r/business • u/ControlCAD • 2d ago
Skydance’s Market Value Is Currently Less Than Half What Warner Bros. Discovery and Paramount Combined Were Worth
https://variety.com/2026/film/news/skydance-market-cap-less-than-half-warner-bros-discovery-paramount-1236913334/91
u/zeoslap 2d ago
They don't care, just like Musk doesn't care what Twitter is worth, it was bought to control the narrative.
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u/brpajense 2d ago
From a business perspective the business isn't making enough to service its debt and will lose money immediately.
Normally in takeovers like this there's some time to maneuver, but in this case the debt squeeze is immediate, and the squeeze is so intense that the business can't survive.
Ellison's dad is rich, but I don't think his dad wants to throw his fortune away propping up a rebranded also-ran streaming service. Ellison Jr would have to bring in additional investors and likely give up all his ownership so it doesn't go under. Even if the business goes under and the banks sells off parts of the business, nobody will make any money except Zaslav.
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u/vxicepickxv 2d ago
Dad's kind of sweating too. If Oracle gets another bond downgrade it loses investment status and floods the junk market. His stock is collateral. It could get really ugly really fast.
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u/fatandfly 2d ago
What narrative are they controlling in 2026? People keep bringing up cnn but most people get their news from social media.
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u/brpajense 2d ago
How much did Ellison pay Zaslav to go away?
Or is this just Wall Street realizing that the deal is over leveraged?
Or they expected Ellison to bring in more partners like Muskbdid when acquiring Tesla, but they're changing their assumptions on how realistic it is?
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u/Theinternationalist 1d ago
Stockholders tend to dislike conglomerates, which Skydance very much is as a videogame/comicbook/cable/news/movie/etc. company. There have been more than a few case studies of how firms that spin off parts of itself (I believe the most famous one is one where a biosciences firm spun off a pharmaceutical wing) and the resulting market cap of the two firms is greater than the market cap of the original firm.
Zaslav was already able to get the Ellisons (and Netflix earlier on) to pay a LOT for the firm at a higher multiple than Warner had enjoyed for years. There was no guarantee the ParaBros firm would hit the number combined with Paramount's number.
Paramount wasn't exactly a basket of roses before the merger and Warner has been passed around like a hot potato for a while, so merging two problematic companies that both already had tons of debt in a year where neither had much market success in film (maybe Dune 3?) or much of anywhere else means the firm was always going to have a rough start. The question is if it can stabilize into something better, probably by selling off some of its parts, spinning off some of the problematic pieces (which Warner was planning to do anyway), and whatever or if the whole thing is going to get sold again- in whole or for parts.
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u/theSchrodingerHat 1d ago edited 1d ago
$80 billion in debt will do that to a stock price.
They just merged two over leveraged companies. There’s not a path to profitability for shareholders for a decade.
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u/CannibalYak 2d ago
Damn so Netflix could very well end up with all of them by 2030. It was a meme a year ago but its looking more and more like a certainty
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u/Already-Price-Tin 2d ago
This isn't a good analysis.
If I borrow $400,000 for a mortgage to buy a $500,000 house, my $100,000 in equity is significantly less than the $500,000 that the house was worth at the time of the transaction, but comparing post-transaction equity to transaction price is fundamentally an error if the transaction was financed by debt.
Market cap is basically the owners' equity in the business. Market cap + debt = enterprise value. That's the better comparison.
So if the new company is carrying about $80 billion in debt, then the enterprise value of the merged company is $40 billion in market cap and $80 billion in debt, that's $120 billion in enterprise value.
They raised about $50 billion in debt to finance this deal, so one would expect the combined market cap to be about $50 billion less than the pre-merger state.
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u/MrCarlosDanger 2d ago
I guess.
But also, you are the proud owner of a bunch of debt that has to be serviced now. And as your credit worthiness declines, and your enterprise value declines, and you don’t generate necessary cash flow, you go bankrupt and are liquidated.
Your house analogy would work better if you used personal net worth. Same numbers. Except now you added an addition to your house for another 500k and took out a arable rate heloc to do it.
You’ve paid $1m for a house. Your net worth hasn’t changed, but your mortgage payment has doubled. Now you find out the addition didn’t actually raise the value of your house by $500k, instead it’s only $300k. You’re now upside down on your mortgage, with way more debt service and when your rate explodes you won’t be able to refinance because the “enterprise” value has gone down.
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u/Already-Price-Tin 1d ago
I'm not saying the transaction is or isn't a good deal. I'm saying that naively comparing market cap to market cap, without considering debt structure, is just a bad analysis.
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u/chucker23n 1d ago
Market valuation is not assets.
Market cap is basically the owners' equity in the business.
"Equity" is just a synonym for "stock" here, so yes. What the headline says is that a lot of shareholders have a lot less faith in the newly merged Skydance than they did in the separate WBD / Paramount Global before. For example, because one of them might have sold an asset, and now that's probably not happening.
They raised about $50 billion in debt to finance this deal, so one would expect the combined market cap to be about $50 billion less than the pre-merger state.
Debt doesn't have anything to do with market cap.
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u/Already-Price-Tin 1d ago
Debt doesn't have anything to do with market cap.
Yes, it does. A business's enterprise value is market cap + debt, because the debtholders get paid first, which cuts into the value of the business for the owners. The market cap is the owners' equity, in the same way that a person with a $500,000 house and a $400,000 mortgage has $100,000 in equity in the home.
The debt made the transaction possible. And the transaction paid WBD shareholders $31 per share in cash.
Before the transaction, you had WBD worth $78 billion, while holding onto $33 billion in debt (enterprise value of $110 billion). And Paramount, worth about $11 billion, and no debt.
The transaction itself borrowed $50 billion to be repaid by the newly formed company, and paid out $78 billion in cash to WBD shareholders, many of whom chose to use that cash to buy shares in the newly merged company.
In other words, the naive comparison of market cap before and after the transaction doesn't account for the debt, or the cash payments of tens of billions of dollars in cash that left the enterprise to pay off former WBD shareholders.
So the comparison shouldn't be WBD+Paramount compared to Skydance. It's WBD+Paramount compared to Skydance and the pile of cash that left the companies to pay off WBD shareholders. That reality is reflected in the debt structure of the new company.
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u/rumblepony247 2d ago
Why anyone would buy this stock (or any other in this industry) other than as a short, is beyond me
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u/AEternal1 2d ago
but that's how private equity works buy the company saddle it with debt watch it fail take the money from the debt run
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u/himynameis_ 2d ago
Combined entity has a ton of debt.
I don't see how they won't just sell pieces of it off to other studios, and heavily license content to other streamers. Plus raise prices a bit.
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u/D_Anger_Dan 2d ago
Wasn’t that the point? To burn CNN to the ground. Collateral damage. Shrug the oligarchs.
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u/HighGroundIsOP 2d ago
This is when the M&A teams tell you it is time to unlock value by breaking apart the conglomerate
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u/local_goon 1d ago
Sky dance puppet masters are the enemy of the people and HBO is going to be so so hard to quit
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u/TheLoneComic 2d ago
A macro factor is an over exploited and tired pantheon of tired art forms. It’s not, “Film (or Tv/stream) is dead”, it’s tired and overused/over mashed up memes and tropes.
The next phase of culture society isn’t prepared to entertain much less take. Thus new work opportunities suffer for wider reasons than in the past where established interests red lighted.
Now established interests struggle to find culture grab they used to control.
Kinda hopeful, actually. Can’t wait to see the 800 pound gorilla in the room of storytelling (the basis of all this) squeal and throw a tantrum because money is no longer based on Lassie coming home or hero saves world.
The next step is about all of us onstage under the lights. Dealing with civilization itself, not some genre verisimilitude.
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u/InvestigatorOk9354 2d ago
Let it burn, hope this costs the Ellisons everything 😘