Paramount bought Warner Bros for $110bn. Now it plans to cut $6bn in costs.
Paramount Skydance closed its $110 billion purchase of Warner Bros.
Discovery on Tuesday, according to CBS News, which Paramount owns. CBS News reported that the combined company is called Skydance and plans $6 billion in cost savings.
That day, Fitch Ratings lowered the company's credit rating by one step, Variety reported. The rating tells lenders how safe it is to lend to the company. Fitch said the deal leaves the company far more indebted, and it is unsure the promised savings will come. The reports put its debt at about $80 billion.
Chief executive David Ellison and co-chief executive Ynon Kreiz wrote to staff: "Integrating two companies will bring change, including difficult decisions that affect our workforce." The memo quoted in the reports gives no job numbers.
Fitch expects net debt of about seven times adjusted EBITDA, a measure of yearly operating earnings, in 2026 and 2027. Fitch cites a target of three times or less by 2029. The reports do not say how much of the $6 billion comes from staff and how much from contracts and systems.
How much of a merger's planned savings turns into cash within three years, once severance, moving to shared software and ending contracts are paid for?
Sources
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