Skydance buys Warner Bros. Discovery; $51.9B financing
The acquisition's pro forma financing includes $51.9 billion of new permanent financing, in addition to $5.0 billion of Term A loans.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Paramount Skydance Corp (renamed Skydance Corporation) completed the acquisition of Warner Bros. Discovery, which became a wholly owned subsidiary. WBD shareholders received $31.01666668 per share in cash; aggregate Ticking Consideration was $41,886,975.78. PIPE investors subscribed for 3,917,657,246 Class B shares at $12.00 per share. Class B shares moved from Nasdaq to the New York Stock Exchange under ticker SKYD, replacing PSKY.
Acquisition financing included $41.4 billion of U.S. dollar senior secured notes, €885 million of second-lien notes, $8.5 billion of dollar and €850 million of euro seven-year Term B-1 loans, and $5.0 billion of Term A loans. The company used financing proceeds and cash on hand for the acquisition, debt repayment and related costs. It targets $6 billion-plus of run-rate synergies over three years and a 3.0x net leverage target by the end of 2029. Andrew Brandon-Gordon was appointed President effective at closing.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThe completed combination includes 200+ million streaming subscribers across platforms.
Negative
- Major pointAcquisition financing includes $51.9 billion of New Permanent Financing, in addition to $5.0 billion of Term A loans. 4.7× market cap
Filing Explained
With the acquisition complete, each eligible Class B share held on
8-K Event Classification
Key Figures
Key Terms
Ticking Consideration financial
New Permanent Financing financial
first-priority liens financial
Change of Control Triggering Event financial
Term B-1 Loan Facility financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What debt financing did Skydance use for the WBD acquisition?
When do Skydance’s Term B-1 loans mature?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code: (
Paramount Skydance Corporation
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Explanatory Note
On October 6, 2026 (the “Closing Date”), Warner Bros. Discovery, Inc., a Delaware corporation (“WBD”), Skydance Corporation (f/k/a Paramount Skydance Corporation), a Delaware corporation (“SKYD” or the “Company”), and Prince Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), completed the transactions contemplated by the previously disclosed Agreement and Plan of Merger, dated as of February 27, 2026, by and among WBD, the Company and Merger Sub (the “Merger Agreement”), pursuant to which, at the effective time of the Merger (as defined below) (the “Effective Time”), Merger Sub merged with and into WBD, with WBD surviving as a wholly owned subsidiary of the Company (the “Merger”).
In connection with the closing of the Merger (the “Closing”), the Company issued shares of its Class B Common Stock, par value $0.001 per share (the “Class B Common Stock”), to certain investors who provided equity financing for the Merger (the “PIPE Transaction”). Additionally, in connection with the Closing, on October 6, 2026, the Company transferred the listing of the Class B Common Stock from The Nasdaq Stock Market LLC to the New York Stock Exchange and changed the ticker symbol for the Class B Common Stock from “PSKY” to “SKYD”.
| Item 1.01 | Entry into a Material Definitive Agreement. |
The information provided in the Explanatory Note of this Current Report on Form 8-K is incorporated by reference herein.
First Lien Senior Secured Notes and Second Lien Senior Secured Notes
On October 5, 2026, the Company issued (a) an aggregate of $41.4 billion in senior secured notes denominated in U.S. dollars, consisting of (1) $30.0 billion of first lien senior secured notes consisting of (i) $3.5 billion aggregate principal amount of 6.300% Senior Secured First Lien Notes due 2028 (the “2028 First Lien Notes”), (ii) $3.5 billion aggregate principal amount of 6.550% Senior Secured First Lien Notes due 2029 (the “2029 First Lien Notes”), (iii) $6.5 billion aggregate principal amount of 7.050% Senior Secured First Lien Notes due 2031 (the “2031 First Lien Notes”), (iv) $5.25 billion aggregate principal amount of 7.550% Senior Secured First Lien Notes due 2033 (the “2033 First Lien Notes”), (v) $5.25 billion aggregate principal amount of 7.900% Senior Secured First Lien Notes due 2036 (the “2036 First Lien Notes”), (vi) $1.25 billion aggregate principal amount of 8.650% Senior Secured First Lien Notes due 2046 (the “2046 First Lien Notes”), (vii) $3.5 billion aggregate principal amount of 8.750% Senior Secured First Lien Notes due 2056 (the “2056 First Lien Notes”), (viii) $1.25 billion aggregate principal amount of 8.900% Senior Secured First Lien Notes due 2066 (the “2066 First Lien Notes” and, together with the 2028 First Lien Notes, the 2029 First Lien Notes, the 2031 First Lien Notes, the 2033 First Lien Notes, the 2036 First Lien Notes, the 2046 First Lien Notes and the 2056 First Lien Notes, the “First Lien Senior Secured Notes”), and (2) $11.4 billion of second lien senior secured notes consisting of (i) $6 billion aggregate principal amount of 8.250% Senior Secured Second Lien Notes due 2031 (the “2031 Second Lien Dollar Notes”), (ii) $4 billion aggregate principal amount of 8.875% Senior Secured Second Lien Notes due 2034 (the “2034 Second Lien Notes”), and (iii) $1.4 billion aggregate principal amount of 9.125% Senior Secured Second Lien Notes due 2036 (the “2036 Second Lien Notes” and, together with the 2031 Second Lien Dollar Notes and the 2034 Second Lien Notes, the “Second Lien Dollar Senior Secured Notes”) and (b) €885 million aggregate principal amount of 7.000% Senior Secured Second Lien Notes due 2031 (the “2031 Second Lien Euro Senior Secured Notes” and, together with the Second Lien Dollar Senior Secured Notes, the “Second Lien Senior Secured Notes”; the Second Lien Senior Secured Notes, together with the First Lien Senior Secured Notes, the “Notes”). The First Lien Senior Secured Notes were issued pursuant to a first supplemental indenture (the “First Supplemental Indenture”), dated as of October 5, 2026, by and between Paramount Skydance Corporation and Deutsche Bank Trust Company Americas, as Trustee and Collateral Agent, to the indenture (the “Base Indenture”) dated October 5, 2026, by and between Paramount Skydance Corporation and Deutsche Bank Trust Company Americas, as Trustee. The Second Lien Dollar Senior Secured Notes were issued pursuant to a second supplemental indenture (the “Second Supplemental Indenture”) dated as of October 5, 2026, by and between Paramount Skydance Corporation and Deutsche Bank Trust Company Americas, as Trustee and Collateral Agent, to the Base Indenture. The 2031 Second Lien Euro Senior Secured Notes were issued pursuant to a third supplemental indenture (the “Third Supplemental Indenture”) dated as of October 5, 2026, by and among Paramount Skydance Corporation, Deutsche Bank Trust Company Americas, as Trustee and Collateral Agent, and Deutsche Bank AG, London Branch, as Euro Notes Authentication Agent, Euro Notes Transfer Agent and Euro Notes Paying Agent, to the Base Indenture. On October 6, 2026, Deutsche Bank Trust Company Americas, as Trustee and Collateral Agent, and the guarantors party thereto, including certain subsidiaries of the Company, entered into a fourth supplemental indenture (the “Fourth Supplemental Indenture”, and together with each of the First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture, each a “Supplemental Indenture”), by and among Deutsche Bank Trust Company Americas, as Trustee and Collateral Agent, and the guarantors party thereto, to the Base Indenture pursuant to which a number of subsidiaries of the Company (the “Initial Guarantors”) became guarantors under each series of Notes.
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The Notes pay interest semi-annually in arrears. The Notes were offered in private placements exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”).
The Company used the net proceeds from the offering of the Notes and borrowings under the Credit Facilities (as defined below), together with cash on hand and the net proceeds of the PIPE Transaction, to finance the Merger, to repay certain existing debt and to pay fees, costs and expenses related thereto.
Optional Redemption Provisions and Change of Control Repurchase Right
First Lien Senior Secured Notes
Prior to the applicable Par Call Date set forth below, upon not less than 10 nor more than 60 days’ notice to each holder of the applicable series of First Lien Senior Secured Notes to be redeemed, each series of First Lien Senior Secured Notes will be redeemable at the Company’s option, in whole or in part, at any time or from time to time, at a “make-whole” premium, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date. The applicable Par Call Date is September 5, 2028 for the 2028 First Lien Notes, September 5, 2029 for the 2029 First Lien Notes, September 15, 2031 for the 2031 First Lien Notes, August 15, 2033 for the 2033 First Lien Notes, July 15, 2036 for the 2036 First Lien Notes, April 15, 2046 for the 2046 First Lien Notes, April 15, 2056 for the 2056 First Lien Notes, and April 15, 2066 for the 2066 First Lien Notes. On or after the applicable Par Call Date, the Company may redeem the First Lien Senior Secured Notes of the applicable series, at its option, in whole or in part, upon not less than 10 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the First Lien Senior Secured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.
Second Lien Senior Secured Notes
Prior to (i) October 15, 2028, in the case of the 2031 Second Lien Dollar Notes and the 2031 Second Lien Euro Senior Secured Notes, (ii) October 15, 2029, in the case of the 2034 Second Lien Notes, and (iii) October 15, 2031, in the case of the 2036 Second Lien Notes, upon not less than 10 nor more than 60 days’ notice, the Second Lien Senior Secured Notes of the applicable series will be redeemable at the Company’s option, in whole at any time or in part from time to time at a “make-whole” premium, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.
Beginning October 15, 2028, in the case of the 2031 Second Lien Dollar Notes and the 2031 Second Lien Euro Senior Secured Notes, October 15, 2029, in the case of the 2034 Second Lien Notes, and October 15, 2031, in the case of the 2036 Second Lien Notes, the Company may redeem the Second Lien Senior Secured Notes of the applicable series, at its option, in whole at any time or in part from time to time. The redemption price will include a call premium that varies depending on the year of redemption, together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date. The call premium ranges from 4.125% to 0% for the 2031 Second Lien Dollar Notes, from 3.500% to 0% for the 2031 Second Lien Euro Senior Secured Notes, from 4.438% to 0% for the 2034 Second Lien Notes, and from 4.563% to 0% for the 2036 Second Lien Notes.
In addition, at any time prior to (i) October 15, 2028, in the case of the 2031 Second Lien Dollar Notes and the 2031 Second Lien Euro Senior Secured Notes, and (ii) October 15, 2029, in the case of the 2034 Second Lien Notes and the 2036 Second Lien Notes, the Company may redeem up to 40% of the aggregate principal amount of the applicable series of Second Lien Senior Secured Notes. Any such redemption will be made with an aggregate amount not exceeding the net cash proceeds of one or more equity offerings, in accordance with the applicable indenture. The redemption price will be equal to 108.250% of the principal amount of the 2031 Second Lien Dollar Notes, 107.000% of the principal amount of the 2031 Second Lien Euro Senior Secured Notes, 108.875% of the principal amount of the 2034 Second Lien Notes and 109.125% of the principal amount of the 2036 Second Lien Notes, in each case together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date.
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Also, prior to the applicable date specified in the foregoing paragraph, the Company may redeem during each calendar year, beginning with the calendar year in which the applicable issue date occurs, up to 10% of the aggregate principal amount of each series of Second Lien Senior Secured Notes initially issued on such issue date, plus the aggregate principal amount of any additional notes of that series. Unused amounts in any calendar year may be carried over to later calendar years. The redemption price will be equal to 103% of the aggregate principal amount of the Second Lien Senior Secured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.
Change of Control Offer and Payoff Transactions
Subject to certain exceptions, the holders of the Notes of a series will have the right to require the Company to repurchase their Notes upon the occurrence of a Change of Control Triggering Event, as defined in the relevant Supplemental Indenture, at an offer price equal to 101% of the aggregate principal amount of the Notes of such series, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.
If at any time holders of not less than 90.0% of the principal amount of the outstanding Notes of a series accept a tender offer, exchange offer or other offer to repurchase such Notes, the Company or a third party will have the right to redeem all of the Notes of such series then outstanding at (i) in the case of a tender offer or other offer to repurchase, a purchase price equal to the price offered to each other holder in such offer, and (ii) in the case of an exchange offer, the same consideration provided in such exchange offer, plus, in each case, to the extent not included in the offer price, accrued and unpaid interest, if any, to, but not including, the date of redemption.
Ranking
First Lien Senior Secured Notes
The First Lien Senior Secured Notes are the Company’s senior secured obligations and are secured by first-priority liens on substantially all personal property of the Company and the Guarantors (as defined below) (the “Collateral”), subject to permitted liens and certain exceptions. The First Lien Senior Secured Notes will be guaranteed on a senior secured basis by each of the Company’s existing and future wholly owned domestic subsidiaries that is a borrower under or guarantees obligations under the Credit Facilities, including the Initial Guarantors (collectively, the “Guarantors”), subject to certain exceptions.
Second Lien Senior Secured Notes
The Second Lien Senior Secured Notes are the Company’s senior secured obligations and are secured by second-priority liens on the Collateral, subject to permitted liens and certain exceptions. The Second Lien Senior Secured Notes will be guaranteed on a senior secured basis by the Guarantors.
Restrictive Covenants
The First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture contain covenants that limit the Company’s (and its subsidiaries’) ability to, among other things: (i) create liens on assets, (ii) sell assets and (iii) engage in mergers or consolidations or sales of all or substantially all of its assets.
Investment Grade Event
Upon the occurrence of an Investment Grade Event (as defined in the applicable Supplemental Indenture) with respect to a series of Notes, subject to certain conditions (including the concurrent release of liens and guarantees securing other secured debt and the Company having no greater than $250,000,000 of term B loans outstanding at such time), the liens on the Collateral securing such series of Notes will be released and the note guarantees with respect to such series will be released. In addition, certain covenants set forth in the applicable Supplemental Indenture relating to asset sales and future subsidiary guarantors will cease to apply to such series of Notes. These releases and covenant suspensions are permanent and will not be reinstated upon any subsequent downgrade or withdrawal of the applicable investment grade ratings.
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First Lien Senior Secured Notes Registration Rights Agreement
In connection with the issuance of the First Lien Senior Secured Notes, the Company entered into a Registration Rights Agreement (the “First Lien Senior Secured Notes Registration Rights Agreement”), dated October 5, 2026, by and among the Company and BofA Securities, Inc., Citigroup Global Markets Inc., and Apollo Global Securities, LLC, as representatives of the initial purchasers, with respect to the First Lien Senior Secured Notes. On October 6, 2026, the Initial Guarantors joined the First Lien Senior Secured Notes Registration Rights Agreement by executing a joinder agreement.
Pursuant to the First Lien Senior Secured Notes Registration Rights Agreement, the Company and the Initial Guarantors have agreed to use commercially reasonable efforts to (i) file a registration statement on an appropriate form with respect to a registered offer to exchange each series of the First Lien Senior Secured Notes for new notes with terms substantially identical in all material respects to such series of the First Lien Senior Secured Notes (such new notes, the “Exchange Notes”) (except that the Exchange Notes will not contain terms with respect to transfer restrictions or additional interest) and cause the registration statement to be declared effective under the Securities Act within 730 days of October 5, 2026, or (ii) in certain circumstances, file a shelf registration statement with respect to resales of the First Lien Senior Secured Notes. The Second Lien Senior Secured Notes do not have any registration rights.
Amendment to Pro Rata Credit Agreement and New Term B-1 Loan Facility
On October 6, 2026, the Company entered into an amendment (“Credit Agreement Amendment No. 1”) to the Credit Agreement, dated as of April 7, 2026 (the “Existing Credit Agreement” and, as amended by Credit Agreement Amendment No. 1, the “Credit Agreement”), among the Company, the lenders party thereto, and Citibank, N.A., as administrative agent and collateral agent, which was previously described in the Company’s Current Report on Form 8-K filed April 9, 2026. The various facilities provided under the Credit Agreement, including the Term B-1 Loan Facility (as defined below), as well as the term A loan facilities (the “Term A Loan Facilities” and the loans funded thereunder, the “Term A Loans”) and the revolving credit facility (the “Revolving Credit Facility”), each of which was previously described in the Company’s Current Report on Form 8-K filed April 9, 2026, are collectively referred to herein as the “Credit Facilities.”
Credit Agreement Amendment No. 1 amended the Existing Credit Agreement to, among other things, (a) provide for a senior secured incremental tranche of term “B” loans consisting of: (i) $8.5 billion of seven-year U.S. dollar-denominated term B loans (the “Dollar Term B-1 Loans”) and (ii) €850 million of seven-year Euro term B loans (the “Euro Term B-1 Loans” and, together with the Dollar Term B-1 Loans, collectively, the “Term B-1 Loans”; the facility under which the Term B-1 Loans are made, the “Term B-1 Loan Facility”) and (b) make certain other changes to the Existing Credit Agreement. The Term B-1 Loans will mature and be payable in full on the seventh anniversary of the Closing Date.
On the Closing Date, the Company borrowed the full amount of the Term B-1 Loans and the Term A Loans, and the proceeds thereof were used to finance the Merger, repay certain existing debt and pay fees, costs and expenses related thereto. In addition, the commitments under the Revolving Credit Facility became available for borrowing on the Closing Date. No amounts were drawn under the Revolving Credit Facility on the Closing Date.
In connection with the execution of Credit Agreement Amendment No. 1 and funding of the Term B-1 Loans, as well as the receipt of net cash proceeds from the offering of the Notes, the amount of the $49.00 billion bridge commitments (the “Bridge Commitments”) obtained by the Company pursuant to a Commitment Letter, dated as of December 8, 2025 by and among the Company, BofA Securities, Inc., Bank of America, N.A., Citigroup Global Markets Inc., Apollo Global Funding, LLC and Apollo Capital Management, L.P., as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the Closing Date (the “Bridge Commitment Letter”), for financing of the Merger has been reduced to $0.00 and the Bridge Commitment Letter has been fully terminated as of the Closing Date.
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The Term B-1 Loans are guaranteed by the Guarantors (which are the same guarantors as under the Company’s other Credit Facilities) and secured by a senior lien on the Collateral on a pari passu basis with the other Credit Facilities and the First Lien Senior Secured Notes.
The Dollar Term B-1 Loans bear interest, at the Company’s option, at a rate per annum equal to either the Alternate Base Rate (as defined in the Credit Agreement) or Term SOFR Rate (as defined in the Credit Agreement) plus a margin based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) that ranges between 2.75% and 2.50% for Term SOFR Rate loans and 1.75% and 1.50% for Alternate Base Rate loans. The Euro Term B-1 Loans bear interest at a rate per annum equal to the EURIBOR Rate (as defined in the Credit Agreement) plus a margin based on the Company’s Consolidated Total Net Leverage Ratio that ranges between 2.75% and 2.50%. The Term SOFR Rate and the EURIBOR Rate are each subject to a floor of 0.00%.
The Dollar Term B-1 Loans amortize at 1.00% of the initial principal amount per annum in quarterly installments (commencing with the thirteenth fiscal quarter ending after the Closing Date), with the remaining balance payable at maturity. No regular amortization is required with respect to the Euro Term B-1 Loans. The Term B-1 Loans may be voluntarily prepaid at any time without premium or penalty, other than customary breakage costs and, in certain circumstances, a repricing premium.
Except as amended by Credit Agreement Amendment No. 1, all other material provisions of the Existing Credit Agreement remain materially unchanged, including customary representations and warranties, events of default and affirmative and negative covenants, as well as financial covenants based on consolidated total net leverage ratio and first lien net leverage ratio of the Company that are only applicable to the Term A Loan Facilities and the Revolving Credit Facility, as previously described in the Company’s Current Report on Form 8-K filed April 9, 2026.
Amended and Restated Registration Rights Agreement
In connection with the Closing, on October 6, 2026, the Company, Harbor Lights Entertainment, Inc., certain entities affiliated with The Lawrence J. Ellison Revocable Trust, u/a/d 1/22/88, as amended (the “Trust”), RedBird Capital Partners Fund IV (Master), L.P. (“RedBird”) and other investors to the PIPE Transaction (the “PIPE Investors”) entered into the amended and restated registration rights agreement, dated October 6, 2026 (the “A&R Registration Rights Agreement”), which amends and restates in its entirety that certain registration rights agreement, dated August 7, 2025 (the “Initial Registration Rights Agreement”), by and among the Company and the parties thereto. The A&R Registration Rights Agreement provides for certain demand and piggyback registration rights that were previously set forth in the Initial Registration Rights Agreement and also provides additional demand, piggyback and resale shelf registration rights to the PIPE Investors with respect to any shares of Class B Common Stock purchased by such PIPE Investors in the PIPE Transaction. Any such securities will cease to be registrable securities pursuant to the A&R Registration Rights Agreement with respect to any holder when such holder (i) is able to dispose of all of its registrable securities pursuant to Rule 144 under the Securities Act, without volume limitation or other restrictions on transfer thereunder and without the requirement for the Company to be in compliance with Rule 144(c)(1) under the Securities Act and (ii) solely for the parties that hold demand and piggyback registration rights, such party holds, together with its affiliates, less than 1% of the common stock of the Company then outstanding.
Pursuant to the A&R Registration Rights Agreement, certain parties to the A&R Registration Rights Agreement have customary demand rights that, pursuant to a demand by such party after the date that is 180 days following the Closing, would require the Company to file registration statements registering their respective registrable securities, including in connection with underwritten offerings, subject to certain limitations described in the A&R Registration Rights Agreement. The Company agreed to bear all registration expenses, other than customary underwriting commissions or fees, regardless of whether a registration statement is filed or becomes effective.
The A&R Registration Rights Agreement requires that the Company use reasonable best efforts to file a registration statement or prospectus supplement registering for resale any registrable securities beneficially owned by the parties to the A&R Registration Rights Agreement by the 71st calendar day following the date which is four business days after the date of the Closing, and thereafter to use reasonable best efforts to keep such registration statement effective. The A&R Registration Rights Agreement also includes customary piggyback rights, subject to certain priority provisions, and customary indemnity, exculpation and contribution obligations by the Company and the other parties to the A&R Registration Rights Agreement.
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Lock-Up Agreement
In connection with the Closing and the entry into the A&R Registration Rights Agreement, PIPE Investors delivered a lock-up agreement (the “Lock-Up Agreement”) agreeing not to engage in certain transfers of the shares of Class B Common Stock that were purchased in the PIPE Transaction for a period of 180 days following the Closing, subject to certain exemptions therein (including for certain transfers to affiliates or dispositions to equityholders, as well as pledging transactions), unless the Company, in its sole discretion, otherwise waives the terms of such Lock-Up Agreement with respect to a party thereto.
General
The foregoing descriptions do not purport to be complete and are subject to, and qualified in their entirety by, the full text of each of the Base Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the First Lien Senior Secured Notes Registration Rights Agreement, Credit Agreement Amendment No. 1, the Existing Credit Agreement, the A&R Registration Rights Agreement and the Form of Lock-Up Agreement, as applicable, each filed with or incorporated by reference into this Current Report on Form 8-K.
| Item 1.02 | Termination of a Material Definitive Agreement. |
The information provided in the Explanatory Note of this Current Report on Form 8-K is incorporated by reference herein.
On the Closing Date, in connection with the consummation of the Merger, the Company repaid all loans and terminated all credit commitments outstanding under that certain Amended and Restated Credit Agreement, dated as of January 23, 2020, by and among the Company, Paramount Global, a Delaware corporation, the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the Closing Date.
The information provided in Item 1.01 with respect to the Bridge Commitment Letter and the Bridge Commitments is incorporated into this Item 1.02 by reference insofar as it relates to the termination of a material definitive agreement.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information provided in the Explanatory Note of this Current Report on Form 8-K is incorporated by reference herein.
Effect on Capital Stock of the Merger
At the Effective Time, each share of Series A common stock, par value $0.01 per share of WBD (the “WBD Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares of WBD Common Stock canceled for no consideration in accordance with the Merger Agreement or as to which appraisal rights were properly exercised in accordance with the Merger Agreement) was automatically cancelled and converted into the right to receive an amount in cash equal to $31.00 plus the Ticking Consideration, without interest (the “Merger Consideration”). The “Ticking Consideration” is an amount in cash equal to $0.00277778 multiplied by the number of calendar days elapsed after September 30, 2026 to and including the Closing Date. The aggregate Ticking Consideration payable with respect to shares of WBD Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of WBD Common Stock canceled for no consideration in accordance with the Merger Agreement or as to which appraisal rights were properly exercised in accordance with the Merger Agreement) was an amount in cash equal to $41,886,975.78.
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Treatment of Equity Awards in the Merger
At the Effective Time, each option to purchase shares of WBD Common Stock granted under any WBD stock plan (a “WBD Option”) outstanding immediately prior to the Effective Time that (x) by its terms vested as of the Effective Time or (y) was held by a former employee or service provider of WBD ( a “Vested WBD Option”) was canceled and converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the excess of the Merger Consideration over the per-share exercise price for such Vested WBD Option by (ii) the total number of shares of WBD Common Stock subject to such Vested WBD Option immediately prior to the Effective Time.
At the Effective Time, each WBD Option outstanding and unexercised immediately prior to the Effective Time and that was not a Vested WBD Option (an “Unvested WBD Option”) with an exercise price per share of WBD Common Stock less than the Merger Consideration was assumed by the Company and automatically converted into the contingent right to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the excess of the Merger Consideration over the per-share exercise price for such Unvested WBD Option, by (ii) the total number of shares of WBD Common Stock subject to such Unvested WBD Option immediately prior to the Effective Time (the “Unvested WBD Option Consideration”), with such Unvested WBD Option Consideration remaining subject to the same terms and conditions (including any applicable terms relating to accelerated vesting upon qualifying terminations of employment and timing and form of payment) that applied to the corresponding Unvested WBD Option immediately prior to the Effective Time (except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for other administrative or ministerial changes as in the reasonable and good faith determination of the Company were appropriate to conform the administration of the Unvested WBD Option Consideration amounts and were not adverse to the holders of such Unvested WBD Options) with respect to receipt of the Unvested WBD Option Consideration.
At the Effective Time, each WBD Option with an exercise price per share of WBD Common Stock that was equal to or greater than the Merger Consideration was canceled without any cash payment or other consideration being made in respect thereof.
At the Effective Time, each award of restricted stock units corresponding to shares of WBD Common Stock granted pursuant to any WBD stock plan, including performance restricted stock units (a “WBD RSU”), outstanding immediately prior to the Effective Time that vested in accordance with its terms as of the Effective Time or that was held by a non-employee member of the board of directors of WBD ( a “Vested WBD RSU”), was canceled and converted into the right to receive the Merger Consideration with respect to each share of WBD Common Stock underlying such Vested WBD RSU, with the number of shares of WBD Common Stock subject to such Vested WBD RSU granted with performance-based vesting conditions determined based on the attainment of the applicable performance measures at the actual level of performance by the board of directors of WBD or a committee thereof in the ordinary course of business and consistent with past practice.
At the Effective Time, each WBD RSU outstanding immediately prior to the Effective Time and that was not a Vested WBD RSU (an “Unvested WBD RSU”) was assumed by the Company and automatically converted into the contingent right to receive an amount in cash, without interest, equal to the product of (i) the Merger Consideration, multiplied by (ii) the total number of shares of WBD Common Stock subject to such Unvested WBD RSU immediately prior to the Effective Time (the “Unvested WBD RSU Consideration”), with such Unvested WBD RSU Consideration remaining subject to the same terms and conditions (including any applicable terms relating to accelerated vesting upon qualifying terminations of employment and timing and form of payment) that applied to the corresponding Unvested WBD RSU immediately prior to the Effective Time (except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for other administrative or ministerial changes as in the reasonable and good faith determination of the Company were appropriate to conform the administration of the Unvested WBD RSU Consideration amounts and were not adverse to the holders of such Unvested WBD RSUs) with respect to receipt of the Unvested WBD RSU Consideration.
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At the Effective Time, the total number of shares of WBD Common Stock subject to each Unvested WBD RSU with performance-based vesting conditions was determined by assuming (i) in respect of such Unvested WBD RSUs for which the applicable performance period completed prior to the Effective Time, actual performance, and (ii) in respect of such Unvested WBD RSUs for which the applicable performance period was not completed prior to the Effective Time, achievement at the greater of (x) target performance and (y) actual performance extrapolated through the end of the applicable performance period based on actual performance through the Closing Date, determined by the board of directors of WBD or a committee thereof in good faith and consistent with past practice.
At the Effective Time, each deferred stock unit of WBD (a “WBD DSU”) outstanding immediately prior to the Effective Time was assumed by the Company and automatically converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the Merger Consideration by (ii) the number of shares of WBD Common Stock subject to such WBD DSU immediately prior to the Effective Time (the “WBD DSU Consideration”), with such WBD DSU Consideration remaining subject to the same terms and conditions that applied to the corresponding WBD DSU immediately prior to the Effective Time (including with respect to timing and form of payment).
At the Effective Time, each notional investment unit with respect to shares of WBD Common Stock (a “WBD Notional Unit”) subject to WBD’s Non-Employee Directors Deferral Plan or WBD’s Supplemental Retirement Plan (a “WBD DC Plan”) that was outstanding immediately prior to the Effective Time was assumed by the Company and automatically converted into a notional unit with respect to a number of shares of Class B Common Stock (a “SKYD Notional Unit”) equal to the product obtained by multiplying (i) the Equity Award Exchange Ratio (as defined below) by (ii) the number of shares of WBD Common Stock subject to such WBD Notional Unit immediately prior to the Effective Time, with each such SKYD Notional Unit remaining subject to the same terms and conditions that applied to the corresponding WBD Notional Unit immediately prior to the Effective Time (including with respect to timing and form of payment), as set forth in the applicable WBD DC Plan. The “Equity Award Exchange Ratio” was determined by dividing (i) the Merger Consideration by (ii) the per share volume-weighted average trading price of the Class B Common Stock for the fifteen consecutive trading days ending on (and including) the trading day that was three trading days prior to the Closing Date.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information provided in Item 1.01 with respect to the Notes, the Base Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture and the Credit Facilities is incorporated into this Item 2.03 by reference insofar as it relates to the creation of a direct financial obligation.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information provided in the Explanatory Note of this Current Report on Form 8-K is incorporated by reference herein.
As previously disclosed in the Company’s Current Report on Form 8-K filed on April 7, 2026, the rights to subscribe for shares of Class B Common Stock under the subscription agreements entered into on February 27, 2026, between the Company and each of the Trust and RedBird, respectively, were assigned to a syndicate of investors that included certain entities affiliated with the Trust and RedBird as well as certain PIPE Investors. Pursuant to the terms of such assignments, the PIPE Investors subscribed on October 6, 2026, substantially concurrently with the Closing, for 3,917,657,246 shares of Class B Common Stock at a purchase price of $12.00 per share. The shares of Class B Common Stock were not required to be registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
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| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The information provided in the Explanatory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
President Appointment
On October 5, 2026, the board of directors of the Company (the “Board”) appointed Andrew Brandon-Gordon as the Company’s President, effective as of the Closing. Mr. Brandon-Gordon will continue to serve as a member of the Board. Prior to the Closing, Mr. Brandon-Gordon served as the Company’s Chief Strategy Officer and Chief Operating Officer. Mr. Brandon-Gordon, age 62, also currently serves on the board of directors of Harbor Lights Entertainment, Inc. From 2020 until joining the Company, Mr. Brandon-Gordon served as a Partner of RedBird Capital Partners Management LLC, where he led the firm’s Technology, Media & Telecom investment vertical and its capital markets activities. Mr. Brandon-Gordon previously served as the Global Chairman of Investment Banking Services, Head of the West Region, Global Head of Media and Telecommunications for the Technology, Media and Telecom Group and Co-Head of the One Goldman Sachs Family Office of Goldman Sachs where he was employed from 1986 to 2020, and as a Partner of Goldman Sachs from 1998 until his retirement in 2020.
Assumption of WBD Stock Plans
Pursuant to the Merger Agreement, at the Effective Time, the Company assumed the following equity incentive plans (collectively, the “WBD Stock Plans”): (i) the Amended and Restated Warner Bros. Discovery, Inc. Stock Incentive Plan, (ii) the Warner Bros. Discovery, Inc. 2013 Incentive Plan (as amended) and (iii) the Warner Bros. Discovery, Inc. 2005 Non-Employee Director Incentive Plan (as amended). As of the Effective Time, all references to WBD or its predecessors or to WBD Common Stock in the WBD Stock Plans were deemed to be automatically amended to be references to the Company and the Class B Common Stock, respectively, except where the context clearly dictates otherwise. The WBD Stock Plans were terminated as of the Closing, except with respect to terms remaining applicable to the Unvested WBD Option Consideration, Unvested WBD RSU Consideration and WBD DSU Consideration.
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Amendment to the 2025 Plan
Effective as of the Closing, the Board adopted the First Amendment (the “Plan Amendment”) to the Paramount Skydance Corporation 2025 Incentive Award Plan (the “2025 Plan”). The Plan Amendment changes the name of the 2025 Plan to the Skydance Corporation 2025 Incentive Award Plan and provides that shares which remained available for issuance under the Amended and Restated Warner Bros. Discovery, Inc. Stock Incentive Plan immediately prior to the Closing (as adjusted by the Equity Award Exchange Ratio) may be used for awards under the 2025 Plan and will not reduce the shares authorized for grant under the 2025 Plan, to the extent that awards using such shares (i) are permitted without stockholder approval under applicable stock exchange rules, (ii) are made only to legacy WBD service providers or individuals who become service providers to the Company following the Closing Date, and (iii) are only granted under the 2025 Plan during the period commencing on the Closing Date and ending on June 3, 2034.
The foregoing description of the Plan Amendment is qualified in its entirety by the full text of the Plan Amendment, which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
Employment Letter Amendments
On the Closing Date, the Company entered into amendments (each, an “Amendment”) to the employment letter agreements (each, an “Employment Agreement”) with each of David Ellison, its Chief Executive Officer, Ynon Kreiz, its Co-Chief Executive Officer, Mr. Brandon-Gordon, its President (formerly its Chief Strategy Officer and Chief Operating Officer), Dennis Cinelli, its Chief Financial Officer, and Makan Delrahim, its Chief Legal Officer (each, an “Executive”).
The Amendments extended the employment terms for Messrs. Ellison, Brandon-Gordon, Cinelli and Delrahim under their respective Employment Agreements through August 7, 2031, August 7, 2031, January 15, 2032, and October 6, 2031, respectively. Pursuant to the Amendments, (i) the annual base salaries for Messrs. Ellison, Brandon-Gordon, Cinelli and Delrahim increased to $5,000,000, $4,000,000, $3,400,000 and $4,000,000, respectively, on the Closing Date; (ii) target annual bonuses increased to $5,000,000 (for Mr. Ellison) and $2,600,000 (for Messrs. Brandon-Gordon, Cinelli and Delrahim), effective as of the Closing Date; and (iii) commencing with calendar year 2027, Messrs. Ellison, Brandon-Gordon, Cinelli and Delrahim will be eligible to receive annual equity award(s) (“Annual Awards”) with an aggregate grant date value of $5,000,000, $1,400,000, $1,250,000 and $4,400,000, respectively (increasing for Annual Awards made in calendar year 2031 to $20,000,000, $13,400,000, $12,500,000 and $13,400,000, respectively). In connection with the entrance into the Amendments, Messrs. Ellison, Brandon-Gordon, Cinelli and Delrahim were granted awards of restricted stock units covering 104,167, 29,167, 26,042 and 91,667 shares of Class B Common Stock, respectively, under the 2025 Plan.
The Amendments also provide that if the applicable Executive’s employment is terminated by the Company without “cause” or by the applicable Executive for “good reason” (each as defined in the respective Employment Agreement), he will be entitled to accelerated vesting of a number of shares of Class B Common Stock subject to his then-outstanding Company equity awards that would have otherwise vested through the 24 month anniversary of the date of termination (had his employment not terminated), subject to his execution and non-revocation of a release of claims and continued compliance with applicable restrictive covenants. In addition, if the applicable Executive’s employment is terminated due to the Executive’s death or “disability” (as defined in the respective Employment Agreement), the Executive will be entitled to receive any earned, unpaid annual bonus for the fiscal year ending immediately prior to the fiscal year in which the termination occurs. Mr. Brandon-Gordon’s Amendment also provides that in the event of his “qualifying retirement” (as defined in the Amendment), he will be entitled to full accelerated vesting of his then-outstanding Company equity awards, subject to his execution and non-revocation of a release of claims and continued compliance with applicable restrictive covenants and the conditions of a qualifying retirement under the Amendment.
The foregoing description of the Amendments is qualified in its entirety by the full text of the Amendments, which are filed herewith as Exhibits 10.2, 10.3, 10.4, 10.5 and 10.6 and are incorporated by reference herein.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On October 5, 2026, and effective as of October 6, 2026, following the Closing, the Company filed an Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”) with the Secretary of State of the State of Delaware, which reflects the Company’s change in name from “Paramount Skydance Corporation” to “Skydance Corporation”, removes certain consent and designation rights and makes certain other administrative changes (the “Charter Amendments”). The Charter Amendments contained in the Amended and Restated Certificate of Incorporation were approved by the Board and holders of 100% of the shares of the Company’s Class A Common Stock, representing 100.0% of the voting power of the Company’s outstanding capital stock, acting by written consent. The Amended and Restated Certificate of Incorporation is attached hereto as Exhibit 3.1 and is incorporated by reference herein.
On October 5, 2026, and effective as of October 6, 2026, following the Closing, the Board adopted the Amended and Restated Bylaws of the Company (the “Amended and Restated Bylaws”), which reflect the Charter Amendments. The Amended and Restated Bylaws are attached hereto as Exhibit 3.2 and are incorporated by reference herein.
| Item 5.07 | Submission of Matters to a Vote of Security Holders |
The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 5.07.
| Item 7.01 | Regulation FD Disclosure |
The information provided in the Explanatory Note of this Current Report on Form 8-K is incorporated by reference herein.
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On October 6, 2026, the Company issued a press release announcing the completion of the transactions contemplated by the Merger Agreement, including the Merger. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated by reference herein.
The information contained in this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
The information provided in the Explanatory Note and Item 2.03 of this Current Report on Form 8-K is incorporated by reference herein.
| (a) | Financial statements of businesses or funds acquired. |
The audited consolidated financial statements and notes thereto contained in WBD’s Annual Report on Form 10-K for the year ended December 31, 2025 were previously incorporated by reference to the Company’s Current Report on Form 8-K, filed on July 31, 2026, pursuant to Item 9.01(a) of Form 8-K.
The interim unaudited condensed consolidated financial statements of WBD as of June 30, 2026 and for the three and six months ended June 30, 2026 and June 30, 2025, and the notes related thereto were filed by WBD with the U.S. Securities and Exchange Commission on August 6, 2026, and are incorporated by reference herein as Exhibit 99.3 hereto.
| (b) | Pro forma financial information. |
The unaudited pro forma condensed combined financial information for the Company, after giving effect to the Merger, certain other transactions and the adjustments described therein, is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
| (c) | Shell company transactions. |
None.
| (d) | Exhibits. |
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|
Exhibit |
Description |
| 2.1 | Agreement and Plan of Merger, dated February 27, 2026, by and among Warner Bros. Discovery, Inc., Paramount Skydance Corporation and Prince Sub Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Paramount Skydance Corporation filed March 2, 2026) (File No. 001-42791). |
| 3.1 | Amended and Restated Certificate of Incorporation of Skydance Corporation, effective as of October 6, 2026. |
| 3.2 | Amended and Restated Bylaws of Skydance Corporation, effective as of October 6, 2026. |
| 4.1 | Indenture dated as of October 5, 2026, by and between Paramount Skydance Corporation and Deutsche Bank Trust Company Americas. |
| 4.2 | Supplemental Indenture dated as of October 5, 2026, by and between Paramount Skydance Corporation and Deutsche Bank Trust Company Americas relating to the First Lien Senior Secured Notes. |
| 4.3 | Forms of First Lien Senior Secured Notes (each included in Exhibit A to Exhibit 4.2). |
| 4.4 | Supplemental Indenture dated as of October 5, 2026, by and between Paramount Skydance Corporation and Deutsche Bank Trust Company Americas relating to the Second Lien Dollar Senior Secured Notes. |
| 4.5 | Forms of Second Lien Dollar Senior Secured Notes (each included in Exhibit A to Exhibit 4.4). |
| 4.6 | Supplemental Indenture dated as of October 5, 2026, by and among Paramount Skydance Corporation, Deutsche Bank Trust Company Americas and Deutsche Bank AG, London Branch relating to the 2031 Second Lien Euro Senior Secured Notes. |
| 4.7 | Form of 2031 Second Lien Euro Senior Secured Note (included as Exhibit A to Exhibit 4.6). |
| 4.8 | Supplemental Indenture dated as of October 6, 2026, by and among Deutsche Bank Trust Company Americas and the guarantors party thereto relating to the guarantees of the First Lien Senior Secured Notes and the Second Lien Senior Secured Notes. |
| 10.1# | First Amendment to the Paramount Skydance Corporation 2025 Incentive Award Plan. |
| 10.2# | Amendment, dated as of October 6, 2026, to Employment Agreement, effective as of August 7, 2025, by and among Paramount Skydance Corporation, Skydance Productions, LLC and David Ellison. |
| 10.3# | Amendment, dated as of October 6, 2026, to Employment Agreement, effective as of October 5, 2026, by and among Paramount Skydance Corporation, Paramount Global and Ynon Kreiz. |
| 10.4# | Amendment, dated as of October 6, 2026, to Employment Agreement, effective as of August 7, 2025, by and among Paramount Skydance Corporation, Paramount Global and Andrew Brandon-Gordon. |
| 10.5# | Amendment, dated as of October 6, 2026, to Employment Agreement, effective as of January 15, 2026, by and among Paramount Skydance Corporation, Paramount Global and Dennis Cinelli. |
| 10.6# | Amendment, dated as of October 6, 2026, to Employment Agreement, dated as of October 6, 2025, by and among Paramount Skydance Corporation, Paramount Global and Makan Delrahim. |
| 10.7 | Registration Rights Agreement, dated October 5, 2026, by and among Paramount Skydance Corporation and BofA Securities, Inc., Citigroup Global Markets Inc., and Apollo Global Securities, LLC, as representatives of the initial purchasers, relating to the First Lien Senior Secured Notes. |
| 10.8+ | Amendment No. 1 to the Credit Agreement, dated October 6, 2026, by and among Paramount Skydance Corporation, the lenders party thereto and Citibank, N.A., as Administrative Agent. |
| 10.9+ | Credit Agreement, dated as of April 7, 2026, by and among Paramount Skydance Corporation, the lenders from time to time party thereto and Citibank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Paramount Skydance Corporation filed April 9, 2026). |
| 10.10+ | Amended and Restated Registration Rights Agreement, dated as of October 6, 2026, by and among the Company, the investors party to the Initial Registration Rights Agreement, the Trust, certain affiliates of RedBird and the other parties thereto. |
| 10.11 | Form of Lock-Up Agreement. |
| 99.1 | Press Release, dated October 6, 2026. |
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| 99.2 | Unaudited pro forma condensed combined financial statements of Skydance Corporation (f/k/a Paramount Skydance Corporation) as of and for the six months ended June 30, 2026 and for the year ended December 31, 2025. |
| 99.3 | Interim unaudited condensed consolidated financial statements of Warner Bros. Discovery, Inc. as of June 30, 2026 and for the three and six months ended June 30, 2026 and June 30, 2025, and the notes related thereto (incorporated by reference to Part I, Item 1 of the Warner Bros. Discovery, Inc. Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 (SEC File No. 001-34177)). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
+ Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
# Indicates a management contract or compensatory plan or arrangement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SKYDANCE CORPORATION | |||
| By: | /s/ Stephanie Kyoko McKinnon | ||
| Name: | Stephanie Kyoko McKinnon | ||
| Title: | General Counsel and Secretary | ||
Date: October 6, 2026
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Exhibit 99.1
PARAMOUNT COMPLETES ACQUISITION OF WARNER BROS. DISCOVERY, CREATING A NEW GLOBAL ENTERTAINMENT LEADER, SKYDANCE
| · | The combination builds on the storied history of two of the world’s most recognizable entertainment companies, forming a single creative powerhouse. |
| · | The combined company, Skydance, brings together two major film studios, two global streaming services, premier television assets including CBS, HBO, and Paramount’s and WBD’s cable networks, two of the industry’s most recognized news networks, CBS News and CNN, and a leading content portfolio that includes live sports, a deep programming library and expansive collection of iconic brands and franchises. |
| · | Together, Paramount and WBD will deliver enhanced output commitments, including a minimum of 30 high-quality theatrical films per year and 180+ television shows and series. |
| · | Skydance aims to build the next-generation global media and entertainment company powered by creativity and technology. We are creative-first, audience focused, tech-forward, globally scaled. |
| · | Storytelling anchors the combined company’s growth strategy – expanding opportunities for the world’s leading creative talent and widening choice for consumers across every entertainment vertical. |
| · | Disciplined execution and an owner-operator model underpin the strategy, targeting at least $6 billion in run-rate synergies within three years. |
Los Angeles, CA and New York, NY October 6, 2026 – Skydance Corporation (f/k/a Paramount Skydance Corporation) (NYSE: SKYD) (“Paramount”) today announced the completion of its acquisition of Warner Bros. Discovery, Inc. (NASDAQ: WBD) (“WBD”), creating a combined company, named “Skydance.” The company brings together two major film studios, two global streaming services, a premier television portfolio including CBS, HBO, and Paramount’s and WBD’s cable networks, two of the industry’s most recognized news networks, CBS News and CNN, and a portfolio of live sports including CBS Sports and TNT Sports, as well as a deep programming library and expansive collection of brands and franchises. The transaction closed following receipt of all required regulatory approvals under the merger agreement and satisfaction of other customary closing conditions. Skydance Class B shares will begin trading today on the New York Stock Exchange (NYSE) under the new ticker symbol "SKYD."
Under the terms of the agreement, WBD shareholders received an amount in cash equal to $31.01666668 per share. WBD shares have ceased trading on NASDAQ, effective today.
The completed transaction unites two of media and entertainment’s most storied companies, each with a history spanning more than a century, giving the combined business a rare legacy to build on. The aim of the combined company is to build the next-generation global media and entertainment company powered by creativity and technology.
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Storytelling will drive the combined company’s growth, bringing creative visions to life for audiences in more than 200 countries and territories and creating greater opportunities for workers across the entertainment industry. Skydance starts from a position of strength: the most diverse film and television library of any studio, the largest theatrical output in the industry, 200+ million streaming subscribers across platforms, an iconic broadcast network, an unmatched sports portfolio, and a franchise portfolio spanning Top Gun and Harry Potter to White Lotus and SpongeBob SquarePants. From this foundation, Skydance is committed to delivering for the creative community and consumers, with at least 30 theatrical films annually, each with a minimum 45-day theatrical window, and already boasts 180+ television shows. Across TV and streaming, Skydance will also continue to support the independent production sector by commissioning content from independent studios and licensing its own content to third parties, creating more opportunities and more jobs for creatives, both in front of and behind the camera.
David Ellison, Chairman and CEO of Skydance, said: “Today is a historic day, not just for Skydance but for our entire industry. From the start, our ambition was to bring these two storied studios together and create a stronger competitor, with the talent, resources, and reach to tell great stories in every genre, on every platform, for audiences everywhere. Now that ambition is a reality. We’re grateful to everyone who made this possible – the employees, creative talent, and production teams of both companies, who worked tirelessly to get us here and inspire audiences around the world every day, as well as the advisors and partners who guided this transaction to completion. Our focus now turns to the future: building a company that empowers creatives, entertains audiences and rewards shareholders. We couldn’t be more excited to get to work.”
Gerry Cardinale, Founder and Managing Partner of RedBird Capital and a Skydance Board Director, said: “This is a defining moment for the industry. By applying our owner-operator model to Paramount and WBD’s unmatched portfolio of iconic franchises, premium original programming, and live sports rights, we can protect that legacy while building for a media landscape that’s undergoing transformational change. David, our Co-CEO Ynon Kreiz, and the rest of our world-class Skydance team have the vision and track record to lead through this change. We’re proud to back them as we build a stronger Hollywood, expand opportunities for talent, and create long-term value for our shareholders.”
At the same time, consumers can expect greater innovation from a company built with technology at its core, including significant improvements to its direct-to-consumer streaming products, which will unify into a single service over time.
The transaction received unanimous approval from competition authorities covering nearly 70 jurisdictions worldwide, reflecting recognition of the deal’s pro-competitive nature and the benefits it brings to consumers and creatives alike. The combination will strengthen competition and expand consumer choice, both on Skydance’s own platforms and across the broader industry.
The combined company is built on a strong financial foundation that positions it to capitalize on growth opportunities, deliver on its commitments, and drive shareholder value. Skydance is one of the largest media and entertainment companies in the world, with nearly $70 billion in revenue. We are targeting $6 billion-plus in run-rate synergies over the next three years. Applying the same operational playbook that allowed Paramount to exceed its synergy targets following the Skydance-Paramount merger, the synergy savings will come primarily from technology, integration and procurement, marketing and real estate rationalization. That will make the company leaner and more nimble, freeing it to grow its investment in the stories, creators and technology that matter most while reducing net leverage to its 3.0x target by the end of 2029.
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Powered by best-in-class content, streaming scale and technological edge, the combined company expects to generate more than $10 billion in free cash flow by 2030 – reducing leverage while funding growth and investment. Its pro forma content spend of more than $30 billion for the last twelve-month period will be disciplined and strategic, prioritizing audience reach and long-term value creation.
WBD’s common stock has ceased trading on the Nasdaq Exchange, effective today. The Ellison Family holds the largest equity stake in Skydance (NYSE: SKYD), and the Ellison Family and RedBird Capital Partners (“RedBird”) together are the sole holders of Paramount Class A Common Stock, including 100% of the combined company’s voting shares.
As previously stated, the transaction included $47 billion of new equity investment in Class B Common Stock, led by the Ellison Family, RedBird, Public Investment Fund (PIF), L’IMAD, Qatar Investment Authority (QIA) and LionTree, which was priced at $12.00 per share. The debt financing for the transaction was led by Bank of America, Citigroup and Apollo.
Advisors
Centerview Partners LLC and RedBird Advisors acted as lead financial advisors to Paramount, and Bank of America Securities, Citi, M. Klein & Company and LionTree Advisors also acted as financial advisors. Cravath, Swaine & Moore LLP and Latham & Watkins LLP acted as legal counsel to Paramount. Latham & Watkins LLP also acted as legal counsel to the investor consortium, including the Ellison Family.
Allen & Company, J.P. Morgan and Evercore served as financial advisors to WBD and Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP served as legal counsel.
Barclays Capital acted as financial advisors to the Special Committee of the Board of Directors of Paramount and Cleary, Gottlieb, Steen & Hamilton LLP served as legal counsel.
About Skydance
Skydance is a next-generation global media and entertainment company, composed of three business segments: Studios, Direct-to-Consumer, and TV Media. Skydance's portfolio unites legendary brands, including Paramount, Warner Bros., HBO and HBO Max, Paramount+, Pluto TV, CBS, CNN, CBS Sports, TNT Sports, Nickelodeon, Cartoon Network, MTV, Food Network, BET, HGTV, and Comedy Central.
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Cautionary Note Concerning Forward-Looking Statements
This communication contains “forward-looking statements” regarding the completed acquisition of WBD and the integration, synergies, financial and leverage targets, strategy, impact on competition, and other go-forward matters of the combined company. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Paramount or WBD. Risks and uncertainties include, but are not limited to: risks that the expected benefits, synergies and opportunities of the completed acquisition may not be realized or may take longer to realize than expected; risks and costs associated with the integration of the business of WBD, including the ability to integrate successfully and to achieve anticipated synergies and financial targets; risks that the combined company may not achieve the expected run-rate synergies, net leverage, free cash flow or other financial goals described in this press release within the expected timeframes or at all; potential disruption to business operations and relationships as a result of the completed acquisition and ongoing integration; the risk of stockholder litigation relating to the acquisition of WBD; risks related to Paramount’s streaming business; the adverse impact on Paramount’s advertising revenues as a result of changes in consumer behavior, advertising market conditions and deficiencies in audience measurement; risks related to operating in highly competitive and dynamic industries; the unpredictable nature of consumer behavior, as well as evolving technologies and distribution models; risks related to Paramount’s decisions to invest in new businesses, products, services and technologies, and the evolution of Paramount’s business strategy; the potential for loss of carriage or other reduction in, or the impact of negotiations for, the distribution of Paramount’s content; damage to Paramount’s reputation or brands; losses due to asset impairment charges for goodwill, content and long-lived assets, including finite-lived intangible assets; liabilities related to discontinued operations and former businesses; increasing scrutiny of, and evolving expectations for, sustainability initiatives; evolving business continuity, cybersecurity, privacy and data protection and similar risks; challenges in protecting and maintaining Paramount’s intellectual property rights; domestic and global political, economic and regulatory factors affecting Paramount’s business generally or the completed acquisition of WBD; the inability to hire or retain key employees or secure creative talent; disruptions to Paramount’s operations as a result of labor disputes; risks and costs associated with the integration of, and Paramount’s ability to integrate, the businesses of Paramount Global, Paramount, Skydance and WBD successfully and to achieve anticipated synergies, including in the amounts or on the timelines anticipated to realize such synergies; litigation relating to the transactions contemplated by the transaction agreement entered into on July 7, 2024, between Paramount Global and Skydance Media, LLC, potentially resulting in substantial costs; volatility in the price of Paramount’s Class B common stock; the effect Paramount’s dual-class capital structure and the concentrated ownership may have on the price of its Class B common stock or business; risks related to a private sale of a controlling interest in Paramount, including that Paramount’s stockholders may not realize any change of control premium on shares of Paramount’s Class B common stock and that Paramount may become subject to the control of a presently unknown third party; risks associated with Paramount’s status as a “controlled company” under NYSE rules, including its exemption from certain corporate governance requirements; risks associated with the lack of voting rights of Paramount’s Class B common stock; risks that anti-takeover provisions in Paramount’s amended and restated certificate of incorporation (“Charter”) and amended and restated bylaws, and under Delaware law, could deter, delay, or prevent a change of control; risks that exclusive forum provisions in Paramount’s Charter could limit a stockholder’s choice of forum for certain claims and discourage lawsuits against Paramount’s directors and officers; risks that corporate opportunity provisions in Paramount’s Charter could permit certain persons to pursue competitive opportunities that might otherwise be available to Paramount; risks associated with Paramount’s holding company structure, including its dependence on distributions from its subsidiaries to meet tax obligations and other cash requirements; risks related to the combined company’s ability to incur substantially more debt and its ability to meet the financial and other covenants contained in the agreements governing its substantial indebtedness; risks relating to the combined company’s ability to deleverage the business in accordance with management’s targets, including risks arising from assumptions, uncertainties and contingencies that may affect our ability to reduce indebtedness; risks relating to management’s ability to execute on its strategic plan and improve the combined company’s financial profile and cash flows from operations; and risks relating to any capital or other financing the combined company may have to raise in order to reduce its indebtedness following the acquisition of WBD. A further list and description of these risks, uncertainties and other factors and the general risks associated with the respective businesses of Paramount and WBD can be found in Paramount’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 25, 2026, as amended by Paramount’s Annual Report on Form 10-K/A, filed with the SEC on April 24, 2026, as superseded by, and solely to the extent set forth in, Paramount’s Current Report on Form 8-K, filed with the SEC on May 13, 2026, Paramount’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed with the SEC on August 4, 2026, including in the sections captioned “Cautionary Note Concerning Forward-Looking Statements” and “Item 1A. Risk Factors,” and Paramount’s subsequent filings with the SEC, and WBD’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026, WBD’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed with the SEC on August 6, 2026, in each case, including in the sections captioned “Cautionary Note Concerning Forward-Looking Statements” and “Item 1A. Risk Factors,” and WBD’s subsequent filings with the SEC, including filings related to the acquisition of WBD. Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, https://ir.paramount.com/sec-filings/paramount, https://ir.corporate.discovery.com/financials/sec-filings, as applicable, or on request from Paramount or WBD. Neither Paramount nor WBD undertakes to update any forward-looking statement as a result of new information or future events or developments, except as required by law. We are not able to reconcile forward-looking non-GAAP financial measures because we are unable without unreasonable efforts to accurately estimate the individual adjustments for such reconciliations, as applicable, or to quantify the probable significance of these items at this time.
4
Skydance
Media Contacts:
Melissa Zukerman / Laura Watson
msz@paramount.com / laura.watson@paramount.com
Brunswick Group
ParamountSkydance@brunswickgroup.com
Gagnier Communications
Dan Gagnier
dg@gagnierfc.com
Investor Contacts:
Kevin Creighton / Logan Thomas
kevin.creighton@paramount.com / logan.thomas@paramount.com
5
Exhibit 99.2
PARAMOUNT SKYDANCE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Summary of the Transactions
Warner Bros. Discovery, Inc. Acquisition
On October 6, 2026, Warner Bros. Discovery, Inc., a Delaware corporation (“WBD”), Paramount Skydance Corporation (“Paramount” or the “Company”) and Prince Sub Inc., a Delaware corporation and wholly owned subsidiary of Paramount (“Merger Sub”) completed the transactions contemplated by the previously disclosed Agreement and Plan of Merger, dated as of February 27, 2026, among WBD, the Company and Merger Sub (the “WBD Merger Agreement”), pursuant to which, Merger Sub merged with and into WBD, with WBD surviving as a wholly owned subsidiary of Paramount (the “Acquisition”). On October 6, 2026, immediately following the Effective Time (as defined below) and subsequent to the date of the financial statements included herein, the Company amended its certificate of incorporation (the “charter amendment”) to, among other things, change its name to Skydance Corporation. As a result, references herein to “Paramount”, “Paramount Skydance Corporation” or the “Company” refer, prior to such charter amendment, to Paramount Skydance Corporation, and following such charter amendment, to Skydance Corporation.
The Acquisition will be accounted for as a business combination under ASC 805, Business Combinations, with the Company identified as the accounting acquirer. In identifying the Company as the accounting acquirer, management considered the structure of the Acquisition and other actions contemplated by the WBD Merger Agreement, relative outstanding voting and equity interests, and the composition of the post-Acquisition board of directors. No single factor was the sole determinant in the overall conclusion that Paramount is the accounting acquirer; rather all factors were considered in arriving at such conclusion.
At the effective time of the Acquisition (the “Effective Time”), each share of WBD Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of WBD Common Stock cancelled for no consideration in accordance with the WBD Merger Agreement or as to which appraisal rights have been properly exercised) was converted into the right to receive an amount in cash equal to $31.00, without interest, plus the Ticking Consideration (collectively, the “Merger Consideration”). The “Ticking Consideration” is an amount in cash equal to $0.00277778 multiplied by the number of calendar days elapsed after September 30, 2026 to and including the closing date of the Acquisition. For purposes of these pro forma financial statements, total cash consideration paid to WBD common stockholders is estimated at $78.0 billion, calculated based on WBD Common Stock outstanding as of July 23, 2026, and including the applicable Ticking Consideration based on the October 6, 2026 closing date of the Acquisition. In addition, cash payments at closing of approximately $1.1 billion are estimated with respect to vested WBD equity awards as described under “Treatment of Equity Awards” below. See Note 3 for additional details regarding the purchase consideration. Certain Equity Investors (as defined herein) subscribed for additional shares of Paramount Class B Common Stock in the PIPE transactions (each as defined herein) in the amount required to cover such Ticking Consideration.
Treatment of Equity Awards
Stock Options
At the Effective Time:
| · | Each stock option outstanding to purchase shares of WBD Common Stock granted under any WBD stock plan that is (x) vested as of the Effective Time or (y) held by a former employee or service provider of WBD, was cancelled and converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the excess if any, of the Merger Consideration over the per share exercise price for such vested stock option by (ii) the total number of shares of WBD Common Stock subject to such vested stock option. |
| · | Each stock option (whether vested or unvested) with an exercise price equal to or in excess of the Merger Consideration was cancelled without consideration. |
| · | Each unvested stock option with an exercise price below the Merger Consideration was assumed by Paramount and automatically converted into the contingent right to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the excess of the Merger Consideration over the per share exercise price for such unvested stock option by (ii) the total number of shares of WBD Common Stock subject to such unvested stock option immediately prior to the Effective Time, and remains subject to generally the same terms and conditions (including any applicable terms relating to accelerated vesting upon qualifying terminations of employment and timing and form of payment) that applied to the corresponding unvested stock option immediately prior to the Effective Time. |
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Restricted Stock Units (“RSUs”), including Performance-Based RSUs (“PRSUs”)
At the Effective Time:
| · | Each WBD RSU that was vested in accordance with its terms or that was held by a non-employee member of the board of directors of WBD as of the Effective Time was cancelled and converted into the right to receive the Merger Consideration with respect to each share of WBD Common Stock underlying such vested WBD RSU, with the number of shares of WBD Common Stock subject to such vested WBD RSU granted with performance-based vesting conditions determined as described below. |
| · | Each WBD RSU that was outstanding immediately prior to the Effective Time and that is not a vested WBD RSU, was assumed by Paramount and automatically converted into the contingent right to receive an amount in cash, without interest, equal to the product of (i) the Merger Consideration, multiplied by (ii) the total number of shares of WBD Common Stock subject to such unvested WBD RSU immediately prior to the Effective Time, and remains subject to generally the same terms and conditions (including any applicable terms relating to accelerated vesting upon qualifying terminations of employment and timing and form of payment) that applied to the corresponding unvested WBD RSU immediately prior to the Effective Time. |
| · | The total number of unvested WBD RSUs with performance-based vesting conditions expected to vest was determined by assuming (i) in respect of such unvested WBD RSUs for which the applicable performance period was completed prior to the Effective Time, actual performance, and (ii) in respect of such unvested WBD RSUs for which the applicable performance period was not completed prior to the Effective Time, achievement at the greater of (x) target performance and (y) actual performance extrapolated through the end of the applicable performance period based on actual performance through the Effective Time, determined by the board of directors of WBD or a committee thereof in good faith and consistent with past practice. |
Deferred and Notional Equity Units
At the Effective Time:
| · | Each deferred stock unit (“DSU”) that was outstanding immediately prior to the Effective Time was assumed by Paramount and automatically converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (A) the Merger Consideration by (B) the number of shares of WBD Common Stock subject to such DSU immediately prior to the Effective Time (the “WBD DSU Consideration”), with such WBD DSU Consideration remaining subject to the same terms and conditions that applied to the corresponding DSU immediately prior to the Effective Time. |
| · | Each notional investment unit with respect to shares of WBD Common Stock (a “WBD Notional Unit”) subject to WBD’s Non-Employee Directors Deferral Plan and WBD’s Supplemental Retirement Plan (each, a “WBD DC Plan”) that was outstanding immediately prior to the Effective Time was assumed by Paramount and automatically converted into a notional unit with respect to a number of shares of Class B common stock, par value $0.001 per share (“Paramount Class B Common Stock”), of Paramount (a “Paramount Notional Unit”) equal to the product obtained by multiplying (A) the Equity Award Exchange Ratio (as defined below) by (B) the number of shares of WBD Common Stock subject to such WBD Notional Unit immediately prior to the Effective Time, with each such Paramount Notional Unit remaining subject to the same terms and conditions that applied to the corresponding WBD Notional Unit immediately prior to the Effective Time (including with respect to timing and form of payment), as set forth in the applicable WBD DC Plan. The “Equity Award Exchange Ratio” was determined by dividing (i) the Merger Consideration by (ii) the per share volume-weighted average trading price of Paramount Class B Common Stock for the fifteen consecutive trading days ending on (and including) the trading day that was three trading days prior to the closing date of the Acquisition. |
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Financing
The Company utilized a combination of equity financing and debt financing to fund the Acquisition. The Company entered into equity subscription agreements (“Subscription Agreements”) providing for up to $46.7 billion plus Ticking Consideration (and certain other additional amounts as defined in the WBD Merger Agreement if required) of equity financing from affiliates of The Lawrence J. Ellison Revocable Trust and $250.0 million from RedBird Capital Partners Fund IV (Master), L.P. (collectively the “Equity Investors”), pursuant to a private placement of Paramount Class B Common Stock (such private placement format being referred to herein as a private investment in public equity, or “PIPE”, arrangement).
The Equity Investors assigned their subscription rights under the Subscription Agreements (the “Equity Syndication”) to a group of institutional investors (each, an "Equity Syndication Party"), comprising affiliates of the Equity Investors, The Public Investment Fund, L'Imad 1st SPV 2 Exempt RSC LTD (an investment vehicle of L'Imad Holding, an Abu Dhabi sovereign wealth fund), QIA TMT Holding LLC (an investment vehicle of the Qatar Investment Authority), and LionTree Investment Fund, L.P. The aggregate allocations covered the full amount committed by the Equity Investors. At closing, the Company issued to each Equity Syndication Party a number of newly issued nonvoting shares of Paramount Class B Common Stock equal to its allocated amount divided by the Syndication Purchase Price, defined as the average of the daily volume-weighted average prices (“VWAP”) of Paramount Class B Common Stock for the 20 trading days up to, and including, the third business day prior to the closing of the Acquisition, subject to a ceiling of $16.02 per share and a floor of $12.00 per share (the “Syndication Purchase Price”). Based on the Syndication Purchase Price of $12.00 per share the Company issued an aggregate amount of approximately 3,918 million shares of Paramount Class B Common Stock to the Equity Syndication Parties.
Each share of Paramount Class B Common Stock (excluding shares held by any Equity Investor or affiliate thereof, certain Company subsidiaries and the Paramount Global 401(k) Plan and the Paramount Global Master Trust (collectively, the “Benefit Plans”)) as of the record date of October 5, 2026 will receive, without payment of any consideration, one 10-year warrant (each, a “Warrant”) for each share held, exercisable at an initial exercise price per share equal to the Syndication Purchase Price of $12.00 and subject to customary anti-dilution and fundamental change make-whole adjustments. Beginning on the third anniversary of issuance, the Company may call the Warrants for early expiration if the closing price of Paramount Class B Common Stock equals or exceeds $30.00 for at least 20 trading days in any 30 consecutive trading day period and warrant holders will have until such early expiration date to exercise their Warrants. The Company expects to distribute the Warrants on or about October 13, 2026.
In addition, the Company previously entered into committed debt financing arrangements, including the Pro Rata Credit Agreement, which provided for (i) $2.5 billion of three-year Term A-1 loans (“Term A-1 Loan Facility”), (ii) $2.5 billion of five-year Term A-2 loans (“Term A-2 Loan Facility”) and (iii) $5.0 billion of five-year revolving credit commitments, as well as a $49.0 billion 364-day senior secured bridge term loan facility (the “Bridge Commitments”). The Bridge Commitments were intended as contingent financing and no borrowings were made under the Bridge Commitments in connection with the closing of the Acquisition. In lieu of the Bridge Commitments, the Company funded the Acquisition with the New Permanent Financing (as defined below), which consisted of additional secured credit facilities and secured capital markets indebtedness across the investment grade and non-investment grade markets as described below. The New Permanent Financing, together with borrowings under the Pro Rata Credit Agreement, is included in the Company’s post-closing capital structure and was incurred in the form of first lien and second lien indebtedness, including term loan borrowings and secured notes (collectively, the “Acquisition Financing Transactions”). The unaudited pro forma condensed combined financial statements reflect the issuance of the New Permanent Financing.
The Acquisition Financing Transactions include (i) $9.5 billion of seven-year Term B Loans (“Term B Loans”), (ii) $30.0 billion of New First Lien Secured Notes (“New First Lien Secured Notes”), and (iii) $12.4 billion of New Second Lien Secured Notes (“New Second Lien Secured Notes”), in an aggregate amount of $51.9 billion (the “New Permanent Financing”), in addition to the $5.0 billion Term A loans under the Pro Rata Credit Agreement.
On October 6, 2026, the Company entered into Credit Agreement Amendment No. 1 to the Pro Rata Credit Agreement and pursuant to this agreement obtained the Term B Loans, consisting of (i) $8.5 billion of seven-year U.S. dollar denominated term B loans (the “Dollar Term B Loans”) and (ii) €850 million of seven-year Euro term B loans (the “Euro Term B Loans”). The Dollar Term B Loans bear interest, at the Company’s option, at a rate per annum equal to either the Alternative Base Rate (as defined in the Pro Rata Credit Agreement) or the Secured Overnight Financing Rate (“SOFR”) plus a margin based on the Company’s Consolidated Total Net Leverage Ratio (as defined in the Pro Rata Credit Agreement) that ranges between 1.75% and 1.50% for Alternative Base Rate loans and 2.75% and 2.50% for Term SOFR Rate loans. The Euro Term B Loans bear interest at a rate per annum equal to the Euro Interbank Offered Rate (“EURIBOR”) plus a margin based on the Company’s Consolidated Total Net Leverage Ratio that ranges between 2.75% and 2.50%.
The New First Lien Secured Notes, issued on October 5, 2026, consist of (i) $3.5 billion of 6.300% Senior Secured First Lien Notes due 2028 (the “2028 First Lien Notes”), (ii) $3.5 billion of 6.550% Senior Secured First Lien Notes due 2029 (the “2029 First Lien Notes”), (iii) $6.5 billion of 7.050% Senior Secured First Lien Notes due 2031 (the “2031 First Lien Notes”), (iv) $5.25 billion of 7.550% Senior Secured First Lien Notes due 2033 (the “2033 First Lien Notes”), (v) $5.25 billion of 7.900% Senior Secured First Lien Notes due 2036 (the “2036 First Lien Notes”), (vi) $1.25 billion of 8.650% Senior Secured First Lien Notes due 2046 (the “2046 First Lien Notes”), (vii) $3.5 billion of 8.750% Senior Secured First Lien Notes due 2056 (the “2056 First Lien Notes”) and (viii) $1.25 billion of 8.900% Senior Secured First Lien Notes due 2066 (the “2066 First Lien Notes”), (collectively, the “New First Lien Secured Notes”).
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The New Second Lien Secured Notes, issued on October 5, 2026, consist of (i) $6.0 billion of 8.250% Senior Secured Second Lien Notes due 2031 (the “2031 Second Lien Dollar Notes”) (ii) €885 million of 7.000% Senior Secured Second Lien Notes due 2031 (the “2031 Second Lien Euro Senior Secured Notes”), (iii) $4.0 billion of 8.875% Senior Secured Second Lien Notes due 2034 (the “2034 Second Lien Notes”) and (iv) $1.4 billion of 9.125% Senior Secured Second Lien Notes due 2036 (the “2036 Second Lien Notes”) (collectively, the “New Second Lien Secured Notes”). In connection with the 2031 Euro Second Lien Senior Secured Notes, the Company has entered into a cross currency swap with a notional amount of $994 million to convert the notes to USD at a fixed coupon rate of 8.82%. Other than as described in Note 5, the effect of the cross currency swap is not reflected in the unaudited pro forma condensed combined financial statements.
The Company used the proceeds of the New Permanent Financing, together with the net proceeds of the PIPE arrangement, borrowings under the Pro Rata Credit Agreement and cash on hand, to finance the Acquisition, the repayment of certain existing debt and to pay fees, costs and expenses related thereto. On October 6, 2026, the Company repaid all loans and terminated all credit commitments outstanding under its Amended and Restated Credit Agreement, dated as of January 23, 2020. The termination of this agreement and associated repayment of outstanding revolving credit facility borrowings, which totaled $1.8 billion at June 30, 2026, are not reflected in the unaudited pro forma condensed combined financial statements.
On June 4, 2026, WBD entered into seven-year $13.0 billion term loans (“WBD Dollar Term Loans”) and seven-year €1.7 billion term loans (the “WBD Euro Term Loans” and together with the WBD Dollar Term Loans, the “WBD Term Loans”). The proceeds were used to repay the $15.0 billion bridge facility that WBD had outstanding on March 31, 2026. The WBD Term Loans were repaid in full in connection with the closing of the Acquisition with a portion of the proceeds from the New Permanent Financing. The unaudited pro forma condensed combined financial statements reflect the settlement of the WBD Term Loans.
The Company also intends to refinance and terminate WBD’s $4.0 billion accounts receivable securitization program (of which $3.9 billion was utilized as of June 30, 2026) within close proximity to the closing of the Acquisition (or shortly thereafter). For purposes of the unaudited pro forma condensed combined financial statements, the Company has reflected the termination of the securitization facility and the related repurchase of accounts receivable as if they were completed at closing.
In connection with the execution of the WBD Merger Agreement, Paramount paid the termination fee of $2.8 billion (the “Netflix Termination Fee”) due to Netflix, Inc. under the Amended and Restated Agreement and Plan of Merger, dated as of January 19, 2026, by and among WBD, Netflix, Inc., Nightingale Sub, Inc., and New Topco 25, which was terminated prior to the execution of the WBD Merger Agreement. The Netflix Termination Fee is reflected in Paramount’s historical balance sheet at June 30, 2026.
Exchange Offers and Tender Offers
In connection with the Acquisition, the Company is offering to exchange any and all of the Exchange Offer WBD Notes (defined below) for the applicable series of newly issued second lien secured notes to be issued by the Company (the “Second Lien Secured Exchange Notes”) (each offer to exchange, an “Exchange Offer” and together, the “Exchange Offers”). The Second Lien Secured Exchange Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by certain of the Company’s wholly owned domestic subsidiaries that are obligors under the Pro Rata Credit Agreement, subject to certain customary exceptions, and will be secured, subject to certain limitations and exceptions and customary permitted liens, on a second priority basis, equally and ratably with all parity lien indebtedness of the Company and related guarantors. In certain circumstances when, among other things, the Second Lien Secured Exchange Notes are rated investment grade by two out of three rating agencies, the liens securing the Second Lien Secured Exchange Notes and related guarantees may be automatically released.
The Exchange Offer WBD Notes were issued by Discovery Communications, LLC, a Delaware limited liability company (the “DCL Issuer”), and Discovery Global Holdings, Inc. (formerly WarnerMedia Holdings, Inc.), a Delaware corporation (the “DGH Issuer” and, together with the DCL Issuer, the “Existing WBD Issuers”).
The consideration offered in the Exchange Offers (i) per $1,000 in aggregate principal amount of U.S. dollar-denominated Exchange Offer WBD Notes tendered and (ii) per €1,000 in aggregate principal amount of Euro-denominated Exchange Offer WBD Notes tendered, in each case, is summarized below:
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| WBD’s Notes to be Exchanged (the “Exchange Offer WBD Notes”) |
Issuer of Exchange Offer WBD Notes |
Aggregate Principal Amount of Notes (amount in millions) |
Second Lien Secured Exchange Notes Offered
|
| 4.125% Senior Notes due 2029 | DCL Issuer | $655.8 | 6.250% Senior Secured Second Lien Notes due 2029 |
| 3.625% Senior Notes due 2030 | DCL Issuer | $914.2 | 4.875% Senior Secured Second Lien Notes due 2030 |
| 5.000% Senior Notes due 2037 | DCL Issuer | $453.3 | 5.000% Senior Secured Second Lien Notes due 2037 |
| 6.350% Senior Notes due 2040 | DCL Issuer | $438.1 | 6.350% Senior Secured Second Lien Notes due 2040 |
| 4.950% Senior Notes due 2042 | DCL Issuer | $130.4 | 4.950% Senior Secured Second Lien Notes due 2042 |
| 4.875% Senior Notes due 2043 | DCL Issuer | $141.6 | 4.875% Senior Secured Second Lien Notes due 2043 |
| 5.200% Senior Notes due 2047 | DCL Issuer | $3.2 | 5.200% Senior Secured Second Lien Notes due 2047 |
| 5.300% Senior Notes due 2049 | DCL Issuer | $247.9 | 5.300% Senior Secured Second Lien Notes due 2049 |
| 4.054% Senior Notes due 2029 | DGH Issuer | $1,353.8 | 6.304% Senior Secured Second Lien Notes due 2029 |
| 4.279% Senior Notes due 2032 | DGH Issuer | $2,691.8 | 4.904% Senior Secured Second Lien Notes due 2032 |
| 5.050% Senior Notes due 2042 | DGH Issuer | $4,104.7 | 5.050% Senior Secured Second Lien Notes due 2042 |
| 5.141% Senior Notes due 2052 | DGH Issuer | $949.9 | 5.141% Senior Secured Second Lien Notes due 2052 |
| 4.302% Senior Notes due 2030 | DGH Issuer | €234.4 | 5.802% Senior Secured Second Lien Notes due 2030 |
| 4.693% Senior Notes due 2033 | DGH Issuer | €316.6 | 5.068% Senior Secured Second Lien Notes due 2033 |
Concurrently with the Exchange Offers, the Company is offering to purchase for cash (the “Tender Offers”) the aggregate principal amount of notes eligible to participate in the Tender Offers. Specifically, the Company is offering to purchase (i) the DCL Issuer’s $1.234 billion aggregate principal amount of 3.950% Senior Notes due 2028 and (ii) the DGH Issuer’s $1.189 billion aggregate principal amount of 3.755% Senior Notes due 2027 (the “Tender Offer WBD Notes”). The Exchange Offers and Tender Offers expire on October 6, 2026 and are expected to settle promptly following the closing of the Acquisition.
For purposes of these pro forma financial statements, it is assumed that 100% of the $12.7 billion principal amount of Exchange Offer WBD Notes eligible to participate in the Exchange Offers and 100% of the $2.423 billion of the Tender Offer WBD Notes subject to Tender Offers will, in each case, be exchanged or tendered, as applicable, in full in the applicable Exchange Offer or Tender Offers. The ultimate aggregate principal amount of Second Lien Secured Exchange Notes exchanged for Exchange Offer WBD Notes in the Exchange Offers and the amount of Tender Offer WBD Notes tendered in the Tender Offers are subject to change based on the ultimate results of such Exchange Offers and Tender Offers, including as a result of market conditions or other factors outside of the Company’s control, and the Company can make no assurances that the Exchange Offers and Tender Offers will be consummated in accordance with such assumptions.
Completed Skydance Transactions and NAI Transaction
On August 7, 2025, pursuant to a transaction agreement dated July 7, 2024, Paramount Global and Skydance Media, LLC (“Skydance”) became wholly owned subsidiaries of Paramount Skydance Corporation (the “Skydance Transactions”). Substantially concurrently with the closing of the Skydance Transactions, Pinnacle Media Ventures, LLC, Pinnacle Media Ventures II, LLC and Pinnacle Media Ventures III, LLC, each entities controlled by the Ellison Family (as defined below), and RB Tentpole Holdings LP (the “NAI Equity Investors”) acquired 100% of the equity interests of Harbor Lights Entertainment, Inc. (f/k/a National Amusements, Inc. (“NAI”)), from NAI’s shareholders under a purchase and sale agreement and, through their ownership of NAI, the NAI Equity Investors indirectly received an aggregate of 31.5 million shares of Class A common stock and 32.0 million shares of Class B common stock of Paramount Skydance Corporation (the “NAI Transaction”). Following the closing of the Skydance Transactions and the NAI Transaction, entities controlled by the Ellison Family indirectly hold approximately 77.5% of the Class A common stock of Paramount Skydance Corporation through their collective approximate 77.5% ownership interest in NAI, which was renamed Harbor Lights Entertainment Inc., and as a result the Ellison Family is the controlling stockholder and ultimate parent (“Ultimate Parent”) of Paramount. For the purpose of determining the controlling ownership of Paramount, the Ellison family is comprised of Lawrence J. Ellison and David Ellison (the “Ellison Family”). David Ellison is the son of Lawrence J. Ellison, and Lawrence J. Ellison and David Ellison are accordingly considered immediate family members.
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In connection with the Skydance Transactions, PIPE investors, including the NAI Equity Investors, made an investment of $6.0 billion into Paramount Skydance Corporation in exchange for 400 million shares of Class B common stock at $15.00 per share and the NAI Equity Investors received, in connection with their PIPE investment, an aggregate of 200 million five-year warrants exercisable at $30.50 per share (subject to customary anti-dilution adjustments). Approximately $4.5 billion of the PIPE proceeds were used to satisfy electing stockholders’ cash consideration in connection with a cash-stock election offered to Paramount Global stockholders, with the remaining approximately $1.5 billion provided to Paramount Skydance Corporation. As further described in Note 1, Paramount’s financial results for the year ended December 31, 2025 are presented in two distinct periods to indicate a new basis of accounting established for Paramount Global’s net assets upon the closing of the Skydance Transactions and NAI Transaction. The periods prior to August 7, 2025 include only Paramount Global and are identified as “Predecessor”, and the periods beginning on August 7, 2025 reflect Paramount Skydance Corporation and are identified as “Successor”.
Unaudited Pro Forma Condensed Combined Financial Statements
The following unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of Regulation S-X and are presented to illustrate the effects of the completed Skydance Transactions and NAI Transaction and the Acquisition, collectively, the “Transactions”.
The unaudited pro forma Condensed Combined Balance Sheet as of June 30, 2026 combines the historical consolidated balance sheet of Paramount as of June 30, 2026 and the historical consolidated balance sheet of WBD as of June 30, 2026, giving effect to the Acquisition as if it had occurred on June 30, 2026.
The unaudited pro forma Condensed Combined Statement of Operations for the six months ended June 30, 2026 combines the historical Consolidated Statement of Operations of Paramount for the six months ended June 30, 2026 and the historical Consolidated Statement of Operations of WBD for the six months ended June 30, 2026, and gives effect to the Acquisition as if it had occurred on January 1, 2025.
The unaudited pro forma Condensed Combined Statement of Operations for the year ended December 31, 2025 combines the Adjusted Combined Statement of Operations for the year ended December 31, 2025 of Paramount and the historical Consolidated Statement of Operations for the year ended December 31, 2025 of WBD, giving effect to the Transactions as if they had occurred on January 1, 2025.
The Adjusted Combined Statement of Operations of Paramount reflects the combination of (i) the historical consolidated Statement of Operations of Paramount Global (Predecessor) for the period from January 1, 2025 through August 6, 2025 (ii) the historical results of Skydance for the same period (iii) the historical consolidated Statement of Operations of Paramount Skydance Corporation from August 7, 2025 to December 31, 2025 (Successor) and (iv) the effects of the Skydance Transactions and NAI Transaction as if they had closed on January 1, 2025. As a result of the pushdown of the Ultimate Parent’s basis, the net assets of Paramount Global were recorded at their fair value as of the close of the Skydance Transactions and NAI Transaction. No adjustments to the August 7, 2025 to December 31, 2025 Successor period are necessary, as the impacts from the Skydance Transactions and NAI Transaction are included in Paramount’s historical results for this period.
The impact of the Acquisition, including the committed equity financing, on the outstanding shares and equity of Paramount is discussed in Note 5 and Note 8.
The pro forma transaction accounting adjustments to adjust WBD’s net assets to preliminary estimates of fair value are based on information available to the Company as of the date of this filing. The fair value estimates made herein may differ materially based upon the finalization of appraisals and other valuation analyses, which is expected no later than one year from the closing date of the Acquisition. These unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not necessarily reflect the operating results or financial position that would have occurred if the Transactions had been consummated on the dates indicated, nor are they necessarily indicative of the results of operations or financial condition that may be expected for any future period or date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity. Additionally, the unaudited pro forma condensed combined financial statements do not give effect to revenue synergies, operating efficiencies or cost savings that may be achieved with respect to the combined company. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial statements should be read in conjunction with the following materials:
| · | The accompanying notes to the unaudited pro forma condensed combined financial statements; |
-6-
| · | The Company’s historical unaudited consolidated financial statements and the notes thereto contained in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed on August 4, 2026, and the historical audited consolidated financial statements and the notes thereto for Paramount Global (Predecessor) for the period from January 1, 2025 to August 6, 2025 and Paramount Skydance Corporation (Successor) as of December 31, 2025 and for the period from August 7, 2025 to December 31, 2025 contained in Paramount’s Current Report on Form 8-K, filed on May 13, 2026; |
| · | Skydance’s historical unaudited condensed consolidated financial statements for the six-month period ended and as of June 30, 2025 contained in the Company’s Form 8-K/A filed October 23, 2025; and |
| · | WBD’s historical unaudited consolidated financial statements and the notes thereto contained in WBD’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed on August 6, 2026 and also incorporated by reference in the Company’s Current Report on Form 8-K with which these pro forma financial statements are filed, and the historical audited consolidated financial statements and the notes thereto contained in WBD’s Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 27, 2026 and previously incorporated by reference in the Company’s Current Report on Form 8-K filed on July 31, 2026. |
-7-
PARAMOUNT SKYDANCE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT JUNE 30, 2026
(In millions)
| Pro Forma Adjustments | ||||||||||||||||||||||
| Paramount Skydance Corp. | WBD Adjusted (2) | WBD Transaction Accounting Adjustments |
Financing Adjustments (5) |
Pro Forma | ||||||||||||||||||
| Assets | ||||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,627 | $ | 3,369 | $ | (93,772 | ) | (3a) | $ | 56,426 | (5a) | $ | 7,888 | |||||||||
| (3,900 | ) | (8d) | (2,423 | ) | (5d) | |||||||||||||||||
| (22 | ) | (5c) | ||||||||||||||||||||
| (384 | ) | (5e) | ||||||||||||||||||||
| 46,967 | (5g) | |||||||||||||||||||||
| Receivables, net | 6,178 | 4,952 | 2,763 | (4) | — | 13,893 | ||||||||||||||||
| Programming and other inventory | 1,655 | 377 | — | — | 2,032 | |||||||||||||||||
| Prepaid expenses and other current assets | 1,560 | 3,751 | — | — | 5,311 | |||||||||||||||||
| Total current assets | 11,020 | 12,449 | (94,909 | ) | 100,564 | 29,124 | ||||||||||||||||
| Property and equipment, net | 2,216 | 6,652 | (215 | ) | (4g) | — | 8,653 | |||||||||||||||
| Programming and other inventory | 15,641 | 19,335 | 4,858 | (4) | — | 39,834 | ||||||||||||||||
| Goodwill | 2,034 | 25,861 | 29,427 | (4a) | — | 57,322 | ||||||||||||||||
| Intangible assets, net | 5,649 | 25,922 | 14,177 | (4) | — | 45,748 | ||||||||||||||||
| Operating lease assets | 1,033 | 2,663 | 16 | (4k) | — | 3,712 | ||||||||||||||||
| Deferred income tax assets | 1,347 | 620 | — | — | 1,967 | |||||||||||||||||
| Advance consideration for WBD acquisition | 2,800 | — | (2,800 | ) | (4) | — | — | |||||||||||||||
| Other assets | 2,671 | 3,746 | 1,001 | (4h), (8d) | (41 | ) | (5c) | 7,377 | ||||||||||||||
| Total Assets | $ | 44,411 | $ | 97,248 | $ | (48,445 | ) | $ | 100,523 | $ | 193,737 | |||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||||
| Accounts payable | $ | 511 | $ | 1,060 | $ | (49 | ) | (4) | $ | — | $ | 1,522 | ||||||||||
| Accrued expenses | 2,158 | 4,907 | (2,464 | ) | (4) | — | 4,601 | |||||||||||||||
| Participants’ share and royalties payable | 2,606 | 3,529 | — | — | 6,135 | |||||||||||||||||
| Accrued programming and production costs | 1,801 | 2,114 | (559 | ) | (4) | — | 3,356 | |||||||||||||||
| Deferred revenues | 1,486 | 1,514 | — | — | 3,000 | |||||||||||||||||
| Debt | 665 | 1,493 | — | — | 2,158 | |||||||||||||||||
| Other current liabilities | 1,373 | 1,526 | 560 | (4) | — | 3,459 | ||||||||||||||||
| Total current liabilities | 10,600 | 16,143 | (2,512 | ) | — | 24,231 | ||||||||||||||||
| Long-term debt | 14,491 | 30,530 | (18,659 | ) | (4c) | 56,426 | (5a) | 80,323 | ||||||||||||||
| (2,424 | ) | (5d) | ||||||||||||||||||||
| (41 | ) | (5c) | ||||||||||||||||||||
| Participants’ share and royalties payable | 1,437 | 2,356 | — | — | 3,793 | |||||||||||||||||
| Pension and postretirement benefit obligations | 1,169 | 177 | — | — | 1,346 | |||||||||||||||||
| Deferred income tax liabilities | 68 | 5,579 | 5,860 | (9a) | — | 11,507 | ||||||||||||||||
| Operating lease liabilities | 1,046 | 3,126 | — | — | 4,172 | |||||||||||||||||
| Programming obligations | 581 | 1,411 | — | — | 1,992 | |||||||||||||||||
| Other liabilities | 2,209 | 3,931 | 54 | (4) | — | 6,194 | ||||||||||||||||
| Paramount stockholders’ equity: | ||||||||||||||||||||||
| Class A Common Stock | — | 27 | (27 | ) | (4f) | — | — | |||||||||||||||
| Class B Common Stock | 1 | — | — | 4 | (5g) | 5 | ||||||||||||||||
| Additional paid-in-capital | 13,307 | 56,022 | (56,022 | ) | (4f) | 46,963 | (5g) | 60,270 | ||||||||||||||
| Treasury stock | — | (8,244 | ) | 8,244 | (4f) | — | — | |||||||||||||||
| Retained earnings (accumulated deficit) | (1,544 | ) | (14,279 | ) | 40,271 | (4f), (8d) | 1 | (5d) | (2,299 | ) | ||||||||||||
| (25,861 | ) | (4a) | (22 | ) | (5c) | |||||||||||||||||
| (481 | ) | (8b) | (384 | ) | (5e) | |||||||||||||||||
| Accumulated other comprehensive income (loss) | 7 | (688 | ) | 688 | (4f) | — | 7 | |||||||||||||||
| Total Paramount stockholders' equity | 11,771 | 32,838 | (33,188 | ) | 46,562 | 57,983 | ||||||||||||||||
| Noncontrolling interests | 1,039 | 1,157 | — | — | 2,196 | |||||||||||||||||
| Total Equity | 12,810 | 33,995 | (33,188 | ) | 46,562 | 60,179 | ||||||||||||||||
| Total Liabilities and Equity | $ | 44,411 | $ | 97,248 | $ | (48,445 | ) | $ | 100,523 | $ | 193,737 | |||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
-8-
PARAMOUNT SKYDANCE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2026
(In millions, except per share amounts)
| Pro Forma Adjustments | ||||||||||||||||||||||
| Paramount Skydance Corp. | WBD Adjusted (2) | WBD Transaction Accounting Adjustments |
Financing Adjustments (5) |
Pro Forma | ||||||||||||||||||
| Revenues | $ | 14,260 | $ | 17,610 | $ | (222 | ) | (4) | $ | — | $ | 31,648 | ||||||||||
| Costs and expenses: | ||||||||||||||||||||||
| Operating | 9,298 | 9,760 | 284 | (4) | — | 19,342 | ||||||||||||||||
| Selling, general and administrative | 2,854 | 4,298 | (136 | ) | (4) | — | 7,016 | |||||||||||||||
| Netflix Termination Fee | — | 2,800 | (2,800 | ) | 3a(5) | — | — | |||||||||||||||
| Depreciation and amortization | 726 | 2,385 | 1,117 | (4) | — | 4,228 | ||||||||||||||||
| Restructuring, transaction-related items and other corporate matters | 291 | 599 | — | — | 890 | |||||||||||||||||
| Total costs and expenses | 13,169 | 19,842 | (1,535 | ) | — | 31,476 | ||||||||||||||||
| Operating income (loss) | 1,091 | (2,232 | ) | 1,313 | — | 172 | ||||||||||||||||
| Interest expense, net | (426 | ) | (1,036 | ) | 518 | (4) | (2,146 | ) | (5f) | (3,090 | ) | |||||||||||
| Loss on extinguishment of debt | — | (102 | ) | — | — | (102 | ) | |||||||||||||||
| Other items, net | (58 | ) | (44 | ) | — | — | (102 | ) | ||||||||||||||
| Earnings (loss) before income taxes and equity in (loss) earnings of investee companies | 607 | (3,414 | ) | 1,831 | (2,146 | ) | (3,122 | ) | ||||||||||||||
| (Provision for) benefit from income taxes | (275 | ) | 653 | 244 | (9c) | 537 | (9c) | 1,159 | ||||||||||||||
| Equity in (loss) earnings of investee companies, net of tax | (116 | ) | 17 | — | — | (99 | ) | |||||||||||||||
| Net earnings (loss) (Paramount and noncontrolling interests) | 216 | (2,744 | ) | 2,075 | (1,609 | ) | (2,062 | ) | ||||||||||||||
| Net earnings attributable to noncontrolling interests | (7 | ) | (23 | ) | — | — | (30 | ) | ||||||||||||||
| Net earnings (loss) attributable to Paramount | $ | 209 | $ | (2,767 | ) | $ | 2,075 | $ | (1,609 | ) | $ | (2,092 | ) | |||||||||
| Net earnings (loss) per common share attributable to Paramount: | ||||||||||||||||||||||
| Basic | $ | .19 | $ | (.42 | ) | |||||||||||||||||
| Diluted | $ | .19 | $ | (.42 | ) | |||||||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||||
| Basic | 1,113 | 3,918 | (10) | 5,031 | ||||||||||||||||||
| Diluted | 1,119 | 3,912 | (10) | 5,031 | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
-9-
PARAMOUNT SKYDANCE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2025
(In millions, except per share amounts)
| Pro Forma Adjustments | ||||||||||||||||||||||
| Paramount Skydance Corp. Adjusted (6) | WBD Adjusted (2) | WBD Transaction Accounting Adjustments |
Financing Adjustments (5) |
Pro Forma | ||||||||||||||||||
| Revenues | $ | 29,394 | $ | 37,296 | $ (558) | (4) | $ | — | $ | 66,132 | ||||||||||||
| Costs and expenses: | ||||||||||||||||||||||
| Operating | 20,347 | 21,853 | 740 | (4) | — | 42,940 | ||||||||||||||||
| Programming charges | 41 | — | — | — | 41 | |||||||||||||||||
| Selling, general and administrative | 6,136 | 8,284 | 11 | (4) | — | 14,431 | ||||||||||||||||
| Depreciation and amortization | 1,469 | 5,684 | 1,301 | (4) | — | 8,454 | ||||||||||||||||
| Impairment charges | 157 | — | — | — | 157 | |||||||||||||||||
| Restructuring, transaction-related items and other corporate matters | 1,453 | 698 | 515 | (4) | 22 | (5c) | 2,697 | |||||||||||||||
| 9 | (5d) | |||||||||||||||||||||
| Total costs and expenses | 29,603 | 36,519 | 2,567 | 31 | 68,720 | |||||||||||||||||
| Gain (loss) on dispositions | 35 | (39 | ) | — | — | (4 | ) | |||||||||||||||
| Operating income (loss) | (174 | ) | 738 | (3,125 | ) | (31 | ) | (2,592 | ) | |||||||||||||
| Interest expense, net | (760 | ) | (1,879 | ) | 881 | (4) | (4,677 | ) | (5f) | (6,435 | ) | |||||||||||
| Gain (loss) from investments | (40 | ) | 6 | — | — | (34 | ) | |||||||||||||||
| Gain on extinguishment of debt | — | 2,945 | — | 10 | (5d) | 2,955 | ||||||||||||||||
| Other items, net | (51 | ) | (147 | ) | — | — | (198 | ) | ||||||||||||||
| Earnings (loss) before income taxes and equity in loss of investee companies | (1,025 | ) | 1,663 | (2,244 | ) | (4,698 | ) | (6,304 | ) | |||||||||||||
| Benefit from (provision for) income taxes | 319 | (896 | ) | 435 | (9c) | 1,175 | (9c) | 1,033 | ||||||||||||||
| Equity in loss of investee companies, net of tax | (275 | ) | (18 | ) | — | — | (293 | ) | ||||||||||||||
| Net earnings (loss) (Paramount and noncontrolling interests) | (981 | ) | 749 | (1,809 | ) | (3,523 | ) | (5,564 | ) | |||||||||||||
| Net earnings attributable to noncontrolling interests | (490 | ) | (24 | ) | — | — | (514 | ) | ||||||||||||||
| Net loss attributable to redeemable noncontrolling interests | — | 2 | — | — | 2 | |||||||||||||||||
| Net earnings (loss) attributable to Paramount | $ | (1,471 | ) | $ | 727 | $ | (1,809 | ) | $ | (3,523 | ) | $ | (6,076 | ) | ||||||||
| Net loss per common share attributable to Paramount (basic and diluted): | ||||||||||||||||||||||
| Class B common stockholders - Receiving Warrants | $ | 4.48 | ||||||||||||||||||||
| Common stockholders - Other | $ | (1.80 | ) | |||||||||||||||||||
| Common stockholders - All | $ | (1.34 | ) | $ | (1.21 | ) | ||||||||||||||||
| Weighted average number of common shares outstanding (basic and diluted): | ||||||||||||||||||||||
| Class B common stockholders - Receiving Warrants | 470 | (10) | 470 | |||||||||||||||||||
| Common stockholders - Other | 1,099 | (6j) | 3,448 | (10) | 4,547 | |||||||||||||||||
| Common stockholders - All | 1,099 | (6j) | 3,918 | (10) | 5,017 | |||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
-10-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share amounts)
1) BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”). Pro forma financial information illustrates the effects of a particular transaction (or transactions) and is based on historically determined amounts. The historical financial statements of Paramount, Skydance, and WBD have been adjusted in the accompanying unaudited pro forma condensed combined financial statements to reflect transaction accounting adjustments that depict the estimated accounting effects of the Transactions in accordance with U.S. GAAP.
At the time Paramount Global and Skydance became subsidiaries of Paramount Skydance Corporation, the Ellison Family controlled both Paramount Global and Skydance (and was the “Ultimate Parent” of each), and as a result, the Skydance Transactions were accounted for as a transaction between entities under common control. As a transaction between entities under common control, the net assets were combined at the Ultimate Parent’s basis, which for Paramount Global was deemed to be the estimated fair value as of August 7, 2025, the date of the closing of the NAI Transaction, which was the point at which the Ellison Family obtained control of Paramount Global. As a result, the net assets of Paramount Global were recorded at their fair value as of this date. Since the net assets of Skydance were already at the Ultimate Parent’s basis, no adjustment to the fair value of net assets was necessary, and Skydance was combined with Paramount Global’s net assets at the Ultimate Parent’s basis as of this date. The pushdown of the Ultimate Parent’s basis resulted in a new basis of accounting for Paramount Global’s net assets, which made the results of operations not comparable between the periods before and after the Skydance Transactions and the NAI Transaction. Accordingly, Paramount’s financial results for the year ended December 31, 2025 are presented in two distinct periods. The periods prior to August 7, 2025 include only Paramount Global and are identified as “Predecessor”, and the periods beginning on August 7, 2025 reflect Paramount Skydance Corporation and are identified as “Successor”. See Note 6.
The unaudited pro forma Condensed Combined Balance Sheet as of June 30, 2026 combines the historical consolidated balance sheet of Paramount as of June 30, 2026, and the historical consolidated balance sheet of WBD as of June 30, 2026, giving effect to the Acquisition as if it had occurred on June 30, 2026. These pro forma financial statements reflect assumptions and adjustments set forth in the accompanying explanatory notes.
The unaudited pro forma Condensed Combined Statement of Operations for the six months ended June 30, 2026 combines the historical Consolidated Statements of Operations of Paramount and WBD, as if the Acquisition occurred on January 1, 2025.
The unaudited pro forma Condensed Combined Statement of Operations for the year ended December 31, 2025 combines the Adjusted Combined Statement of Operations for the year ended December 31, 2025 of Paramount and the historical Consolidated Statement of Operations for the year ended December 31, 2025 of WBD giving effect to the Transactions as if they had occurred on January 1, 2025. The Adjusted Combined Statement of Operations of Paramount reflects the combination of (i) the historical consolidated Statement of Operations of Paramount Global (Predecessor) for the period from January 1, 2025 through August 6, 2025 (ii) the historical results of Skydance for the same period (iii) the historical consolidated Statement of Operations of Paramount Skydance Corporation from August 7, 2025 to December 31, 2025 (Successor) and (iv) the effects of the Skydance Transactions and NAI Transaction as if they had closed on January 1, 2025. As a result of the pushdown of the Ultimate Parent’s basis, the net assets of Paramount Global were recorded at their fair value as of the close of the Skydance Transactions and NAI Transaction. No adjustments to the August 7, 2025 to December 31, 2025 Successor period are necessary, as the impacts from the Skydance Transactions and NAI Transaction are included in Paramount’s historical results for this period.
In addition, the historical financial statements of WBD and the historical Skydance results for the period from January 1, 2025 through August 6, 2025 have been adjusted to align with the Company’s presentation in the unaudited pro forma condensed combined financial statements (See Notes 2 and 6).
-11-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
The preparation of the unaudited pro forma condensed combined financial statements incorporates various assumptions and estimates, including those related to the preliminary purchase price allocation of WBD. The pro forma transaction accounting adjustments to adjust WBD’s net assets to preliminary estimates of fair value are based on information available to the Company as of the date of this filing. The fair value estimates made herein may differ materially based upon the finalization of appraisals and other valuation analyses, which is expected no later than one year from the closing date of the Acquisition. These unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not necessarily reflect the operating results or financial position that would have occurred if the Transactions had been consummated on the dates indicated, nor are they necessarily indicative of the results of operations or financial condition that may be expected for any future period or date.
Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity. Additionally, the unaudited pro forma condensed combined financial statements do not give effect to revenue synergies, operating efficiencies or cost savings that may be achieved with respect to the combined company. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial statements.
2) PRESENTATION OF HISTORICAL WARNER BROS. DISCOVERY
The historical financial information of WBD included in the unaudited pro forma condensed combined financial statements reflects certain reclassifications to conform to the Company’s presentation, which are presented in the tables below.
Balance Sheet Reclassifications
| At June 30, 2026 | ||||||||||||
| Historical WBD | Reclassification Adjustments | WBD, Adjusted | ||||||||||
| Assets | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 3,369 | $ | — | $ | 3,369 | ||||||
| Receivables, net | 4,952 | — | 4,952 | |||||||||
| Programming and other inventory | — | 377 | 377 | |||||||||
| Prepaid expenses and other current assets | 4,218 | (467 | ) | 3,751 | ||||||||
| Total current assets | 12,539 | (90 | ) | 12,449 | ||||||||
| Film and television content rights and games | 19,245 | (19,245 | ) | — | ||||||||
| Property and equipment, net | 6,652 | — | 6,652 | |||||||||
| Programming and other inventory | — | 19,335 | 19,335 | |||||||||
| Goodwill | 25,861 | — | 25,861 | |||||||||
| Intangible assets, net | 25,922 | — | 25,922 | |||||||||
| Operating lease assets | — | 2,663 | 2,663 | |||||||||
| Deferred income taxes | — | 620 | 620 | |||||||||
| Other noncurrent assets | 7,029 | (7,029 | ) | — | ||||||||
| Other assets | — | 3,746 | 3,746 | |||||||||
| Total Assets | $ | 97,248 | $ | — | $ | 97,248 | ||||||
-12-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
| At June 30, 2026 | ||||||||||||
| Historical WBD | Reclassification Adjustments | WBD, Adjusted | ||||||||||
| Liabilities and Equity | ||||||||||||
| Current Liabilities: | ||||||||||||
| Accounts payable | $ | 1,060 | $ | — | $ | 1,060 | ||||||
| Accrued liabilities | 12,076 | (12,076 | ) | — | ||||||||
| Accrued expenses | — | 4,907 | 4,907 | |||||||||
| Participants' share and royalties payable | — | 3,529 | 3,529 | |||||||||
| Accrued programming and production costs | — | 2,114 | 2,114 | |||||||||
| Deferred revenues | 1,514 | — | 1,514 | |||||||||
| Current portion of debt | 1,493 | (1,493 | ) | — | ||||||||
| Debt | — | 1,493 | 1,493 | |||||||||
| Other current liabilities | — | 1,526 | 1,526 | |||||||||
| Total current liabilities | 16,143 | — | 16,143 | |||||||||
| Noncurrent portion of debt | 30,530 | (30,530 | ) | — | ||||||||
| Long-term debt | — | 30,530 | 30,530 | |||||||||
| Participants' share and royalties payable | — | 2,356 | 2,356 | |||||||||
| Pension and postretirement benefit obligations | — | 177 | 177 | |||||||||
| Deferred income taxes | 5,579 | (5,579 | ) | — | ||||||||
| Deferred income tax liabilities, net | — | 5,579 | 5,579 | |||||||||
| Operating lease liabilities | — | 3,126 | 3,126 | |||||||||
| Programming obligations | — | 1,411 | 1,411 | |||||||||
| Other noncurrent liabilities | 11,001 | (11,001 | ) | — | ||||||||
| Other liabilities | — | 3,931 | 3,931 | |||||||||
| Stockholders’ equity: | ||||||||||||
| Class A common stock | 27 | — | 27 | |||||||||
| Additional paid-in-capital | 56,022 | — | 56,022 | |||||||||
| Treasury stock | (8,244 | ) | — | (8,244 | ) | |||||||
| Accumulated deficit | (14,279 | ) | — | (14,279 | ) | |||||||
| Accumulated other comprehensive loss | (688 | ) | (688 | ) | ||||||||
| Total Parent stockholders’ equity | 32,838 | — | 32,838 | |||||||||
| Noncontrolling interests | 1,157 | — | 1,157 | |||||||||
| Total Equity | 33,995 | — | 33,995 | |||||||||
| Total Liabilities and Equity | $ | 97,248 | $ | — | $ | 97,248 | ||||||
-13-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
Statements of Operations Reclassifications
| Six Months Ended June 30, 2026 | ||||||||||||
| Historical WBD | Reclassification Adjustments | WBD, Adjusted | ||||||||||
| Revenues | $ | 17,610 | $ | — | $ | 17,610 | ||||||
| Costs and expenses: | ||||||||||||
| Costs of revenues, excluding depreciation and amortization | 9,264 | (9,264 | ) | — | ||||||||
| Operating | — | 9,760 | 9,760 | |||||||||
| Selling, general and administrative | 5,039 | (741 | ) | 4,298 | ||||||||
| Netflix Termination Fee | 2,800 | — | 2,800 | |||||||||
| Depreciation and amortization | 2,385 | — | 2,385 | |||||||||
| Restructuring and other charges | 317 | (317 | ) | — | ||||||||
| Restructuring, transaction-related items and other corporate matters | — | 599 | 599 | |||||||||
| Impairments and loss on dispositions | 37 | (37 | ) | — | ||||||||
| Total costs and expenses | 19,842 | — | 19,842 | |||||||||
| Operating loss | (2,232 | ) | — | (2,232 | ) | |||||||
| Interest expense, net | (1,092 | ) | 56 | (1,036 | ) | |||||||
| Loss on extinguishment of debt | (102 | ) | — | (102 | ) | |||||||
| Earnings from equity investees, net | 23 | (23 | ) | — | ||||||||
| Other (expense) income, net | 12 | (12 | ) | — | ||||||||
| Other items, net | — | (44 | ) | (44 | ) | |||||||
| Loss before income taxes | (3,391 | ) | (23 | ) | (3,414 | ) | ||||||
| Benefit from income taxes | — | 653 | 653 | |||||||||
| Income tax benefit (expense) | 647 | (647 | ) | — | ||||||||
| Equity in earnings of investee companies, net of tax | — | 17 | 17 | |||||||||
| Net loss | (2,744 | ) | — | (2,744 | ) | |||||||
| Net income attributable to noncontrolling interests | (23 | ) | — | (23 | ) | |||||||
| Net loss available to Warner Bros. Discovery, Inc. | $ | (2,767 | ) | $ | — | $ | (2,767 | ) | ||||
-14-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
| Year Ended December 31, 2025 | ||||||||||||
| Historical WBD | Reclassification Adjustments | WBD, Adjusted | ||||||||||
| Revenues | $ | 37,296 | $ | — | $ | 37,296 | ||||||
| Costs and expenses: | ||||||||||||
| Costs of revenues, excluding depreciation and amortization | 20,885 | (20,885 | ) | — | ||||||||
| Operating | — | 21,853 | 21,853 | |||||||||
| Selling, general and administrative | 9,418 | (1,134 | ) | 8,284 | ||||||||
| Depreciation and amortization | 5,684 | — | 5,684 | |||||||||
| Restructuring and other charges | 399 | (399 | ) | — | ||||||||
| Restructuring, transaction-related items and other corporate matters | — | 698 | 698 | |||||||||
| Impairments and loss on dispositions | 172 | (172 | ) | — | ||||||||
| Total costs and expenses | 36,558 | (39 | ) | 36,519 | ||||||||
| Loss on dispositions | — | (39 | ) | (39 | ) | |||||||
| Operating income | 738 | — | 738 | |||||||||
| Interest expense, net | (2,085 | ) | 206 | (1,879 | ) | |||||||
| Gain from investment | — | 6 | 6 | |||||||||
| Gain on extinguishment of debt | 2,945 | — | 2,945 | |||||||||
| Loss from equity investees, net | (24 | ) | 24 | — | ||||||||
| Other (expense) income, net | 65 | (65 | ) | — | ||||||||
| Other items, net | — | (147 | ) | (147 | ) | |||||||
| Income before income taxes | 1,639 | 24 | 1,663 | |||||||||
| Provision for income taxes | — | (896 | ) | (896 | ) | |||||||
| Income tax benefit (expense) | (890 | ) | 890 | — | ||||||||
| Equity in loss of investee companies, net of tax | — | (18 | ) | (18 | ) | |||||||
| Net income | 749 | — | 749 | |||||||||
| Net income attributable to noncontrolling interests | (24 | ) | — | (24 | ) | |||||||
| Net loss attributable to redeemable noncontrolling interests | 2 | — | 2 | |||||||||
| Net income attributable to Warner Bros. Discovery, Inc. | $ | 727 | $ | — | $ | 727 | ||||||
3) PRELIMINARY PURCHASE PRICE ALLOCATION
Estimated Total Aggregate Acquisition Consideration
Pursuant to the WBD Merger Agreement, on October 6, 2026, all of WBD’s outstanding common shares were converted into the right to receive $31.00 per share, plus the applicable Ticking Consideration.
-15-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
(3a) The estimated preliminary purchase consideration is calculated as follows:
| Preliminary Purchase Consideration (in millions except per share amounts) | Amount | |||
| Common stock outstanding (1) | 2,514 | |||
| Per share cash purchase price | $ | 31 | ||
| Cash paid to WBD’s shareholders before Ticking Consideration | 77,948 | |||
| Ticking Consideration paid to WBD’s shareholders (2) | 42 | |||
| Total cash paid to WBD’s shareholders inclusive of Ticking Consideration | 77,990 | |||
| Add: Cash paid related to pre-combination portion of replacement awards (3) | 1,074 | |||
| Add: Settlement of indebtedness (4) | 14,708 | |||
| Total cash consideration | 93,772 | |||
| Add: Netflix termination fee (5) | 2,800 | |||
| Add: Liabilities assumed related to pre-combination portion of replacement awards (3) | 614 | |||
| Less: Settlement of pre-existing relationships (6) | — | |||
| Total preliminary purchase consideration | $ | 97,186 | ||
| (1) | The amount of estimated shares of WBD Common Stock is based on 2,510,703,314 shares of WBD Common Stock issued and outstanding as of July 23, 2026, per WBD’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, as filed with the SEC on August 6, 2026, adjusted for 3,737,162 WBD PRSUs that were vested, but not distributed at that date. |
| (2) | Reflects $42 million of Ticking Consideration paid to holders of outstanding WBD Common Stock under the terms of the WBD Merger Agreement, based on the Acquisition closing date of October 6, 2026. |
| (3) | Reflects $1.1 billion in estimated cash payments to holders of vested WBD stock options, RSUs, and PRSUs, and $614 million in estimated liabilities related to holders of unvested WBD stock options, RSUs, and PRSUs that were converted into the contingent right to receive cash-based awards of Paramount, with $560 million recorded within “Other current liabilities” and $54 million within “Other liabilities” on the unaudited pro forma Condensed Combined Balance Sheet. Such estimated cash payments and estimated liabilities each include $1 million of Ticking Consideration based on the Acquisition closing date of October 6, 2026. |
| (4) | Reflects the settlement of the amounts outstanding at June 30, 2026 on the $13.0 billion WBD Dollar Term Loans and €1.7 billion WBD Euro Term Loans totaling $14.7 billion. The adjustment to remove the $14.7 billion in term loans from the unaudited pro forma Condensed Combined Balance Sheet is reflected net of deferred issuance costs of $0.2 billion. |
| (5) | The $2.8 billion termination fee paid to Netflix by Paramount, on behalf of WBD, in connection with the execution of the WBD Merger Agreement has been treated as purchase consideration. Accordingly, pro forma adjustments have been recorded to the unaudited pro forma Condensed Combined Balance Sheet to (i) eliminate Paramount’s prepaid asset related to the termination fee and (ii) remove WBD’s accrued liability associated with the obligation. In addition, an adjustment has been recorded to the unaudited pro forma Condensed Combined Statement of Operations for the six months ended June 30, 2026 to eliminate the expense recognized by WBD in its historical financial statements related to the termination fee. |
-16-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
| (6) | Settlement of pre-existing relationships are comprised of receivables due from WBD of approximately $222 million and payables due to WBD and accrued programming liabilities related to WBD, of $41 million and $181 million, respectively. |
| (3b) | The accounting for the Acquisition, including the preliminary purchase consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities is based upon a preliminary estimate of fair values, which leveraged publicly available benchmarking information as well as a variety of other assumptions Paramount believes are reasonable under the circumstances. Actual results may differ materially from the assumptions within the unaudited pro forma condensed combined financial information. |
The following table summarizes the preliminary purchase price allocation as of the date of the Acquisition, including the effects of intercompany eliminations which are reflected in Note 4:
| Preliminary Purchase Price Allocation | Estimated Fair Value | |||
| Cash and cash equivalents | $ | 3,369 | ||
| Receivables, net | 4,729 | |||
| Programming and other inventory | 24,570 | |||
| Prepaid expenses and other current assets | 3,751 | |||
| Property and equipment, net | 6,437 | |||
| Goodwill (1) | 55,288 | |||
| Intangible assets, net | 40,099 | |||
| Operating lease assets | 2,679 | |||
| Deferred income taxes | 620 | |||
| Other assets | 4,085 | |||
| Total assets acquired | $ | 145,627 | ||
| Accounts payable | $ | 1,052 | ||
| Accrued expenses | 2,107 | |||
| Participants’ share and royalties payable | 5,885 | |||
| Accrued programming and production costs | 1,736 | |||
| Deferred revenues | 1,514 | |||
| Debt | 13,364 | |||
| Deferred income taxes | 11,455 | |||
| Operating lease liabilities | 3,126 | |||
| Programming obligations | 1,411 | |||
| Pension and postretirement benefit obligation | 177 | |||
| Other liabilities | 5,457 | |||
| Total liabilities assumed | $ | 47,284 | ||
| Noncontrolling interests | 1,157 | |||
| Total preliminary purchase consideration | $ | 97,186 | ||
| (1) | Goodwill represents the difference between the total preliminary purchase consideration and the estimated fair value of WBD’s net assets based on the preliminary fair value estimates assumed herein. |
-17-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
4) WARNER BROS. DISCOVERY TRANSACTION ACCOUNTING ADJUSTMENTS
Balance Sheet Pro Forma Adjustments
| At June 30, 2026 | ||||||||||||||
| WBD Transaction Accounting Adjustments | ||||||||||||||
| Transaction Accounting Adjustments |
Intercompany Transactions (7) |
Total | ||||||||||||
| Assets | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and cash equivalents | $ | (97,672 | ) | 3a, 8d | $ | — | $ | (97,672 | ) | |||||
| Receivables, net | 2,986 | 3a(6), 8d | (223 | ) | 2,763 | |||||||||
| Total current assets | (94,686 | ) | (223 | ) | (94,909 | ) | ||||||||
| Programming and other inventory | 4,979 | 4i | (121 | ) | 4,858 | |||||||||
| Property and equipment, net | (215 | ) | 4g | — | (215 | ) | ||||||||
| Goodwill | 29,405 | 4a | 22 | 29,427 | ||||||||||
| Intangible assets, net | 14,177 | 4b | — | 14,177 | ||||||||||
| Operating lease assets | 16 | 4k | — | 16 | ||||||||||
| Advance consideration for WBD acquisition | (2,800 | ) | 3a(5) | — | (2,800 | ) | ||||||||
| Deferred income tax assets | — | — | — | |||||||||||
| Other assets | 1,001 | 4h, 8d | — | 1,001 | ||||||||||
| Total Assets | $ | (48,123 | ) | $ | (322 | ) | $ | (48,445 | ) | |||||
| Liabilities and Stockholders’ Equity | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts payable | $ | (41 | ) | 3a(6) | $ | (8 | ) | $ | (49 | ) | ||||
| Accrued expenses | (2,464 | ) | 3a(5), 8a, 8d | — | (2,464 | ) | ||||||||
| Accrued programming and production costs | (181 | ) | 3a(6) | (378 | ) | (559 | ) | |||||||
| Other current liabilities | 560 | 3a(3) | — | 560 | ||||||||||
| Total current liabilities | (2,126 | ) | (386 | ) | (2,512 | ) | ||||||||
| Long-term debt | (18,659 | ) | 4c | — | (18,659 | ) | ||||||||
| Deferred income tax liabilities | 5,796 | 9a | 64 | 9a | 5,860 | |||||||||
| Other liabilities | 54 | 3a(3) | — | 54 | ||||||||||
| Stockholders’ equity: | — | |||||||||||||
| Class A common stock | (27 | ) | 4f | — | (27 | ) | ||||||||
| Additional paid-in-capital | (56,022 | ) | 4f | — | (56,022 | ) | ||||||||
| Treasury stock | 8,244 | 4f | — | 8,244 | ||||||||||
| Accumulated deficit | 13,929 | 4f, 8b, 8d | — | 13,929 | ||||||||||
| Accumulated other comprehensive loss | 688 | 4f | — | 688 | ||||||||||
| Total stockholders’ equity | (33,188 | ) | — | (33,188 | ) | |||||||||
| Total Equity | (33,188 | ) | — | (33,188 | ) | |||||||||
| Total Liabilities and Equity | $ | (48,123 | ) | $ | (322 | ) | $ | (48,445 | ) | |||||
-18-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
Statements of Operations Pro Forma Adjustments
| Six Months Ended June 30, 2026 | ||||||||||||||
| WBD Transaction Accounting Adjustments | ||||||||||||||
| Transaction Accounting Adjustments |
Intercompany Transactions (7) |
Total | ||||||||||||
| Revenues | $ | — | $ | (222 | ) | $ | (222 | ) | ||||||
| Costs and expenses: | ||||||||||||||
| Operating | 504 | 4j | (220 | ) | 284 | |||||||||
| Selling, general and administrative | (105 | ) | 4k, 8c, 8d | (31 | ) | (136 | ) | |||||||
| Netflix Termination Fee | (2,800 | ) | 3a(5) | — | (2,800 | ) | ||||||||
| Depreciation and amortization | 1,117 | 4d | — | 1,117 | ||||||||||
| Restructuring, transaction-related items and other corporate matters | — | — | — | |||||||||||
| Total costs and expenses | (1,284 | ) | (251 | ) | (1,535 | ) | ||||||||
| Operating income | 1,284 | 29 | 1,313 | |||||||||||
| Interest expense, net | 518 | 5f | — | 518 | ||||||||||
| Earnings (loss) before income taxes and equity in (loss) earnings of investee companies | 1,802 | 29 | 1,831 | |||||||||||
| Provision for income taxes | 251 | 9c | (7 | ) | 9c | 244 | ||||||||
| Net earnings (loss) | 2,053 | 22 | 2,075 | |||||||||||
| Net earnings (loss) attributable to Paramount | $ | 2,053 | $ | 22 | $ | 2,075 | ||||||||
| Year Ended December 31, 2025 | ||||||||||||||
| WBD Transaction Accounting Adjustments | ||||||||||||||
| Transaction Accounting Adjustments |
Intercompany Transactions (7) |
Total | ||||||||||||
| Revenues | $ | — | $ | (558 | ) | $ | (558 | ) | ||||||
| Costs and expenses: | ||||||||||||||
| Operating | 1,300 | 4j | (560 | ) | 740 | |||||||||
| Selling, general and administrative | 82 | 4k, 8c, 8d | (71 | ) | 11 | |||||||||
| Depreciation and amortization | 1,301 | 4d | — | 1,301 | ||||||||||
| Restructuring, transaction-related items and other corporate matters | 515 | 8a | — | 515 | ||||||||||
| Total costs and expenses | 3,198 | (631 | ) | 2,567 | ||||||||||
| Operating loss | (3,198 | ) | 73 | (3,125 | ) | |||||||||
| Interest expense, net | 893 | 5f | (12 | ) | 881 | |||||||||
| Earnings (loss) before income taxes and equity in loss of investee companies | (2,305 | ) | 61 | (2,244 | ) | |||||||||
| Provision for income taxes | 451 | 9c | (16 | ) | 9c | 435 | ||||||||
| Net earnings (loss) | (1,854 | ) | 45 | (1,809 | ) | |||||||||
| Net earnings (loss) attributable to Paramount | $ | (1,854 | ) | $ | 45 | $ | (1,809 | ) | ||||||
-19-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
(4a) Reflects the following adjustments to goodwill related to the Acquisition and elimination of intercompany transactions:
| Pro Forma Adjustment | |||||
| Reversal of historical WBD goodwill | $ | (25,861 | ) | (4f) | |
| Preliminary purchase consideration | 97,186 | (3a) | |||
| Reverse WBD historical liability for Netflix Termination Fee | (2,800 | ) | (3a(5)) | ||
| Settlement of WBD Term Loans | (14,467 | ) | (5b) | ||
| Effect of preliminary fair value adjustment to acquired intangible assets | (14,177 | ) | (4b) | ||
| Effect of preliminary fair value adjustment to assumed debt | (4,192 | ) | (4c) | ||
| Effect of preliminary fair value adjustment to acquired property and equipment | 215 | (4g) | |||
| Effect of preliminary fair value adjustment to acquired investments | (339 | ) | (4h) | ||
| Effect of preliminary fair value adjustment to acquired programming assets | (4,979 | ) | (4i) | ||
| Effect of preliminary fair value adjustment to acquired leases | (16 | ) | (4k) | ||
| Tax effects of Acquisition | 5,812 | (4e), (9a) | |||
| Reversal of historical WBD equity, net of historical goodwill reversal | (6,977 | ) | (4f) | ||
| Transaction accounting adjustments | 29,405 | ||||
| Elimination of intercompany transactions | 22 | (7) | |||
| Total pro forma adjustment | $ | 29,427 | |||
(4b) The pro forma adjustment reflects the estimated incremental fair value of WBD’s intangible assets of $14.2 billion. Estimated amortization of the intangible assets is recognized on a straight-line basis over their respective estimated useful lives. The estimated amortization period, estimated fair values, and related pro forma adjustments for the incremental amortization expense are presented in the table below.
Estimated Straight-Line | Fair Value | Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||||||
| Trade names | 10 - 15 years | $ | 9,040 | $ | 306 | $ | 610 | |||||||
| Franchises | 15 years | 11,650 | 388 | 777 | ||||||||||
| Character rights | 15 years | 1,785 | 60 | 119 | ||||||||||
| Affiliate relationships | 5 - 13 years | 10,649 | 796 | 1,588 | ||||||||||
| Technology | 3.5 years | 1,850 | 264 | 529 | ||||||||||
| Subscriber relationships | 2.5 years | 1,600 | 320 | 640 | ||||||||||
| Advertisers (relationship & backlog) | 2 years | 3,525 | 880 | 1,763 | ||||||||||
| Total | $ | 40,099 | $ | 3,014 | $ | 6,026 | ||||||||
| Less: historical amortization | 1,822 | 4,605 | ||||||||||||
| Pro forma adjustment | $ | 1,192 | $ | 1,421 | ||||||||||
The estimated fair value of acquired intangibles was determined as outlined below:
| · | The estimated value of franchises was determined using the multi-period excess earnings method. |
| · | The estimated value of affiliate relationships was determined using the multi-period excess earnings method. |
| · | The estimated value of developed technology was determined using the cost approach. |
| · | The estimated value of character rights was determined using the multi-period excess earnings method. |
| · | The estimated value of trade names was determined using the relief from royalty method. |
| · | The estimated value of advertiser relationships was determined using the with-and-without method. |
| · | The estimated value of subscriber relationships was determined using the cost approach. |
-20-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
(4c) Adjustment includes the fair market value step down of outstanding debt of $4.2 billion and the settlement of WBD’s existing $14.7 billion WBD Term Loans net of $241 million in remaining deferred issuance costs related to the WBD Term Loans, which is described further in Note 5.
(4d) The pro forma adjustments to “Depreciation and amortization” on the unaudited pro forma Condensed Combined Statements of Operations reflect (i) incremental amortization expense related to the intangible assets of $1,192 million and $1,421 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively, and (ii) a reduction in depreciation expense related to property and equipment of $75 million and $120 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively. A 10% change in the valuation of finite-lived intangible assets and property and equipment would result in a corresponding increase or decrease in depreciation and amortization expense of approximately $342 million and $683 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively, based on the estimated useful lives described herein.
(4e) The estimated tax impacts of the pro forma adjustments to adjust WBD’s net assets to preliminary estimates of fair value in the unaudited pro forma Condensed Combined Balance Sheet and the related adjustments in the unaudited pro forma Condensed Combined Statements of Operations are reflected using the estimated statutory tax rates of the combined company. See Note 9.
(4f) The pro forma adjustments reflect the removal of WBD’s historical equity balances, net of the $25.9 billion reversal of historical WBD goodwill, including common stock, additional paid-in-capital, retained earnings, and other components of equity. This reflects the adjustments to remeasure WBD’s net assets at fair value as of the acquisition date.
(4g) The balance sheet pro forma adjustment reflects the estimated fair value step down of WBD’s property and equipment of $0.2 billion. The estimated depreciation period, estimated fair values, and related pro forma adjustments for depreciation expense are presented in the table below.
Estimated Straight-Line | Fair Value | Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||||||
| Total property and equipment | 1 - 27 years | $ | 6,437 | $ | 403 | $ | 807 | |||||||
| Less: historical depreciation | 478 | 927 | ||||||||||||
| Pro forma adjustment | $ | (75 | ) | $ | (120 | ) | ||||||||
(4h) The pro forma adjustment reflects the estimated incremental fair value of certain unconsolidated investments held by WBD of $0.3 billion.
(4i) The pro forma adjustment reflects the estimated incremental fair value of WBD’s programming assets of $5.0 billion. The pro forma adjustment to recognize net incremental content amortization expense has been computed with the assumption that the programming assets will be amortized over their estimated useful lives on a straight-line basis, the revenue forecast model or sum of the years’ digits method, as the Company continues to evaluate the pattern of the economic benefit.
(4j) The pro forma adjustments to “Operating expenses” on the unaudited pro forma Condensed Combined Statements of Operations of $0.5 billion and $1.3 billion for the six months ended June 30, 2026 and year ended December 31, 2025, respectively, reflect the net incremental amortization expense related to the programming assets. A 10% change in the valuation of programming assets would result in a corresponding increase or decrease in expense of approximately $50 million and $130 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively.
(4k) The pro forma adjustments reflect an increase to “Operating lease assets” for the fair value adjustment to acquired leases with favorable market conditions of $16 million, and the resulting increase to "Selling, general and administrative expenses" of $1 million and $2 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively.
For all other assets and liabilities and noncontrolling interests the book value was deemed to approximate fair value, and therefore no fair value adjustments were recorded.
-21-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
5) FINANCING RELATED ADJUSTMENTS
Debt Financing Adjustments
The unaudited pro forma condensed combined financial information reflects the financing transactions completed in connection with the Acquisition, including the issuance of debt and the repayment and refinancing of existing indebtedness, as well as the Exchange Offers and Tender Offers, which are expected to settle promptly following the closing of the Acquisition. Specifically, these unaudited pro forma condensed combined financial statements reflect (i) the issuance of the $2.5 billion Term A-1 Loans and $2.5 billion Term A-2 Loans, (ii) the issuance of $51.9 billion of New Permanent Financing, (iii) the issuance of $12.7 billion of Second Lien Secured Exchange Notes in exchange for certain Exchange Offer WBD Notes pursuant to the Exchange Offers (assuming 100% participation in the Exchange Offers), (iv) the purchase of $2.4 billion of Tender Offer WBD Notes for cash pursuant to the Tender Offers (assuming 100% participation in the Tender Offers), (v) the reduction of the Bridge Commitments to $0 as a result of the New Permanent Financing, and (vi) the settlement of WBD’s existing $14.7 billion WBD Term Loans. The pro forma adjustments do not reflect the impact of any future refinancings or changes in capital structure that may occur following the consummation of the Acquisition.
Balance Sheet Pro Forma Adjustments
Debt Issuance (5a) | Repayment of WBD Term Loans (5b) | Exchange Offers (5c) | Tender Offers (5d) | Pro Forma Adjustment | ||||||||||||||||
| New 3-year Term A-1 Loans | $ | 2,492 | $ | 2,492 | ||||||||||||||||
| New 5-year Term A-2 Loans | 2,492 | 2,492 | ||||||||||||||||||
| New 7-year Term B Loans | 9,390 | 9,390 | ||||||||||||||||||
| New First Lien Secured Notes | 29,749 | 29,749 | ||||||||||||||||||
| New Second Lien Secured Notes | 12,303 | 12,303 | ||||||||||||||||||
| Second Lien Secured Exchange Notes | 10,625 | 10,625 | ||||||||||||||||||
| Existing WBD Long-term Debt | (14,467 | ) | (10,666 | ) | (2,424 | ) | (27,557 | ) | ||||||||||||
| Pro forma adjustment to debt | $ | 39,494 | ||||||||||||||||||
(5a) The adjustments reflect the impact of the issuance of the $2.5 billion Term A-1 Loans and $2.5 billion Term A-2 Loans, $9.5 billion Term B Loans, $30.0 billion New First Lien Secured Notes and $12.4 billion New Second Lien Secured Notes, net of debt issuance costs of $0.4 billion and discounts of $0.1 billion. The proceeds of the New Permanent Financing were used to fund the Acquisition and accordingly, $56.4 billion of cash proceeds were reflected on the unaudited pro forma Condensed Combined Balance Sheet in connection with the issuance of debt.
(5b) The adjustment reflects a transaction accounting adjustment related to the settlement of the $13.0 billion WBD Dollar Term Loans and the €1.7 billion WBD Euro Term Loans net of $0.2 billion in remaining deferred issuance costs related to the WBD Term Loans. The transaction accounting adjustment to debt on the unaudited pro forma Condensed Combined Balance Sheet also includes a fair market value step down of $4.2 billion on WBD’s existing long-term debt, which is not reflected in the table above. See Note 4c.
(5c) The adjustments reflect the impact of the Exchange Offers, specifically the $41 million of payments to bondholders in May 2026 in connection with the Exchange Offers, and the assumption that 100% of the Exchange Offer WBD Notes eligible to participate in the Exchange Offers will be exchanged in full in the applicable Exchange Offer. The Company expects to account for the Exchange Offers as debt modifications in accordance with ASC 470, Debt, because all key terms of the Second Lien Secured Exchange Notes are expected to be materially consistent with the current terms. Accordingly, the payments to the bondholders are reflected as a reduction in the carrying value. The carrying value of the Exchange Offer WBD Notes immediately prior to completion of the Exchange Offers and the fair value of the Second Lien Secured Exchange Notes has been assumed to be equal to the estimated fair value of the Exchange Offer WBD Notes assumed in the Acquisition. Estimated third-party expenses of $22 million are included within “Restructuring, transaction-related items and other corporate matters”.
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
(5d) The adjustments reflect the impact of the Tender Offers, specifically the purchase of (i) the DCL Issuer’s $1.2 billion aggregate principal amount of 3.950% Senior Notes due 2028 with a carrying amount of $1.230 billion immediately prior to extinguishment, and (ii) the DGH Issuer’s $1.2 billion aggregate principal amount of 3.755% Senior Notes due 2027 with a carrying amount of $1.194 billion immediately prior to extinguishment, assuming 100% of such notes subject to the Tender Offers will be tendered in the applicable Tender Offer. The estimated cash consideration for the Tender Offer WBD Notes subject to the Tender Offers of $2.4 billion was determined based on a fixed-spread pricing formula linked to the yield on the applicable Reference Treasury Security determined as of June 30, 2026. The estimated gain on extinguishment of debt of $10 million is reflected on the unaudited pro forma Condensed Combined Statement of Operations for the year ended December 31, 2025. Estimated payments to bondholders and third-party expenses of $9 million are included within “Restructuring, transaction-related items and other corporate matters”.
(5e) The adjustment reflects the cash paid for certain commitment fees associated with the Bridge Commitments and the write-off of those fees, as the Bridge Commitments were reduced to $0 by the New Permanent Financing.
Statements of Operations Pro Forma Adjustments
(5f) The adjustments reflect the following increases (decreases) to Interest expense, net:
| Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||||
| Estimated interest expense on new financing (1) | Financing adjustments | $ | 2,108 | $ | 4,199 | |||||
| Elimination of historical interest expense on WBD bridge facility and term loans (2) | Transaction accounting adjustments | (615 | ) | (647 | ) | |||||
| Adjustment of historical interest expense on debt subject to fair market value step down (3) | Transaction accounting adjustments | 110 | (165 | ) | ||||||
| Elimination of historical interest expense on WBD loans settled through the Tender Offers (4) | Transaction accounting adjustments | (52 | ) | (160 | ) | |||||
| Adjustment to historical interest expense on WBD loans subject to the Exchange Offers (5) | Transaction accounting adjustments | 39 | 79 | |||||||
| Amortization of deferred debt issuance costs (6) | Financing adjustments | 38 | 478 | |||||||
| Total adjustments to Interest expense, net | $ | 1,628 | $ | 3,784 | ||||||
| Total financing adjustments | $ | 2,146 | $ | 4,677 | ||||||
| Total transaction accounting adjustments | $ | (518 | ) | $ | (893 | ) | ||||
| (1) | Represents the additional interest expense in connection with the Term A-1 Loans, Term A-2 Loans, Term B Loans, New First Lien Secured Notes and New Second Lien Secured Notes. Interest expense for the 2031 Second Lien Euro Senior Secured Notes has been calculated based on the USD cross currency swap fixed coupon rate of 8.82%. |
The interest rates on the Term A-1 Loans and Term A-2 Loans are calculated using SOFR adjusted for a margin and are initially estimated to be approximately 5.94%.
The interest rates on the Term B Loans are calculated using SOFR + 2.75% and EURIBOR + 2.75% and are initially estimated to be approximately 6.53% and 5.07%, respectively.
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
The unaudited pro forma condensed combined financial statements reflect interest rates of 7.48% and 8.60% for the New First Lien Secured Notes and New Second Lien Secured Notes, respectively, based on the weighted average cost of such indebtedness.
A sensitivity analysis on interest expense with respect to the variable rate Term A-1 Loans, Term A-2 Loans and Term B Loans for the six months ended June 30, 2026 and the year ended December 31, 2025 has been performed to assess the effect of a change of 0.125% of the hypothetical interest rate. A change in the interest rate of 0.125% would result in a change in estimated interest expense of $9 million and $18 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively. A change in interest rate of 1% would result in a change in estimated interest expense of $72 million and $145 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively.
| (2) | Represents the elimination of historical interest expense associated with WBD’s $15.0 billion bridge facility and the elimination of historical interest expense associated with the $13.0 billion WBD Dollar Term Loans and €1.7 billion WBD Euro Term Loans. |
| (3) | In July 2025, WBD made a significant principal payment to reduce debt. The adjustment to interest expense for the year ended December 31, 2025 reflects a $493 million reduction in interest expense resulting from the composition of debt outstanding as of June 30, 2026 compared with the debt outstanding within the historical period, offset by a $328 million increase in interest expense resulting from the accretion of the fair value step down of assumed debt. |
| (4) | Represents elimination of historical interest expense related to historical WBD debt repurchased as a result of the Tender Offers, assuming that 100% of the Tender Offer WBD Notes eligible to participate in the Tender Offers will be tendered in the applicable Tender Offer. |
| (5) | For purposes of these pro forma financial statements, the Company has assumed 100% of the Exchange Offer WBD Notes eligible to participate in the Exchange Offers will be exchanged in the applicable Exchange Offer. This adjustment represents the incremental interest expense associated with the difference in coupon rates between the Exchange Offer WBD Notes eligible to participate in the Exchange Offers and the Second Lien Secured Exchange Notes. |
| (6) | Represents amortization of issuance costs and discounts associated with new debt issued by the Company and the write-off of deferred issuance costs associated with the Bridge Commitments as the Bridge Commitments were reduced to $0 by the New Permanent Financing. |
Transaction accounting adjustments on the unaudited pro forma Condensed Combined Statement of Operations for the year ended December 31, 2025 also include a $12 million intercompany elimination.
Equity Financing Adjustments
Concurrently with the execution of the WBD Merger Agreement, Paramount entered into the Subscription Agreements pursuant to which the Equity Investors committed to purchase shares of Paramount Class B Common Stock in a PIPE financing. Pursuant to the Equity Syndication, the Equity Investors assigned their subscription rights to a group of institutional investors (each an Equity Syndication Party), comprising affiliates of the Equity Investors, The Public Investment Fund, L'Imad 1st SPV 2 Exempt RSC LTD (an investment vehicle of L'Imad Holding, an Abu Dhabi sovereign wealth fund), QIA TMT Holding LLC (an investment vehicle of the Qatar Investment Authority), and LionTree Investment Fund, L.P. The aggregate allocations cover the full amount committed by the Equity Investors. At closing, the Company issued to each Equity Syndication Party a number of newly issued shares of nonvoting Paramount Class B Common Stock equal to its allocated amount divided by the Syndication Purchase Price for aggregate gross proceeds sufficient, together with other sources of financing, to fund the Merger Consideration and transaction-related payments.
| (5g) | In connection with the Acquisition, the pro forma adjustment reflects a net increase in cash of $46.97 billion, representing $47 billion of proceeds from the PIPE financing, inclusive of $44 million of additional PIPE proceeds related to the $44 million of Ticking Consideration, partially offset by approximately $47 million of issuance costs. The pro forma financial statements reflect the issuance of approximately 3.9 billion shares of Paramount Class B Common Stock at $0.001 par value, with the excess proceeds recorded as additional paid-in-capital based on the Syndication Purchase Price of $12.00 per share. |
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
6) PRESENTATION OF ADJUSTED PARAMOUNT
The Adjusted Combined Statement of Operations of Paramount reflects the combination of (i) the historical consolidated Statement of Operations of Paramount Global (Predecessor) for the period from January 1, 2025 through August 6, 2025 (ii) the historical results of Skydance for the same period (iii) the historical consolidated Statement of Operations of Paramount Skydance Corporation from August 7, 2025 to December 31, 2025 (Successor) and (iv) the effects of the Skydance Transactions and NAI Transaction as if they had closed on January 1, 2025. As a result of the pushdown of the Ultimate Parent’s basis described in Note 1, the net assets of Paramount Global were recorded at their fair value as of the close of the Skydance Transactions and NAI Transaction. No adjustments to the August 7, 2025 to December 31, 2025 Successor period are necessary, as the impacts from the Skydance Transactions and NAI Transaction are included in Paramount’s historical results for this period.
-25-
PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
The historical financial information of Skydance included in the unaudited pro forma condensed combined financial statements reflects certain reclassifications to conform to the Company’s presentation.
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||
| Historical | ||||||||||||||||||||||||||
| Predecessor | Successor | Skydance | Adjustments to | Paramount | ||||||||||||||||||||||
| Paramount Global (1) | Paramount Skydance Corp. (2) | Adjusted Skydance Media, LLC (3) | Transaction
Accounting Adjustments (1) |
Paramount Basis (1) |
| Skydance Corp. Adjusted | ||||||||||||||||||||
| Revenues | $ | 16,622 | $ | 12,269 | $ | 554 | $ | (51 | ) | 6a | $ | — | $ | 29,394 | ||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Operating | 11,287 | 8,408 | 724 | (72 | ) | 6b | — | 6i | 20,347 | |||||||||||||||||
| Programming charges | — | 41 | — | — | — | 41 | ||||||||||||||||||||
| Selling, general and administrative | 3,526 | 2,594 | 16 | — | — | 6,136 | ||||||||||||||||||||
| Depreciation and amortization | 204 | 590 | 1 | — | 674 | 6e | 1,469 | |||||||||||||||||||
| Impairment charges | 157 | — | — | — | — | 157 | ||||||||||||||||||||
| Restructuring, transaction-related items, and other corporate matters | 454 | 731 | 268 | — | — | 1,453 | ||||||||||||||||||||
| Total costs and expenses | 15,628 | 12,364 | 1,009 | (72 | ) | 674 | 29,603 | |||||||||||||||||||
| Gain on dispositions | 35 | — | — | — | — | 35 | ||||||||||||||||||||
| Operating income (loss) | 1,029 | (95 | ) | (455 | ) | 21 | (674 | ) | (174 | ) | ||||||||||||||||
| Interest expense, net | (433 | ) | (302 | ) | (8 | ) | 14 | 6c | (31 | ) | 6f | (760 | ) | |||||||||||||
| Loss from investments | — | (40 | ) | — | — | — | (40 | ) | ||||||||||||||||||
| Other items, net | (92 | ) | (39 | ) | — | — | 80 | 6g | (51 | ) | ||||||||||||||||
| Earnings (loss) before income taxes and equity in loss of investee companies | 504 | (476 | ) | (463 | ) | 35 | (625 | ) | (1,025 | ) | ||||||||||||||||
| Benefit from income taxes | 79 | 40 | — | 47 | 6d | 153 | 6h | 319 | ||||||||||||||||||
| Equity in loss of investee companies, net of tax | (171 | ) | (104 | ) | — | — | — | (275 | ) | |||||||||||||||||
| Net earnings (loss) (Paramount and noncontrolling interests) | 412 | (540 | ) | (463 | ) | 82 | (472 | ) | (981 | ) | ||||||||||||||||
| Net earnings attributable to noncontrolling interests | (447 | ) | (46 | ) | 3 | — | — | (490 | ) | |||||||||||||||||
| Net loss attributable to Paramount | $ | (35 | ) | $ | (586 | ) | $ | (460 | ) | $ | 82 | $ | (472 | ) | $ | (1,471 | ) | |||||||||
| (1) | Represents the historical results of Paramount Global and pro forma adjustments for the period from January 1, 2025 to August 6, 2025. |
| (2) | Represents the historical results for the period from August 7, 2025 through December 31, 2025. |
| (3) | Represents the historical results of Skydance for the period from January 1, 2025 to August 6, 2025, derived from the historical books and records of Skydance. |
| (6a) | The pro forma adjustment to “Revenues” reflects a reduction of $51 million primarily for Skydance’s co-participant share of revenues for feature film and television productions with Paramount that would have been eliminated upon consolidation if the Skydance Transactions had occurred on January 1, 2025. |
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
| (6b) | “Operating expenses” has been adjusted for the impact of intercompany transactions between Paramount and Skydance, including elimination of Paramount’s participation expenses related to Skydance’s proportionate share of revenue for co-production titles, recorded on a gross basis by Paramount and adjustments to the historical amortization of production costs that would have been recorded for co-production titles had Paramount and Skydance been a combined entity during the Predecessor period. |
| (6c) | The transaction accounting adjustment to “Interest expense, net” reflects the impact of the repayment of outstanding borrowings under Skydance’s revolving credit facility in connection with the closing of the Skydance Transactions. Interest expense would have decreased by $14 million if the Skydance Transactions and NAI Transaction had occurred on January 1, 2025. |
| (6d) | The transaction accounting adjustment to “Benefit from income taxes” reflects an increase to the tax benefit of $47 million for the inclusion of Skydance in Paramount’s consolidated income tax calculation for the Predecessor period. |
| (6e) | The pro forma adjustment to “Depreciation and amortization” reflects the impact from the changes to Paramount Global’s historical basis applied as if the Skydance Transactions and NAI Transaction had occurred on January 1, 2025. The adjustment of $674 million principally reflects net incremental amortization expense related to identified finite-lived intangible assets. |
| (6f) | The pro forma adjustment of $31 million to “Interest expense, net” reflects the amortization of the fair value adjustment to debt, partially offset by the removal of the amortization of debt issuance costs as the unamortized debt issuance costs relating to Paramount Global’s debt were reversed in connection with recording the debt at fair value. |
| (6g) | The pro forma adjustment of $80 million to “Other items, net” reflects the reversal of the amortization of net actuarial losses for Paramount Global’s pension and other postretirement benefit plans. Paramount Global’s historical equity accounts were reversed in connection with the pushdown of the Ultimate Parent’s basis. |
| (6h) | The pro forma adjustment of $153 million to “Benefit from income taxes” for the year ended December 31, 2025 reflects the tax impacts of the pro forma adjustments to Paramount Global’s basis as if the Skydance Transactions and NAI Transaction had occurred on January 1, 2025. |
| (6i) | The unaudited pro forma Condensed Combined Statements of Operations do not include any pro forma adjustments to “Operating expenses” as a result of recording Paramount Global’s programming assets at their estimated fair values. It is not practicable to estimate the impact of the fair value adjustments on historical content amortization expense because Paramount’s content portfolio at any point in time is comprised of numerous assets with a different mix of useful lives and amortization patterns that limit the comparability of the content portfolio as of the closing of the Skydance Transactions to the content portfolio in prior historical periods. |
| (6j) | The Paramount Adjusted basic and diluted weighted average number of common shares outstanding of 1,099 million for the year ended December 31, 2025 is calculated based on a weighted average of the number of days in each of the Predecessor and Successor periods, as further detailed in the table below. Since the unaudited pro forma condensed combined Statement of Operations gives effect to the Skydance Transactions as if they occurred on January 1, 2025, the weighted average number of common shares outstanding for the Predecessor period has been adjusted to reflect the actual common shares outstanding of 1,096 million as of August 7, 2025 following the closing of the Skydance Transactions. |
| Weighted Average Shares Outstanding (in millions) | Days in Period | |||||||
| Predecessor Period January 1, 2025 - August 6, 2025 | 1,096 | 218 | ||||||
| Successor Period August 7, 2025 - December 31, 2025 | 1,102 | 147 | ||||||
| Paramount, Adjusted January 1, 2025 - December 31, 2025 | 1,099 | 365 | ||||||
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
7) PARAMOUNT-WBD INTERCOMPANY TRANSACTIONS
Transactions between Paramount and WBD primarily include content licensing, co-production, and advertising arrangements. The unaudited pro forma Condensed Combined Statements of Operations include estimated adjustments to eliminate transactions between Paramount and WBD for content licensing, co-production, and advertising arrangements, consisting of revenues and expenses recognized as part of the intercompany transactions and adjustments to the amortization expense for the profit in capitalized content licenses. The unaudited pro forma Condensed Combined Balance Sheet includes adjustments to eliminate “Accounts Receivable” and “Accounts Payable” between Paramount and WBD for content licensing and advertising arrangements, the elimination of intercompany profit on content licensing arrangements recorded within “Programming and other inventory”, and the elimination of “Accrued programming and production costs” related to programming obligations between Paramount and WBD. “Goodwill” was also adjusted to eliminate intercompany profit on content licensing arrangements to reflect the impact of the elimination on retained earnings that is adjusted against goodwill as part of purchase accounting.
8) OTHER TRANSACTION ACCOUNTING ADJUSTMENTS
Transaction-Related Items
The unaudited pro forma condensed combined financial statements include adjustments for estimated transaction-related costs incurred by Paramount from July 1, 2026 through the closing date of the Acquisition. These costs and the corresponding adjustments to “Accrued expenses” on the unaudited pro forma Condensed Combined Balance Sheet and “Restructuring, transaction-related items and other corporate matters” on the unaudited pro forma Condensed Combined Statement of Operations for the year ended December 31, 2025 are described in the table below.
| Accrued Expenses | Restructuring, Transaction- Related Items and Other Corporate Matters |
||||||||
| Transaction-related costs | $ | 515 | $ | 515 | 8a | ||||
| Total adjustment | $ | 515 | $ | 515 | |||||
| (8a) | Reflects estimated transaction-related costs of $515 million incurred by Paramount from July 1, 2026 through the closing date of the Acquisition, consisting mainly of banking, legal, advisory and other professional fees in connection with the Acquisition, as well as a payment and cost reimbursements in connection with the settlement of certain merger-related litigation actions. The estimated transaction-related costs are not anticipated to affect the unaudited pro forma Condensed Combined Statements of Operations beyond twelve months after the closing date of the Acquisition. |
| (8b) | The reduction of $481 million to "Retained earnings (accumulated deficit)” on the unaudited pro forma Condensed Combined Balance Sheet reflects the impact from the transaction-related costs adjustment to “Accrued expenses” presented in the table above, which totals $515 million, net of the related tax benefit, where applicable, of $34 million (see Note 9). |
Issuance of Shares and Related Activity
In connection with the Acquisition, Paramount has undertaken a series of equity issuances and related financing arrangements to facilitate the consummation of the Acquisition, as further described in Note 5. These activities include the cancellation of all issued and outstanding shares of WBD Common Stock at the Effective Time and their conversion into the right to receive the applicable cash merger consideration. No shares of Paramount common stock were issued to former WBD shareholders as merger consideration.
Each share of Paramount Class B Common Stock (excluding shares held by any Equity Investor or affiliate thereof, certain Company subsidiaries and Benefit Plans) as of the record date of October 5, 2026, will receive, without payment of any consideration, one 10-year Warrant for each share held, exercisable at an initial exercise price per share equal to the Syndication Purchase Price of $12.00 and subject to customary anti-dilution and fundamental change make-whole adjustments. Beginning on the third anniversary of issuance, Paramount may call the Warrants for early expiration if the closing price of Paramount Class B Common Stock equals or exceeds $30.00 for at least 20 trading days in any 30 consecutive trading day period and warrant holders will have until such early expiration date to exercise their Warrants. The Company expects to distribute the Warrants on or about October 13, 2026. In connection with this series of issuances, existing Paramount RSUs will be “made-whole” for the value of the Warrants pursuant to a pre-existing anti-dilution provision in Paramount equity plans. The pro forma financial statements do not include an adjustment for the “make-whole” provision, as the issuance is not expected to result in incremental stock-based compensation expense.
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
In addition, at the effective time of the Acquisition, outstanding equity-based awards of WBD were treated in accordance with the WBD Merger Agreement. Vested equity awards were cancelled and settled in cash based on the applicable Merger Consideration, while unvested equity awards were converted into a contingent right to receive cash-based awards of Paramount, as applicable, generally subject to the same vesting terms and conditions as were in effect immediately prior to the Effective Time, provided the WBD Notional Units outstanding as part of the WBD Non-Employee Directors Deferral Plan and WBD Supplemental Retirement Plan (collectively the “Replaced WBD Equity”) received notional units with respect to a number of shares of Paramount Class B Common Stock based on the ratio of (i) Merger Consideration divided by (ii) the 15 day VWAP of Paramount Class B Common Stock, where the 15 day period ended 3 trading days prior to the closing date of the Acquisition.
The pro forma financial information reflects the cancellation of WBD Common Stock upon consummation of the Acquisition; the issuance of Paramount Class B Common Stock pursuant to the PIPE financing (see Note 5); and the settlement, conversion, or replacement of WBD equity awards at the Effective Time. No pro forma adjustment has been reflected for the issuance of equity-based awards that are subject to future service requirements, except to the extent such awards are reflected as compensation cost in accordance with applicable accounting guidance.
No pro forma adjustment has been recorded for warrants to existing shareholders, as the Company’s accumulated deficit position results in no net impact to additional paid-in-capital. Accordingly, other than as described in Note 10, the effect of these warrants is not reflected in the unaudited pro forma condensed combined financial information.
(8c) The pro forma adjustments reflect the new compensation arrangements executed with WBD employees who held unvested options that were in the money, unvested RSUs, and unvested performance restricted stock units in connection with the Acquisition, resulting in a $67 million decrease and $164 million increase in compensation expense for the six months ended June 30, 2026, and year ended December 31, 2025, respectively. The pro forma adjustments also reflect new compensation arrangements approved by the Board for a grant of Paramount RSUs (the “2026 RSUs”) to certain Paramount executive employees in connection with the Acquisition effective on the closing date. The 2026 RSUs will vest in equal quarterly installments over a five-year period following the closing of the Acquisition, subject to the applicable executive’s continued employment with the Company through the applicable vesting date, and will vest in full (to the extent then-unvested) upon a change in control of the Company (as defined in the Paramount 2025 Incentive Award Plan). The unaudited pro forma condensed combined financial statements reflect a grant of Paramount RSUs totaling approximately 11 million for the 2026 RSUs, resulting in an increase to compensation expense of $15 million and $61 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively.
Accounts Receivable Securitization Facility
(8d) The pro forma adjustment reflects the refinancing and termination of WBD’s securitized accounts receivable facility which is expected within close proximity to the closing of the Acquisition (or shortly thereafter).
| Cash | Other Assets | Receivables, net | Accrued Expenses | Deferred income tax liabilities, net | Retained Earnings (accumulated deficit) | |||||||||||||||||||
| AR Securitization Facility Termination | $ | (3,900 | ) | $ | 662 | $ | 3,208 | $ | (179 | ) | $ | 18 | $ | 131 | ||||||||||
The adjustments to the unaudited pro forma Condensed Combined Statements of Operations reflect the removal of expenses associated with the accounts receivable securitization fees, resulting in a decrease to “Selling, general and administrative expenses” of $54 million and $145 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively.
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
9) INCOME TAX
The tables below reflect the impacts on the unaudited pro forma condensed combined financial statements from the inclusion of WBD in Paramount’s calculation of income taxes and the tax impacts of the transaction accounting adjustments and financing adjustments. An estimated tax rate of 25% was applied in determining the figures presented below.
Balance Sheet Pro Forma Adjustments
| At June 30, 2026 | |||||||||
| Transaction Accounting Adjustments |
Financing Adjustments | ||||||||
| Deferred income tax assets | n/a | n/a | |||||||
| Deferred income tax liabilities | $ | 5,860 | 9a | $ | — | ||||
| Goodwill | $ | 5,876 | 9b | $ | — | ||||
| n/a - not applicable | |||||||||
Statements of Operations Pro Forma Adjustments
| Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||||||||||||||
| Transaction Accounting Adjustments |
Financing Adjustments |
Transaction Accounting Adjustments |
Financing Adjustments |
|||||||||||||||||
| Benefit from income taxes | $ | 244 | 9c | $ | 537 | 9c | $ | 435 | 9c | $ | 1,175 | 9c | ||||||||
| (9a) | The adjustment to “Deferred income tax liabilities” as of June 30, 2026 includes an increase of $5,812 million for the deferred income tax impact of the pro forma adjustments described in Note 4 to reflect WBD’s assets and liabilities at fair value, an increase of $64 million for the deferred tax impact of the elimination of transactions between Paramount and WBD as described in Note 7, and a decrease of $16 million for the deferred tax impact of the transaction-related costs and accounts receivable securitization fees adjustments as described in Note 8. |
| (9b) | The adjustment to “Goodwill” reflects the offsetting impact to the adjustments to “Deferred income tax liabilities” to establish the deferred income taxes. |
| (9c) | The adjustments to “(Provision for) Benefit from income taxes” for the six months ended June 30, 2026 and year ended December 31, 2025 reflect tax benefits of $781 million and $1,610 million, respectively, related to tax effects of the transaction accounting adjustments and financing adjustments with the exception of the Netflix Termination Fee as described in Note 3. |
The pro forma adjustments to “Deferred income tax assets” and “Deferred income tax liabilities” are based on the estimated deferred tax rates of the combined company. The actual deferred tax liabilities may differ materially based on changes resulting from finalizing the deferred tax rates for the combined company and finalizing the fair value adjustments for WBD’s net assets that are not reasonably estimable for the purposes of the unaudited pro forma condensed combined financial statements.
All other income tax estimates and the related tax rates may also differ materially in periods subsequent to the consummation of the Acquisition.
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
10) EARNINGS (LOSS) PER SHARE
The pro forma basic and diluted weighted average number of common shares presented in the unaudited pro forma Condensed Combined Statements of Operations are based on the weighted average number of common shares issued and outstanding as if the Transactions occurred on January 1, 2025. Since the Warrants described in Note 8 will only be issued to certain holders of Paramount Class B Common Stock, the estimated value of the Warrants is considered a deemed dividend which results in the application of the two-class method of EPS for the year ended December 31, 2025. Under the application of the two-class method, earnings per share is calculated separately for the holders of Paramount Class B Common Stock receiving the deemed dividend and the common stockholders (primarily comprised of the Equity Investors and their affiliates) not receiving the deemed dividend. The calculation of the weighted average number of common shares outstanding contemplates an adjustment for the issuance of shares of Paramount Class B Common Stock pursuant to the PIPE financing. All stock options, RSU Awards, and warrants were excluded from the calculation of historical and pro forma diluted net loss per common share ("EPS") for the year ended December 31, 2025 because their inclusion would have been antidilutive since a net loss was reported in the period. The dilutive impact of Paramount RSU Awards totaling 6 million were excluded from the calculation of pro forma diluted EPS for the six months ended June 30, 2026 because their inclusion would have been antidilutive since there is a pro forma net loss for the period. Also excluded from the calculation of diluted EPS in each period are the Warrants and “make-whole” RSUs described in Note 8 because their inclusion also would have been anti-dilutive in the period.
The table below presents the calculation of pro forma EPS including, for the year ended December 31, 2025, amounts attributable to stockholders receiving the deemed dividend and stockholders not receiving the deemed dividend. There is no deemed dividend for the six months ended June 30, 2026, and therefore this presentation is not applicable.
| (Shares in millions) | Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | ||||||
| Basic and diluted - Numerator: | ||||||||
| Pro forma net loss | $ | (2,092 | ) | $ | (6,076 | ) | ||
| Deemed dividend to Class B common stockholders - Receiving Warrants | n/a | $ | (2,952 | ) | ||||
| Undistributed Net Loss | n/a | $ | (9,028 | ) | ||||
| Net earnings attributable to Class B common stockholders - Receiving Warrants | n/a | $ | 2,106 | |||||
| Net loss attributable to common stockholders - Other | n/a | $ | (8,182 | ) | ||||
| Net loss attributable to common stockholders - All | $ | (2,092 | ) | $ | (6,076 | ) | ||
| Basic and diluted - Denominator: | ||||||||
| Weighted average common shares outstanding for Class B common stockholders - Receiving Warrants | n/a | 470 | ||||||
| Weighted average common shares outstanding for common stockholders - Other | n/a | 4,547 | ||||||
| Weighted average common shares outstanding for common stockholders - All | 5,031 | 5,017 | ||||||
| Pro forma EPS: | ||||||||
| Basic and diluted EPS - Class B common stockholders - Receiving Warrants | n/a | $ | 4.48 | |||||
| Basic and diluted EPS - common stockholders - Other | n/a | $ | (1.80 | ) | ||||
| Basic and diluted EPS - common stockholders - All | $ | (.42 | ) | $ | (1.21 | ) | ||
n/a - not applicable
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PARAMOUNT SKYDANCE CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)
The aggregate number of shares of Paramount Class B Common Stock issued in connection with the Equity Syndication is equal to the aggregate commitment amount of approximately $47 billion divided by the Syndication Purchase Price of $12.00 per share.
Accordingly, for purposes of the unaudited pro forma condensed combined financial information, the issuance of 3,918 million shares of Paramount Class B Common Stock has been included in weighted average common shares outstanding for the six months ended June 30, 2026 and year ended December 31, 2025.
Since the Warrants will have an initial exercise price per share equal to the Syndication Purchase Price, an exercise price of $12.00 has been used for purposes of determining the estimated value of the deemed dividend in the calculation of basic and diluted EPS.
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- EX-4.1 EXHIBIT 4.1 405.5 KB
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