Paramount Skydance’s $110 B Merger with Warner Bros. Discovery Triggers S&P Rating Downgrade and Regulatory Scrutiny

Paramount Skydance Corp. (PSKY) will buy Warner Bros. Discovery (WBD) in a $110 billion deal that merges CBS, Paramount+, HBO Max, CNN and Warner’s film library. S&P Global Ratings will lower PSKY’s issuer rating from BB+ to BB when the merger closes, citing high leverage and integration risk.

Variety Magazine

Paramount will assume about $30 billion of WBD’s net debt; after restructuring the combined balance sheet will hold roughly $49 billion, financed by new first- and second-lien notes. S&P projects adjusted debt-to-EBITDA at 7.6× in 2026, staying near that level through 2027 and only dropping below 5× by 2029. The Ellison family pledged to cut leverage to under 3.75× by 2028 and to 3.0× by 2029. S&P estimates $6 billion in cost synergies, noting they will depress EBITDA and free cash flow in 2026-27. Linear TV should generate about 48% of revenue, covering roughly 30% of U.S. viewing audiences and 20% of TV ad revenue.

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S&P indicated the downgrade assumes the transaction proceeds without significant regulatory, market or geopolitical changes. Paramount’s chief legal officer Makan Delrahim said the deal would bring new competitive energy to the industry. California Attorney General Rob Bonta raised concerns about higher prices, lower wages, fewer jobs and reduced competition. The company is cooperating with state AGs; shareholders will receive a 25-cent-per-share quarterly “ticking fee” if closing slips past September 30. The deal faces review by the U.K. CMA, the U.S. FCC and the DOJ.

The Wrap

Internal plans target a July 15 closing, while public statements set a third-quarter deadline of September 30. S&P forecasts a 30% audience share, yet another analysis notes linear-TV revenue will account for 48% of total revenue, indicating differing views on the merged firm’s revenue composition.

The Wrap

• “We will lower the issuer credit rating on PSKY to ‘BB’ when its acquisition of WBD closes, assuming no material changes to the structure or terms of the transaction due to regulatory considerations, our view of the media ecosystem, or the company’s competitive position due to geopolitical factors or secular pressures,” — S&P Global Ratings

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• “All [of Paramount Skydance’s] key sectors face seismic challenges and an increasingly uncertain future,” — S&P Global Ratings

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• “red flags are everywhere when you have a merger of this type” — Rob Bonta, California Attorney General

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• “We’re looking at things like higher prices, lower wages, fewer jobs, less quality, less choice, less competition — the things that you look at when you’re looking at an antitrust case and a proposed merger.” — Rob Bonta

New York Post

The merger awaits clearance from the U.K. CMA, U.S. DOJ, FCC and state AGs. If approved, integration begins in late 2026; failure triggers a $7 billion termination fee and quarterly ticking fees.

The Wrap