Skydance co-CEOs David Ellison and Ynon Kreiz sought to dial down Hollywood jitters that the company’s massive and expensive-to-service debt load approaching $80 billion will force them shortchange production.
“We have a business plan. There’s a complete financial envelope to how we’re going to run the business, and content is a spend, but you can also see it as an investment because it’s also going to drive growth,” Kreiz said during a press conference Tuesday to mark the close of the Paramount-Warner Bros. Discovery merger. Skydance is looking to annual content spend of $30 to $40 billion.
“As a whole, yes, we have debt. But we expect to reduce the leverage. It’s really about the leverage ratio — what does the debt mean relative to profit. We intend to bring it down as we’ve said publicly two, three times, by 2029 [while] investing in content and at the same time achieving synergies in other parts of the company,” said the former Mattel boss who joined Ellison’s Skydance last week.
“It’s all part of a multi-year plan that will drive growth and expansion and increase cash flow over time, that will allow us to bring debt down, improve our leverage ratio, and continue to run the business for long-term growth,” he added.
Ellison swatted down the argument that “you can’t actually operate more efficiently while investing more in content.”
“I’d just point to the last year, what we’ve done at Paramount. We’ve overdelivered on synergies — $2.7 billion, basically, by the end of this year from an initial announcement of $2 billion. We did that while doubling the film slate at Paramount from eight films to 15, greenlighting four new and returning series, and growing EBITDA [earnings before interest, taxes, depreciation and amortization, a key metric] significantly year-over-year.”
So, “you actually can do both things simultaneously. We’ve measured this incredibly carefully,” he said.
The combined entity will have $70 billion in revenue, Ellison noted, and the plans is to ultimately grow to “a $10 billion-dollar cash flow company … We absolutely have the ability to manage the debt and de-lever while investing for growth.”
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