Paramount Dares $44.4B Debt Gamble to Grab Warner Bros Discovery

Paramount Pictures announced Monday a $44.4 billion debt offering aimed at financing its pending acquisition of Warner Bros Discovery (WBD). The announcement comes as the company awaits the final approval of an antitrust settlement that is a prerequisite for closing the deal.

In a filing with the Securities and Exchange Commission, Paramount noted that the merger’s closing date remains uncertain and will only occur once all closing conditions are satisfied or waived by a federal judge. It set an October 7 marker for the purposes of the debt offering.

The sole remaining condition involves a federal court judge’s approval of a settlement reached last week between Paramount and twelve state attorneys general led by California’s Rob Bonta.

Judge Araceli Martinez‑Olguin declined to approve the settlement at a September 24 hearing and scheduled opposition briefs, with responses due by noon Pacific Time today.

## Background & Context

Paramount first unveiled its intent to acquire WBD in February, valuing the transaction at roughly $80 billion in equity and about $110 billion in enterprise value. The equity figure represents the cash that WBD shareholders would receive, while the enterprise value adds the company’s debt and subtracts its cash balance.

Warner Bros Discovery carried about $34 billion of debt and $3.4 billion in cash as of June, . Paramount, whose market capitalization stands at roughly $11.5 billion, is significantly smaller than the $77.4 billion WBD.

The combined company would assume over $80 billion in long‑term debt, adding to the $34 billion that WBD already carries. That debt load would push annual interest expenses well above $6 billion, a figure that has raised concerns among market watchers.

Paramount’s financing plan includes $32 billion in investment‑grade debt and $12.4 billion in high‑yield bonds, with the debt issued in both dollars and euros. Bank of America and Citigroup hosted investor calls that attracted sufficient demand to cover the entire offering, .

Beyond the debt, Paramount has secured a $7.5 billion seven‑year Term B loan that began marketing last week and has set aside a $49 billion bridge loan as contingent financing if permanent funding is not in place by the deal’s close.

The company plans to combine the proceeds from the debt, its existing cash reserves, previously announced term‑loan financing, and equity capital to meet the $78 billion cash consideration due to WBD shareholders, which includes a $31‑per‑share payout and a ticking fee that starts on October 1.

The deal’s equity component will draw up to $46.7 billion from the Lawrence J. Ellison Revocable Trust and an additional $250 million from RedBird Capital, though both parties have assigned their subscription rights to external investors.

The assignments include sovereign wealth funds from Saudi Arabia, Abu Dhabi and Qatar, as well as investment bank LionTree.

Outside investors who acquire the Class B shares will receive nonvoting stock at closing, and the trust has committed to backstop the equity financing if needed.

Ellison’s leadership team has reportedly expressed interest in attracting high‑net‑worth individuals such as Elon Musk and other prominent investors to participate in the equity round.

## What People Are Saying

In the SEC filing, Paramount stated that the acquisition’s closing date remains uncertain and will only occur once the settlement with state attorneys general is approved or waived by a federal judge.

The antitrust settlement was announced by Paramount and California Attorney General Rob Bonta a week ago, but Judge Araceli Martinez‑Olguin rejected it at a September 24 hearing and scheduled opposition briefs to be filed by today’s noon Pacific Time.

Paramount also disclosed that its equity financing will involve up to $46.7 billion from the Lawrence J.

Ellison Revocable Trust, plus $250 million from RedBird Capital, though both entities have assigned their subscription rights to other parties, including sovereign wealth funds from Saudi Arabia, Abu Dhabi and Qatar and investment bank LionTree.

Bank of America and Citigroup hosted investor calls to market the debt offering, which attracted sufficient demand to cover the $44.4 billion issue, .

During the September 24 hearing, Judge Martinez‑Olguin set aside time for opposition briefs, prompting both Paramount and the attorneys general to submit defenses. Their arguments, which are expected to be filed by noon Pacific Time today, seek to persuade the court that the settlement protects competition.

## What Happens Next

The next milestone is Judge Martinez‑Olguin’s decision on whether to approve or dismiss the antitrust settlement. Responses from Paramount and the attorneys general are due by noon Pacific Time today, and a ruling will determine whether the closing conditions for the acquisition are satisfied.

If the settlement is approved, Paramount would proceed with the $44.4 billion debt offering, which has already garnered enough investor interest to fully fund the loan. The company’s SEC filing indicates that, assuming an October 6 close, it would pay WBD shareholders a total of $78 billion in cash consideration.

The merger consummation will also trigger a series of payments, including the $31‑per‑share payout, a ticking fee that activates on October 1, and approximately $1.1 billion in payments for vested WBD equity awards at closing.

Once the acquisition closes, the merged entity will carry over $80 billion in long‑term debt and be responsible for an annual interest expense exceeding $6 billion, a level that has drawn criticism from some analysts who worry about the company’s leverage.

If permanent financing is not secured by the acquisition’s closing date, Paramount has a $49 billion bridge loan ready to deploy, ensuring that the $78 billion cash consideration can still be delivered.

Post‑merger, analysts warn that the company’s leverage will increase sharply, with annual interest expenses projected to rise beyond $6 billion as the combined debt load surpasses $80 billion.

The package also contains the $7.5 billion Term B loan that Paramount began marketing last week.

## Closing

Paramount’s next move hinges on the federal judge’s ruling and the completion of its debt offering, after which it will combine cash, loans, and equity to finalize the WBD purchase. Stakeholders are watching closely as the outcome will shape the future of both companies.

The outcome will also determine the timing of the final payment to Warner shareholders.