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Skydance may have expanded its entertainment empire by acquiring Paramount Pictures and Warner Bros. Discovery, but the deals also left the company carrying a staggering $80 billion in net debt. Variety reports that Skydance is under intense pressure to pay it down, and layoffs and broader spending cuts are only part of the plan. Even the company's smaller dining and hospitality expenses are now under scrutiny.
After reviewing Warner Bros. Discovery's books, Skydance reportedly uncovered tens of millions of dollars in luxury hospitality spending across dining, travel and gifts—including stacks of receipts for sandwiches and green juices from upscale grocery store Erewhon. Skydance believes the former Warner Bros. Discovery leadership spent extravagantly and is expected to slash those expenses.
(Image source: Skydance)
Skydance's debt-reduction strategy also involves spending more on production, with the company pledging to invest over $30 billion annually in new content. Its interest expenses alone are expected to top $6 billion next year. Financial projections call for Skydance to reduce its debt load from seven times its adjusted annual earnings to three times its adjusted net earnings, a ratio more typical for a major corporation.
That plan requires a steady pipeline of movies, and the project Skydance is most eager to fast-track is a sequel to Warner Bros.' highest-grossing film, "Barbie." Contract negotiations have stalled the project, however. As reported in August, Warner Bros. had been unable to convince the original movie's core creative team to return: writer-director Greta Gerwig, her husband and co-writer Noah Baumbach, producer-star Margot Robbie and leading man Ryan Gosling.
(Image source: Warner Bros. Pictures)
The earlier talks collapsed because Warner Bros. believed the cast and filmmakers were asking for too much money. According to Variety's latest report, Gerwig, Robbie and Gosling are seeking equal pay of $25 million each, while Baumbach would split the screenwriting fee with Gerwig.
Former Warner Bros. Discovery CEO David Zaslav also reportedly balked at the trio's proposed back-end deals, believing the box office thresholds needed to trigger their bonuses were too low. Under that arrangement, the studio would have to share profits with the stars once the movie crossed an agreed-upon box office benchmark. Complicating matters further, Warner Bros.' screen licensing rights to "Barbie" are set to expire at the end of the year. If the studio cannot finalize the contracts and move the sequel into active development before then, it could lose its chance to make another movie.
via： Variety