Paramount stumps up high borrowing costs to fund Warner deal

By the Editorial Team · Friday, October 2, 2026

Paramount Global secured $52 billion in financing to proceed with its $110 billion acquisition of Warner Bros Discovery, positioning the combined company to reshape the media industry despite high leverage and challenging market conditions. The deal creates significant debt risks and reliance on cost savings amid intensifying streaming competition, with regulators having approved the transaction as it nears completion.

Paramount Global is moving forward with its $110 billion acquisition of Warner Bros Discovery amid challenging market conditions, having secured a $52 billion financing package despite rising borrowing costs and volatile credit markets. The deal, expected to close imminently following regulatory approval, will significantly reshape the Hollywood media landscape.

To fund the transaction, Paramount issued a combination of investment-grade and speculative-grade debt. Leading banks including Citigroup, Bank of America, and Apollo facilitated the offering, which comprises $30 billion of investment-grade bonds, over $12 billion of junk bonds, and $9.5 billion in leveraged loans denominated in both dollars and euros. This substantial borrowing has positioned Paramount as the largest issuer in the speculative-grade debt market this year, surpassing SoftBank’s recent $11 billion raise linked to its OpenAI investments.

The investment-grade debt carries a BBB- rating from S&P and Fitch— the lowest rung of investment grade— though market participants have priced the bonds closer to junk status, reflecting caution among investors amid uncertain credit fundamentals. Yields on the investment-grade bonds range from 6.3% to 8.9%, significantly above the approximately 3.5% average for comparable BBB-rated corporate bonds, illustrating the premium required by lenders given the elevated risk.

Paramount’s leveraged buyout will leave the combined entity with approximately $80 billion in net debt, equivalent to more than six times its annual earnings before interest, taxes, depreciation, and amortization (EBITDA). Company executives, including CEO David Ellison, have emphasized an expected $6 billion in annual cost savings and the intent to maintain investment-grade credit status over time through deleveraging efforts.

However, some analysts remain skeptical about the group’s capacity to realize these efficiencies in a highly competitive media environment. The company’s cash flow depends heavily on legacy television operations, which face ongoing challenges, even as the newly merged firm pushes into streaming. Increased industry competition, highlighted by Netflix’s recent commitment to accelerate its own streaming growth, may intensify pressure on content spending and profitability.

Paramount’s financial position carries risks beyond market skepticism. A downgrade from investment grade could force holders of certain debt funds to divest their positions, adding volatility to the company’s credit profile. Meanwhile, large institutional investors such as Apollo, Pimco, and Man Group hold significant stakes in the new debt. Sources indicate the financing package includes relatively flexible covenants, suggesting a negotiated balance between creditor protections and borrower flexibility.

The acquisition process itself involved negotiations not only with Warner Bros Discovery’s board but also with U.S. state regulators, with the deal nearing closure after overcoming these hurdles. Despite the successful financing, Paramount faces the challenge of managing a heavily leveraged capital structure amid shifting market dynamics and evolving competition in the media sector as it integrates Warner Bros Discovery into its portfolio.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.