TLDR
- Paramount Skydance shares jumped 8-12% after the company raised its cost-cutting target to $3 billion and announced 1,600 additional job cuts from asset sales in Argentina and Chile.
- CEO David Ellison plans to invest $1.5 billion in streaming and studios, targeting $30 billion in revenue by 2026 and releasing at least 15 films annually.
- The company added 1.4 million Paramount+ subscribers to reach 79.1 million total and will raise US prices early next year.
- Third quarter revenue came in at $6.7 billion, missing analyst expectations of $6.87 billion.
- Paramount has been pursuing an acquisition of Warner Bros Discovery but has had multiple bids rejected for being too low.
Paramount Skydance shares rose 8% to 12% on Tuesday after the newly merged company outlined an aggressive cost-cutting strategy. The stock gained investor confidence following CEO David Ellison’s first earnings report since combining Paramount with his production company Skydance Media.
Paramount Skydance Corporation Class B Common Stock, PSKY
The company raised its savings target to at least $3 billion. That’s $1 billion higher than the previous goal.
Paramount announced 1,600 additional job cuts tied to the sale of TV businesses in Argentina and Chile. This comes on top of 1,000 layoffs in October and 600 voluntary exits from employees who declined the new five-day office requirement.
About a quarter of senior vice presidents and above were affected by the cuts. The restructuring will be completed by the end of 2027 at an expected cost of up to $1.3 billion.
Third quarter revenue came in at $6.7 billion. That missed analyst forecasts of $6.87 billion.
Adjusted operating income before interest, taxes, depreciation and amortization totaled $952 million. The company is forecasting $30 billion in revenue next year, slightly above analyst estimates of $29.8 billion.
Streaming and Content Investments
Paramount+ added 1.4 million subscribers during the quarter. The streaming service now has 79.1 million total subscribers.
The company plans to raise US prices for Paramount+ early next year. Ellison said management is pursuing a more balanced, year-round programming strategy to drive engagement.
Paramount will invest $1.5 billion in additional spending for 2026. The money will go toward Paramount+, UFC partnerships, third-party licensing deals, and an expanded film slate.
The company plans to release at least 15 movies per year starting in 2026. Ellison has already secured several projects including a Timothee Chalamet heist film and signed South Park creators to a five-year deal.
Market Performance and Analyst Views
The Paramount Skydance stock has gained about 30% since the $8 billion merger was finalized in August. The stock’s forward price-to-earnings ratio of 14.58 sits below Walt Disney at 16.96 and well under Netflix at 35.23.
MoffettNathanson analysts noted that management’s focus on growth investments and cost efficiencies looked promising. However, they warned that near-term cash requirements could constrain free cash flow generation.
J.P.Morgan analysts said they were encouraged by the vision but noted execution risks remain. They stated that benefits may not be visible until later in 2026.
Warner Bros Pursuit
Paramount has been actively pursuing an acquisition of Warner Bros Discovery. Multiple bids have been rejected for being too low.
Other companies including Netflix and Comcast have also expressed interest in Warner Bros. Warner Bros is currently dividing its streaming and studios business from its cable networks into two separate companies.
Ellison said on the earnings call that he couldn’t comment on deal speculation. He noted there are “no must-haves” for the company and that they have the ability to build rather than buy to reach their goals.
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