With Warner in the Fold, Skydance Now Must Realize Its Expected Synergies and Reduce Debt

Skydance’s acquisition of Warner Bros. Discovery puts the firm in a much better position to compete and drive growth in the streaming and studios businesses, but it also increases exposure to linear television networks, which are in perpetual decline. Overall, we view the firm as much better positioned to be a long-term winner in the industry. However, the high price it had to pay leads us to believe the deal is dilutive, and the debt Skydance took on brings substantial risk.