Fitch Downgrades Skydance Paramount WBD Days After Merger Close

Fitch cut its debt rating on the newly merged Skydance, Paramount and Warner Bros. Discovery on Monday, October 12, 2026, citing significant execution and integration risks and higher leverage stemming from the combination, according to deadline.com. The downgrade landed a day before the Paramount-Warner Bros. Discovery merger formally closed on Tuesday.

Fitch pointed to leverage of 7.8x in fiscal 2026, projected to fall to 6.2x in 2027 and 4.5x in 2028. The combined company carries about $80 billion in debt following one of the biggest leveraged buyouts in corporate history. The total $52 billion debt financing included $30 billion in U.S. dollar investment grade bonds, $11.4 billion in U.S. junk-rated bonds, $1 billion in euro-denominated junk bonds, an $8.5 billion U.S. dollar loan and a $1 billion euro loan. A $42.5 billion bond sale over the past week provided critical financing for the merger.

The new debt will raise annual interest expense by up to $500 million more than initially anticipated, with rates on some notes topping 9%. In its closing announcement, Skydance said the company is built on a strong financial foundation. The combined company has nearly $70 billion in revenue and has targeted over $6 billion in cost savings.

CEO David Ellison has committed family resources if needed to reduce leverage significantly by 2028. Ellison and co-CEO Ynon Kreiz said in a staff memo that integrating the two companies will bring change including difficult workforce decisions.

Earlier rating pressure

In late September 2026, S&P Global made a similar rating move on the company. Attorneys general led by California's Rob Bonta sued to block the Paramount-WBD merger, delaying the close by several months in a period of rising interest rates; the case never went to trial and the settlement is widely viewed as a win for Paramount. The equity portion of the deal is about $47 billion in equity financing, largely backstopped by Larry Ellison.