Paramount Just Launched a $44 Billion Debt Sale to Buy Warner Bros.
Paramount Skydance is stacking nearly $80 billion in debt onto a freshly downgraded balance sheet, racing a $7 million daily clock, and still faces a judge who has not signed off on a 12-state lawsuit. Here is what that means…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
On Monday, September 28, 2026, Paramount Skydance Corporation (NASDAQ:PSKY | PSKY Price Prediction) launched an offering of about $44.4 billion of senior secured notes to help finance its acquisition of Warner Bros. Discovery (NASDAQ:WBD).
A senior secured note is a bond backed by company assets, giving holders a priority claim on pledged collateral over unsecured creditors in a default.
Paramount shares rose 3.21% in the September 28 session to $10.28. Warner closed at $30.90, just below the $31-a-share cash offer, so investors are assigning a high probability to the deal closing.
A $52 Billion Financing Package With a Junk-Rated Core
The full financing package is at about $52 billion. It includes roughly $32 billion of investment-grade bonds, about $12.4 billion of high-yield bonds and a $7.5 billion term loan.
High-yield debt is below investment grade, so borrowers generally pay higher interest rates to compensate lenders for greater credit risk.
The 10-year dollar bonds in the high-yield portion were marketed in the low 9% range. The 10-year Treasury yield was 5.17% on September 25.
That is an expensive borrowing rate for a media company and puts greater pressure on the combined business to generate strong cash flow.
Paramount Carries the Debt, Warner Holders Carry the Clock
The combined company is expected to carry nearly $80 billion of debt after a transaction valued at about $110 billion including debt.
S&P Global Ratings estimates leverage will begin around 7.6 times EBITDA and remain near that level through 2027.
Warner stock now trades largely as a merger arbitrage position, where the gap to the cash offer reflects closing risk and the time value of waiting for the deal to complete.
A Fresh Downgrade and an Unfinished Court Fight
S&P Global Ratings cut Paramount to BB from BB+ on September 24, 2026. It expects leverage to remain around 7.6 times EBITDA through 2027.
Paramount says completing the notes offering is not a condition of closing the merger, meaning the deal does not depend specifically on completing this bond sale.
The California Department of Justice said twelve states settled their lawsuit on September 21, 2026, with film-output commitments backed by a $30 million penalty per missed film. The judge has not yet approved the settlement.
Paramount estimates a close on October 7, 2026. There’s a ticking fee of about $7 million a day if the deal does not close before October.
There are also operating gains that offset the debt.
Paramount reported Q2 2026 adjusted EBITDA of $1.1 billion, up 27%, and 81.6 million Paramount+ subscribers. It also raised its cost-savings target to at least $3 billion.
Those improvements help, but the post-merger balance sheet will still be heavily leveraged.
Should You Buy or Sell PSKY Stock
The credit picture looks stretched. S&P Global Ratings expects leverage near 7.6 times EBITDA through 2027, leaving the combined company less room for weaker box office results, softer advertising, or disappointing streaming performance.
Operating gains are real, although higher interest costs will consume a meaningful portion of the cash generated before shareholders see the benefit.
Warner offers a different risk profile. Its upside is capped near the cash offer, while holders receive a ticking fee of 25 cents per share per quarter if closing slips past September 30.
If the high-yield notes price above the low 9% area, financing costs will come in above initial marketing levels. If the judge rejects the state settlement, Paramount’s October 7 closing estimate would also become much harder to meet. I wouldn’t buy either stock due to the uncertainty. WBD stock is already priced in.
Contact [email protected] for any questions or corrections.
Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
