Paramount Skydance's ambitions remain excessive

Acquired by Skydance after an epic and suspenseful saga, the group that owns the CBS network, the eponymous studios and the Paramount+ streaming platform published its first quarterly results yesterday.

The results are largely unreadable, both because of the effect of the change in scope and because the fiscal period only covers eight weeks.

What we do know, as CEO David Ellison has reiterated, is that the new group intends to go all out on the production of new content and, of course, accelerate even more strongly in streaming in the hope of competing with Netflix and Disney.

However, it will have its work cut out, as Paramount+ subscriber numbers have stagnated for twelve months, while the decline in television network activity—which still accounts for 57% of consolidated revenue—is getting worse, with revenues down $502m over the last three months.

For 2026, Paramount Skydance is projecting revenue of $30bn and adjusted operating profit of $3.5bn. This means that, despite price increases being well absorbed by streaming subscribers, these will barely be enough to offset the decline in television network activity; gains on one side are immediately siphoned off on the other.

Improvements in margins will therefore have to come from operating costs. However, such an effort seems difficult to reconcile with the need to invest even more in technology—another priority identified as urgent and strategic by David Ellison.

Paramount Skydance is also reportedly getting ready to acquire Warner Bros Discovery. Given its precarious financial situation—net debt is about four times adjusted operating profit—it is difficult to see how the group could finance such a transaction, unless it turns to the deep pockets of Larry Ellison or another white knight.

Such a scenario would thwart the plans of David Zaslav, Warner Bros Discovery's CEO. He had planned to split his group in two next year, thereby divesting itself of its television networks business to focus solely on streaming and its crown jewel, HBO.

The media sector is known for its failed mega-mergers. While Warner Bros.' strategy of repositioning itself as a pure player in streaming makes sense, Paramount Skydance's strategy of doubling down on the rapidly and structurally declining television business is questionable, despite all the promised "synergies."

Once considered potential buyers, Apple and Netflix have both turned down the possibility of acquiring Warner Bros Discovery.