Skydance faces $80 billion debt mountain as Warner Bros. Discovery merger closes

As the Skydance-Warner Bros. Discovery transaction closes on Oct. 6, the merged company will carry an unprecedented debt load of close to $80 billion, dwarfing the $43 billion AT&T debt taken on in the 2022 Discovery-WarnerMedia merger. Analysts from Moody’s, S&P Global and Fitch Solutions stress that meeting specific leverage-reduction targets is critical; failure could compel Larry Ellison to cover shortfalls from his personal wealth.

Skydance has pledged $6 billion in cost savings over three years, primarily through workforce reductions and operational streamlining, while still needing to fund content creation and technology upgrades for assets such as Paramount, Warner Bros., HBO Max, Paramount+, several outlets. The firm is projected to run negative cash flow through 2027, making disciplined prioritization essential. Credit ratings range from Ba3 (just below investment grade) to marginal investment-grade levels, reflecting the high interest costs and reliance on the Ellison family’s backstop. Success will hinge on extracting synergies from linear TV, which still generates the bulk of cash flow, and on modernizing streaming platforms to compete with Netflix and Disney+.