Paramount executives sought to soothe the scale of expected job cuts as the company seeks to realize more than $6 billion in synergies within three years of completing its acquisition of Warner Bros. Discovery. There is a general consensus among the town that the savings were largely through layoffs.
“It’s important to note that the majority of our synergy targets are coming from non-labor sources within the efficiencies we’ve identified,” David Ellison said on a call with Wall Street media analysts to discuss the landmark merger announced Friday by Paramount and WBD. He said the cuts would not affect production capacity.
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He believes, “Integrating our spend technology stack and cloud providers, including Paramount+ and HBO Max; achieving global efficiencies in procurement and commercial services; optimizing the combined real estate footprint and broader enterprise overhead; improving marketing efficiency; optimizing agency spend; and migrating the combined company to a single enterprise resource planning (also known as ERP system), and consolidating other IT systems across the company. Again, these are just a few examples of the meaningful efficiencies we believe we will find by bringing these legendary companies together.”
It’s unclear how reassuring this is. Many industry insiders believe the reductions will have to be well over $6 billion, given the combined company’s massive debt load. “Majority” can mean more than half. Paramount has gone through a wave of layoffs both before and after its acquisition by Skydance.
At Paramount, Ellison said: “We’re well on our way to transitioning, and we’re using similar programs…obviously, on a larger scale.”
He added: “I would point out that while we expect significant efficiencies and that $6 billion to eventually come down to the bottom line, it’s important to note that in addition to reducing debt in the near term, we are positioning the business for investment and growth.”
Separately, on the call, Ellison declined to answer questions about contract negotiations with Hollywood guilds as the process begins to heat up as the massive media merger begins.
Co-CEO Ted Sarandos said Netflix and WBD expect minimal layoffs following the merger. Warner Bros. terminated its sale of the streaming giant last week and agreed to sell itself to Paramount for $31 per share in a deal valued at $110 billion. Par expects the deal to close in the third quarter.
