David Ellison Bets Big on AI, but Draws the Line at “Slop” in First Skydance Earnings Call

David Ellison now runs one of the largest companies in Hollywood, and his first earnings call since the Warner Bros. deal showed where he wants it to go. Skydance, the company formed by combining Paramount Skydance and Warner Bros. Discovery, reported its first quarterly results after the mega-acquisition this week. The results came out after the market closed on Monday.

Ellison has been positioning the merged studio as more than a traditional Hollywood player. As the heir to his father Larry Ellison’s Oracle fortune, he has a unique perspective here, and that background is central to his plan to rebrand legacy studios as a tech-centric business. Oracle’s enterprise cloud apps even got a mention on the call when executives discussed consolidating back-office work.

The most talked-about part of the call was Ellison’s position on artificial intelligence. In his first earnings call as CEO at the helm of both Paramount and Warner Bros., he talked up his merged Hollywood empire as a tech-forward enterprise, embracing AI while dismissing “AI slop” at the same time. He argued that, as low-quality AI content spreads, truly handcrafted storytelling will always be worth more.

Even so, Ellison’s overall tone on the technology was extremely optimistic. He told analysts he expects AI to help the company’s studios make content faster and cheaper. He also called it the biggest industry breakthrough since CGI effects went mainstream.

He compared the moment directly to the rise of CGI and digital compositing in the early ’90s, when that technology gave audiences films like ‘Jurassic Park’ and ‘Terminator 2’. Ellison said he finds it hard to imagine AI having a smaller impact than that. He also stressed that the company sees AI as a tool for artists, not a replacement for them.

Ellison said AI will change the business significantly. Back-office work is one of the first places the company is using it, and Skydance has just launched an AI agent to help with its procure-to-pay process. Advertising is another area where he expects AI tools to help.

He also connected AI to the company’s creative risk-taking. Ellison said the tools could make budgets more manageable, giving the studio more room to take chances on original stories. That argument is likely to get plenty of attention from creatives across the industry.

Ellison’s AI message ties directly into the company’s cost-cutting plans. Skydance is pulling back the curtain on how it plans to achieve at least $6 billion in cost savings in the next three years. Those savings include “rationalizing” its office footprint.

Streaming is a big part of the plan. Merging Paramount+ and HBO Max within a year is part of that effort, and Ellison called it an ambitious goal that’s possible because of the latest AI tools. The first step is a bundle of the services, planned for early next year.

Content spending is under review as well. Co-CEO Ynon Kreiz told investors during the company’s earnings call that Skydance is also looking for ways to optimize its content budget. The company spends more than $30 billion annually on shows and films.

Investors seem to be holding off on a verdict for now. One analyst questioned how this merger could succeed when so many other big media deals have failed. Shares fell after the results were released.

There are short-term problems too. Skydance noted that it’s expecting a $200 million headwind in the fourth quarter from theatrical underperformance at Warner Bros. Analysts are also waiting for pro forma financials covering the combined business, which the company plans to release before its Q4 earnings call.

Ellison’s challenge is now to convince both Wall Street and Hollywood’s creative community that AI can save money without hurting quality. Whether audiences can tell the difference between “hand-crafted” stories and AI-assisted ones may decide whether his bet works.

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