Skydance Earnings: Wall Street Is Skeptical So Far

Skydance’s first quarterly earnings report after the mega-acquisition of Warner Bros. Discovery (WBD) is in. And Wall Street’s take on the results and especially the outlook for David Ellison’s Hollywood giant is … still under review.

The results, posted after the market close on Monday, came a year after Paramount’s first financials under the leadership of Ellison. On the earnings call, the Skydance chairman and CEO expressed bullishness on the creative potential of AI. And he addressed the surprise leadership change at DC Studios, with Marvel alum Jeremy Latcham replacing James Gunn and Peter Safran.

Skydance shares were down more than 2 percent to $8.50 in pre-market trading. So, what did Wall Street analysts take away from the entertainment conglomerate’s first financial and strategic update since the WBD deal close? The Hollywood Reporter is compiling key commentary and thoughts below.

Analyst: Laurent Yoon, Bernstein
Stock rating and price target: underperform, $6
Takeaways: “Trailer Looks Good… Waiting for the Movie” was the title of Yoon’s report following the latest results. “The third quarter was more of a prologue than Chapter 1 of Skydance’s journey following the WBD acquisition,” he wrote. “Pro forma financials with WBD won’t be available until sometime before the fourth-quarter print, leaving us on the edge of how this story could unfold. There are more questions than answers, but we come out net positive.”

One of the key questions, or developing stories, if you will, is the studio. “Legacy WBD seems likely to be a drag near-term, particularly in the fourth quarter,” the analyst concluded. “Studio performance has underperformed, with management flagging an up to a around $200 million fourth-quarter profit shortfall from WBD theatrical performance. WBD’s larger linear exposure also remains a likely drag, though it represents meaningful opportunity for operating expense synergies.”

So, what will investors need to get more bullish? “The raw ingredients are there to build something better than the individual parts. And we wait for Chapter 1.”

Analyst: Michael Morris, Guggenheim Securities
Stock rating and price target: neutral, no price target
Takeaways: “Skydance’s first report since closing the WBD acquisition showed continued progress at legacy Paramount and limited incremental detail on the combined company,” Morris wrote in his report entitled “Awaiting Takeoff.” He currently doesn’t have a price target on the stock, citing “the lack of historical pro forma disclosure and no third-quarter operating results for legacy Warner Bros. Discovery.” His rating “balances potential upside from synergies and streaming scale against execution risk and the combined company’s higher leverage.”

The analyst also outlined what he is looking for now. “We believe the market has heard the strategy and needs evidence of progress in three areas: 1) a content slate that bolsters confidence in consumer demand for core franchises, 2) the net financial impact of combining HBO Max and Paramount+, beginning with the early 2027 bundle, and 3) management of the declining but cash-generative linear business.”

Morris highlighted that Warner Bros. is a work in progress, highlighting that management called the studio on track “with the exception of the near-term film slate.” Noting an up to $200 million fourth-quarter profit impact from films already released this quarter and those still to come, the analyst described the DC Studios leadership change as “the first structural response.” And he added: “The 2027 Warner Bros. slate (Godzilla x Kong: Supernova, Man of Tomorrow, A Minecraft Movie Squared, the Ocean’s Eleven prequel, The Lord of the Rings: The Hunt for Gollum) is where Paramount’s greenlight and marketing discipline should show up.”

Analyst: Doug Creutz, TD Cowen
Stock rating and price target: hold, $8
Takeaways: Because the WBD deal closed after the end of the third quarter, the latest results reflect “Paramount Skydance standalone results,” the analyst emphasized, summarizing: “Paramount’s standalone third-quarter adjusted EBITDA of $1.0 billion beat our $947 million estimate on stronger DTC and Studios profit, though revenue of $7.03 billion was below our estimate of $7.13 billion.”

The TD Cowen expert also noted that management reiterated its target of at least $6 billion in deal synergies within three years and “gave the first breakdown by category,” namely at least $2.2 billion from corporate overhead, real estate, and facilities, $1.4 billion from technology, $1.4 billion from procurement and vendor management, and $1.0 billion from marketing. About 30 percent of those synergies should be in place by the end of 2027.

All that said, Creutz continues to have doubts, sharing this investment thesis: “The risks (leverage, integration) of the combination with WBD are high; we remain skeptical that Skydance management will be able to create value from this deal when so many other major media deals have failed.”

Analyst: Robert Fishman, MoffettNathanson
Stock rating and price target: neutral, $7
Takeaways: “Ghosts of the Past, Present and Future” was the title of Fishman’s report, a timely Charles Dickens reference just before Skydance releases Ebenezer, starring Johnny Depp. “After last night’s earnings report, we get a first glimpse of how Skydance views its trajectory in relation to some … questions [we have previously outlined] but still lots of questions remain.”

Among them is whether the merged company can balance cost cuts and growth investments. Looking at the areas that Skydance said it would find efficiencies in, the MoffettNathanson analyst offered: “In theory, savings in these areas should get the company to its synergy targets without dipping into its $30 billion-plus of content spending, allowing it to pay down debt without sacrificing growth. However, as we’ve seen with other media M&A, it is a lot harder to see these cost savings translate into real upside to EBITDA and cash flows, likely forcing the company to limit its content spend growth in the future.”

And he highlighted a need for investor and analyst patience for a closer look under the hood until Skydance discloses pro forma financials for its business plus WBD early in 2027. For now, he left most of his estimates unchanged.