Skydance Warns Layoffs Will Follow Its Warner Bros. Merger, With No Job Count

Skydance, formerly Paramount Skydance, has told staff that job cuts are coming after its merger with Warner Bros. Discovery. In a memo sent on Tuesday, Oct. 6, the day the deal closed, chairman and CEO David Ellison and co-CEO Ynon Kreiz said integration would bring “difficult decisions” affecting the workforce.

The memo is two weeks old, and no job count has been released. LA Magazine reports that the company has not publicly commented on the layoffs. The deal carries a headline value of $81 billion, according to the Associated Press, or about $111 billion including debt.

The Memo and the $6 Billion Target

Variety reports that Paramount executives aim for more than $6 billion in annualised cost savings over three years. LA Magazine reports that layoffs were expected in light of that goal. Variety says the memo itself refers to at least $6 billion in synergies, with no timeframe.

Variety also reports that the memo puts the combined company’s revenue at nearly $70 billion. Variety says part of that savings target will come from layoffs.

LA Magazine cites a Los Angeles County Department of Economic Opportunity report, from August, estimating that the merger could eliminate 4,500 film and TV jobs in the county over three years. Variety gives the figure as some 4,500. The estimate is a projection, not a count from the company.

Settlement Film Commitment
Under the settlement with state attorneys general, Paramount must release 30 films a year for two years, then 32 a year for three years, with a $30 million payment for each missed film, according to the Associated Press.

Union Protections in the WGA Settlement

Under its settlement with the Writers Guild of America, Paramount Skydance will pay $17.5 million to the WGA health plan and cover the guild’s legal fees, according to TheWrap. The company also agreed to prohibit layoffs at CBS News’ broadcast division.

The WGA said it still believes the merger will harm writers and the industry. It said that pursuing its antitrust case through trial would cost millions of dollars, and that as a nonprofit it must now proceed without government enforcers. The guild said it will keep opposing consolidation and called for structural separation between streamers and studios across the industry.

Film Output, Penalties and the $47.5 Million Fund

The settlement with state attorneys general, announced Sept. 21, requires Paramount to release 30 films a year for two years, then 32 a year for three years, according to the Associated Press. If Paramount misses its film release targets, the states say it must divest from Miramax Studios and pay $30 million for each missed film to health care and retirement trust funds tied to the WGA and other unions.

Reports differ on what triggers the Miramax divestment. TheWrap ties it to a requirement of 30 theatrical films a year and refers to Paramount’s 49% stake in Miramax, while AP ties it to the full release schedule. The memo, as quoted by Variety, also says the company is committed to making at least 30 movies a year.

Attorney General Rob Bonta had said for weeks that only structural remedies would be considered, according to TheWrap. TheWrap describes the settlement as containing few, if any, structural remedies, including the Miramax divestment and a requirement that the television divisions negotiate pay-TV deals as separate companies. Behavioral terms include an editorial board of journalists to oversee CNN and a pledge not to move headquarters out of California. TheWrap reports that a force majeure clause would allow Paramount to abandon the pledge in extreme circumstances, including “economic recessions.”

A separate $47.5 million workforce fund would pay for training and career development for workers displaced by the merger. LA Magazine says the fund runs over five years and attributes that term to a statement from California Attorney General Rob Bonta’s office. AP also reports at least $1.5 billion in additional domestic film production over five years, or $300 million a year.

The AP report said the settlement still needed a final sign-off by a judge.

The memo is two weeks old, and no job count has been released.

What Remains Open for Workers and Guilds

For workers, Variety reports that the company has not revealed the extent of the job cuts it expects. The reported terms name the CBS News broadcast division and the training fund, but they do not set a headcount for Skydance’s wider cuts.

AP quotes Alvaro Bedoya of the American Economic Liberties Project, a former FTC commissioner, who criticized the deal. In a statement the same day, Ellison said “We aren’t going anywhere.”

For film output, the penalty is tied directly to the release schedule the settlement sets. The AP report said the settlement still needed a judge’s final sign-off, and Variety reports that the company has not revealed the extent of its expected job cuts.