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COMMITMENTS AND CONTINGENCIES | 6 Months Ended
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Jun. 30, 2026
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Guarantees Letters of Credit and Surety Bonds At June 30, 2026, we had outstanding letters of credit and surety bonds of $1.24 billion that were not recorded on the Consolidated Balance Sheet, including $998 million issued under a $1.9 billion standby letter of credit facility. In accordance with the contractual requirements of one of our commitments, the letter of credit outstanding under this facility increases and decreases consistent with the related contractual commitment. Letters of credit and surety bonds are primarily used as security against non-performance in the normal course of business under contractual requirements of certain of our commitments. The standby letter of credit facility, which matures in May 2027, is subject to provisions similar to the Credit Facility, including the same principal financial covenant (see Note 7), and will be secured by the same collateral as the Credit Facility at closing of the WBD merger. Other In the course of our business, we both provide and receive indemnities that are intended to allocate certain risks associated with business transactions. Similarly, we may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not live up to its obligations under an indemnification obligation. We record a liability for our indemnification obligations and other contingent liabilities when probable and reasonably estimable. Legal Matters General On an ongoing basis, we vigorously defend ourselves in numerous lawsuits and proceedings and respond to various investigations and inquiries from federal, state, local and international authorities (collectively, “Litigation”). Litigation may be brought against us without merit, and is inherently uncertain and always difficult to predict. However, based on our understanding and evaluation of the relevant facts and circumstances, we believe that the following matters are not likely, in the aggregate, to result in a material adverse effect on our business, financial condition and results of operations. Litigation Relating to the WBD Merger In April 2026, Pamela Faust, together with four other consumers of streaming, cable television, news media, and theatrical entertainment programming, filed a private antitrust action in the U.S. District Court for the Northern District of California against Paramount and Skydance relating to the WBD Merger. The complaint seeks to block the WBD Merger, among other relief. In May 2026, the plaintiffs filed a motion for a preliminary injunction to enjoin the WBD Merger pending a trial on the merits. In June 2026, we filed a motion to dismiss and an opposition to the plaintiffs’ motion for a preliminary injunction. A hearing took place on July 16, 2026 on the plaintiffs’ motion for a preliminary injunction and our motion to dismiss. The Court denied the plaintiffs’ motion for a preliminary injunction and is still considering our motion to dismiss. In July 2026, twelve states (California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington) filed an antitrust action in the U.S. District Court for the Northern District of California against Paramount and WBD relating to the WBD Merger. The complaint seeks to block the WBD Merger, among other relief. On July 13, 2026, the plaintiff-states filed a motion for a temporary restraining order and to show cause why a preliminary injunction should not issue. We filed our opposition on July 16, 2026, and the Court held a hearing on the plaintiff-states’ motion on July 17, 2026. On July 20, 2026, the Court granted the motion for a temporary restraining order and set a briefing schedule for the preliminary injunction. On July 22, 2026, we filed a motion seeking a three-day evidentiary hearing for the preliminary injunction during the week of August 17 or August 24 and to amend the briefing schedule. On July 23, 2026, the plaintiff-states informed the Court that they would not file their preliminary injunction motion that day, and that the filing timeline would depend on the outcome of further discussions with the defendants. On July 24, 2026, the plaintiff-states, the WGA plaintiffs (described below), and defendants entered a stipulation agreeing that the WBD Merger will not close, and defendants will not take any steps to integrate their operations, until the earlier of (1) five days after a merits determination in these actions or (2) June 1, 2027. The parties also cancelled the briefing schedule and the August 3, 2026 hearing on the plaintiff-states’ preliminary injunction motion and agreed to file a joint trial- scheduling statement by July 31, 2026. The Court granted the stipulation the same day. On July 31, 2026, the parties, together with the WGA plaintiffs, filed a joint scheduling statement. On August 4, 2026, the Court entered an order for a single 12-day trial beginning March 2, 2027 and ending March 19, 2027 covering both the plaintiff- states and WGA plaintiffs cases. In July 2026, the Writers Guild of America, West, Inc., and Writers Guild of America East, Inc. filed a private antitrust action in the U.S. District Court for the Northern District of California against Paramount and WBD relating to the WBD Merger. The complaint seeks to block the WBD Merger, among other relief. On July 17, 2026, the case was reassigned to Judge Araceli Martinez-Olguin from Magistrate Judge Peter H. Kang. On July 21, 2026, the plaintiffs filed a motion for a preliminary injunction and a motion to expedite the preliminary injunction briefing schedule. On July 22, 2026, we filed an opposition to the motion to expedite. On July 23, 2026, the plaintiffs filed a reply to the motion to expedite. That same day, the Court issued an order aligning the briefing schedule on the motions for preliminary injunction in both the state and the WGA actions, extending the temporary restraining order to August 17, 2026. On July 24, 2026, the plaintiff-states, the WGA plaintiffs, and the defendants entered a stipulation agreeing that the WBD Merger will not close, and defendants will not take any steps to integrate their operations as described above. The stipulation also provides that the WGA plaintiffs will withdraw their preliminary injunction motion and that the parties will file a joint trial-scheduling statement by July 31, 2026. The Court granted the stipulation the same day. As described above, on August 4, 2026, the Court entered an order for a single 12-day trial beginning March 2, 2027 and ending March 19, 2027 covering both the plaintiff-states and WGA plaintiffs cases. In July 2026, Paul Robbins, a Paramount stockholder, filed a derivative lawsuit in the Delaware Court of Chancery against certain of our officers and directors, alleging that they breached their fiduciary duty of loyalty in pursuit of Paramount’s acquisition of WBD. The plaintiff seeks to enjoin the WBD Merger and monetary damages, among other relief, and has asked the Court to expedite the proceedings to allow him to seek an injunction. On July 26, 2026, the plaintiff sent an email to the Court withdrawing his request to expedite the matter in light of the stipulation in the pending state antitrust lawsuit described above. The plaintiff has asked the Court to order the parties to meet and confer to discuss a schedule in the matter. On July 27, 2026, the defendants submitted a response letter stating that, given that the plaintiff was withdrawing his motion to expedite, the schedule governing the matter should be no different than any other non-expedited matter, that they intended to file a motion to dismiss at the appropriate time, and that they will also file a motion to stay discovery pending resolution of that motion if the plaintiff does not stipulate to such a stay. In addition, we have received demand letters from purported holders of our Class B Common Stock requesting the inspection of books and records to investigate possible breaches of fiduciary duties or other misconduct in connection with the WBD Merger. Litigation Relating to the Skydance Transactions In connection with the Skydance Transactions, in July 2024, Scott Baker, a purported holder of Paramount Global Class B Common Stock, filed a putative class action lawsuit in the Court of Chancery of the State of Delaware against NAI, Shari E. Redstone, Barbara M. Byrne, Linda M. Griego, Judith A. McHale, Charles E. Phillips, Jr., Susan Schuman, Skydance and David Ellison (the “Baker Action”). The complaint alleges breaches of fiduciary duties to Paramount Global Class B stockholders in connection with the negotiation and approval of the Transaction Agreement, among other claims, and seeks unspecified damages, costs and expenses, as well as other relief. In November 2024, the Court granted the parties’ stipulation in the Baker Action to (i) postpone briefing on the motions to dismiss until the filing or designation of an operative complaint following resolution of the plaintiff’s motion to appoint him and the Baerlocher Family Trust, a purported holder of Paramount Global Class B Common Stock, as co-lead plaintiffs and Berger Montague PC as interim class counsel (the “Baker Leadership Motion”), and (ii) stay discovery until resolution of any motion to dismiss an operative complaint following resolution of the Baker Leadership Motion. In October 2024, various purported stockholders filed motions to intervene to oppose the Baker Leadership Motion. In December 2024, the plaintiff, along with Mark Baerlocher, as trustee for the Baerlocher Family Trust, filed an amended complaint alleging the same breaches of fiduciary duties against the same defendants as in the original complaint. In June 2025, counsel for Mr. Baker informed the Court that the Baker Leadership Motion would be withdrawn without prejudice and that the group of purported stockholders seeking lead plaintiff status would meet and confer to propose a schedule for resolving lead plaintiff applications. In April 2024, the State of Rhode Island Office of the General Treasurer, on behalf of the Employees’ Retirement System of Rhode Island, a purported holder of Paramount Global Class B Common Stock, filed a verified complaint for the inspection of books and records under Section 220 of the General Corporation Law of the State o f Delaware (the “DGCL”) in the Court of Chancery of the State of Delaware against us, seeking the inspection of books and records to investigate whether Paramount Global’s Board of Directors, NAI, Shari E. Redstone and/or certain executive officers may have breached their fiduciary duties to stockholders for alleged diversion of corporate opportunities (the “220 Action”). The magistrate judge held a trial in July 2024 and denied the request for inspection. The plaintiff filed an exception to the Court, and in January 2025, the Court ruled that the plaintiff was entitled to obtain books and records that were both necessary and sufficient to fulfill the purpose of its request. In February 2025, the Court granted an implementing order returning the 220 Action to the magistrate judge for further proceedings on the scope of production. In March 2025, the Court granted our application for certification of interlocutory appeal to the Delaware Supreme Court, which was accepted in April 2025. In March 2026, the Delaware Supreme Court affirmed the trial court’s decision and remanded the case for further proceedings. The parties submitted supplemental briefs to the Court in June 2026 and submitted reply supplemental briefs in July 2026 concerning the appropriate scope of further inspection. Certain other purported holders of Paramount Global Class B Common Stock and Class A Common Stock have delivered demand letters requesting the inspection of books and records to investigate similar alleged breaches of fiduciary duties in connection with the Skydance Transactions. We have also received demand letters from purported holders of Paramount Global Class B Common Stock related to alleged omissions in our registration statement on Form S-4. Additionally, in August 2024, LiveVideo.AI Corp. filed a lawsuit in the U.S. District Court for the Southern District of New York against Shari E. Redstone, NAI, Christine Varney and Monica Seligman, alleging that the defendants did not fairly consider its offer to purchase Paramount Global. The complaint asserts claims for unfair competition, tortious interference, unjust enrichment and aiding and abetting breach of fiduciary duty, among others, and seeks unspecified monetary damages, costs and other relief. The defendants were never served. The parties exchanged several filings related to service and default. In August 2025, the magistrate judge issued a Report and Recommendation recommending that the case be dismissed and that the Court impose $10,000 in monetary sanctions against LiveVideo.AI Corp. In September 2025, the district judge adopted the report in full, dismissed the case, imposed the sanctions, and enjoined LiveVideo.AI Corp. from filing any further lawsuits in any federal district court arising out of the Skydance Transactions. LiveVideo.AI Corp. filed a notice of appeal in November 2025, and in April 2026, the appeal was dismissed. In April 2026, LiveVideo.AI Corp. moved to reinstate the appeal, and in May 2026, the Court denied the motion. LiveVideo.AI Corp. again moved to reinstate the appeal in June 2026. The parties are currently litigating a motion for sanctions against the plaintiff. In June 2026, following briefing, the Court granted defendants’ motion for sanctions against LiveVideo.AI Corp. and its counsel. LiveVideo.AI Corp. filed a notice of appeal on July 1, 2026. In August 2025, Gabelli Value 25 Fund Inc. (“Gabelli”) filed a putative class action complaint in the Court of Chancery of the State of Delaware against Barbara M. Byrne, Linda M. Griego, Judith A. McHale, Charles E. Phillips, Jr., Susan Schuman, Harbor Lights (f/k/a National Amusements, Inc.) and Shari E. Redstone (the “NAI Defendants”), and Skydance Media, LLC and RB Tentpole LP (the “Skydance Defendants”), alleging breach of fiduciary duty against all defendants and unjust enrichment against the NAI Defendants (the “Gabelli Action”). Gabelli seeks a declaratory judgment, damages, including rescissory damages and/or quasi-appraisal damages, disgorgement of NAI’s profits, fees and costs, and pre- and post-judgment interest. In September 2025, the Skydance Defendants filed placeholder motions to dismiss, and Gabelli filed a motion to be appointed as interim lead plaintiff representing former minority holders of Paramount Global Class A Common Stock (the “Gabelli Class A Leadership Motion”). In October 2025, counsel for Gabelli filed a letter with the Court indicating that no competing motions or objections to the Gabelli Class A Leadership Motion were filed and proposed that the Court appoint Gabelli as lead plaintiff. In November 2025, the Court granted the Gabelli Class A Leadership Motion and appointed Gabelli as lead plaintiff to prosecute the claims on behalf of the Class A minority shareholders. Defendants moved to stay discovery pending resolution of any filed and forthcoming motions to dismiss, and in February 2026, the Court granted defendants’ motion to stay discovery. In February 2025, New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Police Pension Fund, the New York City Board of Education Retirement System, and the Teachers’ Retirement System of the City of New York, purported holders of Paramount Global Class B Common Stock and Class A Common Stock, filed a putative class action lawsuit in the Court of Chancery of the State of Delaware against Barbara M. Byrne, Linda M. Griego, Judith A. McHale and Susan Schuman, alleging breaches of fiduciary duties for their alleged failure to sufficiently consider an alternative offer that the plaintiffs claimed was superior to the Skydance Transactions (the “NYCERS Action”). The plaintiffs argue that the no-shop provision in the Transaction Agreement should be declared invalid and unenforceable because it prevented the parties from engaging in further deal discussions and negotiations with companies other than Skydance, including, specifically, Project Rise Partners, after the no-shop period began. The plaintiffs further assert that the Court has the power to invalidate this provision because Skydance allegedly aided and abetted NAI’s and Shari E. Redstone’s breach of fiduciary duties, including by agreeing to indemnify Shari E. Redstone (through Skydance’s separate agreement with NAI) for any breach of fiduciary duty claims arising out of the Skydance Transactions up to a certain amount. Skydance, NAI, Shari E. Redstone and Paramount Global were not named as defendants in the original complaint. The NYCERS Action originally sought, among other forms of relief, an order from the Court enjoining the closing of the Skydance Transactions until the Court reached a final resolution on the plaintiffs’ claims and an order compelling the special committee of Paramount Global’s Board of Directors to evaluate Project Rise Partners’ alternative offer to, among other things, acquire Paramount Global Class A Common Stock for $23.00 per share and Paramount Global Class B Common Stock for $19.00 per share. The Project Rise Partners’ offer was made after the go-shop period in the Transaction Agreement had ended. The plaintiffs filed a motion for expedited proceedings along with their complaint. In February 2025, the plaintiffs moved to join Paramount Global, Skydance, Shari E. Redstone, NAI and various other entities named in the Transaction Agreement as necessary parties to the litigation and moved for a temporary restraining order preventing the closing of the Skydance Transactions until the Court considered the plaintiffs’ anticipated motion for injunctive relief following expedited discovery. In March 2025, the Court allowed plaintiffs to amend the complaint to add Paramount Global, Skydance, Shari E. Redstone, NAI and the various other entities as defendants. The amended complaint seeks compensatory damages. The parties reached an agreement to withdraw the plaintiffs’ request for expedition and their application for injunctive relief in exchange for targeted discovery from certain of the defendants and third parties. The productions are now complete. In April 2026, the Court held a status conference in the Baker Action, the NYCERS Action and the Gabelli Action, at which the Court indicated a preference for coordinating the Class A and Class B stockholder actions and for providing Class A stockholders discovery equivalent to that provided to Class B stockholders. It directed the parties to submit a proposed scheduling order governing, among other things, the filing of plenary complaints and the appointment of Class B leadership. In July 2026, following another status conference, the Court entered a scheduling order which sets a deadline in October 2026 for briefing the Class B leadership dispute. In April 2025, Metropolitan Water Reclamation District Retirement Fund, Laborers’ and Retirement Board Employees’ Annuity and Benefit Fund of Chicago, Gary Mendelsohn, and Park Employees’ Annuity and Benefit Fund of Chicago, purported holders of Paramount Global Class B Common Stock, filed a complaint for the inspection of books and records under Section 220 of the DGCL in the Court of Chancery of the State of Delaware against us to maintain standing to enforce their statutory inspection rights and seek an order to produce all the books and records identified in their Section 220 demands to investigate possible breaches of fiduciary duties in connection with the Skydance Transactions. The complaint alleges that the documents produced to such purported stockholders thus far pursuant to their Section 220 demands are insufficient. The complaint seeks an order requiring us to produce the documents identified in their Section 220 demands, among other relief. In November 2025, the parties contacted the Court with a request to lift the stay and schedule a trial. A magistrate judge held a trial in March 2026. Subsequently, the parties simultaneously submitted supplemental briefs in April 2026. The Court issued a decision in June 2026, which held in part that inspection of certain informal board materials would be necessary and essential to satisfy plaintiffs’ demands. The parties are negotiating further inspection. Litigation Relating to Video Streaming Patents In August 2025, Nokia Technologies Oy (“Nokia”) filed complaints alleging infringement of patents related to video streaming against Paramount in the United States, Brazil, Germany and the Unified Patent Court (“UPC”) in Europe. In November 2025, Paramount filed a rate-setting action against Nokia in the High Court of Justice of England and Wales (“U.K. Court”). In March 2026, Nokia submitted to the jurisdiction of the U.K. Court and agreed to a mechanism in which the U.K. Court would determine reasonable and non-discriminatory terms for a global license to Nokia’s video patent portfolio, Paramount would make a refundable interim payment to Nokia as determined by the U.K. Court, and all parallel litigation involving Nokia’s video patent portfolio would be withdrawn or dismissed by the parties. The interim payment amount is entirely without prejudice to the amount payable for the license to be determined at trial and is refundable in that if it exceeds the U.K. Court’s final rate determination, then Nokia will refund the difference to Paramount with interest. Nokia’s complaints filed in the United States, Brazil, Germany, and the UPC were dismissed without prejudice, and the U.K. Court set the interim payment amount in June 2026. The trial is scheduled for late 2026. Claims Related to Former Businesses Asbestos We are a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which allegedly occurred as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. We are typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the plaintiffs have not identified which of our products is the basis of a claim. Claims against us in which a product has been identified most commonly relate to allegations of exposure to asbestos- containing insulating material used in conjunction with turbines and electrical equipment. Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. We do not report as pending those claims on inactive, stayed, deferred or similar dockets that some jurisdictions have established for claimants who allege minimal or no impairment. As of June 30, 2026, we had pending approximately 18,300 asbestos claims, as compared with approximately 17,490 as of December 31, 2025. During the second quarter of 2026, we received approximately 860 new claims and closed or moved to an inactive docket approximately 610 claims. We report claims as closed when we become aware that a dismissal order has been entered by a court or when we have reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. Our total costs for settlement and defense of asbestos claims after insurance recoveries and net of tax, were approximately $23 million for the Successor period from August 7 - December 31, 2025, $11 million and $34 million for the Predecessor periods from January 1 - August 6, 2025, and the year ended December 31, 2024, respectively. Our costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses. Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. A significant number of pending claims against us are non-cancer claims. It is difficult to predict long-term future asbestos liabilities, as events and circumstances may impact the estimate. Environmental and Other From time to time, we also receive claims from federal and state environmental regulatory agencies and other entities asserting that we are or may be liable for environmental cleanup costs and related damages principally relating to our historical and predecessor operations. In addition, from time to time we receive personal injury claims including toxic tort and product liability claims (other than asbestos) arising from our historical operations and predecessors. Contingent Liabilities Relating to Former Businesses In connection with recording Paramount Global’s net assets at the Ultimate Parent’s basis, “Other liabilities” was increased to reflect the fair value of Paramount Global’s estimated contingent liabilities for the defense and settlement of asbestos lawsuits as well as claims from federal and state environmental regulatory agencies and other entities asserting liability for environmental cleanup costs and related damages (See Note 2). The estimated fair value of the asbestos-related liability was determined in consultation with a third-party firm with expertise in estimating asbestos liability and represents the estimate of the amount a third party would pay to take on the risk of any asbestos-related future losses. We record an accrual for a loss contingency when it is both probable that a liability has been incurred and when the amount of the loss can be reasonably estimated. The reasonably estimable period for our long-term asbestos liability is 10 years, which we determine in consultation with a third-party firm with expertise in estimating asbestos liability and is due to the inherent uncertainties in the tort litigation system. This estimate is based upon many factors, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims, and is assessed in consultation with the third-party firm. While we believe that our accruals for these matters are adequate, there can be no assurance that circumstances will not change in future periods and, as a result, our actual liabilities may be higher or lower than our accrual.

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