Paramount executives tried to reassure regarding the extent of layoffs anticipated as it seeks $6 billion-plus in synergies within three years of closing its acquisition of Warner Bros. Discovery. The belief around town is that the savings would be mostly jobs cuts.
“It’s important to note that the majority of our synergy target comes from non-labor sources among the efficiencies we have identified,” said David Ellison on call with Wall Street media analysts to discuss the landmarket merger announced Friday between Paramount and WBD. He said cuts would not touch production capacity.
He sees savings from “consolidating our spending technology stacks and cloud providers, including Paramount+ and HBO Max; realizing global efficiencies in procurement and business services; optimizing the combined real estate footprint and the broader corporate overhead; driving efficiencies in marketing; optimizing spending on agencies; and also migrating the combined company to a single enterprise resource planning, otherwise known as ERP system, and combining other IT systems across the company. Again, these are just a few examples of where we believe we will find meaningful efficiencies as we unite these storied companies.”
It’s not clear how reassuring that is. Many industry players believe the cuts must go well beyond $6 billion given the combined company’s massive debt load. A “majority” can mean just over half. Paramount had already undergone waves of layoffs leading up to and after its acquisition by Skydance.
At Paramount, Ellison said, “We’re well on our way to delivering on our transformation, and we are using a similar plan here. … obviously, on a larger scale.”
“I want to note that while we expect significant efficiencies and for that $6 billion to ultimately fall to the bottom line, is important to note that we are positioning the business for investment and growth in addition to reducing debt over the near term,” added said.
Separately on the call, Ellison declined to respond to a question about contract negotiations with Hollywood guilds as that process begins to gather steam just as this giant media merger is taking off
A combined Netflix and WBD was expected to see minimal staff cuts, according to co-CEO Ted Sarandos. Warner Bros. terminated its sale to the giant streamer last week and agreed to sell itself to Paramount for $31 a share in a deal worth $110 billion. Par expects the deal to close in the third quarter.
More to come