Paramount's debt to hit $79 billion on $110 billion Warner Bros deal

Takeover likely to get FCC backing

The Paramount Skydance-Warner Bros Discovery merger will create a combined entity that would have a net debt of about $79 billion, Paramount said on Monday, ruling out any plan to divest or spin off the cable assets.

 

The companies will fold their streaming services, including Paramount+ and HBO Max, into a single platform, Paramount Chief Executive Officer David Ellison said on a call with analysts.

 

The company signed the $110 billion, or $31-per-share, deal for Warner Bros on Friday, after Netflix declined to raise its offer, following which, Fitch Ratings downgraded Paramount Skydance’s corporate and long-term borrower ratings to BB-plus. It was previously BBB-minus, the lowest investment-grade rating. Moreover, US Federal Comm- u­nications Commission Chair Brendan Carr has signalled that the watchdog will not seek to block Paramount's $110 billion deal to buy Warner Bros and played down competition concerns over a combination of CBS and CNN, the Financial Times reported on Tuesday. The acquisition will be funded by $47 billion in equity from the Ellison family and RedBird Capital Partners, with additional debt commitments of $54 billion from Bank of America, Citigroup and Apollo.

   

All the information that I’ve seen about that foreign debt is that it would qualify under FCC rules as what we call bona fide debt, meaning, it would be a very quick, almost pro forma review, Carr told the Financial Times.

 

The acquisition remains under active review by US antitrust officials, according to people familiar with the matter, even though the odds of a legal challenge are low.

 

The Justice Department is still seeking comment from third parties and actively enforcing deadlines to comply with information requests, said the people, who asked to not be identified discussing the private review.

 

The acquisition is expected to save more than $6 billion in costs, with a big share coming from “non-labor sources” by clubbing streaming technology stacks and cloud providers of the companies, among others, Paramount strategy chief Andy Gordon said.