Skydance Shares Fall 9% as Warner Bros. Films Weigh on Earnings
Walt Disney shares fell 1% in morning trading as Skydance dropped 9% despite beating quarterly earnings estimates. Skydance’s chief financial officer warned that underperforming Warner Bros. films would weigh on fourth-quarter adjusted earnings, while Disney’s decline was smaller than the newly merged company’s.
Walt Disney shares fell 1% in morning trading as Skydance stock dropped 9% after its chief financial officer warned that underperforming Warner Bros. films would drag fourth-quarter adjusted earnings by $200 million. Disney stock was trading at $117.64, while Skydance shares stood at $7.92.
Skydance’s decline came despite the company beating analysts’ estimates for its first quarterly results since completing its acquisition of Warner Bros. Discovery. The contrasting share moves pointed to concerns focused on Skydance’s film slate and balance sheet rather than a broad selloff across media stocks.
Skydance reported adjusted earnings per share of $0.45, above the $0.20 consensus estimate. Revenue reached $7.03 billion, compared with a $7.02 billion estimate, and rose 4.8% year over year.
On a GAAP basis, Skydance earned $0.06 per share. Its results included $89 million in restructuring costs, $98 million in transaction-related costs and a $275 million discrete tax reserve, partly offset by a $514 million net derivative gain.
Chief Financial Officer Dennis Cinelli said the Warner Bros. film slate would create a $200 million drag on adjusted earnings before interest, taxes, depreciation and amortization in the fourth quarter. The impact covers films already released and those still due before the quarter ends.
Skydance’s streaming and studio businesses grew, with Paramount+ revenue up 21% and Studios revenue up 23% on secondary licensing. Television revenue fell 7%, however, while advertising declined 8% and affiliate revenue dropped 5% amid pay-TV subscriber erosion.
The company carried $87 billion in gross debt after the acquisition closed. Skydance is moving to annual guidance, with full 2027 guidance due alongside its fourth-quarter results, and plans to put more emphasis on profitable streaming growth than subscriber counts.
Chairman and Chief Executive David Ellison reiterated a goal of at least $6 billion in annual run-rate synergies within three years and more than $10 billion in free cash flow by 2030. “Growing our business and paying down debt are our top priorities, and we strongly believe we can achieve both simultaneously,” Ellison said.
A bundle combining Paramount+ and HBO Max is planned for early 2027. Ellison also named Jeremy Latcham to the DC studio operation, describing him as “one of the founding team members of Marvel Studios.”
Netflix shares fell 2% to $62.90 in morning trading. Disney stock was up 4% year to date, while Netflix was down 33% and Skydance was down 40%.
