The ink is barely dry on the Paramount-Warner merger, but new company Skydance is already talking about layoffs and “AI opportunities.” As history has already taught us, mergers inevitably lead to layoffs, as executives try to find ‘synergies’ and ‘efficiencies’. And so it is that, within hours of Paramount formally signing the $110bn deal to ... Skydance | Paramount-Warner merger completes, talk immediately turns to layoffs and using AI
The ink is barely dry on the Paramount-Warner merger, but new company Skydance is already talking about layoffs and “AI opportunities.”
As history has already taught us, mergers inevitably lead to layoffs, as executives try to find ‘synergies’ and ‘efficiencies’. And so it is that, within hours of Paramount formally signing the $110bn deal to take over Warner Bros, David Ellison – boss of the whole enterprise, now simply called Skydance – has talked about cutting jobs.
The merger officially happened on Tuesday 6th October, and Ellison sounded a jubilant note in a memo to staff.
“It has taken hard work, perseverance and commitment with many challenges along the way – but we did it!” Ellison, son of billionaire Oracle co-founder Larry Ellison, wrote. Then came the warning sounds about redundancies.
“Integrating two companies will bring change, including difficult decisions that affect our workforce,” Ellison and co-CEO Ynon Kreiz wrote in a separate memo quoted by Variety. “We are committed to handling this process thoughtfully and respectfully.”
It’s thought that the number of layoffs could be considerable. After it acquired Paramount last year, Skydance cut roughly 10 percent of the studio’s workforce. The number of job losses after this latest acquisition could be even higher, since the newly-formed entity is now saddled with a huge amount of debt: $80bn.
To assist with this new mega-corporation, Ellison has hired the above-mentioned Kreiz, formerly the CEO of toy manufacturer Mattel, but who also has experience in media – he was previously at Endemol.
Kreiz will likely come in handy as Skydance prods Barbie 2 into existence, though Ellison also appears to have hired him because of his track record as a job cutter.
The Hollywood Reporter writes that Kreiz eliminated the headcount at Mattel by 22 percent when he joined it in 2018, and restructured the company to expand into other media – paving the way for the 2023 Barbie film and the currently-in-development Hot Wheels.
Kreiz appears to have a big plans for the studios now under the Skydance banner – and in their first email to staff, he and Ellison began talking about the use of AI to improve productivity.
“We will embrace the opportunities AI provides to expand what our creatives can imagine and to make our businesses even more productive,” Kreiz and Ellison wrote. “The opportunities ahead are enormous, and we intend to seize them. But one principle will never change: technology must serve the art – never the other way around.”
Some industry onlookers have said that Skydance may be able to save billions through consolidating departments and tech stacks, though some number of job losses are still inevitable. HBO Max and Paramount Plus are to be merged into one streaming platform, for example, which is bound to have a knock-on effect on staff.
Ellison, meanwhile, insists that the merger had to happen; in the face of rivals like Netflix and Amazon MGM, a vast company had to be formed in order to compete.
Skydance, he said, will “be able to compete with the Disneys and Netflixes and Amazons and anybody in the world.”
And while staff at the company face months of uncertainty, there’s good news for Skydance executives and shareholders are all getting pay rises, including a $5m base salary for Ellison, who will also walk away with roughly $150m in cash and stocks now that the deal’s closed.
