Skydance expects weak results from the Warner Bros. film slate to cut fourth-quarter profit at its studios division by up to $200m against its earlier forecasts. The warning came on Monday 9 November in the company’s first shareholder letter since Paramount’s takeover of Warner Bros. Discovery closed on 6 October, filed with the US Securities and Exchange Commission at 16:04 ET (22:04 CET).
Warner Bros. releases in the quarter, “including films already released quarter-to-date”, have underperformed, the letter said, and will more than offset an improving Paramount slate. It names no titles, but it makes plain to exhibitors and producers how the new owner means to run Warner Bros.: the way it has run Paramount.
Key facts
- Q4 warning: Studios profit up to $200m below prior expectations, with slower revenue growth, because of the Warner Bros. slate
- Q3 results (Paramount Skydance only; Warner Bros. Discovery not included): revenue $7.0bn, up 5%; adjusted EBITDA $1.0bn; net earnings $73m
- Streaming: HBO Max and Paramount+ sold as one bundle from early 2027; quarterly subscriber figures end with the Q4 results
- Debt: gross debt of $87bn after the close, with about $10bn in cash
- FilmBunch calculation from the filing: theatrical revenue of $112m, flat year on year and 1.6% of the quarter’s revenue
The Paramount playbook
Skydance said it is applying “the playbook we ran at Paramount” to Warner Bros.: testing films earlier, sizing marketing and release plans to each title with the help of real-time market data, and tightening what it greenlights. At Paramount, it said, that approach should leave the 2026 slate more than $500m ahead of the 2025 slate in lifetime profit. Both studios now answer to a single motion picture leadership team while keeping their own creative staff, the structure under which DC Studios was moved beneath the film co-chairs earlier on Monday.
Paramount Pictures now expects 15 releases in 2026; in February it had guided to 16, Variety reported at the time. The letter points to PAW Patrol: The Dino Movie, past $160m worldwide, and David Ayer’s Heart of the Beast, past $180m.
Six releases across the two studios remain this year: The Cat in the Hat, which opened on Friday; Ebenezer, with Johnny Depp, this Friday; Focker-in-Law on 25 November, which Paramount distributes internationally; Dune: Part Three on 18 December; The Angry Birds Movie 3 on 23 December; and Mr. Irrelevant on Christmas Day, the first theatrical release from Skydance Sports’ partnership with the NFL. For 2027 the company says it is on track for more than 30 theatrical films, from Children of Blood and Bone in January to The Lord of the Rings: The Hunt for Gollum in December.
Where the studio money came from
The segment tables tell a different story. Paramount’s Studios revenue rose 23% to $1.5bn in the third quarter, and licensing and other income accounted for $283m of the $284m increase, from secondary-market licensing and work for third parties. Theatrical revenue was $112m, unchanged on the pro forma figure a year earlier: by our calculation, 7.5% of Studios revenue and 1.6% of the group total. Studios adjusted EBITDA was $129m, an 8.6% margin. At the top of its range, the Warner Bros. warning is larger than Paramount’s entire third-quarter studio profit.
Streaming and savings
From early 2027, subscribers will be able to buy HBO Max and Paramount+ as “a single bundle”, the first step towards one service; both are due on a common technical backend “within a year of closing”, around October 2027. Paramount+, HBO and HBO Max count 203 million subscribers between them, before stripping out overlap, and quarterly subscriber reporting stops with the fourth-quarter results.
Skydance repeated its target of at least $6bn in annual run-rate savings within three years. By our calculation, the minimum savings it itemises in four areas (corporate overhead, marketing, technology and procurement) add up to that $6.0bn, about 23% of the roughly $26bn it expects to spend on them in 2026. Content, at more than $30bn a year, is not on the list. The company aims to bring net debt down to 3.0 times adjusted EBITDA by the end of 2029.
What is not known
The letter does not say which Warner Bros. releases have disappointed, what the bundle will cost or where it launches first. More detail is promised at an investor day in the first half of 2027.
Our reading
The telling number is the smallest in the filing. Theatrical revenue of $112m in a $7.0bn quarter shows how little of a studio group’s income now arrives through the box office in any three months, and why a weak run of releases surfaces first as a profit warning rather than a revenue problem.
For distributors and exhibitors, the signal is the playbook: earlier testing and marketing sized to each film tend to mean fewer wide bets and more varied release patterns. The evidence will come quickly: Ebenezer on Friday, Dune: Part Three in December, and the first results to consolidate Warner Bros., early in 2027.
Sources
- Skydance Corporation, third-quarter 2026 shareholder letter (Form 8-K, Exhibit 99), 9 November 2026
- Skydance Corporation, Q3 2026 earnings event page
- TheWrap, HBO Max and Paramount+ bundle to launch in 2027 in first step of merging streamers, 9 November 2026
- Variety, Paramount leaders avoid Warner Bros. questions in Q4 earnings call, 25 February 2026