Skydance Warns Warner Bros. Film Slate Could Cut Q4 Profit by $200 Million, Will Stop Reporting Subscribers

Since Skydance closed its $110 billion acquisition of Warner Bros. Discovery on October 6, investors have waited for hard numbers on the combined company. They got a partial set on Monday, Nov. 9, and the details beyond the cost-cut headline are where the questions sit.

The third-quarter report covers only the Paramount side, because the deal closed in the fourth quarter. Revenue rose 5% to $7.03 billion. Net earnings were $73 million, or 6 cents a share, compared with a loss of $257 million a year earlier. Adjusted EBITDA came in around $1 billion.

The combined company's first full results are due in early February 2027. That is also when Skydance said it will give full-year guidance for the merged business.

A $200 million warning on Warner's film slate

Skydance told investors that Warner Bros.' underperforming film slate could reduce fourth-quarter profit by as much as $200 million. That is a hit to results Skydance now owns, and it lands before the company has booked a single full quarter of Warner earnings.

The company said the deal left it with about $87 billion in gross debt and roughly $10 billion in cash. Business Insider put the debt load at about $79 billion. Front Office Sports reported that the company's long-term debt rating was recently cut from BB+ to BB. Skydance has said it wants investment-grade credit metrics and a substantially lower net leverage ratio by 2029.

Forrester analyst Mike Proulx said ahead of the report that the merged company "comes with massive debt that remains at the center of concern over the company's ability to profitably grow."

The subscriber number comes with an asterisk

Skydance said Paramount+, HBO and HBO Max reach 203 million subscribers worldwide. That is a sum of subscriptions, not unique customers, so anyone paying for more than one service is counted more than once. It also leaves out Discovery+ and other Warner streaming services.

Paramount+ ended September with 82.2 million subscribers, up 600,000 from the prior quarter and about 6% from a year earlier. Revenue at the service jumped 21% to $2.13 billion, and average revenue per subscriber rose about 14% to $8.69, according to the company's filing. Earlier price increases and higher advertising revenue drove that gain, the company said.

The Paramount+ total likely includes some customers who moved over after BET+ was shut down in August and its programming folded into Paramount+, according to Yahoo Finance contributor Rick Ellis. The company has not said how many.

Starting with the fourth-quarter report, Skydance will stop disclosing quarterly subscriber totals. It will emphasize revenue, engagement and profitability instead, a shift that follows Netflix. That means the 203 million figure may be the last subscriber count the public gets for a while.

Where the money came from, and where it fell

The direct-to-consumer unit earned $225 million on $2.5 billion in revenue, up 11%. Higher programming spending, including UFC rights and original content, ate into the margin. Studios earned $129 million on revenue up 23% to $1.5 billion, helped by licensing and third-party production.

Traditional TV kept shrinking. TV Media revenue fell 7% to $3 billion, with advertising down 8% and affiliate revenue down 5%. The company blamed continued pay-TV subscriber losses. Political advertising softened the drop. CBS prime-time viewership rose 18% from a year ago, excluding sports.

Ellison's pitch and the market's reaction

CEO David Ellison told analysts, "We'll apply the same playbook we did at Paramount. We've proven it works and we're confident it will work again." He described a bundle of Paramount+ and HBO Max, due in early 2027, as "our first step toward fully unifying the two services." A single unified service is loosely targeted for about a year out. Pricing and distribution terms for the bundle have not been disclosed.

The company has detailed at least $6 billion in savings over three years, with about 30% expected in the first year. Skydance has said most of it will not come from layoffs, though Front Office Sports reported that layoffs have already started. In late October, Business Insider reported, employees were told to return to the office five days a week or take a buyout.

Shares jumped more than 4% after the report, then slid about 2% in after-hours trading Monday, according to Business Insider. The stock gained roughly 8% in regular trading earlier Monday after falling more than 11% from pre-merger levels. That is a volatile few weeks for a company that has not yet reported a combined quarter.

Ellison and co-CEO Ynon Kreiz told staff in a post-earnings memo that "the progress we've made is a direct result of your contributions."

The next hard test is early February 2027. By then Skydance owes investors its first consolidated results, full-year guidance, and a look at how much of that $200 million Warner film hit actually landed.