David Ellison has closed the acquisition of Warner Bros. Discovery and merged it with Paramount into Skydance, a company saddled with $80 billion in debt. Peter Kafka explains that, like previous owners, Skydance has no plan for new revenue—only promises of cost-cutting. The irony is that the Ellison family's wealth is tied to OpenAI and TikTok, technologies that undermine Warner's traditional IP and advertising business.
Summarized by Podsumo
Skydance inherits $80 billion in debt from the Warner Bros. Discovery merger, with no clear revenue growth plan—only cost-cutting measures like $6 billion in synergies
California regulators caved to David Ellison's threats to move the company, accepting weak conditions that require only 30 films yearly, with many allowed to skip theaters
The Ellison family's wealth is tied to Oracle's AI deal with OpenAI and a stake in TikTok—technologies that directly undermine Warner's IP value and attention-based business model
New co-CEO Enon Krees, known for aggressive layoffs at Mattel, is hired to execute painful restructuring while David Ellison focuses on Hollywood relationships
The deal faces regulatory arbitrage: Ellison won approval by promising to keep 30 films yearly, but the debt load suggests aggressive cuts are inevitable
"The whole premise was: we're gonna techify this and cloud and Oracle… but there’s never been any indication that they have any plan other than shaving costs."
"David Ellison's primary achievement was befriending Tom Cruise. That is what the job of a producer is: you don't really do anything, you just sort of package stuff."
"I still don't know how David Ellison is gonna make one more dollar than he made last year."