Skydance’s First Move: The $110B Merger Started in the One Division the Announcement Skipped
The closing statement celebrated film, TV, news and streaming — but not games. Then the first internal reorganization email landed in the game studios. That ordering says more about the $6B synergy plan than any press release.
“What once was the peak, is now just the beginning.” David Ellison wrote that on X on October 2, in the first post on a brand-new account, to give the $110 billion merger its name: Skydance. Four days later, Paramount’s takeover of Warner Bros. Discovery closed, and the closing statement celebrated movies, television, news and streaming. It never mentioned video games once.
That same Tuesday, though, the first reorganization email went to the game studios. Nothing in the announcement covered games. Skydance president Andy Gordon wrote to staff that Paramount Games Studio and Warner Bros. Games would merge into one games-and-experiences division, led by Tony Driscoll, the executive who’d built the Paramount side. The division pulls in Avalanche Software, NetherRealm Studios, Rocksteady Studios, TT Games, and the WB Games teams in Montreal and Boston, the makers of Hogwarts Legacy, Mortal Kombat, the Batman Arkham games, and the Lego titles.
The merger’s first restructure was a games restructure.
Gordon called the unit one of the company’s “future growth engines,” writing that “we want to meet consumers where they watch, play, and engage.” That’s the language of expansion for a division that’s being reorganized first. And the reorganization lands on teams that have just spent two years being cut. Warner Bros. Games came through a brutal stretch under Discovery ownership: Rocksteady’s Suicide Squad: Kill the Justice League flopped in 2024, and by February 2025 the company had shut down Monolith Productions, Player First Games, and WB Games San Diego, and canceled Monolith’s Wonder Woman game. What’s left was narrowed around four franchises — DC, Harry Potter, Mortal Kombat, Game of Thrones. TalkEsport’s blunt summary: WB Games comes into the deal already shrunk.
On the other side, Paramount Games Studio is barely four months old, formed in June from Skydance Interactive and Skydance New Media, and its big projects, Marvel 1943: Rise of Hydra and an untitled Star Wars game from Amy Hennig’s team, now sit inside a merger nobody’s explained to their developers. Filmoria’s games piece put it plainly: reports have said explicitly that it’s unclear what happens to the Marvel and Star Wars productions.
Gerry Cardinale of RedBird Capital, the board member who built the merger, told the Bloomberg Screentime conference on October 1: “That notion that $6 billion of cost-related synergies means you’re firing all these people is just completely antiquated,” adding that the majority of the savings would come from non-labor spending. The memo came five days later. Ellison and co-CEO Ynon Kreiz wrote to staff: “Integrating two companies will bring change, including difficult decisions that affect our workforce. We are committed to handling this process thoughtfully and respectfully.” Two overlapping publishing operations, two marketing teams, two business-development groups now do the same job, and Filmoria’s layoffs analysis said it straight: games teams with overlapping roles are the most exposed. The memo named no number of jobs, no divisions, and no timetable.
The debt exceeds a year’s revenue. Roughly $80 billion of it sits against about $70 billion in annual revenue, and at today’s borrowing costs it runs up billions in interest a year — the entire three-year $6 billion savings target covers roughly eighteen months of it. Paramount sold $52 billion in loans and bonds in a single week to fund the deal, had already cut about 1,000 jobs before it closed, and a Los Angeles County study estimated 4,500 direct film and TV jobs in the county at risk over three years — while David Zaslav, who sold the company, is reported to be walking away with $606 million in exit payouts.
The players, so far, are mostly waiting. Critical Pixel surveyed the reaction and found no consensus — one reader under GameSpot’s story just asked Skydance to release the Nemesis system from Shadow of Mordor; another worried that every major gaming IP will soon belong to the same three companies. The outlet’s own take was blunter: a $111 billion merger closing without one word about Hogwarts Legacy, Mortal Kombat or Batman, it wrote, “is a bad sign for the people who make those games.”
The settlement that cleared the merger fines Skydance $30 million for every theatrical film it fails to release, with a 45-day exclusive window attached. No games quota exists. For games, the decree contains no equivalent commitment.
