Skydance Officially Closes Deal To Merge With Paramount

(Eric Thayer/Getty Images)

Paramount sinks as ratings agencies scrutinize its debt

Paramount on Monday said its merger with Warner Bros. would create an entity with $79 billion in net debt.

3/3/26 1:09PM

Shares of Paramount are down 7% on Tuesday as investors get skittish about the $79 billion in debt the company would have following a merger with Warner Bros. Discovery.

Fitch Ratings on Monday evening downgraded Paramount to junk status, calling its acquisition “highly complex” and noting that it expects heightened regulatory scrutiny in key jurisdictions. Fitch also placed the company on “rating watch negative,” indicating Paramount could get a further downgrade after the deal goes through. Per the agency’s statement:

“The downgrade reflects competitive pressures across the media sector and continued FCF [free cash flow] headwinds from significant transformation costs. Fitch believes PSKY’s leverage and FCF may remain outside negative rating sensitivities longer than we anticipated.”

On Tuesday, S&P Global changed its outlook on Paramount to negative, stating that Paramount’s $111 billion acquisition would “increase its leverage well above our 4.25x downgrade threshold for the current rating.”

In simple terms, what this all means is: ratings agencies have become concerned about how much debt Paramount will carry following the proposed merger, and whether it will be able to reliably generate earnings to pay off that debt, considering the difficulty of merging two large companies and the highly competitive nature of the media industry in general. Competing with cash-heavy companies with more wiggle room, like Netflix and Google’s YouTube, Paramount will have its work cut out for it.

All that debt would also mean lots of cost cutting, including job cuts in an already tough Hollywood labor market. Paramount on Monday said it expects $6 billion in “synergies” from the companies’ overlaps. The majority, the company said, would come from “nonlabor sources.” Netflix co-CEO Ted Sarandos, who was outbid for Warner Bros., told Bloomberg in an interview over the weekend that he thinks the deal will include $16 billion in cuts:

“This deal is dependent on a lot of cost-cutting. We were in the books of Warner Bros., and the biggest cost centers are people in productions. There’ll be cuts in excess of $16 billion. They are telling people who lend them the money that’s gonna happen in 18 months or so. It would be less production, less people working.”

As IndieWire put it earlier this week, the deal has the potential to make debt one of the most powerful executives in Hollywood.

Tom Jones

hut’s off

6/1/26

Yum! Brands might have found a potential buyer for Pizza Hut

Yum! is in exclusive talks with private equity firm LongRange Capital about a sale, per reports.

Hyunsoo Rim

hot dogs & half tanks

6/1/26

Costco’s gas stations are breaking records as drivers seek cheaper fuel

Higher prices have pushed many members to the retailer’s pumps for the first time.

Max Knoblauch5/29/26

The Trump administration is reportedly planning a 50% made-in-America requirement for USMCA tariff relief

Qualifying for USMCA-related lower tariffs may soon require more US-made vehicle components, according to reporting by The Wall Street Journal.

The Trump administration is reportedly planning to introduce a 50% US content requirement for vehicles covered by the trade pact to receive lower tariffs. The content would be measured by cost, according to the WSJ.

There currently isn’t any US-specific requirement for those lower tariff rates, but in order to receive preferential tariffs, vehicles are must contain at least 75% regional content (components made in North America). Per Reuters reporting, the Trump admin is seeking to raise the regional requirement to 82%.

These reported plans are subject to change as the US negotiates USMCA terms with Mexico over the next few months.

Overall, Tesla will likely have the easiest time qualifying for any stricter requirements. The automaker’s vehicles contained the highest amount of US/Canadian content in 2025, according to American University research. Ford, GM, and Stellantis all scored lower.

Notably: the underlying government data that many domestic content measurements rely on intentionally combines US and Canadian components, so it’s difficult to know exactly how much of any given vehicle is specifically US-made.

Exclusive | Trump Administration Wants Autos Under USMCA to Be at Least 50% Made in America

These reported plans are subject to change as the US negotiates USMCA terms with Mexico over the next few months.

Tom Jones5/29/26

The $640,000 Luce makes the average Ferrari look like a bargain

Put aside the shape; put aside the smoothing out of Ferrari’s iconic sharp edges; put aside, even, the calls from former Chairman and President Luca Cordero di Montezemolo to “take the Prancing Horse off.” On the grounds of price alone, Luce detractors might have a point.

By now, many of us will have read the criticisms of Ferrari’s first fully electric vehicle, as the Luce — which was unveiled to the world earlier this week and promptly saw the company’s shares crash out in New York and Milan — gets subtly shaded by competitors online and not-so-subtly shaded by basically everyone else.

What makes all of this worse for Ferrari is that, even by the luxury car maker’s notoriously high standards, they’ve slapped a pretty hefty price tag on the Luce, and the company’s CEO, Benedetto Vigna, has already been forced to defend the €550,000 ($640,000) price point, saying yesterday that it’s “fair to pay for innovation,” per Reuters.

While Ferrari’s cars have been getting more expensive of late, as recently as 2022, Ferrari’s average revenue per car sold was around $340,000. At nearly twice that price, this new electric model is obviously proving a little much (visually, conceptually, and financially) for many loyal and long-standing fans of the Prancing Horse to stomach.