Paramount credit downgraded to 'junk' status over debt worries

Core Insights - Paramount is set to emerge with $79 billion in debt following its acquisition of Warner Bros. Discovery, which raises concerns about its creditworthiness [2][3][7]. Debt and Financial Structure - The acquisition will result in Paramount absorbing Warner Bros. Discovery's existing debt, which was nearly $55 billion after its spinoff from AT&T, along with an additional $33.5 billion that will be inherited [7][8]. - Fitch Ratings has downgraded Paramount's credit rating to BB+ from BBB- and placed it on a "negative" ratings watch due to uncertainties surrounding the $110 billion deal [3]. - S&P Global Ratings has taken similar actions regarding Paramount's credit rating [4]. Financing and Cost Management - To finance the Warner Bros. Discovery acquisition, Larry Ellison has guaranteed $45.7 billion in equity, while Bank of America, Citibank, and Apollo Global have committed over $54 billion in debt financing [4]. - Paramount plans to restructure approximately $15 billion of Warner Bros. Discovery's existing debt [9]. - The company aims to achieve over $6 billion in cost cuts or "synergies" within three years, which may impact entertainment industry employment, particularly in Los Angeles [10]. Regulatory and Approval Process - The merger is expected to be completed by the end of September, pending approval from Warner Bros. Discovery shareholders and regulatory bodies, including the European Union [6].