It’s done: Paramount and Warner Bros. Discovery merge

After more than a year of battle, David Ellison has won his bet: the two historic studios are now one, within Skydance Corp.

They become one.

Paramount and Warner Bros. Discovery are now one company. The merger, valued at $111 billion including the assumption of WBD’s debt, gives rise to Skydance Corp., headed by David Ellison, 43, who becomes president and CEO.

The new giant brings together two of the largest historical Hollywood studios, but also an impressive portfolio of channels and platforms. CBS, CNN, Comedy Central, MTV and TBS thus come under the same banner, as do Paramount+ and HBO Max. Skydance announces nearly $70 billion in annual revenues, with a major downside: around $80 billion in net debt.

This merger concludes a battle that lasted more than a year.

The Ellison family, thanks to the financial support of Larry Ellison, David’s father and co-founder of Oracle, holds the largest equity stake in Skydance.

Along with investment fund RedBird Capital Partners, the Ellisons are the sole holders of Paramount’s Class A common stock, which represents 100% of the voting rights of the new group. Skydance’s Class B shares begin trading on the New York Stock Exchange on Tuesday under the new symbol “SKYD.” Shareholders of Warner Bros. Discovery received $31.01666668 in cash per share, while WBD shares ceased trading on Nasdaq. David Ellison rejoices:

“Today is a historic day, not just for Skydance, but for our entire industry. From the beginning, our ambition was to bring these two historic studios together and create a stronger competitor, with the talent, resources and reach to tell great stories across all genres, on all platforms and for all audiences..Our focus now turns to the future: building a company that empowers creators, entertains viewers, and rewards shareholders.“

The merger was financed by $47 billion in investments in Class B shares, led by Larry Ellison, RedBird Capital Partners, LionTree and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. This stake was valued at $12 per share. Debt financing was notably provided by Bank of America, Citigroup and Apollo Global Management.

David Ellison has also recruited Ynon Kreiz, former boss of Mattel, to become co-chief executive officer. The leadership team for the new Skydance was announced Monday.

A new Hollywood powerhouse is born. It remains to be seen what the consequences will be, in the long term, for the industry and the 7th art.