David Ellison says savings from the Skydance-Paramount merger will significantly exceed the $3 billion initially projected, with $2.5 billion anticipated by the end of this year. And, “We’re in the process of basically converging Paramount+, BET+ and Pluto all into one unified tech stack. We’re going to finish that second quarter of this year,” the Paramount CEO noted at a conference.
The tech stack — which has been front and center in Ellison’s comments around M&A — refers to all of the technologies from software and programming to data storage options that “stack” on top of each other to build and run an application. It’s redundant and costly to have more than one.
“As we look forward to Warner Bros, yes, there are the efficiencies and the ability to operate the company more efficiently, which dramatically increases cash flow,” he told the FII Priority Summit. The event put on by the nonprofit Future Investment Initiative Institute was Friday, but Par released the transcript of Ellison’s remarks in an SEC filing today.
The company anticipates at least $6 billion in cost savings from its proposed acquisition of Warner Bros. Discovery, which the companies expect to close in the third quarter. The industry is bracing for massive jobs cuts, which Ellison has played down and did again Friday, insisting the combined company will operate more efficiently but also grow.
“Over the last six months since we’ve been at Paramount, we’ve taken the film slate from eight films when we bought the company to 16 movies that will be released this year exclusively in theaters,” Ellison added. “We’ve green-lit 11 shows to grow Paramount+. We brought the UFC onto our platform, the [UEFA] Champions League. We’ve invested significantly in content. So I think this narrative of ‘you can’t operate the company more efficiently by growing’ is actually a false one.”
Par-WBD will have a joint $69 billion in revenue, $18 billion of EBITDA and well north of $10 billion in cash flow, he said, “and that’s while investing over $30 billion in content.”
It also will have about $80 billion in debt to service, a huge number that many Hollywood insiders and not a few Wall Streeters find alarming.
Ellison tends to only speak generally to issues like layoffs and debt and the FII appearance was a softball conversation with Gerry Cardinale of RedBird Capital, a major investor-partner in Paramount. Ellison stressed the benefit of being an owner-operator.
“We’re very proud that we were the largest shareholders in Skydance,” he said. “We’re the largest shareholders in Paramount, and we will be the largest shareholders of the combined Paramount-Warner Bros. Discovery when that deal closes. What that does is make sure that all of the incentives are aligned for really long, long, long-term success. And you make decisions not for two quarters from now, but for five years from now, [you] make sure that you have something that really stands the test of time for centuries to come. And that’s what we’re excited about. That’s what we’re motivated about doing.”
Ellison, whose father and main business backer is Oracle co-founder Larry Ellison, always stresses a merging of content and technology that still needs to happen at legacy media. He believes Par has the sauce given his family’s tech ties. That includes AI, which he called a “phenomenal tool for the creative community.”
An example: “One of the core principles of Pixar was always, ‘Be wrong as fast as possible.’ You get to make a movie kind of eight times. You make an animated movie. You then get to kind of preview it a few times. And then you’re kind of effectively at the point where you have to be done. The thing that I think you’re going to see enable basically what artificial intelligence and these model-based kind of GPU [graphic processing unit] pipelines that are in the process of being created are going to allow for is to actually help you tell better stories because you’re going to be able to iterate faster. If you can make the movie 15 times, 20 times, get that audience feedback, you’re going to be able to tell better stories that entertain your audience.”
WBD has set an April 23 special meeting for shareholders to a vote on the merger.
