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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 6 Months Ended
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Jun. 30, 2026
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business—Paramount Skydance Corporation is a global media and entertainment company with a portfolio that includes Paramount Pictures, Paramount Television, CBS, CBS News, CBS Sports, Nickelodeon, MTV, BET, Comedy Central, Showtime, Paramount+, Pluto TV, and Skydance Animation, Film, and Television, Paramount Sports Entertainment and Paramount Games Studio. Beginning in 2026, we transitioned our reporting structure into three new segments: Studios, Direct-to-Consumer, and TV Media (see Note 13). References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Skydance Corporation and its consolidated subsidiaries, unless the context otherwise requires. Warner Bros. Discovery Merger—On February 27, 2026, Paramount and Warner Bros. Discovery, Inc. (“WBD”) announced a definitive merger agreement (the “WBD Merger Agreement”) under which Paramount will acquire WBD (the “WBD Merger”). The closing of the WBD Merger is subject to customary closing conditions, including regulatory clearances. The anticipated closing of the WBD Merger has been delayed as a result of a lawsuit, with the parties agreeing to postpone closing until the earlier of five days following the court’s ruling or June 1, 2027. Under the terms of the WBD Merger Agreement, Paramount will pay $31.00 per WBD share to acquire all outstanding shares of WBD, which at the time of the WBD Merger Agreement represented an equity value of $80.9 billion, and will assume WBD’s net debt. At March 31, 2026, WBD’s debt (excluding finance leases) was comprised of $17.7 billion of senior notes and $15.0 billion of borrowings from a bridge facility. Furthermore, if the WBD Merger closes, Paramount will pay WBD stockholders a per share “ticking fee” of $0.00277778 for each day after September 30, 2026 that the WBD Merger has not closed, up to a maximum of $0.25 per WBD share per 90 calendar day period (the “Ticking Consideration”). No Ticking Consideration is payable if the WBD Merger Agreement is terminated pursuant to its terms. The WBD Merger Agreement has a termination date of March 4, 2027, subject to one automatic extension to June 4, 2027. Also, under the terms of the WBD Merger Agreement, in the first quarter of 2026, Paramount paid a termination fee of $2.8 billion to Netflix, Inc. (“Netflix”) on behalf of WBD in connection with the termination of a prior merger agreement between Netflix and WBD (see Note 15). This payment was initially funded with cash on hand and a $2.15 billion borrowing from our credit facility (see Note 7) and, in accordance with the Subscription Agreements described below, entered into by the Ellison Parties (as defined below), such amount will ultimately be funded by the $46.7 billion to be received from the Ellison Parties. If the WBD Merger Agreement is terminated because the WBD Merger cannot close due to a failure to obtain antitrust or regulatory approval, or because a court order prevents the WBD Merger from closing on antitrust grounds, Paramount will owe WBD a $7.0 billion Regulatory Termination Fee (as defined in the WBD Merger Agreement). In accordance with the Subscription Agreements, this termination fee and the previously paid $2.8 billion Netflix termination fee described above would be funded by the Ellison Parties in exchange for shares of Paramount Skydance Corporation Class B Common Stock (as defined below) at $16.02 per share. WBD will owe Paramount a $3.0 billion termination fee under certain circumstances, including if WBD terminates the WBD Merger Agreement to enter into a definitive agreement for an alternative acquisition proposal. Concurrent with the execution of the WBD Merger Agreement (i) The Lawrence J. Ellison Revocable Trust, u/a/d 1/22/88, as amended (the “Trust”), and Lawrence J. Ellison (together with the Trust, the “Ellison Parties”) and (ii) RedBird Capital Partners Fund IV (Master), L.P. (“RedBird” and, together with the Trust, the “Equity Investors”) entered into subscription agreements (collectively, the “Subscription Agreements”) providing for a private placement investment in Class B common stock of Paramount Skydance Corporation (“Paramount Skydance Corporation Class B Common Stock”), for an aggregate amount of up to $46.7 billion (subject to increase if the Ticking Consideration or certain other additional amounts as defined in the WBD Merger Agreement are required) from the Trust and $250 million from RedBird pursuant to the terms of the Subscription Agreements. In April 2026, we announced that the Equity Investors had determined, as permitted under the Subscription Agreements, to assign their subscription rights thereunder (such assignments, the “Equity Syndication” and the assignees, the “Equity Syndication Parties”) to the Equity Syndication Parties. The Equity Syndication Parties are composed of affiliates of the Ellison Parties and RedBird, as well as the following institutional investors: The Public Investment Fund, L’Imad 1st SPV 2 Exempt RSC LTD (an investment vehicle of L’Imad Holding, an Abu Dhabi sovereign wealth fund), QIA TMT Holding LLC (an investment vehicle of the Qatar Investment Authority), and LionTree Investment Fund, L.P. The aggregate allocations under the Equity Syndication total to the full amount of the commitments under the Subscription Agreements. At closing of the WBD Merger, Paramount will issue to each Equity Syndication Party a number of newly issued nonvoting shares of Paramount Skydance Corporation Class B Common Stock (or securities convertible into shares) equal to its allocated amount divided by the Syndication Purchase Price, defined as the 20-trading-day daily volume-weighted average price of Paramount Skydance Corporation Class B Common Stock determined as of the third business day prior to the closing of the WBD Merger, subject to a ceiling of $16.02 per share and a floor of $12.00 per share. The Equity Syndication does not relieve the Equity Investors of their contractual commitments made to the Company. To the extent that any Equity Syndication Party does not perform under its syndication assignment, the obligation of the Equity Investors to fund the related amount of the commitments would continue to be required under the Subscription Agreements. Following the closing, the Ellison Family (as defined below) and RedBird will remain the sole holders of Paramount Class A Common Stock, representing 100% of the voting shares of Paramount. For the purpose of determining the controlling ownership of Paramount, the Ellison family is comprised of Lawrence J. Ellison and David Ellison (the “Ellison Family”). David Ellison is the son of Lawrence J. Ellison, and Lawrence J. Ellison and David Ellison are accordingly considered immediate family members. We have also secured commitments for debt financing totaling $54 billion, which include a $49 billion 364-day senior secured bridge loan facility, which we plan, subject to market conditions and other timing considerations, to reduce or replace with permanent financing (which may include issuance of debt securities) on or prior to the closing of the WBD Merger and, in connection with a credit agreement entered into in April 2026 (the “Pro Rata Credit Agreement”), $2.50 billion three-year senior secured term A loans and $2.50 billion five-year senior secured term A loans. The term A loans will be made in a single borrowing on the closing date of the WBD Merger. The Pro Rata Credit Agreement also provides for a $5.00 billion five-year senior secured revolving credit facility, which will be used for general corporate purposes, and will replace our existing revolving credit facility (see Note 7). The availability and initial funding of the facilities under the Pro Rata Credit Agreement and the bridge loan facility (if not replaced by permanent financing) are subject to the satisfaction or waiver of customary conditions set forth in the Pro Rata Credit Agreement and the bridge commitment papers, including the closing of the WBD Merger. In addition, following the closing of the WBD Merger, each holder of Paramount Skydance Corporation Class B Common Stock (excluding any Equity Investor or affiliate thereof) as of a record date to be determined will receive, without payment of any consideration, one 10-year warrant (each, a “Warrant”) for each share held, exercisable at an initial exercise price per share equal to the Syndication Purchase Price and subject to customary anti-dilution and fundamental change make-whole adjustments. Beginning on the third anniversary of issuance, we may call the Warrants if the closing price of our Class B Common Stock equals or exceeds $30.00 for at least 20 trading days during any 30 consecutive trading day period. We intend to apply to list the Warrants for trading on the Nasdaq Stock Market LLC (“Nasdaq”) separate from our Class B Common Stock, subject to applicable approvals. The planned Warrant issuance is in lieu of a previously planned rights offering at $16.02 per share. In connection with the Warrant issuance, existing Paramount restricted stock units (“RSUs”) are expected to be equitably adjusted pursuant to pre-existing anti-dilution provisions in Paramount equity plans. WBD Debt—In May 2026, we commenced (i) exchange offers, which are expected to result in the exchange of up to $12.7 billion aggregate principal amount of certain of WBD’s senior notes for newly issued Paramount notes, and (ii) tender offers for cash for up to $2.4 billion aggregate principal amount of other WBD senior notes, in each case conditioned on the closing of the WBD Merger. In June 2026, WBD entered into a seven-year $13.0 billion term loan (“First Lien Credit Agreement”), and a seven-year €1.7 billion term loan (the “WBD Term Loans”). The proceeds were used to repay the $15.0 billion bridge facility WBD had outstanding on March 31, 2026. We plan to replace or refinance the WBD Term Loans, if not refinanced by WBD prior to closing of the WBD Merger. The NAI Transaction—On August 7, 2025, pursuant to a purchase and sale agreement dated July 7, 2024, certain affiliates of investors in Skydance Media, LLC (“Skydance”), comprised of entities controlled by the Ellison Family and affiliates of RedBird Capital Partners (collectively the “NAI Equity Investors”), purchased all of the outstanding equity interests of Paramount Global’s controlling stockholder, National Amusements, Inc. (“NAI”) from the shareholders of NAI (the “NAI Transaction”). The Skydance Transactions—Also on August 7, 2025, following the completion of the NAI Transaction and pursuant to the Transaction Agreement dated as of July 7, 2024, Paramount Global and Skydance became wholly- owned subsidiaries of Paramount Skydance Corporation (the transactions contemplated by the Transaction Agreement, the “Skydance Transactions”). Paramount Skydance Corporation, formerly known as New Pluto Global, Inc., was formed on June 3, 2024 to consummate the Transactions and was a wholly-owned direct subsidiary of Paramount Global until, through a series of mergers, it became the holding company of Paramount Global and Skydance as part of the Skydance Transactions. Concurrent with the NAI Transaction, the NAI Equity Investors and certain other affiliates of investors in Skydance made an investment of $6.0 billion into Paramount Skydance Corporation (the “PIPE Transaction”) in exchange for 400 million newly issued shares of Paramount Skydance Corporation Class B Common Stock for a purchase price of $15.00 per share, and the NAI Equity Investors also received warrants to purchase 200 million shares of Paramount Skydance Corporation Class B Common Stock at an initial exercise price of $30.50 per share (subject to customary anti-dilution adjustments), which expire five years after issuance. $4.45 billion of the PIPE Transaction investment was used to fund the cash-stock election discussed below and $1.52 billion of cash was provided to the Company. The Skydance Transactions also included: (1) a transaction pursuant to which each outstanding Skydance membership unit held by Skydance investors and each Skydance Phantom Unit was converted into the right to receive the applicable portion of 316.7 million shares of Paramount Skydance Corporation Class B Common Stock (313.8 million shares after reduction in connection with certain tax withholding requirements), and (2) a cash-stock election offered to holders of Paramount Global common stock pursuant to which (a) shares of Paramount Global Class A Common Stock held by stockholders other than NAI or its subsidiaries were converted, at the stockholders’ election, into the right to receive either $23.00 in cash (“Class A Cash Consideration”) or 1.5333 shares of Paramount Skydance Corporation Class B Common Stock (“Class A Stock Consideration”), and (b) shares of Paramount Global Class B Common Stock held by stockholders other than NAI or its subsidiaries, the NAI Equity Investors and certain other affiliates of investors in Skydance referred to above were converted, at the stockholders’ election, into the right to receive either $15.00 in cash (“Class B Cash Consideration”), subject to proration, or one share of Paramount Skydance Corporation Class B Common Stock (“Class B Stock Consideration”). The shares of Paramount Class A Common Stock held by NAI and its subsidiaries converted into shares of Class A common stock, par value $0.001 per share. Shares of Paramount Global Class A Common Stock for which elections to receive Class A Cash Consideration or Class A Stock Consideration were not made or were validly revoked were automatically converted into Class A Stock Consideration. Shares of Paramount Global Class B Common Stock for which elections to receive Class B Cash Consideration were not made or were validly revoked were converted automatically into one share of Paramount Skydance Corporation Class B Common Stock. See Note 10. Shares of Paramount Skydance Corporation Class B Common Stock trade on Nasdaq under the ticker symbol “PSKY.” All shares of Paramount Global Class A Common Stock and Class B Common Stock have been delisted from Nasdaq and have been cancelled and cease to exist. Holders of shares of Class A common stock of Paramount Skydance Corporation (“Paramount Skydance Corporation Class A Common Stock”) are entitled to one vote per share with respect to all matters on which the holders of Paramount Skydance Corporation common stock are entitled to vote. Holders of Paramount Skydance Corporation Class B Common Stock do not have voting rights. Following the closing of the Skydance Transactions and the NAI Transaction, NAI, which was renamed Harbor Lights Entertainment, Inc., and its subsidiaries held 100.0% of the Paramount Skydance Corporation Class A Common Stock. Accordingly, entities controlled by the Ellison Family indirectly hold approximately 77.5% of the Paramount Skydance Corporation Class A Common Stock through their collective approximate 77.5% ownership interest in Harbor Lights Entertainment, Inc., and as a result the Ellison Family is the controlling stockholder and the ultimate parent of Paramount (“Ultimate Parent”). Pushdown of Ultimate Parent’s Basis—At the time Paramount Global and Skydance became subsidiaries of Paramount Skydance Corporation, the Ellison Family controlled both Paramount Global and Skydance, and as a result, this transaction has been accounted for as a transaction between entities under common control. As a transaction between entities under common control, the net assets were combined at the Ultimate Parent’s basis, which for Paramount Global was deemed to be the estimated fair value as of August 7, 2025, the date of the closing of the NAI Transaction, which was the point at which the Ellison Family obtained control of Paramount Global (see Note 2). As a result, the net assets of Paramount Global were recorded at their fair values as of this date. Since the net assets of Skydance were already at the Ultimate Parent’s basis, no adjustment to the fair value of net assets was necessary, and Skydance was combined with Paramount Global’s net assets at the Ultimate Parent’s basis as of this date. Due to the pushdown of the Ultimate Parent’s basis, which resulted in a new basis of accounting, the results of operations, financial position and cash flows are not comparable between the Successor and Predecessor periods. Accordingly, our consolidated financial statements and footnote disclosures are presented in distinct periods. The periods prior to the closing of the Skydance Transactions and the NAI Transaction include only Paramount Global and are identified as “Predecessor,” and the periods beginning on August 7, 2025 reflect Paramount Skydance Corporation and are identified as “Successor.” In addition, we are required to present segment information for the Predecessor period based on our previous segments, Filmed Entertainment, Direct-to-Consumer, and TV Media (see Note 13). Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared on a basis consistent with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in our Form 8-K filed with the Securities and Exchange Commission on May 13, 2026, which was filed in order to recast the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 to reflect our new segment presentation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain previously reported amounts have been reclassified to conform to the current presentation. Use of Estimates—The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from these estimates under different assumptions or conditions. Net Earnings per Common Share—Basic net earnings per share (“EPS”) is based upon net earnings available to common stockholders divided by the weighted average number of common shares outstanding during the period. Weighted average shares for diluted EPS reflect the effect of the assumed exercise of stock options and warrants, and vesting of RSUs or performance share units only in the periods in which such effect would have been dilutive. The table below presents stock options, RSUs, and warrants excluded from the calculations of diluted EPS because their inclusion would have been antidilutive.
| Successor |  | Predecessor |  |  | Successor |  |  | Predecessor
| Three Months Ended June 30, |  |  | Three Months Ended June 30, |  | Six Months Ended June 30, |  |  | Six Months Ended June 30,
(in millions) | 2026 |  |  | 2025 |  | 2026 |  |  | 2025
Stock options and RSUs |  | 56 |  |  |  |  | 5 |  |  |  | 60 |  |  |  |  | 5 |
Warrants |  | 200 |  |  |  |  | — |  |  |  | 200 |  |  |  |  | — |
The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.
| Successor |  |  | Predecessor |  | Successor |  |  | Predecessor
| Three Months Ended June 30, |  |  | Three Months Ended June 30, |  | Six Months Ended June 30, |  |  | Six Months Ended June 30,
(in millions) | 2026 |  |  | 2025 |  | 2026 |  |  | 2025
Weighted average shares for basic EPS |  | 1,117 |  |  |  |  | 675 |  |  |  | 1,113 |  |  |  |  | 673 |
Dilutive effect of shares issuable under stock-based compensation plans |  | 3 |  |  |  |  | 5 |  |  |  | 6 |  |  |  |  | 6 |
Weighted average shares for diluted EPS |  | 1,120 |  |  |  |  | 680 |  |  |  | 1,119 |  |  |  |  | 679 |
Accounting Pronouncements Not Yet Adopted Disaggregation of Income Statement Expenses In November 2024, the Financial Accounting Standards Board (“FASB”) issued guidance requiring disclosure in the notes to the financial statements of the disaggregation of relevant expense captions on the income statement into specified expense categories, including employee compensation, as well as disclosure of total selling expenses. The guidance is effective for us for the year ending December 31, 2027, and for all interim and annual periods thereafter, and may be applied either prospectively or retrospectively. Internal-use Software Costs In September 2025, the FASB issued updated guidance on the recognition and disclosure of internal-use software costs. This guidance eliminates capitalization based on software development stages and requires that capitalization of internal-use software development costs begin when (1) management has authorized and committed to funding the software project and (2) it is probable the project will be completed and the software will be used to perform its intended function. The guidance is effective for us for the year ending December 31, 2028, including interim periods within that year, and may be adopted prospectively, retrospectively, or using a modified transition approach for projects in process. We are currently evaluating the impact of this guidance on our consolidated financial statements.

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