Paramount Raises $7.5B in New Debt as Warner Bros. Merger Nears Close

Key points

• Paramount Skydance launched a syndication to raise $7.5 billion through a senior secured incremental tranche of term 'B' loans.
• The funds will help finance the $111 billion purchase of Warner Bros. Discovery and pay down existing debt.
• Paramount intends to raise approximately $44.4 billion in additional secured debt in total for the transaction.
• The merger is expected to close in about two weeks, pending judge approval of a consent decree settling antitrust lawsuits from 12 state attorneys general.
• Morgan Stanley estimates the merged entity will have net debt of $77.2 billion at the end of 2026, a figure likely to rise with the new loans.
• Oracle founder Larry Ellison has personally guaranteed $46.7 billion in equity financing, while sovereign wealth funds from Saudi Arabia, Qatar, and the UAE have committed $24 billion.

Background

Paramount recently reached a settlement with 12 state attorneys general, removing a major obstacle to the merger. The settlement includes commitments regarding production levels and editorial oversight of CBS News and CNN. Morgan Stanley analysts have projected that the merged entity could become a streaming powerhouse with over 240 million subscribers by 2030, though the heavy debt load presents a significant challenge.

How outlets are covering it

Variety focuses on the financial mechanics of the deal, highlighting the new $7.5 billion debt raise and the overall financing structure, including equity guarantees from Larry Ellison and commitments from Middle Eastern sovereign wealth funds. Deadline, in contrast, emphasizes the human impact and internal atmosphere at Warner Bros., describing a 'gloomy' and uncertain environment among staff. Deadline notes that while Paramount promises synergy savings, many Warner Bros. employees are skeptical and concerned about job security and the future of the studio's brand. The two outlets present different aspects of the same story: Variety details the financial logistics, while Deadline explores the cultural and operational anxieties within the company being acquired.

Why it matters

The Paramount-Warner Bros. Discovery merger represents a massive consolidation in the entertainment industry, aiming to create a competitor to streaming giants like Netflix and Amazon. The significant debt load and the potential for job cuts and operational changes will have far-reaching implications for the film and television industry, affecting not only the companies involved but also the broader workforce and the landscape of content production and distribution.

What to watch

The merger is expected to close in about two weeks, pending judge approval of the consent decree. Paramount will likely announce the name and leadership structure of the new company before closing. The company will need to manage the integration of operations, address staff concerns, and navigate the significant debt load while aiming to achieve the projected synergy savings and streaming growth.