The Merger of WBD and Paramount Takes Effect.. "Skydance" Seeks Transformation in the Entertainment Sector

- The massive merger between "Paramount" and "Warner Bros. Discovery," which came into effect today, Tuesday, symbolizes the dominance of major tech companies in Hollywood.

This step also represents an opportunity for the new entity named "Skydance" to emulate the approach of tech companies and bring about a transformation in the entertainment sector. Technology is a fundamental pillar in the promotional pitch that "Skydance" is presenting to the "Wall Street" community, which is set to be opened by Skydance's CEO, David Ellison, later this week.

In addition to every reference to the timeless art of storytelling and Ellison's personal passion for cinema, there is also a mention of highly advanced technical capabilities and the creation of a "comprehensive global entertainment platform." The newly appointed co-CEO of Skydance, Ynon Kreiz, stated on Monday that the company will create "the most technologically advanced media company, through a modern technology platform that enhances user experience, improves workflows, and achieves high operational efficiency."

Technology was mentioned 9 times in the press release issued by Ellison and Kreiz regarding the company's new leadership team, which includes experts from Google, Facebook, and "Scale AI." The executives indicated that they would use artificial intelligence tools - which Ellison described as a "force multiplier" - across all departments of the company.

They will also work on updating the technical infrastructure that powers streaming services like HBO Max, one of the many assets of "Warner" that Ellison sought to acquire over the past year. Afaq News also joined "Skydance" on Tuesday.

On Tuesday morning, "Skydance" promoted the merger as a positive step for consumers, noting that they can "expect more innovation from a company that puts technology at the core of its business, including substantial improvements to direct-to-consumer streaming services, which will merge to become a unified service over time." The cost of expansion is considered a remarkable achievement for Ellison, 43, who initially launched a small production company in Hollywood two decades ago.

Thanks to financial support from his father Larry - co-founder of "Oracle" and one of the richest people in the world - Ellison took charge of "Paramount" in August 2025 and immediately began making an offer to acquire "Warner," which is many times larger than "Paramount." Warner Bros. Discovery CEO David Zaslav repeatedly rejected Ellison's offers.

"Warner" initially agreed to a deal with Netflix, but Ellison ultimately presented a better offer, driven at least in part by "Paramount's" need to strengthen its position in the direct streaming market. For Hollywood experts, the message was clear: with exceptional support from Larry Ellison's wealth in Silicon Valley, the heir to a tech company carved his way into the heart of the entertainment world.

Now, with the addition of "Warner's" assets, "Skydance" will reach over 200 million subscribers to streaming services worldwide. Laura Martin, an analyst at Needham & Co, wrote on Tuesday that the merger "creates a strong global competitor in the streaming space."

The merger will also unify two of the five largest studios in Hollywood, dozens of television channels, and two of the largest television news divisions in the United States, namely ABC News and CBS News. As with any merger, there is a lot of unattractive administrative work that needs to be done.

The risks here are particularly heightened as the new company is burdened with debt, amounting to approximately $80 billion, and has a tight schedule for repayment. Ellison's management team will need to sharply cut costs, partly by streamlining some of the overlapping technology platforms of "Paramount" and "Warner."

Ross Benes, a senior analyst at "eMarketer," told Afaq News: "When Sky Dance officials promise to turn it into a technology company, I expect layoffs." He added that there is clear work to be done to improve the company's technological infrastructure.

Sky Dance announced on Tuesday that most of the cost savings will come from "technology, integration and procurement, marketing, and streamlining real estate." Benes stated: "There are many streaming services offered by the two companies, and they may need some technological investments to unify and simplify them."

He added: "Compared to competitors like Netflix, Disney+, and Amazon Prime Video, Paramount+ and HBO Max do not offer the best user experience." It is likely that these two streaming services will be launched together in a single package, and there is a plan to "unify the technical infrastructure for direct-to-consumer operations," according to Jerry Cardinale, one of the key engineers of the merger deal, last week.

Cardinale pointed out that the only way for Hollywood to move to the next stage and achieve parity with "players in the north (i.e., Silicon Valley companies) is to transform the institution to become closer to a technology company." However, this is easier said than done in a sector accustomed to releasing films rather than software updates.

Moreover, "Skydance" is facing significant skepticism due to its move to merge such a large number of studios and platforms under one corporate umbrella; opponents of the merger believe that the deal would reduce opportunities available to a wide range of storytellers and creators. Janet Grillo, a professor at NYU's Tisch School of the Arts and former executive at New Line Cinema, said: "How can a monopoly be beneficial to any sector? It eliminates competition, stifles innovation, and hinders growth."

Silicon Valley rules. "Skydance" is seeking to attract attention amid a media landscape completely reshaped by Silicon Valley companies.

YouTube is the most-watched service on television in the United States, continuing to enhance the experience for both content creators and viewers, and represents television itself for many. Some of the biggest box office successes this year did not come from major studios, but from young filmmakers who started their careers on YouTube and marketed their works online.

This is in addition to the increased time audiences spend watching "microdramas" that last no more than two minutes and are specifically produced for the TikTok platform. Larry Ellison played a pivotal role in the deal that kept TikTok available in the United States, and Oracle also holds a stake in this project and oversees the storage of American users' data on the platform.

Artificial intelligence is also innovating new ways to accomplish everything, from content editing to creating entire characters, which may, in turn, reduce job opportunities available for humans. Ellison told CNBC earlier this year: "I don't think artificial intelligence is a substitute for human creativity."

I see it as a multiplier of the power of filmmakers in creative circles, enabling them to achieve their vision more completely, and I believe it will be an extremely important tool for this industry." With a company like Skydance owning intellectual property rights that span decades, artificial intelligence may open up new licensing opportunities, which could help build a revenue source that Kenan Kriz knows well from his years of work as CEO of Mattel.

Last year, Disney tested a new approach to licensing its cartoon characters using the Sora AI video application from OpenAI, but the application ceased operations after a few months. Ellison appointed several key talents from Silicon Valley to support his ambitions.

Last year, Dain Glasgow, a Google and Meta graduate, was appointed as the head of the product division at Paramount. In May, Glasgow attracted Barak Torofsky, the former head of artificial intelligence at General Motors, to lead the consumer AI division.

Torofsky previously spent more than a decade at Google, where he applied artificial intelligence to some of its core products, including search and advertising. In August, Nick Lee, who spent four years working on artificial intelligence at Microsoft and sixteen years at Google before that, joined Paramount, as did Susan Pelican, who worked for eight years at Google, including improving the advertising product using artificial intelligence.

Just last week, the company announced the appointment of two more executives specializing in artificial intelligence. Nikhil Mehta, one of the new appointees, said in a post on LinkedIn: "There is a huge opportunity to use artificial intelligence to change the way users discover what they watch and enjoy."

This merger also represents a generational change, as David Ellison is decades younger than many of his peers. His relative youth may not translate into a level of technical competence that distinguishes "Skydance" from others.

For example, last fall, Ellison greenlit a feature film based on the video game series "Call of Duty," partly because he is a huge fan of it. However, traditional media companies, such as "Paramount" and "Warner," are still far from innovating a game that rivals "Call of Duty" on their own efforts.

The establishment of "Skydance" is the culmination of a dream that has long been held by its founders, but achieving long-term success requires it to go beyond being just a Hollywood empire. As Ellison stated last year, coinciding with his taking the reins at "Paramount": "Unless you can build a tech product that can actually compete with what comes out of Silicon Valley, you won't be able to compete."