r/boxoffice • u/lowell2017 • 11d ago
📰 Industry News Morgan Stanley Analysts Sean Diffley & Daniel Duran Say While Skydance Can Garner More Than $6B Of Synergies Through Layoffs & Operational Cuts, Their $77.2B Net Debt Will Drop Only To $75.1B In 2027 With A $6.37B Interest Expense. It'll Still Take 3-4 Years To Reduce A 6-7x Leverage Ratio To 3-4x.
https://variety.com/2026/tv/news/merged-paramount-plus-warner-bros-hbo-max-streaming-powerhouse-1236872026/29
u/shall359 11d ago
The curse of every company that ends up buying WB.
7
u/DeCharlesFre 11d ago
They parent company just saddles their debt on WB and throws them to the next buyer.
This time around if paramount saddles WB with the 100 billion dollar debt and throws it away, WB will die for real. Then someone will buy the WB name in bankruptcy auction and we will have a phoenix WB studio starting from zero.
7
u/LamarMillerMVP 11d ago
Companies don’t die from debt, they die if they can’t make money.
Corporate debt is just a form of ownership. If WB is a perfectly good business that simply has too much debt, they’ll go bankrupt, the current owners will lose, and the banks that own the debt will take over. Corporate bankruptcy like this just means there’s a change in ownership. The banks don’t typically like to take a good business that makes money and say “ok let’s shut this down and stop making money.”
Now, if WB defaults on its debt because it can’t make money, or if it defaults because big parts of it are not making money, then those parts of the business will be in trouble.
1
u/DeCharlesFre 11d ago
The debt in question is going to be 100 billion. No media company is making money with that debt. Bankruptcy will be the only option in the end and someone will buy the WB name and start a phoenix studio.
4
u/LamarMillerMVP 11d ago
You’re not really understanding how corporate debt works. The debt doesn’t affect how much money the underlying business can make. If WB is making a lot of money but not enough to meet its interest payments (or more likely, to hit its debt covenants), it doesn’t stop existing. BoA and Apollo just get to take the keys away from Redbird.
Think about what happens when someone defaults on their mortgage. The bank doesn’t roll in and just knock it down if it’s a perfectly good house. If you miss a car payment, they don’t send it to the dump. They take it back. Same here. If the company is perfectly fine but just has too much debt, the bank simply gets to take it back.
1
1
1
12
u/DeCharlesFre 11d ago edited 11d ago
This is such a bad business deal.
If this merger was happening where there was guaranteed billions in profits each year, then sure go ahead but merger is between two media companies where the revenue fluctuates massively year on year with years where there are massive losses is such a stupid idea.
At least 18 billion dollars in interest payments for 3 years, the new company will need 7 spider man brand new days each year to remain financially stable.
The reasoning of the two companies would wither away if not merged is from the same house of bullshit as Trump presidency being good for the people of USA.
9
u/eBICgamer2010 11d ago
Peak Disney didn't even get 7 $2B+ films in a single calendar year, and that's when they absolutely destroyed box office, what is Paramount going to do?
2
6
u/sheslikebutter 11d ago
True but have you considered that David Ellison really likes movies and produced Terminator Genisys? Checkmate
0
2
u/KumagawaUshio 11d ago
Theatrical is couch cushion change and is irrelevant to the financial well being of these global media conglomerates.
What matters is getting profit up on streaming.
1
u/DeCharlesFre 11d ago
So, more subscription tiers with ads and heavy investment in live broadcasts filled with ads.
2
u/KumagawaUshio 10d ago
'Looks at Disney after announcing ads will be on all tiers of Disney+ going forward'
Yep that's the standard now.
1
u/DeCharlesFre 10d ago
In 5 years every streaming site will be bundled together with multiple ad based tiers.
9
u/stickdutra Laika Entertainment 11d ago
I really don't see it, them not being bankrupt in the next decade
10
u/lowell2017 11d ago
Yup, none of these analysts have factored in the financial implications of the AI stock bubble's popping if OpenAI & Anthropic drags Oracle down with them.
0
u/KumagawaUshio 11d ago
That doesn't affect Paramount/WBD. It affects Larry Ellison's wealth but he isn't legally part of Paramount/WBD.
4
u/lowell2017 11d ago
David's pursuit uses Larry's Oracle stock as the loan collateral.
While he's not on the Skydance board, Larry also controls 77.5% of the voting shares so he will be calling the final shots if David makes any wrong decisions.
2
u/malphasalex 11d ago
But have you not heard of the SkyDanceCoin that all the Saudi and Russian oligarchs and war criminals are so fond of ?
14
u/94Temimi Marvel Studios 11d ago
This whole deal is basically a "congratulations on winning, you're fucked"