Paramount's $110B Warner Bros deal is really a $49B bridge loan with a movie studio attached
Everyone's talking about which franchises Paramount gets. I've been staring at the financing instead, because that's where this deal will actually be won or lost.
On Thursday Paramount launched syndication for a $7.5B incremental Term Loan B, and buried in the same press release: they intend to raise another \~$44.4B of secured debt on top of everything already committed.
The headline says "$110B deal" but that hides how it's funded, so let me walk through the stack.
Paramount is paying $31 a share in cash for WBD. On 2.51B shares outstanding (per the Q2 10-Q) that's \~$77.7B for the equity, a 147% premium to the $12.54 unaffected price. The $110B is enterprise value — it includes WBD's debt.
The money comes from four buckets. $47B of new equity: Ellison family + RedBird at $16.02 a share, plus three Gulf sovereign wealth funds and LionTree who put in money with no board seats and no governance rights. Larry Ellison personally guaranteed the equity piece. Then the debt: $54B committed from BofA, Citi and Apollo, the new $7.5B Term Loan B, and $44.4B of additional secured notes still to be raised. That's \~$153B of sources against \~$78B for the equity check. The other \~$75B goes to taking out WBD's existing $33B of gross debt, refinancing Paramount's own debt, and fees. (That last number is my arithmetic on their disclosed totals, not a company figure.)
What's left standing: a combined company with \~$77-80B of net debt — Morgan Stanley's estimate, from before the extra $7.5B. Against pre-synergy EBITDA that's 6-7x leverage. Management's 4.3x only works if the full $6B of promised synergies actually show up. S&P has Paramount on negative watch for a cut from BB+ to BB and doesn't see leverage below 5x until 2029.
The piece I can't stop thinking about is the $49B 364-day bridge sitting inside the committed debt. A bridge is meant to be temporary: you close, then you term it out into long-dated bonds. If credit markets don't cooperate when that wall comes due, or the combined cash flows can't support the refi, the entire structure is under stress within a year of closing.
And look at what services it. WBD did $1.88B of adjusted EBITDA last quarter on $8.7B of revenue. Linear networks revenue was down 17% ex-FX, domestic linear subscribers down 10%. The linear business is the cash cow behind this debt and it's structurally shrinking \~4-5% a year. Streaming did $3.1B of revenue (+10%) with $512M of EBITDA — growing fast, but nowhere near big enough to carry $80B of debt on its own yet.
The bull case isn't crazy, to be fair. Combine HBO Max and Paramount+ (Morgan Stanley sees 240M+ subs by 2030), take $6B+ of cost out, grow into the leverage the way cable did in the 2000s. 6x leverage has worked in media before, when the cash flows were stable.
But "stable" is doing a lot of work there. This needs three things to go right at once: the $6B of synergies (while releasing at least 30 films a year under the state AG settlement, which limits how much content cost you can actually cut), the $49B bridge termed out cleanly, and linear declining slower than the debt gets paid down.
What would change my mind: the bridge getting termed out into long-dated paper at a sane spread before close, or leverage printing below 6x in year one on reported results instead of synergy models.
Until then this looks like one of the most levered large-cap media deals ever attempted, funded by a guy whose father had to personally guarantee the equity check.