SKYD

After acquiring Warner Bros. Discovery, Skydance trades at roughly one-eighth Netflix's valuation. However, the discount appears justified given Skydance's $78.9 billion net debt (more than double its market cap), single-digit operating margins, and shrinking cable networks, compared to Netflix's clean balance sheet, powerful cash generation, and 33.4% operating margins.

Skydance (SKYD) stock fell 24% on October 14, 2026, after 471 million warrants began trading separately from the company's shares on the ex-distribution date. The warrants, issued to former Paramount shareholders, allow them to purchase SKYD shares at $12 each through 2036.

If fully exercised, this would generate $5.7 billion but dilute shares by roughly 10%. The combined company carries approximately $80 billion in net debt against $11.2 billion in adjusted EBITDA, making it a highly leveraged investment.

Skydance stock dropped 28.5% on Wednesday due to a warrant dividend distribution to Class B shareholders. Each shareholder received one warrant per share, exercisable at $12 per share for 10 years.

The warrants trade separately and are valued at approximately $1.1 billion. This restructuring did not represent actual value loss for eligible shareholders, as the warrant value offsets the stock price decline. The Ellison family and RedBird Capital were excluded from the warrant distribution.

The streaming industry faces consolidation and maturation challenges. Netflix remains the industry leader but faces slowing growth and content concerns.

Disney's streaming is becoming profitable under new leadership. Skydance, formed from the Paramount-Warner Bros. Discovery merger, carries $80 billion in debt and faces regulatory restrictions.

Comcast's Peacock has limited international reach. All four companies compete against tech giants like Amazon, Apple, and Alphabet that can operate streaming at a loss.

Skydance, formed from Paramount's acquisition of Warner Bros. Discovery, now generates nearly $70 billion in annual revenue, surpassing Netflix's expected $51 billion. However, Skydance carries $82 billion in debt with $6.4 billion in annual interest expenses, compared to Netflix's $14.3 billion debt and $777 million interest expense.

Despite larger sales, Skydance posted a $2.6 billion operating loss in 2025 while Netflix generated $13.3 billion in operating income. The analyst concludes Netflix remains the stronger competitor due to superior profitability and lower debt burden, though rising content costs pose a future challenge.

Comcast trades at a low valuation of 6x forward earnings with a 6% dividend yield, but the article advises caution. While upcoming spinoffs of NBCUniversal and Sky could unlock value and speculation about a Charter merger exists, significant headwinds persist including projected subscriber losses of 558,000 in 2026 and 665,000 in 2027, with earnings expected to decline from $4.10 to $3.48-$3.59 per share. The author recommends avoiding bottom-fishing Comcast shares until subscriber losses stabilize.

Netflix faces headwinds with a 26% year-to-date stock decline, weak engagement trends, and declining U.S. market share. The company laid off 6% of staff and replaced its Chief Content Officer. Despite current challenges, the author suggests Netflix's global scale and subscriber base provide long-term advantages, making the current valuation potentially attractive for long-term investors, though near-term earnings could disappoint.