Paramount Skydance Debt Downgraded to Junk Following WBD Deal

Mar 3, 2026 8:38am PT Paramount Skydance Debt Downgraded to Junk Status by Fitch Ratings Following Warner Bros. Discovery Deal Credit rating agencies Moody's and S&P Global have placed Paramount on review for potential downgrades By Todd Spangler Plus Icon Todd Spangler NY Digital Editor xpangler Latest Warner Bros. Discovery Likely to Take New Paramount Skydance Offer Under Review While Still Recommending Netflix Pact to Shareholders 1 week ago Hearst Magazines Union Ratifies New Deal With Company Covering 410 Members 1 week ago Sarah Turney, Kourtney Nichole Launch ‘The Final Hours’ True-Crime Podcast From PAVE Studios to ‘Shine a Light on the Cases That Deserve a Second Look’ 1 week ago See All Getty Images With its mammoth deal for Warner Bros. Discovery, Paramount Skydance is set to amass a ton of new debt and it faces a number of other financial risks. Now one of Wall Street’s big credit-rating agencies has downgraded Paramount’s debt to junk status and cut its issuer default ratings. Fitch Ratings downgraded Paramount Skydance’s long-term issuer default rating to from “BBB-” to “BB+,” putting it into speculative-grade investment territory (aka “junk”). In addition, Fitch downgraded Paramount Skydance’s senior unsecured debt from “BBB-” to “BB+” — and placed all the ratings on “Rating Watch Negative,” indicating that further downgrades may be in the offing. Related Stories MGK Talks 'Unassuming' Tommy Hilfiger Partnership, His 'Lost Americana' Tour Wardrobe and Bringing Back Wired Headphones: 'I'll Take Credit For That' The downgrade on Paramount Skydance “reflects competitive pressures across the media sector and continued [free cash flow] headwinds from significant transformation costs,” Fitch Ratings said in an announcement Monday. “Fitch believes PSKY’s leverage and FCF may remain outside negative rating sensitivities longer than we anticipated.” Popular on Variety The negative rating watch “reflects uncertainty related to the proposed acquisition of Warner Bros. Discovery,” Fitch added. Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of “materially elevated leverage” and “limited visibility on post-transaction financial policy and capital structure,” the agency said. Fitch’s announcement comes after the two other big credit ratings agencies, Moody’s and S&P Global, both announced on Feb. 27 that they were putting Paramount Skydance on review for potential downgrades. That came after Netflix abandoned its deal to buy Warner Bros.’s studios and streaming business after David Ellison’s Paramount upped its WBD bid to $31/share — leaving Paramount the winner in the M&A battel with a deal carrying a $111 billion enterprise value. Paramount will assume roughly $33 billion in debt that Warner Bros. Discovery has on its books. All told, the new company will have approximately $79 billion in long-term debt. In its downgrade note, Fitch Ratings said it has “limited visibility” into Paramount Skydance’s post-transaction capital structure, including the ranking and security package of any new debt, the expected split between secured and unsecured tranches, and where debt would be issued within the group. “This uncertainty increases the risk of structural subordination and potential priming of existing unsecured creditors, particularly if the combined group adopts a more bifurcated secured/unsecured capital structure,” Fitch said. Paramount’s proposed acquisition of WBD is “highly complex, reflecting the scale of required financing and limited transparency on the pro forma capital structure, as well as the operational challenge of integrating two large media groups,” Fitch continued. “We expect heightened regulatory scrutiny in key jurisdictions, which could increase execution risk and extend the timeline to close. Fitch believes key areas of focus could include market concentration and potential impacts on competition, distribution practices and consumer outcomes.” That said, the acquisition of WBD would increase Paramount’s scale across filmed entertainment through ownership of another major studio with a deep catalog of movies and TV shows. That promises to “strengthen PSKY’s competitive position including greater pricing power, control over content licensing, and prioritization of premium content for its own platforms,” Fitch said. S&P Global, for its part, already had a “BB+” (junk) credit rating on Paramount. Its move to put Paramount Skydance on review “with negative implications” reflects “our view that the potential merger with WBD will increase PSKY’s leverage well above our 4.25x downgrade threshold for the current rating,” S&P Global said. Jump to Comments Japanese Comedy Hit ‘You Laugh You Lose’ Gets Global Push as Banijay Entertainment Acquires Format Rights From ‘LOL’ Creator Yoshimoto Kogyo (EXCLUSIVE) Drag Queen ‘Amateur’ Crime Caper ‘Queen Heist’ and ‘Liberating’ Romcom ‘The Good Widow’ Added to Banijay Finland’s Burgeoning Scripted Slate (EXCLUSIVE) Inside Swedish Writer Karin Arrhenius’ Banijay Series ‘My Brother,’ a Psychological Mystery-Thriller of Elemental, Carnal Passions  Banijay and All3Media in Talks for Production Merger JavaScript is required to load the comments. Loading comments...