S&P Global Analyst Discusses Paramount-WBD Merger Credit Risks
6 reported
A proposed $111 billion merger between Paramount and Warner Bros. Discovery is nearing completion, according to a report from Variety. Naveen Sarma, sector lead for U.S. media and telecom at S&P Global, discussed the deal on the Variety podcast “Strictly Business,” explaining the rationale for the agency’s downgrade of the combined company’s credit rating upon closing. Sarma stated that leverage is significantly high for the transaction but expressed belief that the company can deliver on $6 billion in cost-cutting synergies without massive cuts at the studios. The company projects these synergies will come from technology upgrades, real estate consolidation, and operational efficiencies rather than cuts to content spending. However, Sarma noted that cash flow is not expected for the next two years. The deal still faces potential opposition from European regulators or a possible antitrust lawsuit from California State Attorney General Rob Bonta, even if the Department of Justice approves it.
What’s reported
The proposed merger between Paramount and Warner Bros. Discovery is valued at $111 billion.
Naveen Sarma is the sector lead for U.S. media and telecom at S&P Global.
S&P Global downgraded the combined company’s credit rating upon closing.
The company projects $6 billion in synergies from technology upgrades, real estate consolidation, and operational efficiencies.
Sarma stated that cash flow is not expected for the next two years.
Potential opposition could come from European regulators or a lawsuit from California State Attorney General Rob Bonta.
Key figures
Naveen Sarma, sector lead for U.S. media and telecom at S&P Global
Rob Bonta, California State Attorney General
Sources: Variety
