Why the Skydance Merger is the Worst Thing to Happen to the Entertainment Industry in Years
Yesterday, on October 6, 2026, a corporate merger officially closed that joined two of the oldest studios in Hollywood, Paramount and Warner Bros., into a single company called Skydance that will control 27% of the film market and shrink the Big Five studios to a Big Four. It will also put HBO Max and Paramount+ under one roof, meaning that it would be naive to expect those services to stay separate, or to stay at their current prices, forever.
This deal didn’t happen in a vacuum, and what Skydance has done with Paramount over the past year is the best evidence of what comes next. David Ellison’s company completed its purchase of Paramount in August 2025, and in the months leading up to that deal closing, Paramount’s co-CEOs told employees they were rolling back diversity initiatives to comply with the federal government’s directives, ending aspirational hiring goals and simultaneously removing diversity from executive bonus metrics and from what we see on our screens, all while the company sought FCC approval for the Skydance deal. Under Ellison, the pattern has continued. Avatar Aang: The Last Airbender, a film made for theaters, was pulled from its scheduled release and sent straight to Paramount+, while Paramount’s 2026 theatrical slate was so thin that some outlets referred to it as barren. Meanwhile, Star Trek: Starfleet Academy, the franchise’s most ambitious attempt to speak to a younger audience, was canceled after two seasons out of a planned four. With the only other remaining show in the franchise, Star Trek: Strange New Worlds, ending with its fifth season, there is no Star Trek series announced beyond them, only a questionable theatrical film in development.
The path to the merger’s closing deserves scrutiny too. The Justice Department approved the deal in June without a single condition despite it presenting clear and significant antitrust concerns. It took a coalition of twelve state attorneys general to fight it, and even they were pressured into settling in the end. The settlement’s centerpiece is a “news editorial independence board” meant to safeguard CNN and CBS News. Critics have called it toothless, and at least one attorney general who signed off on the settlement said afterward that he had pushed for a full divestiture of both news outlets. Ellison insists that no commitments about CNN were made to any government body, and that he is in “the truth business.” But he is also a friend of an increasingly dangerous president, having hosted a Washington dinner in April honoring Trump, and has put Bari Weiss, an outspoken critic of “wokeness,” in charge of CBS News. Some Paramount shareholders have already sued, alleging a quid pro quo with the president. Ellison denies it.
It is Warner Bros. that has the most to lose. The studio’s history is a catalogue of American cinema: Casablanca, The Searchers, My Fair Lady, Million Dollar Baby, The Departed, Argo, Barbie, plus the DC Universe, Harry Potter, and The Lord of the Rings film franchises. In 2025, under Michael De Luca and Pamela Abdy, it did something no studio had ever done, releasing seven consecutive films to opening weekends above $40 million. Those weren’t safe sequels. They included films like Sinners, Weapons, and A Minecraft Movie, alongside Superman and F1. Analysts credited the studio’s “big creative risks,” and the risks paid off. The streak ended with One Battle After Another, a $130 million Paul Thomas Anderson epic that went on to win Best Picture. At the most recent Academy Awards, Warner Bros. tied the all-time studio record with 11 Oscars from an industry-leading 30 nominations.
And yet, De Luca and Abdy will not be part of Ellison’s management team. The film studio they shepherded to such great success for the past four years will now be overseen by Dana Goldberg and Josh Greenstein, the executives who have been running Paramount Pictures for Ellison for the past year, thus bringing an end to a studio with a 103-year history as its assets are completely absorbed into this new Skydance framework. Goldberg and Greenstein have pledged that Paramount Pictures and Warner Bros. Pictures will keep building and releasing their slates separately, each film carrying its own logo, with DC Studios and New Line Cinema remaining distinct labels, while Ellison says the company will make “a completely diverse slate” with original stories and has pointed to Sinners as his favorite film of 2025. I’d like to believe all of it. But the logo is not the studio. Putting “A Skydance Company” under the Warner Bros. shield preserves the packaging while moving every decision about what gets made into a single set of hands. 35 films in the first year, one every eleven days, will be “choreographed” from the top. That is not how independent studios work. That is how a single studio works.
It is also how a single studio cuts costs. The same merger will place Cartoon Network and Nickelodeon under one owner, will place CNN and CBS News under one owner, and David Ellison and co-CEO Ynon Kreiz have already acknowledged that layoffs are coming. The scale is not yet known, but with overlapping studios, networks, streaming services, and game divisions, it will be significant, and every job cut is a voice removed from an industry that desperately needs more of them. The fewer different studios we have, the fewer different kinds of films we get to see.
And all of it rests on an enormous bet. Wall Street is scrutinizing Skydance’s strategy for managing roughly $80 billion in debt on a three-year runway to pay it down, and Fitch has already downgraded the company’s credit rating. The only slim silver lining is the possibility that this same mountain of debt that makes Ellison’s empire so precarious could one day become its undoing, forcing him to sell Skydance or its individual assets off to better, more progressive ownership, one that understands that a studio’s legacy is something to be nurtured rather than stripped for parts. It’s a long shot, but with this much debt on the books, it isn’t an impossible one.
Because debt like that doesn’t encourage risk. It demands predictable returns, the safest franchises, and the cheapest possible path to the next quarter. Kreiz himself described the investment thesis as increasing output and establishing the company as a “content engine.” Engines don’t care what they produce, only how much.
For now, there is still plenty to look forward to. Films that were already developed under the Warner Bros. leadership that is now on its way out, including Clayface, Dune: Part Three, Remain, Godzilla x Kong: Supernova, Man of Tomorrow, A Minecraft Movie Squared, The Great Beyond, and The Lord of the Rings: The Hunt for Gollum, are all on the way through the end of 2027. After that, we’ll find out what this new company actually wants to make. Ellison says movies are best seen together on a big screen, and I hope he means it. But the history of media consolidation suggests that promises made on day one rarely survive the debt payments of year three, and if they don’t, the damage to this studio, and to the industry around it, will have been the work of one very powerful, very well-connected billionaire.