Group 1 - Warner Bros. Discovery (WBD) rejected a cash-based acquisition offer from Paramount Skydance at nearly $24 per share, totaling slightly below $60 billion [1][2] - The rejection indicates that the market perceives the offer as insufficient in terms of valuation and premium, suggesting a need for a public bidding process to achieve a higher price [2] - Warner Bros. Discovery previously proposed a split into two companies (streaming and traditional film business) to unlock value, reinforcing the belief that the value from a split or sale could exceed a single buyer's offer [2] Group 2 - Following the news of the rejected offer, Warner Bros. Discovery's stock price rose over 12% during trading, closing up 10.97% at $20.33 [1]

Core Viewpoint - S&P Global Ratings has downgraded Warner Bros. Discovery's unsecured bond rating to "BB," indicating a deeper "junk" status, following the company's announcement of a business unit spin-off [1][2] Group 1: Credit Rating Changes - The downgrade from "BB+" to "BB" signifies that Warner Bros. Discovery's bonds are now rated lower than most other junk bonds, reflecting increased credit risk [1] - S&P is also evaluating potential downgrades of other credit ratings for the company, indicating a broader concern about its financial health [1] Group 2: Business Strategy and Financial Implications - Warner Bros. Discovery plans to use $17.5 billion in secured bridge financing to refinance over $14 billion of unsecured bonds during the spin-off process, prioritizing new creditors over unsecured bondholders [1] - The addition of secured debt is expected to significantly weaken the recovery prospects for the company's unsecured debt, as noted by S&P analysts [1] - The company has approximately $35.5 billion in outstanding bonds, excluding debt maturing this year, highlighting its substantial debt burden [1] Group 3: Company Background and Challenges - Warner Bros. Discovery was formed in April 2022 from the merger of AT&T's WarnerMedia and Discovery, Inc., inheriting high debt levels and transformation pressures [3] - The company has faced declining performance over the past two years, with weak revenue and cash flow attributed to factors such as loss of traditional TV advertising and subscription users, significant merger-related debt, content impairment, rising streaming transition costs, and sports rights pressures [3]