Skydance’s Hollywood Empire Is Here. Wall Street Likes the Alternatives Better
Hollywood just pulled off the kind of crossover usually reserved for the movies. Paramount Skydance closed its $110B takeover of Warner Bros. Discovery this week, creating a much larger media empire that will trade as Skydance. With cable shrinking and streaming costs climbing, investors are watching whether bigger actually means better.
Scale on credit: The new company controls Paramount Pictures and Warner Bros. Studios, CBS, HBO, CNN, Paramount+, and HBO Max, plus nearly one-third of basic cable programming. David Ellison will run the empire as CEO, with former Mattel chief Ynon Kreiz serving as co-CEO and overseeing daily operations. But all that scale comes with a hefty debt load, putting pressure on management to prove the blockbuster combination can pay for itself.
- Skydance carries more than $80B in debt after assuming existing liabilities and raising fresh financing to get the massive combination across the finish line.
- Management is targeting $6B in annual synergies against roughly $12B of EBITDA, an unusually ambitious cost-cutting goal that Moody’s called among the largest ever.
Why Analysts Keep Pointing Elsewhere
Wall Street isn’t sold. Just three of 25 analysts covering the company rate it a Buy, while 10 recommend selling. Wolfe Research’s Peter Supino calls the road ahead “an uphill climb,” citing leverage near seven times EBITDA, shrinking sales, and leadership uncertainty. Disney and Netflix trade at richer valuations with healthier finances, though Deutsche Bank’s Bryan Kraft argues “the current growth outlook is being undervalued.”
- Disney trades at 15 times projected earnings for its fiscal year ended September, backed by parks, ESPN, and streaming.
- Netflix trades at ~20 times projected 2026 earnings, with Bill Ackman's Pershing Square buying near current levels.
The integration tax: Skydance promised regulators at least 30 theatrical films a year and more than 180 television shows, commitments that won’t come cheap as it tries to cut debt below four times EBITDA by 2028. Its second-lien secured debt due in 2034 yields about 9.5%, showing just how much risk bondholders see. For equity investors, established rivals offer similar industry exposure without the balance-sheet repair job.
