The Bad PlaceVariety | Paramount’s Junk-Status Credit Rating to Be Downgraded Further Following Warner Bros. Merger to Reflect ‘Major Ongoing Uncertainties,’ S&P Global Says by Todd Spangler
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S&P Global says that once Paramount Skydance’s $111 billion merger with Warner Bros. Discovery closes, its “BB+” issuer rating will be cut to “BB,” reflecting a move deeper into junk‑status territory and “major ongoing uncertainties.” The downgrade is tied to the combined company’s elevated leverage—Paramount will assume roughly $30 billion of Warner Bros. Discovery’s net debt plus its own borrowing, pushing the projected 2026 debt‑to‑EBITDA ratio to about 7.6× and not falling below 5× until 2029. S&P warns of slower‑than‑expected deleveraging due to integration risks, secular trends, geopolitical and macro‑economic factors, and a fragmented media landscape increasingly challenged by AI. While the firms anticipate more than $6 billion in cost synergies from real‑estate rationalisation, process improvements and a unified streaming platform, the rating agency will only count these once realised and expects layoffs mainly in linear‑TV operations and corporate overhead. The deal is slated to close in September 2026, pending regulatory approval.
Paramount Junk-Status Credit to Be Lowered With Warner Bros. Merger
S&P Global Ratings already has Paramount Skydance's credit rating in junk-status territory -- indicating that its debt securities are considered speculative-grade. But if and when Paramount completes its megadeal for Warner Bros. Discovery, the credit-rating firm will take it down another notch.
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