and streaming series in 2027.
Skydance Direct-to-Consumer
The Direct-to-Consumer segment encompasses Paramount+, HBO, HBO Max, Discovery+, and Pluto TV, representing a globally scaled DTC business available in over 130 markets. Paramount+, HBO, and HBO Max combined reach 203 million aggregate subscribers worldwide6, and Pluto TV has approximately 75 million monthly active users. We provide consumers with choice across our premium and standard ad-free, ad-lite, and free ad supported product offerings.
Our streaming products are powered by an unparalleled portfolio of leading brands and franchises, such as
Star Trek,
Yellowstone,
Top Gun: Maverick,
Mission: Impossible,
Harry Potter,
Game of Thrones,
SpongeBob SquarePants,
The Pitt,
The Big Bang Theory,
Superman,
Batman, and
Teenage Mutant Ninja Turtles, along with sports and news in a number of markets around the world.
We see a meaningful opportunity to grow reach and engagement, improve retention, and increase the revenue and profitability of our streaming services in line with or ahead of the leading competitors in the industry. Our first step toward bringing together Paramount+ and HBO Max is to offer them in a single bundle. Starting in early 2027, consumers will be able to subscribe to both world-class streaming services at an even greater value. We look forward to sharing more details on the bundle and our streaming roadmap in the coming months.
6Amount is based on each company's historical subscriber definition and for WBD is applicable only to HBO and HBO Max, and accordingly does not include Discovery+ or other WBD streaming services that may have previously been included in subscriber counts. See WBD’s 2025 Annual Report on Form 10-K for its historical definition and our Quarterly Report on Form 10-Q for the third quarter of 2026 for the Paramount+ definition. Such amount does not account for subscriber overlap.
As we work toward a fully unified offering, we will phase in changes based on consumer feedback so we can continue to drive healthy financial growth through the transition. During Q3, Paramount+ revenue was up 21% – with engagement up over 20% year-over-year – and pro forma DTC revenue growth including WBD was 15% year-over-year. We expect to achieve strong top-line growth in our streaming business in Q4 2026 and in 2027, as well as expand margins over that same period as we harness the reach of our global platform and verticalized studio system. Accelerating our integrated direct-to-consumer business is a key priority and important growth engine, and with Paramount+ and HBO Max together, we have the global scale to compete and win.
With the unmatched production capabilities of Paramount and Warner Bros., we expect to provide a powerful combination of breadth and depth of content each year. And with at least 30 theatrical releases annually, a new movie will arrive across our bundled services every two weeks, on average.
Great storytelling is the foundation of everything we do, and viewers are responding. Lioness
viewership grew 62% in its third season, and MobLand’s second installment became the biggest original series ever for Paramount+ in the UK and Ireland. DC’s Lanterns and House of the Dragon Season 3 rank among HBO Max’s strongest launches and returning seasons ever, averaging 22 million and 42 million global viewers, respectively. We are excited for our upcoming slate, which we expect will carry momentum through year end, highlighted by the premiere of the HBO Original Series Harry Potter and the Philosopher’s Stone on Christmas Day.
Alongside that investment in programming, we are enhancing how audiences discover and enjoy our content. We’ve largely completed phase one of the tech convergence, moving Pluto TV onto the unified Paramount+ platform across all major devices. It is the largest technology investment in Pluto TV’s history, and it is already improving the user experience with better personalization and on-demand offerings that serve both consumers and advertisers. Running the services on a unified backend system lowers our cost to operate, speeds up product development, and gives us shared personalization and monetization capabilities across our free and subscription offerings.
At the same time, we are expanding Pluto TV’s free line-up of iconic series, with more than 25 generation-defining series as of the end of Q3, contributing more than a quarter of all VOD viewing on the platform. Last week we also added 14 channels from the Warner Bros. library. Great content brings viewers to Pluto TV and keeps them watching, and with shared monetization capabilities across our services, a larger, more engaged audience becomes a stronger business.
The integration of Pluto TV with Paramount+ took about 18 months. Drawing on that experience, our combined technology team, and the latest in AI tools, we expect to bring Paramount+ and HBO Max together much faster, aiming to align our backend systems within a year of closing, enabling us to quickly deliver a unified product.
We will manage the DTC business for long-term profitable growth, with an emphasis on the value of each customer relationship. We expect to grow our subscriber base with healthy economics and measure performance by financial results. To that end, beginning with Q4’26 results and in line with other leading DTC players in the industry, we will no longer provide quarterly subscriber disclosures. We will instead highlight key milestones and KPIs, such as engagement, along the way.
Skydance TV
Skydance TV brings together broadcast and cable networks, underpinned by a leading portfolio of live news and sports programming, serving audiences in 200+ countries and territories. Our offering spans CBS and more than 50 cable networks, among them MTV, Comedy Central, Nickelodeon and BET, and WBD’s CNN, TNT, TBS, HGTV, Food Network and Discovery. TNT, TBS, TLC, Food Network and CNN were five of the top 10 ad-supported cable networks among adults 25-54 last year. We distribute marquee sports, including the NFL and, via Eurosport, the Olympics in Europe, and we provide trusted news through CBS News and CNN. Skydance TV is a highly profitable, cash-generative business, anchored by the enduring strength of CBS, the crown jewel of U.S. broadcast television.
Our goal is to manage the combined portfolio to optimize long-term profitability and cash flow as the industry shifts toward streaming. To achieve that, we have established a unified leadership structure across TV and DTC to ensure we fully align distribution, advertising sales, and content sales as part of a holistic strategy. This will allow us to follow one globalized commercial approach to maximize the full potential of our scale across TV and DTC.
CBS is having another strong year and currently leads the new fall season with the #1 show on television, all five of the top series and seven of the top 10, and 11 shows are up year over year. Excluding sports, CBS is the #1 broadcast network in primetime and up 18% year-over year among total viewers. Live sports add to that strength: the
NFL on CBS is posting its highest viewership through Week 8 on record, averaging 19.6 million viewers, up 5% from last year’s record-setting pace. It has also brought us the season’s most-watched game on any network and the most-watched international NFL game ever.
Our scale in sports is also a competitive advantage. With CBS Sports and TNT Sports under one roof, we have a premium sports offering that includes NFL, NHL, UFC, MLB, NASCAR, March Madness, as well as the Olympics in Europe and the Champions League in key markets. Advertisers can purchase media across the sports portfolio through a single partner spanning broadcast, cable, and streaming. Sports advertising commitments have risen over 20% year over-year for current and upcoming sports seasons leading into 2027.
U.S. pay TV subscriber declines moderated sequentially in the third quarter as genre-based packages gained traction with the start of the NFL season. Our sports and news networks, including CBS, drive a majority of the U.S. Skydance TV revenues and EBITDA, giving us a durable, live-driven foundation. We believe more consumer choice supports the long-term health of the pay TV ecosystem, and we will continue partnering with distributors to optimize the experience across linear and streaming.
With the CBS Television Network, premier live sports and some of the most beloved cable brands in the world, Skydance TV is well positioned to give viewers more of what they love across broadcast, cable and streaming, and to create lasting value for our shareholders.
Transformation Program
We expect to achieve at least $6 billion in run-rate synergies, net of reinvestment across our cost structure within three years. More than 20 workstreams are already underway, as we evaluate and rightsize every aspect of our organization and cost structure. But this is more than cutting costs: it is a tech-forward transformation that will make us more efficient and agile, create flexibility to reinvest for long-term growth, and establish a healthy margin profile and free cash flow trajectory.
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. We have identified multi-billion dollar opportunities in key areas, including non-labor and labor spend where we expect to deliver across these areas:
Skydance Outlook
We will provide our full-year outlook for 2027 during our Q4 2026 earnings when we will share our full year financial results.
Going forward, we will provide guidance on an annual basis, as we prioritize long-term value creation, which we believe will be more consistent with our strategic approach. We will continue to provide quarterly updates, including certain forward-looking commentary where applicable, which will give investors visibility into our near-term progress of the business.
Based on year-to-date results, Paramount Skydance as a standalone would remain on track for our prior 2026 guidance, including achieving the high end of our prior profitability range at $3.9 billion.
In Q4, we expect to see continued strong growth in DTC revenue, and consistent TV revenue trends to prior quarters, adjusting for seasonality around politics and sports. And while we are incredibly excited about the shape of the combined Studio business and our Paramount theatrical slate continues to perform, the near-term performance of the Warner Bros. film slate in Q4, including films already released quarter-to-date, has underperformed. Based on our current forecasts for the rest of the year for Studios, we expect slower revenue growth and a profit impact of up to $200 million vs. prior expectations for Q4.
Looking ahead to 2027, we expect continued strong growth in DTC revenue, higher Studios revenue, and an increase in pro forma total company adj. EBITDA year-over-year based on underlying growth and the ramp of our $6 billion-plus synergies program. 2027 is the first step in working towards achieving our medium-term financial goals.
Capital Structure & Capital Allocation
Paramount Skydance ended the quarter with $1.4 billion in cash and cash equivalents and $15.0 billion in gross debt, prior to the acquisition. Free cash flow was $31 million, inclusive of $174 million of restructuring, transaction-related, and transformation costs. On October 6, we completed the Warner Bros. Discovery acquisition funded with $47 billion of new equity and $57 billion of new secured debt. Gross debt following closing and related debt activity was $87 billion, with cash of approximately $10 billion, part of which is earmarked for payment of cash-converted equity to WBD employees who joined the company and also to pay down WBD’s securitization program.
We are restructuring our cost base so we can invest for growth while achieving at least $6 billion of run-rate synergies within three years and strengthening our balance sheet. Growing our business and paying down debt are our top priorities, and we strongly believe we can achieve both simultaneously. We expect to reduce net leverage to 3.0x by the end of 2029, reaching investment-grade credit metrics within approximately three years of closing. To get there, we expect to ramp our annual free cash flow to more than $10 billion in 2030. One time cash costs to achieve the synergies are expected to be roughly $1.5 to $2 billion in 2027 and roughly $4 billion throughout our transformation, 60% to 70% of which will impact 2027 and 2028, and have been contemplated in our financial and leverage outlook.
Until we reach our leverage target, we will use excess cash, beyond our reinvestment into the business and our current dividend, to repay debt.
Closing
We came together to build something bigger, bolder and better, with the stories, the technology and the scale to win. We’ll move quickly over the coming months and share more with investors, partners and consumers at an Investor Day in the first half of 2027. There is still a lot to work through, but our vision is clear, and we are steadfast in our operational goals and financial commitments. We are confident in our plan, excited for what’s ahead and just getting started.
Sincerely,
David Ellison
Chairman & CEO
Skydance
Ynon Kreiz
Co-CEO
Skydance
