Paramount-Warner merger poised as streaming contender despite $77 billion debt load

Paramount Skydance chief David Ellison announced that the merger with Warner Bros. Discovery is set to finalize in about two weeks after a settlement with twelve Democratic state attorneys general resolved antitrust concerns. The agreement does not require immediate asset sales and includes a commitment to release at least 30 films annually with a 45-day theatrical window.

Morgan Stanley analysts highlighted that the combined HBO Max and Paramount+ services could reach more than 240 million subscribers by 2030, positioning the entity to rival Disney and Amazon for the second and third spots behind Netflix. They estimate a 28% overlap between the two services and anticipate that some churn will be offset by new subscribers. The merged firm will face a net debt burden of $77.2 billion at the end of 2026, declining slightly to $75.1 billion in 2027, with interest costs of $6.37 billion in the next year. Cost-saving measures, including technology consolidation, procurement efficiencies, real-estate rationalisation, and staff reductions, are expected to generate over $6 billion in annual savings and boost free cash flow to $8.12 billion by 2030, reducing leverage to a 3-4 times EBITDA ratio within three years.