Skydance Sued Again: Consumers Target DC Shakeup, Cost Cuts, Streaming Combo in Refiled Antitrust Suit

Consumers who previously sued to block the Paramount-Warner Bros. Discovery merger have refiled their lawsuit in California federal court. The new challenge takes aim at David Ellison’s plans launch a Paramount+-HBO Max bundle in 2027 and eventually merge the two services into a single platform, calling the moves a “substantial threat of increased aggregate subscription costs, fewer independent offers, and diminished programming value.” “Before the acquisition, a consumer dissatisfied with the priceor programming of Paramount+ could direct that consumer’s subscription payment to HBO Max, an independently owned competitor, and vice versa. That choice between independent sellers hasbeen eliminated,” the complaint states. “The two services may retain distinct names and interfaces, but both now answer to one owner and its combined financial interests. The announced bundle is a concrete steptoward implementing that change in competitive incentives.” The consumers also called out Skydance’s plans for at least $6 billion in merger-related cost savings over the next three years, as well as layoffs at Skydance Games and the ouster of DC Studios co-chairs James Gunn and Peter Safran. “Workforce reductions are relevant here not as an independent claim for employees’ injuries, but as evidence of an integration strategy that can remove creative capacity and reduce the number, variety, and quality of finished products offered to viewers. These announcements support Plaintiffs’ specific concerns about loss of independent choices and programming output, rather than an objection to corporate restructuring alone,” the complaint continues. “When separately competing creative teams are reduced, or their development decisions are pooled under a single budget, fewer projects will be commissioned or completed, and consumers lose differentiated shows and films that independent rivals otherwise had incentives to produce.” Additionally, the group warned that Skydance’s leadership has “powerful financial incentives to increase subscription revenue, eliminate overlapping operations, and reduce investments in independently produced programming” as it looks to service nearly $80 billion in net debt. “Those incentives, combined with the elimination of independent competition, substantially heighten the threatened harm tothe prices, quantity, quality, and variety of the products Plaintiffs purchase,” they added. The consumers are seeking a court order to unwind the $110 billion deal as well as the Paramount Skydance merger. They are also asking for an unspecificed amount of damages and for the costs of the lawsuit and attorneys fees to be covered. The refiling comes after their original antitrust challenge was dismissed by a judge in August. The merger subsequently closed in October after reaching separate legal settlements with a group of 12 state attorneys general and the Writers’ Guild of America. A spokesperson for Skydance did not immediately return TheWrap’s request for comment. In addition to the bundle plans, Skydance CEO David Ellison revealed on Monday that Paramount+ and HBO Max would be merged onto the same backend infrastructure within the first year of the merger’s closing. Executives have previously said that the two services would eventually be combined into a single platform. As of the third quarter, Paramount+, HBO Max and HBO reach a total of 203 million subscribers globally. Paramount+ accounts for 82.2 million of that total, while HBO Max and HBO make up the remaining 120.8 million. The company will no longer disclose subscriber counts on a quarterly basis starting next quarter. Ellison and Skydance co-CEO Ynon Kreiz also provided more specifics on the $6 billion in cost savings, which will come from areas including real estate, labor, technology, marketing and procurement. Approximately 30% of its merger-related cost savings will be realized in the first year of the deal and 70% will be realized within two years as it looks to service nearly $80 billion in net debt. Those savings include: At least $2.2 billion in cost savings from consolidating redundant back-office and corporate functions, reducing management layers, using shared services, implementing a single enterprise resource planning system, scaling AI workflows, and shifting to lower-cost support functions.” It is also rationalizing its real estate footprint while keeping the Paramount and Warner Bros. studio lots. At least $1 billion in savings from streamlining its company-wide spend on marketing, including unifying media planning and buying and coordinating cross-business unit campaigns At least $1.4 billion in technology spending from unifying its enterprise tech stack, streaming ecosystem and broadcast architecture, merging parallel technology functions, leveraging AI coding tools and integrating platforms and systems At least $1.4 billion in savings from procurement and vendor management Skydance has already offered some employees voluntary buyouts ahead of the formal layoffs and is shifting to a mandatory in-office policy of five days per week. At least 25 people have also been impacted by a reorganization in the Skydance Games division. Additionally, Skydance executives said they see an opportunity to generate cost savings through content and making smarter choices about how it distributes and monetizes its slate. When asked specifically about whether it would drop or sublicense anything from its portfolio of 36 premium sports rights, Ellison said the company reviews each package on a case-by-case basis based on its audience size, engagement and advertising value, economics and whether it fills a gap in its sports calendar. “As it relates to future rights, we’ll be disciplined. Every right has to earn its place, but we’re really happy with the portfolio we have,” Ellison added. “We also feel we’re well positioned to be great partners to all of our sports leagues that we have the privilege of being in business with.” Skydance expects to incur roughly $1.5 billion to $2 billion in costs to achieve its merger-related savings in 2027 and $4 billion throughout its transformation, with 60% to 70% to impact 2027 and 2028. By 2030, Skydance expects mid-single-digit annualized revenuegrowth, mid-20% adjusted EBITDA margins and more than $10 billion in free cash flow. It also expects to transition the majority of its revenue and profit from the declining linear TV business to the streaming and studios businesses. Additionally, the company plans to invest more than $30 billion in content annually and lower its leverage ratio — a measure of a company’s debt relative to its earnings — to 3x in 2029. While executives believe they can hit that target without raising additional equity or asset sales, they noted they would review Skydance’s portfolio as it integrates Paramount and Warner Bros. Discovery and be “opportunistic” around monetizing non-core assets. The company will provide more details about their progress and plans when they host an Investor Day in the first half of 2027. More to come…