Paramount Skydance shares rose over 5% on Tuesday during pre-market trading, after the newly merged media group announced deeper cost cuts and plans to invest $1.5 billion in its streaming and studio divisions.
The news lifted investor confidence as the company reported its first quarterly results since the merger of Paramount Global and Skydance Media in August.
The combined entity, trading under the ticker PSKY, posted third-quarter revenue of $6.7 billion, missing analyst estimates of $6.97 billion.
But the upbeat guidance and aggressive restructuring efforts were seen as a sign of renewed focus under CEO David Ellison.
Ellison pushes digital transformation
Ellison, who founded Skydance Media and is the son of Oracle co-founder Larry Ellison, is driving a sweeping overhaul to modernise Paramount’s business model.
His goal, he said, is to bring the century-old media powerhouse into the digital age and position it to compete with Disney, Netflix, and Warner Bros. Discovery.
Since taking charge, Ellison has secured a string of high-profile content deals — including a Timothée Chalamet-led heist film, a five-year contract with “South Park” creators Matt Stone and Trey Parker, and a partnership with Activision to adapt “Call of Duty” for theatres.
Paramount also plans to ramp up its theatrical releases to 15 films in 2026, part of its effort to boost studio output and expand its global reach.
Ellison has set a revenue goal of $30 billion by 2026.
The company’s cost-saving drive has raised its target to at least $3 billion, including 1,600 job cuts tied to asset sales in Argentina and Chile.
These reductions come on top of 1,000 layoffs in October and 600 voluntary exits earlier this year.
Analysts urge caution on execution
While analysts have welcomed Ellison’s ambitions, they remain cautious about the near-term challenges.
“While we’re encouraged by Paramount’s vision, there remains a significant amount of execution across direct-to-consumer (DTC) and filmed entertainment, the benefits of which may not be visible until later in 2026,” J.P.Morgan analysts said.
Paramount faces mounting transformation costs, including a $500 million restructuring charge in the fourth quarter and $800 million in one-time investments through 2026.
The company’s TV Media division continues to struggle with declining ad revenue and cash outflows.
Only two of 26 brokerages currently rate Paramount Skydance a “buy,” with 16 recommending “hold” and eight suggesting “sell.”
The median price target stands at $12, according to LSEG data.
Strategic deals and acquisition ambitions
Ellison has already made bold moves to expand Paramount’s portfolio.
Days after the merger, the company signed a seven-year, $7.7 billion deal with TKO Group for exclusive US media rights to Ultimate Fighting Championship matches.
In October, Paramount acquired the news and opinion platform The Free Press for $150 million, appointing its founder, Bari Weiss, as editor-in-chief of CBS News.
Paramount has also reportedly made three offers to acquire Warner Bros. Discovery, though each has been rebuffed.
Ellison said the company’s balance sheet allows it to be “opportunistic” in pursuing mergers and acquisitions that align with its long-term goals, while emphasising there are “no must-haves” on its target list.
Despite recent challenges, Paramount Skydance shares have gained nearly 46% this year and trade at a forward price-to-earnings ratio of 14.58 — below Disney and well under Netflix — suggesting investors still see room for growth as Ellison’s digital overhaul takes shape
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