Skydance Faces One Box Office Bust After Another

On the eve of its merger deal with Paramount Skydance finally closing, Warner Bros. Discovery went out with a bang in the form of a nuclear-grade box office bomb. Over the weekend, the Tom Cruise-led “Digger” earned an abysmal $8 million across 3,300 screens with a budget that reportedly ran close to $180 million. They’ll be seeing red for a while on that one.

As David Ellison’s new media empire, which will henceforth be simply known as Skydance, begins a debt-strapped new era, the “Digger” disaster is a reminder that the modern box office remains boom or bust. That leaves the company largely reliant on whether its streaming unit can grow faster than its still-lucrative linear TV business can sink. What could go right?

Showtime, Baby

Box office booms are still possible, and the theatrical industry is actually enjoying its best year since the pre-pandemic Before Times. But neither WBD nor Paramount has been invited to the party. “Digger” is just the latest in what looks like a WBD carpet bombing campaign this year, following fellow high-profile flops like “Supergirl” and “The Bride.” That makes it no surprise that WBD’s studio heads Pamela Abdy and Michael De Luca, who led the company to a record-breaking and award-winning 2025, have already been informed they won’t have a home in the newly combined Skydance. Paramount’s not faring much better, if at all. The studio earned just the seventh-largest box office haul this summer, behind WBD (6th place), indie studio A24 (5th) and Lionsgate (4th). 

In other words: Salvation will not be found at the cinemas. In its streaming and linear realms, on the other hand, Skydance may be set up for success:

• Ellison has suggested that Paramount+ and HBO Max will be combined in the fullness of time. That has the potential for a streaming “powerhouse,” Morgan Stanley wrote in a note to clients last month. Skydance could have 230 million subscribers by 2030, MS analysts said.
• That would make it neck and neck with Disney and Amazon as strong runners-up behind Netflix, MS said, adding that the company will have a strong mix of scale and IP.

Lift Off: “At the end of the day, [Skydance’s success] is going to be about where we get these synergies. It is going to be about pushing streaming growth, getting better streaming economics and trying to maintain the EBITDA you have from the linear network,” John Conca, sector analyst at Third Bridge Group, told The Daily Upside.