Paramount Skydance has completed its $110billion (£80billion) takeover of Warner Bros Discovery, raising concerns about job losses in Hollywood and higher streaming subscription prices.
The newly formed entertainment company, which moved from Nasdaq to trade under the ticker SKYD on the New York Stock Exchange on Tuesday, brings together the Paramount and Warner Bros studios.
Chief executive David Ellison will lead the combined business, which houses the CBS and CNN networks alongside the Paramount+ and HBO Max streaming services.
"Today is a historic day, not just for Skydance but for our entire industry," Ellison said.
"From the start, our ambition was to bring these two storied studios together and create a stronger competitor, with the talent, resources, and reach to tell great stories in every genre, on every platform, for audiences everywhere. Now that ambition is a reality," he added.
Paramount is the studio behind films such as The Godfather, Titanic and Top Gun. Warner Bros is responsible for box office hits including The Wizard of Oz, Casablanca, Barbie and Harry Potter.
Fears of higher subscription prices
The deal was completed after Skydance reached settlements with a Hollywood writers union and a coalition of US states led by California, which removed the main legal barriers to the merger.
However, industry watchers fear that streaming prices could rise at HBO Max, which hosts The Sopranos and House of the Dragon, and Paramount+, home to Yellowstone.
Mike Proulx, research director at Forrester, warned that the $80billion (£70billion) of debt used to finance the transaction could lead to higher costs for subscribers.
"It's hard to imagine that streaming price hikes aren't in Skydance's future," Proulx said.
Executives aim to make $6billion in annual cost savings within three years. While short term deals to attract customers are likely initially, monthly subscription costs are expected to increase over time, although no pricing changes have been posted yet.
Staffing and restructuring concerns
The merger has also sparked fears of significant job losses among actors, writers and behind the scenes staff in Hollywood.
Employees are concerned the takeover will result in cuts as news brands are consolidated, affecting the US television channels CNN, previously owned by Warner Bros, and Paramount's CBS News.
Ellison, the son of billionaire Oracle founder and Donald Trump ally Larry Ellison, said the Skydance name was chosen to retain the individual identities of the Paramount and Warner Bros studios.
Analysts suggested the name highlights the extent of Ellison's control, giving him a platform to impose his strategy and culture on some of Hollywood's most iconic brands.
The merger will also affect the wider media landscape in the United Kingdom, where Skydance will now control Channel 5, previously owned by Paramount, as well as TNT Sports, a joint venture between Warner Bros and BT Group.
UK Culture Secretary Lisa Nandy said in June that she was minded to intervene in the transaction due to public interest concerns over competition, but the deal was given the green light and completed today.
Film release quotas
As part of the settlement with the US states that opposed the merger, Skydance has committed to releasing 156 films over the next five years.
The company must release 30 films annually for the next two years, increasing to 32 films a year for the three years after that.
Most of these must be wide releases shown in cinemas, rather than being limited to a single streaming subscription service, and four films each year must be independent productions.
If Skydance fails to meet the annual quota, it could be forced to sell its 49 per cent stake in Miramax, the studio co-founded by Harvey Weinstein.
It is unknown how many films the company will release after the five year period ends.
Some observers are concerned that Skydance will use its future flexibility to prioritise streaming over mainstream cinema releases, similar to the strategies employed by rivals Disney and Netflix.
Founded in 2010, Skydance built its reputation by financing and producing the Paramount blockbuster Top Gun: Maverick. The independent studio merged with Paramount last year before entering a heated bidding contest with Netflix to acquire Warner Bros.
