As the new reality set in, the questions multiplied.
Paramount Skydance shocked the entertainment industry on Feb. 26 with the news that it had reached an agreement to acquire Warner Bros. Discovery, muscling aside Netflix to pull off the kind of come-from-behind victory that is usually the stuff of inspirational sports movies.
In the days that followed, industry insiders circulated during a busy pre-Oscars awards season weekend in Los Angeles that included the Producers Guild Awards, the Actor Awards and the Eddie Awards. The upshot was a lot of tongues wagging about a deal that will surely change the Hollywood landscape as two pillars of the town — Warner Bros. and HBO — are absorbed into the Paramount Skydance structure. Yes, those assets have changed hands twice in less than six years (to AT&T and then Discovery Inc.) — but they’ve never been taken over by a direct-rival media firm with a whole lot of overlapping operations.
There’s a sense of whiplash around WBD because the tables turned so quickly in favour of David Ellison’s Paramount Skydance despite Netflix having a signed agreement. There’s also a sense of mourning for an era that is clearly ending.
“For those of us in our 50s, we grew up with HBO and Warner Bros. being a gold standard. So to have those things change is very difficult. It’s emotional,” Scott Stuber, an alum of Netflix and Universal Pictures, told Variety at the PGAs. “It’s a big change.”
The scope of that change promises to be stunning. Here are key questions that inquiring minds want answered sooner rather than later.
1.) Warner Bros. Pictures Is Riding High — Will It Matter?
Arguably no one in Hollywood has a hotter hand than Warner Bros. Pictures co-heads Michael De Luca and Pam Abdy. The film chiefs have topped the box office with blockbusters like “Weapons” and “A Minecraft Movie.” And they’ve established a reputation for betting on visionary filmmakers like Paul Thomas Anderson (“One Battle After Another”) and Ryan Coogler (“Sinners”), which paid off with 30 Oscar nominations in 2025. But Ellison already has Josh Greenstein and Dana Goldberg in place at Paramount Pictures. Will he allow De Luca and Abdy to operate as a separate island, or will he put too many layers of authority over them, making it hard for them to stick around? There’s also skepticism that the combined studios can come up with the 30 theatrical releases Ellison has promised to deliver annually. And then there’s the treasure required to produce such a sprawling slate. Most major studio releases cost $75 million to $200 million, and if the sale goes through, Warner Bros. and Paramount might not have a lot of cash to throw around.
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2.) It’s Not TV — It’s a Tile on Paramount+?
What will become of HBO? That’s a question that people inside and outside WBD want answered ASAP. Less urgent but still a source of curiosity is whether the HBO Max brand simply goes away. Speaking to Wall Street analysts on March 2, Ellison indicated that HBO and its CEO, Casey Bloys, will retain some autonomy. “We do plan for that to be able to operate with independence,” Ellison said, “so that HBO can, candidly, do what it does incredibly well. … But by bringing the platforms together, all of our content will be able to reach even a broader audience than we can do stand-alone.” Ellison faced no questions about HBO Max, which probably is the answer in itself.
3.) Can WB and Paramount Avoid Debtor’s Prison?
The media and entertainment industry’s consolidation binge has been fueled by debt, and the WBD-Paramount merger is no exception. On a call with analysts on Monday, Ellison acknowledged that the combined company will be saddled with a staggering $79 billion in debt but was optimistic that $6 billion in cost savings would be achieved thanks to synergies. But that still leaves the company highly leveraged — exactly the same situation that led David Zaslav and his team to find a buyer for Warner Bros. Discovery. It’s also the predicament that previous owner AT&T faced when it sold the company less than four years ago. That’s the thing about borrowing money: At some point, it needs to be repaid.
4.) Who Does David Ellison Think He Is?
Nobody would deny that Ellison, who has snagged two of Hollywood’s legendary studios in record time, has chutzpah. And as the son of a centibillionaire, he’s got deep pockets. What Ellison lacks, however, is a track record of successfully running a major conglomerate. Skydance, the production company he founded in 2006, had some wins, including co-financing “Top Gun: Maverick” and five “Mission: Impossible” films. Outside of the Tom Cruise business, things were bumpier. Most of Skydance’s biggest movies were based on IP that was around long before its founding. The films that Ellison’s team developed were more of a mixed bag, including such forgettable fare as “Fountain of Youth” and “Heart of Stone.” It’s not exactly the kind of CV that would make Irving G. Thalberg jealous.
5.) What’s Next for Netflix?
Netflix didn’t win this one. But the streaming giant has a whole lot of spare cash and resources on hand now that it won’t be buying WB and HBO. Moreover, Ted Sarandos is now extremely motivated to show Hollywood and Wall Street that Netflix has plenty of growth prospects even without bolting on a studio library or the O.G. of pay TV. Never underestimate the power of a CEO scorned.
From Variety US