By Matt Tracy
WASHINGTON, March 3 (Reuters) – Credit rating agency Fitch Ratings downgraded Paramount Skydance and Paramount Global’s ratings to junk status late on Monday following the media company’s proposed acquisition of Warner Bros Discovery.
In a Monday note, Fitch analysts said they expect Los Angeles-based Paramount to carry “materially elevated leverage” following its successful acquisition of Warner Bros Discovery.
The rating agency placed Paramount on watch for a potential further downgrade once the acquisition’s final terms and financing structure, and its plans to address that debt, become clearer.
“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 Fitch analysts wrote.
Paramount announced on Friday that it had agreed to acquire Warner Bros Discovery in a $110 billion deal after Netflix walked away from its agreement with the owner of HBO Max. The transaction is expected to close in the third quarter and will be backed by $54 billion of debt commitments, the companies said.
The merger will create a combined entity with net debt of about $79 billion, Paramount said.
Paramount had $14 billion in outstanding debt at year-end 2025, including senior unsecured and junior subordinated debt, Fitch analysts wrote on Monday.
Fitch said its downgrades also reflect competitive pressure within the media sector, as well Paramount’s continued free cash flow headwinds related to the acquisition and expenditures on content.
Fellow rating agencies Moody’s Ratings and S&P Global Ratings announced on February 27 that they had also placed Paramount on watch for potential rating downgrades.
Paramount currently holds lower-investment-grade ratings with Moody’s and speculative-grade ratings with S&P.
(Reporting by Matt Tracy in Washington;)
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