What’s Ahead for David Ellison’s Paramount Skydance, According to Its First Earnings Report

<img decoding="async" class="lazyload size-full-width wp-image-1435786" src="data:image/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==" data-src="https://observer.com/wp-content/uploads/sites/2/2024/07/GettyImages-1398214784-e1721406055401.jpg?quality=80&w=970" alt="David Ellison and Tom Cruise” width=”970″ height=”763″ data-caption=’David Ellison is steering the newly merged studio through heavy restructuring while betting big on original content and efficiency. <span class=”lazyload media-credit”>Kate Green/Getty Images for Paramount Pictures</span>’>

David Ellison’s Paramount Skydance reported its first quarterly earnings under its new name, revealing a company still deep in restructuring. The short-term outlook remains focused on cost efficiencies, even as Ellison emphasizes long-term investment in content.

The company posted $6.7 billion in revenue for the July–September quarter, essentially flat year-over-year and slightly below Wall Street expectations. Streaming revenue from Paramount+ rose 17 percent to $2.17 billion, offset by a 12 percent decline in TV advertising revenue. Paramount Skydance recorded a net loss of $257 million, largely due to merger-related expenses.

Paramount+ added 1.4 million subscribers in the quarter, bringing its global total to 79.1 million. The hit show South Park was cited as the top driver of new signups. While Paramount+ continues to grow, it remains a mid-tier player compared to giants like Netflix, which boasts more than 300 million global subscribers.

Subscribers, however, face higher prices ahead. Paramount+ will raise rates in January 2026, partly to cover costs from its new seven-year, $7.7 billion UFC rights deal. The ad-supported plan currently costs $7.99 per month, matching Netflix’s ad tier, while the ad-free plan costs $12.99 per month, below Netflix’s $17.99 ad-free price.

Meanwhile, cost-cutting continues. Executives confirmed plans to eliminate 1,600 jobs—about 9 percent of total staff—as part of a broader effort to reduce $3 billion in expenses by 2026. The layoffs will affect film, TV, streaming and corporate divisions.

Paramount doubles down on content spending

Despite the cuts, Ellison reiterated his commitment to content investment. “We expect to make incremental programming investments in 2026 in excess of $1.5 billion, which includes our investments in the UFC, Paramount+ originals and third-party catalog licensing and the ramp in our film slate,” he said on an earnings call yesterday.

Ellison acknowledged that Paramount’s 2025 film slate is underperforming, requiring what he described as a “recalibration.” Much of the weakness, he noted, stems from prior leadership’s reliance on reboots of older IP that failed to resonate with audiences. The Smurfs reboot, for instance, struggled to recoup its production and marketing costs. The studio now aims to prioritize quality over quantity in its upcoming film lineup.

Recent announcements underscore that shift. Paramount Skydance has inked a five-year exclusive deal with South Park creators; a four-year partnership with Stranger Things creators, the Duffer Brothers, for film and TV projects; and plans for the first live-action adaptation of the video game franchise Call of Duty, directed by Peter Berg and written by Taylor Sheridan. (Ellison has described himself as a “lifelong fan” of the games, having spent “countless hours” playing them.)

Beginning in 2026, Paramount intends to release at least 15 films annually, up from roughly 11 to 14 in recent years.

No rush for WBD

Inevitably, Warner Bros. Discovery came up during the earnings call. According to Variety, Ellison had reportedly told associates ahead of the Paramount–Skydance merger approval that he was also eyeing another target at the time: “We’re going after Warners.”

Asked whether a merger with WBD remains a priority, Ellison said there’s no immediate need for another deal. “It’s important to know that there’s no must-have for us. We really look at this as buy-versus-build, and we absolutely have the ability to build to get to where we want to go,” Ellison said. “We believe we can achieve our streaming goals, that we can drive enterprise efficiency, and create value and long-term free cash flow generation all through the building.”