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Skydance (SKYD) shares fell about 9% after first post-merger earnings, as $87B in debt and weak Warner Bros. films outweighed a $6B cost-cutting plan.
- Shares fell about 9% to near $7.94 on Nov. 10 after a slight revenue miss and a $200M Warner Bros. film warning.
- Gross debt stands at $87B after the Warner Bros. deal, against roughly $10B in cash.
- Management targets at least $6B in annual synergies within three years and 3x net leverage by 2029.
Lead
Skydance Corporation, the company formerly known as Paramount Skydance, lost about 9% of its market value on Tuesday, Nov. 10, 2026. Its third-quarter report, released after the close on Nov. 9, was its first since completing the acquisition of Warner Bros. Discovery on Oct. 6. Revenue of $7.0 billion came in just under the $7.04 billion Wall Street expected, and management warned that weak Warner Bros. films will cut fourth-quarter profit by about $200 million. The stock traded near $7.94, down from $8.70 the prior session, on volume of about 5.8 million shares, well below its 14.6 million daily average. Shares are down roughly 35% to 40% in 2026.What Did Skydance Report for the Third Quarter?
Skydance reported revenue of $7.0 billion, up 5% year over year, and adjusted EBITDA of $1.0 billion at a 14.2% margin. Adjusted earnings of 45 cents per share beat consensus of roughly 13 to 20 cents. GAAP net earnings were $73 million, or 6 cents per share, after restructuring and transaction costs. Free cash flow was $31 million, including $174 million of restructuring outlays.
Streaming and studio results were solid. Paramount+ revenue rose 21% to $2.1 billion, the fastest quarterly growth this year. Average revenue per user rose about 14%, and subscribers reached 82.2 million, up 6%. The direct-to-consumer segment generated $2.5 billion in revenue, up 11%. Studios revenue rose 23% to $1.5 billion with $129 million in profit.
The drag came from TV Media, where revenue fell 7% to $3.0 billion. Advertising revenue declined 8% and affiliate revenue fell 5%, extending the pressure on traditional cable networks.
Why Did Skydance Shares Fall After Earnings?
Shares fell because investors focused on leverage and the Warner Bros. outlook rather than the profit beat. The report reflects Skydance before the Warner Bros. Discovery acquisition closed, so the third-quarter figures do not show the combined balance sheet. The combined company carries about $87 billion of gross debt, roughly $77 billion to $80 billion net of cash, compared with $15 billion of gross debt before the deal.
The second concern was the Warner Bros. film slate. Management said underperforming fourth-quarter releases will reduce EBITDA by about $200 million. One Tom Cruise political satire, Digger, reportedly cost $160 million before global marketing and has taken in about $50 million worldwide. Streaming gains are now expected to be offset by theatrical losses in the quarter.
Wall Street's reaction was mixed. One firm trimmed its price target to $13 from $14 while keeping a positive rating. Another maintains an underperform rating with a $9 target. The average target of $6.42 sits below the share price, and consensus is hold. Peers also slipped on the session, with Netflix (NFLX) down about 2% and Disney (DIS) down about 1%.
How Will the $6 Billion Cost-Cutting Plan Work?
The plan targets at least $6 billion of annualized run-rate savings within three years, with roughly 30% delivered in the first year and 70% within two. Management broke the target into four buckets:
- Corporate and back-office consolidation: more than $2.2 billion
- Technology stack integration: more than $1.4 billion
- Procurement and vendor spending: more than $1.4 billion
- Unified marketing: more than $1 billion
Delivering these savings will cost money first. Total transformation costs are projected at about $4 billion, including $1.5 billion to $2 billion in 2027. The company expects free cash flow at or above breakeven in 2027 and more than $10 billion annually by 2030. Its 2030 targets also include mid-single-digit revenue growth and adjusted EBITDA margins in the mid-20% range.
Strategic Context
The strategic case rests on scale in streaming. Paramount+, HBO and HBO Max have 203 million aggregate subscribers worldwide. A Paramount+ and HBO Max bundle is planned for early 2027, and the services are to move onto a single technology backend within the first year after closing. The 2027 content slate includes more than 30 theatrical films and more than 180 television and streaming series.
The risk is execution. Large media combinations have a mixed record, and the company must pay down debt while cable revenue declines. Net leverage is targeted at 3.0x by the end of 2029. Management said 2026 profitability is tracking at the high end of its $3.9 billion guidance, but investors want pro forma financials for the combined company before judging the plan.
Outlook
Skydance faces a fourth quarter that will be the first to consolidate Warner Bros., with a $200 million film-related earnings hit already flagged. Pro forma results, early progress on the $6 billion savings program, and the timing of the Paramount+ and HBO Max bundle will shape sentiment. Until the combined company shows debt falling toward its 3x target, the $87 billion balance sheet is likely to remain the main constraint on the stock.
Mentioned tickers: SKYD, NFLX, DIS
