Industry Insider: Paramount Skydance Charts an Aggressive Rebuild as the New Era Takes Shape
Paramount Skydance achieved its first key milestone this quarter: 96 days as a single organization. The merger, one of the most closely observed restructurings in contemporary entertainment history, was touted as a marriage of traditional storytelling power and emerging technical discipline. Following the release of its Q3 2025 shareholder letter and the first earnings call, the business provided its most specific blueprint yet for how the new Paramount expects to compete in a global streaming economy influenced by consolidation, growing content costs, and altering audience behavior.
The top line is clear. Paramount Skydance anticipates $30 billion in total revenue and $3.5 billion in adjusted OIBDA in 2026, powered by a streaming business that the firm claims will be profitable globally next year. At the same time, leadership increased its run rate efficiency target from $2 billion to at least $3 billion as it continues to eliminate redundancies, reorganize business units, and reduce staff layers throughout the organization. These endeavors are one of the most major attempts in recent years to rebuild a legacy media empire from the inside out.
However, underlying the financial targets is a deeper philosophical shift. Paramount Skydance is establishing itself as a technology-forward entertainment firm with plans to develop streaming, elevate its film and TV studios, and restore Paramount Pictures' theatrical slate, all while consolidating operations under a streamlined corporate structure. Viewers will notice increased content output and a more refined streaming experience. Investors will see increased profitability, lower structural costs, and a more disciplined approach to global growth. For both viewers and Wall Street, this quarter is the true start of the new Paramount.
From the start, the merger established storytelling as Paramount Skydance's primary purpose. This focus is reiterated in the shareholder letter, which emphasizes investment in cinema, television, sports, news, and gaming content that must be continuously delivered to worldwide audiences. To extend its collection, the company is seeking high-profile partnerships and long-term exclusive deals in a variety of creative sectors. Recent acquisitions include an exclusive five-year contract with Matt Stone and Trey Parker, a four-year pact with the Duffer Brothers beginning in 2026, an overall film deal with James Mangold, and a first-look relationship with Jessica Biel and Michelle Purple's Iron Ocean Productions.
The business recently completed one of its most ambitious entertainment crossovers: a full picture version of Activision's Call of Duty by director Peter Berg, with input from writer and creator Taylor Sheridan. Sheridan's contract expires in 2028, but leadership stressed ongoing collaboration throughout the rest of the decade.
Nonetheless, Paramount Pictures remains one of the new enterprise's major pressure points. The shareholder letter acknowledges that the 2025 film slate underperformed, with most films expected to miss lifetime earnings objectives. Starting in 2026, theater output will increase to at least 15 films per year, nearly doubling the quantity produced when the merger was completed. On the results call, leadership reaffirmed that quality is still a top focus and that Skydance's track record, which includes titles such as Top Gun Maverick, is leading the rebuilding of Paramount's theatrical strategy.
Television output will also increase, with programs available on both company-owned platforms and through third-party licensing. Live sports remain an important pillar. Paramount just signed a seven-year exclusive media rights arrangement with the UFC, launching monthly headline events in the United States, Latin America, and Australia. The firm also announced deals with Zuffa Boxing and the Professional Bull Riders premier tour, which will begin in 2026. These brands join CBS Sports' existing rights, which include the NFL, March Madness, the UEFA Champions League, the PGA Tour, The Masters, and more.
Paramount Skydance's renewed expenditures in franchises and live events indicate that it hopes to capture viewer attention with regular global tentpole material. The strategy is similar to those of Disney, Comcast, and Warner Bros. Discovery, but with a stronger emphasis on unified technological infrastructure and smaller corporate operations.
The corporation reiterated one point in both the shareholder letter and the earnings teleconference: streaming is the highest priority. Paramount+, which added 1.4 million subscribers in the third quarter, bringing the total to 79 million, remains the principal driver of growth, revenue, and long-term profitability. The company announced a 24% year-over-year revenue rise for Paramount Plus and a 17% gain in the direct to consumer market overall. The average revenue per user also increased by 11% year on year.
Leadership feels that global expansion is dependent on two pillars: more investment in content and a new streaming platform. The company presently operates three distinct technology stacks across Paramount Plus, Pluto TV, and BET Plus. These systems operate across many clouds, with no infrastructure connectivity. Convergence is underway to consolidate all services under a single platform by mid-2026. David Ellison defined the unified tech strategy as a revolutionary investment aimed at improving suggestions, discovery, personalization, and ad revenue.
On the investment front, the business is expanding Originals and restructuring its annual programming schedule. Tulsa King, Mayor of Kingstown, and Landman will return for new seasons in Q4, with Dexter Resurrection, Yellowjackets, and The Chi all renewed. Paramount Plus will also benefit from the UFC relationship, which will eliminate the typical pay-per-view secondary paywall. Fans may now watch UFC events for the price of an annual Paramount Plus subscription, which was previously the same as a single PPV. The company expects this transition to result in more subscriptions and year-round engagement.
The enlarged lineup represents a strategy change toward more balanced year-round programming, rather than concentrating releases around sports or holiday periods. This approach is similar to that of streaming leaders Netflix, Disney Plus, and Prime Video, which have shifted away from seasonal increases in engagement. Paramount Skydance also announced forthcoming pricing increases in the United States, Canada, and Australia to fund greater investments in technology and content.
However, not all overseas markets will experience increased investment. The company plans to abandon low-margin hard bundles, terminate free trials, cut pricing, and reduce investment in locations with no clear path to profitability. Pluto TV will play a larger role globally, particularly in low-ARPU markets where free ad-supported streaming is frequently used as an entry point into paid subscription ecosystems.
Overall, Paramount Plus is positioned as the flagship of the new Paramount. Its performance will determine whether the company's ambitious content and technological investments can provide sustainable long-term margins.
While content and streaming drive the growth story, the company's transformation strategy is also defined by structural discipline. Paramount Skydance is reorganizing into three corporate units: Studios, Direct to Consumer, and Television Media. Core functions are being integrated to reduce redundancy, optimize workflows, and improve cooperation.
Four company-wide workstreams anchor the transformation:
Technology as a Core Competency: This includes platform convergence, new enterprise software through Oracle Fusion, cloud optimization, unified ERP systems by early 2027, and expanded use of AI for search, recommendations, and operational efficiency. Leadership stresses that AI will enhance, not replace, human inventiveness.
Improved Industrial Efficiency and Scalability: The new Global Operations department integrates procurement, real estate, facilities, security, and global business services, focusing on automation and artificial intelligence. Real estate consolidation strategies seek to integrate teams while reducing overhead.
Unified Leadership Structure: Reducing leadership levels improves decision-making efficiency. Recent reductions affected about one-quarter of senior vice presidents and above.
Workforce Optimization: Approximately 1000 personnel were reduced, with a voluntary severance program offered to LA and NY employees who did not want to return to full-time office employment in January 2026. Approximately 600 employees accepted the offer. Additional divestitures in Argentina and Chile will reduce manpower by around 1600 more.
These actions boost confidence in achieving at least $3 billion in run rate efficiencies by 2027, with $1.4 billion completed by the end of this year and an additional $1 billion scheduled for 2026. Achieving these reductions will cost around $800 million in 2026 and up to $500 million in 2027 in one-time investments.
Paramount Skydance has a clear goal for 2026: expand the streaming business, rebuild theatrical output, elevate television and sports, and consolidate technological and operational infrastructure. The tone of both the shareholder letter and the earnings teleconference implies urgency and conviction. Leadership feels the company is now well-positioned to offer high-quality content on a large scale while generating long-term cash flow.
The coming year will see if Paramount Skydance can maintain subscriber growth, increase ARPU, and boost engagement as it introduces new technology and a larger film slate. Investments in premium content, paired with cost discipline and better platform experience, represent the company's bet on becoming a worldwide streaming powerhouse.
In a business marked by consolidation, increased rivalry, and a trend toward creator-driven platforms, Paramount Skydance is making one thing clear. This merger is not an extension of the former Paramount. It is the foundation for something completely new.
