CreditMarket noteWednesday 7 October 2026, 08:10
Paramount completes Warner Bros deal, funded by $41.4bn of bonds at up to 9.1%
Paramount closed its Warner Bros. Discovery takeover and is now Skydance. It paid about $78bn in cash, funded by $47bn of equity and $41.4bn of secured bonds.
By The Notebook Desk
Paramount completed its takeover of Warner Bros. Discovery on Tuesday, and the combined company is now called Skydance. Warner Bros. Discovery shareholders received $31.0167 in cash for each share, and the shares stopped trading on Nasdaq, Paramount announced. Skydance’s Class B shares now trade on the New York Stock Exchange under the ticker SKYD.
The Paramount Warner Bros deal brings together two film studios, HBO and Paramount+, the CBS network and two news channels, CBS News and CNN. It was paid for with tens of billions of dollars of new debt, some of it at rates above the average junk bond.
How Paramount paid for Warner Bros
The cash for Warner Bros. Discovery’s shareholders came to about $78bn, by our calculation from the 8-K filing. The filing gives the total of the small daily top-up added to the price after 30 September, $41.9m, which implies about 2.5 billion shares.
Equity paid for part of it. Investors put in $47bn of new equity at $12.00 a share, led by the Ellison family, RedBird Capital Partners, Saudi Arabia’s Public Investment Fund, L’IMAD, the Qatar Investment Authority and LionTree. The Ellison family and RedBird hold all of the Class A shares, and so all of the voting power.
Debt paid for the rest, and for refinancing. On 5 October the company sold $41.4bn of dollar bonds secured on its assets, plus €885m of euro bonds. It also borrowed $8.5bn and €850m through seven-year term loans, alongside term loans arranged in April. The new money replaced a $49.0bn bridge loan from Bank of America, Citigroup and Apollo.
What the Skydance bonds pay
The $30.0bn of first-lien bonds, which have first claim on the collateral, come in eight maturities from 2028 to 2066. Their coupons run from 6.300% on the 2028 notes to 8.900% on the 2066 notes. The $11.4bn of second-lien dollar bonds, which rank behind them, pay between 8.250% and 9.125%.
Those are high rates for a company that calls itself one of the largest media and entertainment groups in the world. The 10-year Treasury yield was 5.27% on Tuesday, Treasury data show, so the 2036 first-lien bonds pay about 2.6 percentage points more than the US government for the same term. The 2036 second-lien bonds pay about 3.9 points more.
The second-lien coupons sit at or above the average yield on US junk bonds. The ICE BofA US High Yield index yielded 8.15% on 5 October, according to FRED. Lenders asked for both collateral and a high return, a sign that they see real risk in the combined company’s debt.
Can Skydance carry the debt?
The company says it can. Skydance has nearly $70bn in revenue and aims for at least $6bn a year of cost savings within three years, mainly from technology, procurement, marketing and property. It expects more than $10bn of free cash flow by 2030, and it targets net leverage of 3.0 times by the end of 2029.
Those targets leave little room for error. The combined company spent more than $30bn on films and programmes over the past 12 months, and it has promised at least 30 cinema releases a year. That spending competes with debt repayment for the same cash.
The bonds give the company some flexibility. It can buy back up to 40% of some second-lien series early, and up to 10% a year of each second-lien series at 103% of face value. If control of the company changes, holders can sell their bonds back at 101%.
What to watch
The first test is the company’s first results as Skydance, which will show the cost of its new debt in the income statement. Bond prices are the other: if the new bonds trade below the price they were sold at, investors are asking for more to hold the debt. With the 10-year Treasury yield above 5%, the cost of refinancing the earlier maturities, in 2028 and 2029, is the risk to watch.
Disclosure
This is analysis and opinion, not investment advice.