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In one of its first moves since the merger closed, Skydance raised the price of Discovery+. The basic version with ads now costs $6.99 a month, and the version with fewer ads rose to $11.99. This is a clear sign that management is focused on making its streaming business more profitable by asking customers to pay more for its library of shows.
For investors, this helps show how the company plans to handle its massive debt. By raising prices across its various apps, Skydance can bring in more cash to pay down what it owes. The risk is that some customers might cancel, but the company is betting that its popular reality and documentary content is worth the extra cost.
Source: Deadline
On October 13, Skydance distributed about 471 million warrants to its shareholders as a dividend. A warrant is a contract that gives the holder the right to buy a share of stock at a specific price, in this case, $12 per share, before a certain date. These warrants now trade separately on the New York Stock Exchange under the ticker SKYD WS.
While the stock price dropped following this move, it is largely a technical adjustment. When a company hands out warrants, the value of the stock itself usually falls because the warrants represent a new, separate piece of value that was previously part of the share price. For long-term owners, this does not change the value of the underlying entertainment business, though it does mean more shares could be created in the future if those warrants are used.
Source: 8-K filing
Paramount Pictures is working on a new film set in the world of the video game Cyberpunk 2077. This move follows a common trend in Hollywood of using established games and books to build new movies, which often have a built-in audience and lower marketing costs. While one movie won't change the company's financial picture on its own, it shows that the studio is actively using its production muscle to find new hits. For a company that just took on a lot of debt, a steady stream of reliable film releases is key to keeping cash flowing.
Source: Reuters
Skydance appointed Robert Kotick and Laurene Powell Jobs to its board of directors in early October. Kotick previously ran the video game giant Activision Blizzard for decades, and Powell Jobs is the founder of Emerson Collective and a major investor in media and technology.
Adding experienced leaders from the gaming and tech worlds suggests Skydance wants to look beyond traditional TV and movies. Their expertise could help the company figure out how to turn its film brands into games or better digital products, which is a key part of the plan to grow the business after its massive merger.
Source: 8-K filing
As part of the closing of the Warner Bros. Discovery deal, the company finalized its plan to manage the massive debt it is taking on. These exchange and tender offers are a way for the company to trade old debt for new securities or cash, helping to organize its finances under the new Skydance name.
While technical, this is a necessary step because the combined company is carrying about $15 billion in debt. Keeping these borrowing costs under control is vital to ensure the company has enough cash to invest in new content while it works through the expensive process of merging two global businesses.
Source: PRNewsWire
Management has a history of setting a low bar and clearing it by small margins. This suggests a conservative approach, though recent choppy results show the business is becoming harder to forecast.
| Expectation | |
|---|---|
| EPS | $0.22 |
| Revenue | $7.05B |
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