psky-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-42791

Paramount Skydance Corporation

(Exact name of registrant as specified in its charter)


Delaware			99-3917985
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1515 Broadway	New York,	New York	10036
(Address of principal executive offices)			(Zip Code)

(212) 258-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)		Name of each exchange on which registered
Class B Common Stock, $0.001 par value		PSKY		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been

subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to

Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such

files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and

“emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at July 31, 2026:

Class A Common Stock, par value $.001 per share—31,500,087

Class B Common Stock, par value $.001 per share— 1,090,445,692

-3-

PART I – FINANCIAL INFORMATION


Item 1.	Financial Statements.

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2026			2025	2026		2025
Revenues		$6,913		$6,849		$14,260		$14,041
Costs and expenses:
Operating		4,443		4,624		9,298		9,585
Selling, general and administrative		1,443		1,401		2,854		2,944
Depreciation and amortization		364		87		726		175
Impairment charges		—		157		—		157
Restructuring and transaction-related items		188		181		291		266
Total costs and expenses		6,438		6,450		13,169		13,127
Gain on dispositions		—		—		—		35
Operating income		475		399		1,091		949
Interest expense		(255)		(214)		(493)		(431)
Interest income		29		32		67		70
Other items, net		(34)		(39)		(58)		(76)
Earnings before income taxes and equity in loss of investee companies		215		178		607		512
Provision for income taxes		(120)		(50)		(275)		(150)
Equity in loss of investee companies, net of tax		(54)		(67)		(116)		(140)
Net earnings (Parent and noncontrolling interests)		41		61		216		222
Net earnings attributable to noncontrolling interests		—		(4)		(7)		(13)
Net earnings attributable to Parent		$41		$57		$209		$209

Basic net earnings per common share attributable to Parent		$.04		$.08		$.19		$.31

Diluted net earnings per common share attributable to Parent		$.04		$.08		$.19		$.31

Weighted average number of common shares outstanding:
Basic		1,117		675		1,113		673
Diluted		1,120		680		1,119		679

See notes to consolidated financial statements.

-5-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)


		At		At
	June 30, 2026		December 31, 2025
ASSETS
Current Assets:
Cash and cash equivalents		$1,627		$3,274
Receivables, net		6,178		6,615
Programming and other inventory		1,655		1,461
Prepaid expenses and other current assets		1,560		1,970
Total current assets		11,020		13,320
Property and equipment, net		2,216		2,195
Programming and other inventory		15,641		15,028
Goodwill		2,034		1,600
Intangible assets, net		5,649		6,238
Operating lease assets		1,033		1,126
Deferred income tax assets, net		1,347		1,282
Advance consideration for WBD acquisition		2,800		—
Other assets		2,671		2,553
Total Assets		$44,411		$43,342
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$511		$906
Accrued expenses		2,158		2,077
Participants’ share and royalties payable		2,606		2,646
Accrued programming and production costs		1,801		1,832
Deferred revenues		1,486		1,355
Debt		665		433
Other current liabilities		1,373		1,350
Total current liabilities		10,600		10,599
Long-term debt		14,491		13,225
Participants’ share and royalties payable		1,437		1,361
Pension and postretirement benefit obligations		1,169		1,185
Deferred income tax liabilities, net		68		85
Operating lease liabilities		1,046		1,150
Programming obligations		581		400
Other liabilities		2,209		2,450

Commitments and contingencies (Note 14)

Parent stockholders’ equity:
Class A Common Stock, par value $.001 per share; 55 shares authorized; 32 (2026 and 2025) shares issued		—		—
Class B Common Stock, par value $.001 per share; 7,000 (2026) and 5,500 (2025) shares authorized; 1,089 (2026) and 1,076 (2025) shares issued		1		1
Additional paid-in capital		13,307		13,386
Accumulated deficit		(1,544)		(1,753)
Accumulated other comprehensive income		7		59
Total Parent stockholders’ equity		11,771		11,693
Noncontrolling interests		1,039		1,194
Total Equity		12,810		12,887
Total Liabilities and Equity		$44,411		$43,342

See notes to consolidated financial statements.

-6-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Successor		Predecessor
	Six Months Ended June 30,			Six Months Ended June 30,
	2026			2025
Operating Activities:
Net earnings (Parent and noncontrolling interests)		$216			$222
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
Depreciation and amortization		726			175
Impairment charges		—			157
Deferred tax provision		50			21
Stock-based compensation		161			87
Gain on dispositions		—			(35)
Equity in loss of investee companies, net of tax and distributions		118			141
Change in assets and liabilities		(767)			(429)
Net cash flow provided by operating activities		504			339
Investing Activities:
Investments		(172)			(148)
Capital expenditures		(150)			(102)
Advance consideration for WBD acquisition		(2,800)			—
Proceeds from dispositions		13			66
Other investing activities		(6)			—
Net cash flow used for investing activities		(3,115)			(184)
Financing Activities:
Borrowings under credit facility		2,700			—
Repayment of credit facility borrowings		(900)			—
Repayment of notes and debentures		(347)			—
Dividends paid on common stock		(117)			(70)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation		(104)			(26)
Payments to noncontrolling interests		(189)			(65)
Other financing activities		(51)			—
Net cash flow provided by (used for) financing activities		992			(161)
Effect of exchange rate changes on cash and cash equivalents		(28)			84
Net (decrease) increase in cash and cash equivalents		(1,647)			78
Cash and cash equivalents at beginning of year		3,274			2,661
Cash and cash equivalents at end of period		$1,627			$2,739

See notes to consolidated financial statements.

-7-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)


Three Months Ended June 30, 2026
	Class A and B Common Stock Outstanding		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Parent Stockholders’ Equity		Noncontrolling Interests		Total Equity
(Successor)	(Shares)
March 31, 2026	1,118	$1		$13,316		$(1,585)		$(27)		$11,705		$1,044	$12,749
Stock-based compensation activity	3	—		50		—		—		50		—	50
Common stock dividends	—	—		(59)		—		—		(59)		—	(59)
Noncontrolling interests	—	—		—		—		—		—		(6)	(6)
Net earnings	—	—		—		41		—		41		—	41
Other comprehensive income	—	—		—		—		34		34		1	35
June 30, 2026	1,121	$1		$13,307		$(1,544)		$7		$11,771		$1,039	$12,810


Six Months Ended June 30, 2026
	Class A and B Common Stock Outstanding		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Parent Stockholders’ Equity		Noncontrolling Interests		Total Equity
(Successor)	(Shares)
December 31, 2025	1,108	$1		$13,386		$(1,753)		$59		$11,693		$1,194	$12,887
Stock-based compensation activity and other	13	—		57		—		—		57		—	57
Common stock dividends	—	—		(119)		—		—		(119)		—	(119)
Noncontrolling interests	—	—		(17)		—		—		(17)		(163)	(180)
Net earnings	—	—		—		209		—		209		7	216
Other comprehensive income (loss)	—	—		—		—		(52)		(52)		1	(51)
June 30, 2026	1,121	$1		$13,307		$(1,544)		$7		$11,771		$1,039	$12,810

See notes to consolidated financial statements.

-8-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited; in millions)


Three Months Ended June 30, 2025
	Class A and B Common Stock Outstanding		Additional Paid-In Capital		Treasury Stock	Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Parent Stockholders’ Equity		Noncontrolling Interests		Total Equity
(Predecessor)	(Shares)
March 31, 2025	674	$1		$33,412	$(22,958)		$7,604		$(1,521)		$16,538		$390	$16,928
Stock-based compensation activity	—	—		43	—		—		—		43		—	43
Common stock dividends	—	—		—	—		(35)		—		(35)		—	(35)
Noncontrolling interests	—	—		—	—		—		—		—		11	11
Net earnings	—	—		—	—		57		—		57		4	61
Other comprehensive income	—	—		—	—		—		102		102		1	103
June 30, 2025	674	$1		$33,455	$(22,958)		$7,626		$(1,419)		$16,705		$406	$17,111


Six Months Ended June 30, 2025
	Class A and B Common Stock Outstanding		Additional Paid-In Capital		Treasury Stock	Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Parent Stockholders’ Equity		Noncontrolling Interests		Total Equity
(Predecessor)	(Shares)
December 31, 2024	671	$1		$33,394	$(22,958)		$7,487		$(1,604)		$16,320		$462	$16,782
Stock-based compensation activity	3	—		61	—		—		—		61		—	61
Common stock dividends	—	—		—	—		(70)		—		(70)		—	(70)
Noncontrolling interests	—	—		—	—		—		—		—		(71)	(71)
Net earnings	—	—		—	—		209		—		209		13	222
Other comprehensive income	—	—		—	—		—		185		185		2	187
June 30, 2025	674	$1		$33,455	$(22,958)		$7,626		$(1,419)		$16,705		$406	$17,111

See notes to consolidated financial statements.

-9-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) 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

-10-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

-11-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

-12-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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.

-13-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

-14-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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.

-15-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

2) PUSHDOWN OF ULTIMATE PARENT'S BASIS

The NAI Transaction resulted in a change in control of our Predecessor, Paramount Global, that established a new

accounting basis, which reflects the estimated fair value of Paramount Global as indicated by the NAI Transaction

and the Skydance Transactions. The table below presents the calculation of the Ultimate Parent’s basis in

Paramount Global as of the date these transactions closed.


Estimated value of NAI Transaction consideration attributable to Paramount Global common stock	$2,124	(a)
Cash paid to stockholders (see Note 10)	4,454	(b)
Proceeds from PIPE Transaction, net of subscription discount	1,517
Outstanding Paramount Global RSU Awards and Paramount Global PSU Awards	80	(c)
Remaining shares of Paramount Skydance Corporation Class B Common Stock	3,520	(d)
Paramount Global basis at August 7, 2025	$11,695

(a) In the NAI Transaction, the NAI Equity Investors purchased all of the outstanding equity interests of NAI. Based on

valuation analyses of NAI’s assets and liabilities, the estimated value attributable to the shares of Paramount Global

common stock held by NAI and its subsidiaries is $2.1 billion. This amount increased $107 million from the preliminary

estimate included in our quarterly report on Form 10-Q for the third quarter of 2025, which resulted in an increase in

Paramount Global’s basis in this amount.

(b) Reflects cash paid to holders of Paramount Global Class A Common Stock and Paramount Global Class B Common

Stock who elected to receive the Class A Cash Consideration and Class B Cash Consideration of $23.00 per share and

$15.00 per share, respectively, in the Skydance Transactions. Such payout was funded by the $6.0 billion PIPE

Transaction.

employees’ service prior to the Skydance Transactions and the NAI Transaction. The fair value is based on the closing

stock price of Paramount Global Class B Common Stock on August 6, 2025 of $11.04 per share. The remaining fair

value of outstanding Paramount Global RSU Awards and Paramount Global PSU Awards, which were assumed by

Paramount Skydance Corporation and converted into awards of restricted stock units covering an equivalent number of

shares of Paramount Skydance Corporation Class B Common Stock are being expensed over their remaining vesting

periods.

(d) Reflects 318.8 million shares of Paramount Skydance Corporation Class B Common Stock owned by holders of

Paramount Global Class A and Paramount Global Class B Common Stock following the Skydance Transactions, other

than those held directly or indirectly by NAI or its affiliates, not converted into cash, valued at the closing stock price of

Paramount Global Class B Common Stock on August 6, 2025 of $11.04 per share. Certain holders of Paramount Global

Class A Common Stock received the Class A Stock Consideration, which resulted in the conversion of 2.0 million shares

of Paramount Global Class A Common Stock into approximately 3.1 million shares of Paramount Skydance Corporation

Class B Common Stock, based on the exchange ratio of one share of Paramount Global Class A Common Stock to

1.5333 shares of Paramount Skydance Corporation Class B Common Stock.

-16-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The table below details the preliminary estimated fair values of Paramount Global’s assets, liabilities and

noncontrolling interests at the Ultimate Parent’s basis as of August 7, 2025, including measurement period

adjustments recorded subsequent to the third quarter of 2025. The impact on our statement of operations in 2026

from the amounts that would have been recognized in the third quarter of 2025 had these measurement period

adjustments been recognized as of the acquisition date were not material. The fair values were determined based on

valuation techniques that use unobservable inputs (Level 3 in the fair value hierarchy). Significant judgments in

these valuations include long-term projections, discount rates, royalty rates, and decay rates. While the

determination of the estimated fair values of Paramount Global’s assets, liabilities, and noncontrolling interests

was substantially complete as of June 30, 2026, if within one year of the August 7, 2025 closing date we become

aware of information that existed as of such closing date that affects these fair values, additional measurement

period adjustments may be required.


	Allocation of Ultimate Parent’s Basis
	Preliminary	Measurement Period Adjustments	Preliminary, Revised
Assets:
Cash and cash equivalents	$3,977	$—	$3,977
Receivables, net	5,980	(19)	5,961
Programming and other inventory, current	1,970	(66)	1,904
Prepaid expenses and other current assets	1,641	—	1,641
Property and equipment, net (a)	2,118	(2)	2,116
Programming and other inventory, noncurrent (b)	13,599	(456)	13,143
Goodwill (c)	947	863	1,810
Intangible assets, net (d)	6,748	11	6,759
Operating lease assets	875	39	914
Deferred income tax assets, net	1,200	48	1,248
Other noncurrent assets	2,470	14	2,484
Total assets	$41,525	$432	$41,957

Liabilities:
Long-term debt (e)	$13,619	$—	$13,619
Pension and postretirement benefit obligations (f)	1,390	—	1,390
Deferred income tax liabilities, net	306	(186)	120
Operating lease liabilities	1,219	(3)	1,216
Programming obligations (g)	2,017	209	2,226
Other liabilities (h)	10,137	378	10,515
Total liabilities	$28,688	$398	$29,086

Noncontrolling interests (i)	1,249	(73)	1,176

Paramount Global basis at August 7, 2025	$11,588	$107	$11,695

(a) The fair value was determined based on the market approach, which estimates the value based on transactions in the market for

comparable assets, or the cost approach, which estimates the value based on the amount required to replace the asset. The fair

value reflects an increase to the book value of $635 million principally reflecting incremental fair value of Paramount Global’s

owned land and buildings.

(b) The fair value was determined based on the income approach, including the multi-period excess earnings method, which

estimates the cash flows generated by the asset over its economic life using a discounted cash flow analysis. For certain content,

fair value was determined to be equivalent to net book value. The fair value reflects a net decrease to the book value of

-17-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

programming assets of $653 million principally from reductions for programming at our TV Media and Direct-to-Consumer

segments offset by an increase to the fair value of our film and television libraries.

(c) Goodwill relates principally to the Direct-to-Consumer segment and represents the difference between Paramount Global’s basis

and the fair value of its net assets based on the preliminary fair value estimates assumed herein. Goodwill reflects operating

synergies between our businesses, as well as anticipated cost savings and is not deductible for tax purposes. During the first and

second quarters of 2026, in connection with the finalization of our appraisals and other valuation analyses, we recorded

measurement period adjustments that resulted in increases to goodwill of $22 million and $411 million, respectively. These

adjustments principally resulted from increases during the year-to-date period of $257 million to programming obligations and

$196 million to contingent liabilities, and a decrease of $91 million to programming assets, partially offset by the related deferred

tax impact of $140 million.

(d) The table below presents our intangible assets by asset class, as well as the valuation method used to determine the estimated fair

values, and the related estimated weighted average useful lives. The weighted average useful life of the total intangibles below

is 16.6 years.


Intangible assets	Values	Valuation Method	Estimated weighted average straight-line amortization period
FCC and other broadcasting licenses	$2,558	Greenfield discounted cash flow method	30 years
Trade names	$1,521	Relief from Royalty	17.3 years
Affiliate relationships	$1,005	Multi-period excess earnings	2.6 years
Subscriber relationships	$1,080	Replacement cost	2 years
Franchises	$337	Discounted cash flow	10 years
Developed technology	$258	Replacement cost	3 years

(e) The fair value was determined based on quoted prices in active markets.

(f) The fair value was determined based on a remeasurement of the obligation using actuarial assumptions. Key valuation inputs

included discount rates and mortality assumptions.

(g) “Programming Obligations” include $777 million recorded to establish liabilities for unfavorable contractual arrangements.

(h) The estimated fair value of Paramount Global’s contingent liabilities as of August 7, 2025 was $1.6 billion, which relates to the

defense and settlement of lawsuits claiming various personal injuries related to exposure to asbestos as well as claims from

federal and state environmental regulatory agencies and other entities asserting liability for environmental cleanup costs and

related damages (see Claims Related to Former Businesses in Note 14) and other legal contingencies.

(i) The fair value was determined based on a discounted cash flow analysis.

-18-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

3) PROGRAMMING AND OTHER INVENTORY

The following table presents our programming and other inventory at June 30, 2026 and December 31, 2025,

grouped by type and predominant monetization strategy.


		At		At
	June 30, 2026		December 31, 2025
Film Group Monetization:
Licensed program rights, including prepaid sports rights		$3,123		$2,877
Produced television and film programming:
Released		9,112		9,107
In process and other		2,273		1,935

Individual Monetization:
Produced television and film programming:
Released		853		1,005
Completed, not yet released		92		27
In process and other		1,804		1,526
Home entertainment		4		5
Game development		35		7
Total programming and other inventory		17,296		16,489
Less current portion		1,655		1,461
Total noncurrent programming and other inventory		$15,641		$15,028

The following table presents amortization of our television and film programming and production costs, which is

included within “Operating expenses” on the Consolidated Statements of Operations.


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2026		2025		2026		2025
Licensed program rights		$1,000		$1,117		$2,681		$2,628

Produced television and film programming, and acquired libraries:
Individual monetization		$405		$316		$805		$685
Film group monetization		$1,171		$1,371		$2,208		$2,670

-19-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

4) RESTRUCTURING AND TRANSACTION-RELATED ITEMS

During the three and six months ended June 30, 2026 and 2025, we recorded the following within “Restructuring

and transaction-related items” on the Consolidated Statements of Operations.


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,			Six Months Ended June 30,
	2026		2025		2026			2025
Severance (a)		$35		$177		$35			$177
Exit costs		—		—		—			65
Restructuring charges		35		177		35			242
Transaction-related items		153		4		256			24
Restructuring and transaction-related items		$188		$181		$291			$266

(a) Severance costs include the accelerated vesting of stock-based compensation.

Restructuring Charges

During the second quarter of 2026, we recorded restructuring severance costs of $35 million associated with

changes in management and aligning the business around our strategic priorities following the Skydance

Transactions, including costs related to a plan under which severance payments are being provided to certain

eligible employees who voluntarily elected to participate.

Restructuring charges for the three and six months ended June 30, 2025 included severance costs of $177 million

associated with strategic changes in our global workforce in order to streamline our organization. In addition,

during the six months ended June 30, 2025, we recorded exit costs of $65 million, primarily for the impairment of

lease assets that we ceased use of in connection with initiatives to reduce our real estate footprint. The impairments

were primarily the result of a decline in market conditions since the inception of these leases and reflect the

difference between the estimated fair values, which were determined based on the expected future cash flows of

the lease assets, and the carrying values.

The following is a rollforward of our restructuring severance liability, which is recorded in “Other current

liabilities” and “Other liabilities” on the Consolidated Balance Sheets, and is expected to be substantially paid by

the end of 2027.


	Successor
			2026 Activity
	Balance at December 31, 2025		Charges (a)	Payments and other		Balance at June 30, 2026
Studios		$133	$6		$(44)		$95
Direct-to-Consumer		53	—		(20)		33
TV Media		384	15		(168)		231
Corporate		135	5		(29)		111
Total		$705	$26		$(261)		$470

(a) Excludes stock-based compensation expense of $9 million.

-20-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Transaction-Related Items

Transaction-related items include costs directly associated with prospective and completed mergers and

acquisitions, as well as related integration activities. During the three and six months ended June 30, 2026, we

recorded transaction-related costs of $153 million and $256 million, respectively, principally for legal, advisory,

and other professional fees associated with the planned WBD Merger and related integration. During the three and

six months ended June 30, 2025, we recorded legal, advisory, and other professional fees relating to the Skydance

Transactions of $4 million and $24 million, respectively.

5) RELATED PARTIES

The Ellison Family (Successor)

At June 30, 2026, the Ellison Family, the controlling stockholder of Paramount, indirectly held approximately

77.5% of our voting Class A Common Stock through their collective approximate 77.5% ownership interest in

Harbor Lights Entertainment, Inc. (f/k/a National Amusements, Inc.) and 47.2% of our Class A and non-voting

Class B Common Stock on a combined basis. In addition, in connection with the PIPE Transaction, the NAI Equity

Investors (including entities controlled by the Ellison Family) received warrants to purchase a total of 200 million

shares of Paramount Skydance Corporation Class B Common Stock (of which entities controlled by the Ellison

Family received warrants to purchase a total of 155 million shares) at an initial exercise price of $30.50 per share

(subject to customary anti-dilution adjustments), which expire five years after issuance. The Ellison Family is

comprised of Lawrence J. Ellison and David Ellison. David Ellison is the son of Lawrence J. Ellison, and

Lawrence J. Ellison and David Ellison are accordingly considered immediate family members. David Ellison is the

CEO of Paramount and the Chairman of our Board of Directors.

Lawrence J. Ellison is the Chairman and a significant stockholder of Oracle Corporation (“Oracle”). We have

several multi-year software as a service agreements with Oracle, principally for finance and human resources, as

well as software support agreements and database licenses used by various applications. During the three and six

months ended June 30, 2026, we made payments to Oracle totaling $44 million and $46 million, respectively. In

February 2026, we executed a six-year cloud infrastructure services agreement with Oracle with a total

commitment of $300 million, under which payments escalate over the term, in connection with our anticipated

enterprise, data, and streaming workloads.

In addition, we have a lease agreement with a term that expires in 2034 under which the lessor is an entity owned

and controlled by Lawrence J. Ellison. At June 30, 2026 and December 31, 2025, the total liability associated with

these leases was $166 million and $174 million, respectively. During the three and six months ended June 30,

2026, we recorded lease costs associated with these leases totaling $10 million and $14 million, respectively.

The Ellison Family has investments in other entities over which they have control or can exert significant

influence, which as a result, are related parties to us. We did not have any material transactions with these entities.

-21-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

RedBird (Successor)

In December 2025, RedBird BD LLC, an affiliate of RB Maverick LLC and RB Tentpole, was engaged as a

financial advisor to the Company in connection with the evaluation of the WBD Merger. Pursuant to the

agreement, RedBird BD LLC is entitled to receive an aggregate transaction fee of $80 million upon closing,

comprised of $60 million for mergers and acquisitions advisory services and $20 million for capital raising

advisory services. If a termination fee is paid to us in connection with the WBD Merger, RedBird BD LLC is

entitled to receive 20% of such fee (subject to a cap of 50% of the aggregate fee that would have otherwise been

payable to RedBird BD LLC had the WBD Merger been consummated).

In the second quarter of 2026, we entered into a three-year agreement with RedBird Development Group LLC

(“RedBird Development”), an affiliate of RedBird, for media strategy and operations transformation services

related to branded media initiatives. Under the agreement, RedBird Development is compensated through

structured quarterly commission fees, subject to an annual cap of $12 million per year plus reimbursable travel and

business expenses of up to $300,000 annually.

Warner Bros. Discovery Merger

As further described in Note 1, in connection with the WBD Merger, the Ellison Parties and RedBird entered into

the Subscription Agreements and the Equity Syndication. In addition, we are required to reimburse the Ellison

Trust and RedBird for reasonable and documented out-of-pocket expenses, each subject to a cap of $5 million.

Other Related Parties

In the ordinary course of business, we are involved in transactions with our equity method investees, primarily for

the licensing of television and film programming. We earned revenue from an equity method investee of $55

million and $147 million during the three and six months ended June 30, 2026 (Successor), respectively, and $98

million and $164 million during the three and six months ended June 30, 2025 (Predecessor), respectively.

Receivables from this equity method investee are included in “Receivables, net” and “Other assets” on the

Consolidated Balance Sheets. These totaled $185 million and $90 million, respectively, at June 30, 2026, and $201

million and $87 million, respectively, at December 31, 2025.

Through the normal course of business, we are involved in other transactions with related parties, including other

equity method investees, that have not been material in any of the periods presented.

6) REVENUES

The table below presents our revenues disaggregated into categories based on the nature of such revenues. See

Note 13 for revenues by segment disaggregated into these categories.


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,			Six Months Ended June 30,
	2026		2025		2026		2025
Revenues by Type:
Advertising		$1,959		$2,152		$4,401			$4,665
Affiliate and subscription		3,520		3,445		7,021			6,842
Theatrical		138		254		290			402
Licensing and other		1,296		998		2,548			2,132
Total Revenues		$6,913		$6,849		$14,260			$14,041

-22-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Receivables

Reserves for accounts receivable reflect our expected credit losses based on historical experience as well as current

and expected economic conditions and industry trends. At June 30, 2026 and December 31, 2025, our allowance

for credit losses was $16 million and $10 million, respectively.

Included in “Other assets” on the Consolidated Balance Sheets are noncurrent receivables of $782 million and

$835 million at June 30, 2026 and December 31, 2025, respectively. Noncurrent receivables primarily relate to

revenues recognized under long-term content licensing arrangements. Revenues from the licensing of content are

recognized at the beginning of the license period in which programs are made available to the licensee for

exhibition, while the related cash is generally collected over the term of the license period.

Contract Liabilities

Contract liabilities are included within “Deferred revenues” and “Other liabilities” on the Consolidated Balance

Sheets and were $1.6 billion and $1.5 billion at June 30, 2026 and December 31, 2025, respectively. We

recognized revenues of $0.9 billion and $0.6 billion for the six months ended June 30, 2026 (Successor) and 2025

(Predecessor), respectively, that were included in the opening balance of deferred revenues for the respective year.

Unrecognized Revenues Under Contract

At June 30, 2026, unrecognized revenues attributable to unsatisfied performance obligations under our long-term

contracts were approximately $6 billion, of which $2 billion is expected to be recognized during the remainder of

2026, $2 billion in 2027, $1 billion in 2028, and $1 billion thereafter. These amounts only include contracts subject

to a guaranteed fixed amount or the guaranteed minimum under variable contracts, primarily consisting of

television and film licensing contracts and affiliate agreements that are subject to a fixed or guaranteed minimum

fee. Such amounts change on a regular basis as we renew existing agreements or enter into new agreements. In

addition, the timing of satisfying certain performance obligations under these long-term contracts is uncertain and,

therefore, is also subject to change. Unrecognized revenues under contracts disclosed above do not include (i)

contracts with an original expected term of one year or less, mainly consisting of advertising contracts, (ii)

contracts for which variable consideration is determined based on the customer’s subsequent sale or usage, mainly

consisting of affiliate agreements and (iii) long-term licensing agreements for multiple programs for which variable

consideration is determined based on the value of the programs delivered to the customer and our right to invoice

corresponds with the value delivered.

Performance Obligations Satisfied in Previous Periods

Under certain revenue arrangements, the amount and timing of our revenue recognition is determined based on our

licensees’ subsequent sale to its end customers. As a result, under such arrangements we often satisfy our

performance obligation of delivery of our content in advance of revenue recognition. We recognized revenues of

$0.1 billion for each of the three months ended June 30, 2026 (Successor) and 2025 (Predecessor) and $0.2 billion

and $0.3 billion for the six months ended June 30, 2026 (Successor) and 2025 (Predecessor), respectively,

principally relating to content licensing arrangements for which the performance obligation was satisfied prior to

the periods indicated, including agreements with distributors of transactional video-on-demand and electronic sell-

through services, other licensing arrangements, and theatrical distribution of our films.

-23-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

7) DEBT

Our debt consists of the following:


	At		At
	June 30, 2026		December 31, 2025
4.0% Senior Notes due 2026		$—		$347
3.70% Senior Notes due 2026		86		85
2.90% Senior Notes due 2027		578		573
3.375% Senior Notes due 2028		490		487
3.70% Senior Notes due 2028		492		489
4.20% Senior Notes due 2029		491		489
7.875% Senior Debentures due 2030		905		915
4.95% Senior Notes due 2031		1,224		1,221
4.20% Senior Notes due 2032		927		921
5.50% Senior Debentures due 2033		418		417
4.85% Senior Debentures due 2034		76		76
6.875% Senior Debentures due 2036		1,117		1,119
6.75% Senior Debentures due 2037		75		75
5.90% Senior Notes due 2040		273		272
4.50% Senior Debentures due 2042		34		34
4.85% Senior Notes due 2042		404		400
4.375% Senior Debentures due 2043		1,090		1,079
4.875% Senior Debentures due 2043		14		14
5.85% Senior Debentures due 2043		1,107		1,103
5.25% Senior Debentures due 2044		277		275
4.90% Senior Notes due 2044		435		432
4.60% Senior Notes due 2045		456		452
4.95% Senior Notes due 2050		768		763
6.25% Junior Subordinated Debentures due 2057		628		628
6.375% Junior Subordinated Debentures due 2062		989		989
Borrowings under credit facility		1,800		—
Obligations under finance leases		2		3
Total debt (a)		15,156		13,658
Less current portion		665		433
Total long-term debt, net of current portion		$14,491		$13,225

(a) At June 30, 2026 and December 31, 2025, our total senior and junior debt was net of unamortized fair value adjustments

of $1.28 billion and $1.32 billion, respectively, recorded in connection with the pushdown of the Ultimate Parent’s basis

(see Note 2). The face value of our total debt at June 30, 2026 and December 31, 2025 was $16.43 billion (including

credit facility borrowings discussed below) and $14.98 billion, respectively.

Senior Debt

In January 2026, we repaid our $347 million of 4.0% senior notes at maturity.

Commercial Paper

At both June 30, 2026 and December 31, 2025, we had no outstanding commercial paper borrowings.

-24-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Credit Facility

In April 2026, we entered into an amendment to our revolving credit facility (the “Credit Facility”), increasing the

commitments from $3.50 billion to $5.00 billion, which will be reduced to $4.94 billion in January 2027 through

maturity in January 2028. The Credit Facility is used for general corporate purposes and to support commercial

paper borrowings, if any. We may, at our option, also borrow in certain foreign currencies up to specified limits

under the Credit Facility. Borrowing rates under the Credit Facility are determined at the time of each borrowing

and are generally based on either the prime rate in the U.S. or an applicable benchmark rate plus a margin (based

on our senior unsecured debt rating), depending on the type and tenor of the loans entered into. The benchmark rate

for loans denominated in U.S. dollars is Term SOFR, and for loans denominated in euros, sterling and yen is based

on EURIBOR, SONIA and TIBOR, respectively. In the first quarter of 2026, in connection with the $2.8 billion

termination fee paid to Netflix (see Note 15), we borrowed $2.15 billion under the Credit Facility. As of June 30,

2026, outstanding borrowings under the Credit Facility totaled $1.8 billion at a weighted average interest rate of

6.13%. The remaining availability under the Credit Facility at June 30, 2026, was $3.2 billion. At August 3, 2026,

outstanding borrowings under the Credit Facility totaled $1.75 billion at a weighted average interest rate of 6.13%.

Credit facility borrowings outstanding at the closing of the WBD Merger are expected to be repaid with the

funding from the private placement described in Note 1.

The Credit Facility has one principal financial covenant which sets a maximum Consolidated Total Leverage Ratio

(“Leverage Ratio”) at the end of each quarter. The maximum Leverage Ratio was 4.50x for the quarter ended

June 30, 2026 and will remain at this level until maturity. The Leverage Ratio reflects the ratio of our Consolidated

Indebtedness, net of a maximum of $3.0 billion of unrestricted cash and cash equivalents at the end of a quarter, to

our Consolidated EBITDA (each as defined in the credit agreement) for the trailing twelve-month period. We met

the covenant as of June 30, 2026.

Other Bank Borrowings

At both June 30, 2026 and December 31, 2025, there were no outstanding bank borrowings under Miramax’s $50

million credit facility that matures in November 2027.

8) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The carrying value of our financial instruments approximates fair value, except for notes and debentures. At

June 30, 2026 and December 31, 2025, the carrying value of our outstanding notes and debentures was $13.35

billion and $13.65 billion, respectively, and the fair value, which is determined based on quoted prices in active

markets (Level 1 in the fair value hierarchy), was $12.1 billion and $13.2 billion, respectively.

Investments

Our investments without a readily determinable fair value for which we have no significant influence had a

carrying value of $55 million and $58 million at June 30, 2026 and December 31, 2025, respectively. These

investments are included in “Other assets” on the Consolidated Balance Sheets.

Foreign Exchange Contracts

Foreign currency forward contracts have principally been used to manage our exposure to currencies such as the

British pound, the euro, the Canadian dollar and the Australian dollar. We designate forward contracts used to

hedge committed and forecasted foreign currency transactions, including for the production and licensing of

content, as cash flow hedges. We also enter into non-designated forward contracts to hedge non-U.S. dollar

-25-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

denominated assets, liabilities, and cash flows. The maximum period we are hedging our exposure to variability in

future cash flows is 4.6 years.

At June 30, 2026 and December 31, 2025, the notional amount of all foreign exchange contracts was $6.84 billion

and $3.14 billion, respectively. At June 30, 2026, $6.28 billion related to future production and licensing of content

and $562 million related to our foreign currency assets and liabilities. At December 31, 2025, $2.74 billion related

to future production costs and $407 million related to our foreign currency assets and liabilities.

Interest Rate Contracts

In the second quarter of 2026, we entered into interest rate contracts with an aggregate notional amount of $10.0

billion in connection with anticipated debt issuances associated with the WBD Merger and future debt refinancing,

of which $3.0 billion were designated as cash flow hedges. These instruments are intended to hedge exposure to

changes in benchmark U.S. Treasury rates from the execution date of the agreements through the issuance of the

related debt.

The table below presents gains (losses) recognized on derivative financial instruments. Amounts for cash flow

hedges are recognized in other comprehensive income (loss) and for non-designated hedges are included within

“Other items, net” on the Consolidated Statements of Operations.


	Successor		Predecessor			Successor		Predecessor
	Three Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2026			2025		2026		2025
Cash flow hedges
Foreign exchange contracts		$12			$11		$(36)		$19
Interest rate contracts		(2)			—		(2)		—
Total		$10			$11		$(38)		$19

Non-designated hedges
Foreign exchange contracts		$(2)			$(20)		$3		$(29)
Interest rate contracts		(12)			—		(12)		—
Total		$(14)			$(20)		$(9)		$(29)

Fair Value Measurements

The table below presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2026 and

December 31, 2025. These assets and liabilities have been categorized according to the three-level fair value

hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on

publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable

other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets

or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting our own

assumptions about the assumptions that market participants would use in pricing the asset or liability. All of our

assets and liabilities that are measured at fair value on a recurring basis use Level 2 inputs. The fair value of

foreign currency hedges is determined based on the present value of future cash flows using observable inputs

including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based

on the fair value of the investments elected by employees.

-26-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


		At		At
	June 30, 2026		December 31, 2025
Assets:
Foreign exchange contracts		$44		$38
Interest rate contracts		20		—
Total Assets		$64		$38
Liabilities:
Deferred compensation		$286		$312
Foreign exchange contracts		68		28
Interest rate contracts		34		—
Total Liabilities		$388		$340

Level 3 inputs were used in determining Paramount Global’s net assets at the Ultimate Parent’s basis (see Note 2)

and the estimated fair value of FCC licenses that were impaired in the second quarter of 2025 (see Note 15).

9) VARIABLE INTEREST ENTITIES

In the normal course of business, we enter into joint ventures or make investments with business partners that

support our underlying business strategy and provide us the ability to enter new markets to expand the reach of our

brands, develop new programming and/or distribute our existing content. In certain instances, an entity in which

we make an investment may qualify as a variable interest entity (“VIE”). In determining whether we are the

primary beneficiary of a VIE, we assess whether we have the power to direct matters that most significantly impact

the activities of the VIE, and have the obligation to absorb losses or the right to receive benefits from the VIE that

could potentially be significant to the VIE.

The following tables present the amounts recorded in our consolidated financial statements related to our

consolidated VIEs. During the first quarter of 2026, we acquired our minority partner’s interest in one of our

consolidated VIEs, which increased our ownership interest to 100%. Accordingly, for periods subsequent to the

acquisition, this entity is not included in the amounts disclosed.


		At		At
	June 30, 2026		December 31, 2025
Total assets		$829		$1,193

Total liabilities		$149		$311


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,			Six Months Ended June 30,
	2026		2025		2026			2025
Revenues		$127		$117		$221			$242

Operating income (loss)		$13		$(40)		$37			$(87)

10) STOCKHOLDERS’ EQUITY

Impact from the Skydance Transactions—Common Stock

On August 6, 2025, each share of Paramount Global common stock that was owned by Paramount Global as

treasury stock was cancelled and ceased to exist, and each issued and outstanding share of Paramount Global Class

A Common Stock and Paramount Global Class B Common Stock was converted automatically into the right to

-27-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

receive one share of Paramount Skydance Corporation Class A Common Stock and Paramount Skydance

Corporation Class B Common Stock, respectively. Additionally, at the closing of the Skydance Transactions, all

outstanding Paramount Global RSU awards and PSU awards were converted to Paramount RSU awards.

The Skydance Transactions included a cash-stock election offered to holders of Paramount Global 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 the Class A Cash

Consideration or the 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 were converted, at the stockholders’ election, into the right to receive the Class B Cash Consideration

(subject to proration) or the Class B Stock Consideration. The elections resulted in cash settlement of 7.2 million

shares of Paramount Global Class A Common Stock at a price of $23.00 per share and cash settlement of 285.9

million shares of Paramount Global Class B Common Stock at a price of $15.00 per share for which holders of the

shares elected to receive the Class A Cash Consideration and Class B Cash Consideration, respectively. In

addition, holders of 2.0 million shares of Paramount Global Class A Common Stock elected to receive the Class A

Stock Consideration or made no election, and as such received shares of Paramount Skydance Corporation Class B

Common Stock at a conversion rate of 1.5333, resulting in the issuance of 3.1 million shares of Paramount

Skydance Corporation Class B Common Stock. Elections made for the Class B Cash Consideration were subject to

a proration mechanism. Shares of Paramount Global Class B Common Stock for which elections to receive Class B

Cash Consideration were not made or were validly revoked remained issued and outstanding as one share of

Paramount Skydance Corporation Class B Common Stock. Shares of Paramount Global Class A Common Stock

and Paramount Global Class B Common Stock were cancelled and ceased to exist upon completion of the

Skydance Transactions.

The cash elections were funded by $4.45 billion of the PIPE Transaction proceeds, and the remaining $1.52 billion

was provided to Paramount. In exchange for these proceeds, the NAI Equity Investors and certain other affiliates of

investors in Skydance received 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.

In addition, 316.7 million shares (313.8 million shares after reduction in connection with certain tax withholding

requirements) of Paramount Skydance Corporation Class B Common Stock were issued to holders of Skydance

Membership Units and Skydance Phantom Unit awards.

The table below details the activity described above and calculates shares of Paramount Skydance Corporation

Class A Common Stock and Class B Common Stock issued and outstanding after completion of the Skydance

Transactions on August 7, 2025.

-28-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


(in millions)	Class A	Class B
Each share of Paramount Global Class A Common Stock converted to one share of Paramount Skydance Corporation Class A Common Stock	40.7
Each share of Paramount Global Class B Common Stock converted to one share of Paramount Skydance Corporation Class B Common Stock		633.6
Issuance of Paramount Skydance Corporation Class B Common Stock to the NAI Equity Investors and certain other affiliates of investors in Skydance in exchange for proceeds from the PIPE Transaction		400.0
Cancellation of cash-settled Class A Common Stock	(7.2)
Cancellation of cash-settled Class B Common Stock		(285.9)
Conversion of one share of stock-settled Class A Common Stock to 1.5333 shares of Class B Common Stock	(2.0)	3.1
Issuance of Paramount Skydance Corporation Class B Common Stock to holders of Skydance Membership Units and Skydance Phantom Unit awards		313.8
Total share issuance, net of cancellations	(9.2)	431.0
Total shares of Paramount Skydance Corporation Class A and Class B Common Stock issued and outstanding after the Skydance Transactions on August 7, 2025	31.5	1,064.6

Paramount Skydance Corporation is authorized to issue up to 55 million shares of Paramount Skydance

Corporation Class A Common Stock, par value of $.001 per share; 100 million shares of preferred stock, par value

of $.001 per share; and, effective April 2026, 7.0 billion shares of Paramount Skydance Corporation Class B

Common Stock, par value of $.001 per share, which increased from 5.50 billion shares. The Certificate of

Amendment to the amended and restated certificate of incorporation that increased this authorization also permits

the Paramount Skydance Corporation Board of Directors to declare and pay a dividend to holders of Paramount

Skydance Corporation Class B Common Stock without being required to declare and pay a corresponding dividend

to the holders of Paramount Skydance Corporation Class A Common Stock, subject to the prior written consent or

approval of the holders of all of the outstanding shares of Paramount Skydance Corporation Class A Common

Stock.

Common Stock Dividends

The following table presents dividends declared per share and total dividends for Paramount Skydance Corporation

Class A and B Common Stock for the Successor period and Paramount Global’s Class A and Class B Common

Stock for the Predecessor period.


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,			Six Months Ended June 30,
	2026		2025			2026			2025
Class A and Class B Common Stock
Dividends declared per common share		$.05		$.05		$.10			$.10

Total common stock dividends		$59		$35		$119			$70

-29-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the components of accumulated other comprehensive income

(loss).


(Successor)	Cumulative Translation Adjustments		Net Actuarial Gain and Prior Service Cost		Cash Flow Hedges		Accumulated Other Comprehensive Income (Loss)
At December 31, 2025		$40		$19		$—		$59
Other comprehensive loss before reclassifications		(24)		—		(28)		(52)
At June 30, 2026		$16		$19		$(28)		$7


(Predecessor)	Cumulative Translation Adjustments		Net Actuarial Loss and Prior Service Cost			Cash Flow Hedges		Accumulated Other Comprehensive Income (Loss)
At December 31, 2024		$(670)		$(947)			$13		$(1,604)
Other comprehensive income before reclassifications		150		—			14		164
Reclassifications to net earnings		—		21	(a)		—		21
Other comprehensive income		150		21			14		185
At June 30, 2025		$(520)		$(926)			$27		$(1,419)

(a) Reflects amortization of net actuarial losses (see Note 12).

The cash flow hedges included in other comprehensive income (loss) are net of a tax benefit of $10 million and tax

expense of $5 million for the six months ended June 30, 2026 (Successor) and June 30, 2025 (Predecessor),

respectively. The net actuarial loss and prior service cost related to pension and other postretirement benefit plans

included in other comprehensive income (loss) is net of a tax benefit of $7 million for the six months ended

June 30, 2025 (Predecessor).

11) INCOME TAXES

The income tax provision represents federal, state and local, and foreign taxes on earnings before income taxes and

equity in loss of investee companies. For the three and six months ended June 30, 2026 (Successor), we recorded a

provision for income taxes of $120 million and $275 million, reflecting an effective income tax rate of 55.8% and

45.3%, respectively. Included in the provision for income taxes are the following items identified as affecting the

comparability of our results, which in aggregate increased our effective income tax rate by 20.1 percentage points

and 10.9 percentage points for their respective periods.

-30-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


	Impact from Items Affecting Comparability
	Successor
	Three Months Ended June 30, 2026				Six Months Ended June 30, 2026
	Earnings (Loss) Before Income Taxes		Benefit from (Provision for) Income Taxes		Earnings (Loss) Before Income Taxes		Benefit from (Provision for) Income Taxes
Restructuring charges (Note 4)		$(35)		$5		$(35)		$5
Transaction-related items (Note 4)		$(153)		$15		$(256)		$21
Net discrete tax benefit		n/a		$4		n/a		$8

n/a - not applicable

For the three and six months ended June 30, 2025 (Predecessor), we recorded a provision for income taxes of $50

million and $150 million, reflecting an effective income tax rate of 28.1% and 29.3%, respectively. Included in the

provision for income taxes are the following items identified as affecting the comparability of our results, which in

aggregate increased our effective income tax rate by 2.9 percentage points and 3.0 percentage points for their

respective periods.


	Impact from Items Affecting Comparability
	Predecessor
	Three Months Ended June 30, 2025				Six Months Ended June 30, 2025
	Earnings (Loss) Before Income Taxes		Benefit from (Provision for) Income Taxes		Earnings (Loss) Before Income Taxes		Benefit from (Provision for) Income Taxes
Impairment charges (Note 15)		$(157)		$39		$(157)		$39
Restructuring charges (Note 4)		$(177)		$42		$(242)		$58
Transaction-related items (Note 4)		$(4)		$1		$(24)		$1
Gain from dispositions		$—		$—		$35		$(2)
Net discrete tax provision		n/a		$(2)		n/a		$(9)

n/a - not applicable

On July 10, 2026, the Company received Notices of Proposed Adjustment (“NOPAs”) from the Internal Revenue

Service for legacy Viacom Inc.’s 2017, 2018, and 2019 tax years regarding the tax treatment of certain transactions

between our subsidiaries. The proposed adjustments could increase taxes, including the one-time transition tax on

cumulative foreign earnings, by up to approximately $400 million, excluding any penalties and interest that may be

due. The Company disagrees with the proposed adjustments and is evaluating its options, including contesting the

NOPAs through all available administrative and, if necessary, judicial proceedings. As the NOPAs were received

after the balance sheet date, changes in measurement of the tax position, if any, will be accounted for in the third

quarter of 2026.

-31-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

12) PENSION AND OTHER POSTRETIREMENT BENEFITS

The following tables present the components of net periodic cost for our pension and postretirement benefit plans,

which are included within “Other items, net” on the Consolidated Statements of Operations.


	Pension Benefits					Postretirement Benefits
	Successor		Predecessor			Successor		Predecessor
	Three Months Ended June 30,			Three Months Ended June 30,		Three Months Ended June 30,			Three Months Ended June 30,
	2026				2025	2026				2025
Components of net periodic cost (a):
Interest cost		$50			$49		$2			$3
Expected return on plan assets		(35)			(32)		—			—
Amortization of actuarial loss (gain) (b)		—			19		—			(5)
Net periodic cost		$15			$36		$2			$(2)


	Pension Benefits					Postretirement Benefits
	Successor		Predecessor			Successor		Predecessor
	Six Months Ended June 30,			Six Months Ended June 30,		Six Months Ended June 30,			Six Months Ended June 30,
	2026			2025		2026			2025
Components of net periodic cost (a):
Interest cost		$100			$99		$4			$5
Expected return on plan assets		(70)			(64)		—			—
Amortization of actuarial loss (gain) (b)		—			37		—			(9)
Net periodic cost		$30			$72		$4			$(4)

(a) Amounts reflect our domestic plans only.

(b) Reflects amounts reclassified from accumulated other comprehensive loss to net earnings (loss).

13) SEGMENT INFORMATION

The tables below set forth our financial information by reportable segment that is regularly reviewed by the

Company’s chief operating decision maker (“CODM”), who is the Company’s Chief Strategy Officer and Chief

Operating Officer, Andrew Brandon-Gordon. Beginning in 2026, we transitioned our reporting structure into three

new segments: Studios, Direct-to-Consumer, and TV Media. Under the new segment structure, our Studios segment

reflects the combination of the historical Filmed Entertainment segment with the historical TV Media studio

operations, consolidating our content creation activities. Additionally, our premium cable channel, Paramount+

with Showtime, which was previously under the TV Media segment, is now managed under the Direct-to-

Consumer segment. Concurrent with the change to our segments, we updated our segment expense allocations to

better reflect how we operate and make cost decisions across the business. Certain centralized costs that were

previously allocated at the segment level are now reported within corporate expenses.

-32-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

As a result of the new accounting basis established in connection with the Skydance Transactions and NAI

Transaction on August 7, 2025, which makes our results of operations not comparable between the Successor and

Predecessor periods (see Note 1), we are required to present segment information for the periods prior to August 7,

2025 based on our previous segments, Filmed Entertainment, Direct-to-Consumer, and TV Media.

•Studios—Our Studios segment consists of our television and film studio operations, including CBS

Studios, Paramount Television Studios, Nickelodeon Animation, Paramount Pictures, Paramount

Animation, and Miramax, as well as Skydance Animation, Film, and Television, Paramount Sports

Entertainment and Paramount Games Studio. For the Predecessor period, our Filmed Entertainment

segment was most comparable to our new Studios segment and excluded studio operations related to our

TV Media businesses, including CBS Studios and Paramount Television Studios.

•Direct-to-Consumer—Our Direct-to-Consumer segment consists of our portfolio of domestic and

international pay and free streaming services, including Paramount+ and Pluto TV, as well as our domestic

premium cable network, Paramount+ with Showtime. For the Predecessor period, the Direct-to- Consumer

segment excluded Paramount+ with Showtime. During the second quarter of 2026, we integrated BET+

into Paramount+.

•TV Media—Our TV Media segment consists of our (1) broadcast operations—the CBS Television

Network, our domestic broadcast television network; CBS Stations, our owned television stations; and our

international free-to-air networks, including Network 10 and Channel 5; (2) domestic basic cable networks,

including MTV, Comedy Central, Paramount Network, The Smithsonian Channel, Nickelodeon, BET

Media Group, CBS Sports Network, and international extensions of certain of these brands; and (3) CBS

Media Ventures, which produces and distributes first-run syndicated programming. TV Media also

includes a number of digital properties such as CBS News 24/7 for 24-hour news and CBS Sports HQ for

sports news and analysis. For the Predecessor period, the TV Media segment also included domestic and

international television studio operations and the premium cable network, Paramount+ with Showtime.

In the first quarter of 2026, we also renamed our primary measure of profit and loss for our operating segments

from Adjusted OIBDA to Adjusted EBITDA. Although these measures have different starting points, as we define

them, they produce the same result. We define Adjusted EBITDA as net earnings (loss) before interest expense and

income; provision for (benefit from) income taxes; other items; equity in earnings (loss) of investee companies, net

of tax; and depreciation and amortization, adjusted to exclude stock-based compensation expense and certain items

identified as affecting comparability that are not part of our normal operations. We define Adjusted OIBDA as

operating income before depreciation and amortization, adjusted to exclude stock-based compensation expense and

the same items identified as affecting comparability. This change was made to align with the measure our

management, including the CODM, began using in 2026, including for planning and forecasting of future periods,

evaluating the operating performance of our segments, and making decisions about resource allocation. The items

identified as affecting comparability that are excluded in both measures include programming charges, impairment

charges, restructuring charges, and gain (loss) on dispositions, each where applicable. Stock-based compensation is

a noncash expense that management does not consider to be part of our underlying operating performance and is

also excluded in both measures.

We do not disclose our assets by segment because they are not regularly provided to the CODM and are not used to

evaluate our operating performance or in determining the allocation of resources.

-33-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


Successor			Predecessor
	Three Months Ended June 30,				Three Months Ended June 30,
	2026				2025
Revenues:				Revenues:
Studios				Filmed Entertainment
Theatrical		$138		Theatrical		$254
Licensing and other		1,172		Licensing and other		434
Advertising		4		Advertising		2
Studios		1,314		Filmed Entertainment		690
Direct-to-Consumer				Direct-to-Consumer
Advertising		535		Advertising		494
Affiliate and subscription		1,939		Subscription		1,665
Licensing		—		Licensing		1
Direct-to-Consumer		2,474		Direct-to-Consumer		2,160
TV Media				TV Media
Advertising		1,420		Advertising		1,657
Affiliate and subscription		1,581		Affiliate and subscription		1,780
Licensing and other		127		Licensing and other		574
TV Media		3,128		TV Media		4,011
Eliminations		(3)		Eliminations		(12)
Total Revenues		$6,913		Total Revenues		$6,849


Successor			Predecessor
	Six Months Ended June 30,				Six Months Ended June 30,
	2026				2025
Revenues:				Revenues:
Studios				Filmed Entertainment
Theatrical		$290		Theatrical		$402
Licensing and other		2,299		Licensing and other		910
Advertising		8		Advertising		5
Studios		2,597		Filmed Entertainment		1,317
Direct-to-Consumer				Direct-to-Consumer
Advertising		1,052		Advertising		967
Affiliate and subscription		3,820		Subscription		3,236
Licensing		—		Licensing		1
Direct-to-Consumer		4,872		Direct-to-Consumer		4,204
TV Media				TV Media
Advertising		3,341		Advertising		3,695
Affiliate and subscription		3,201		Affiliate and subscription		3,606
Licensing and other		252		Licensing and other		1,248
TV Media		6,794		TV Media		8,549
Eliminations		(3)		Eliminations		(29)
Total Revenues		$14,260		Total Revenues		$14,041

-34-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

For content licensed between segments, costs are allocated across segments based on the relative value of the

distribution windows within each segment; accordingly, no intersegment licensing revenues or profits are recorded

by the licensor segment. Under our previous segment presentation, revenues generated between segments were

principally from intersegment arrangements for the distribution of content, rental of studio space, and advertising,

as well as licensing revenues earned from third parties who license our content to our internal platforms either

through a sub-license or co-production arrangement. These transactions were recorded at market value as if the

sales were to third parties and eliminated in consolidation. Under our new segment presentation, intersegment

revenues are comprised of advertising revenues and licensing revenues earned from third parties who license our

content to our internal platforms through sub‑licensing or co‑production arrangements. For the three and six

months ended June 30, 2026, intercompany revenues were all earned by the Studios segment. The table below

presents intercompany revenue by segment for the 2025 periods.


	Three Months Ended June 30,		Six Months Ended June 30,
	2025		2025
Intercompany Revenues:
TV Media		$6		$17
Filmed Entertainment		6		12
Total Intercompany Revenues		$12		$29

-35-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


Successor			Predecessor
	Three Months Ended June 30,				Three Months Ended June 30,
	2026				2025
Studios				Filmed Entertainment
Revenues		$1,314		Revenues		$690

Content costs		926		Content costs		394
Advertising and marketing		143		Advertising and marketing		195
Other (a)		209		Other (a)		185
Total segment expenses		1,278		Total segment expenses		774

Studios Adjusted EBITDA		36		Filmed Entertainment Adjusted OIBDA		(84)
Direct-to-Consumer				Direct-to-Consumer
Revenues		2,474		Revenues		2,160

Content costs		1,161		Content costs		1,085
Advertising and marketing		316		Advertising and marketing		294
Other (b)		631		Other (b)		624
Total segment expenses		2,108		Total segment expenses		2,003

Direct-to-Consumer Adjusted EBITDA		366		Direct-to-Consumer Adjusted OIBDA		157
TV Media				TV Media
Revenues		3,128		Revenues		4,011

Content costs		1,185		Content costs		1,956
Advertising and marketing		66		Advertising and marketing		116
Other (c)		814		Other (c)		1,076
Total segment expenses		2,065		Total segment expenses		3,148

TV Media Adjusted EBITDA		1,063		TV Media Adjusted OIBDA		863
Corporate/Eliminations		(366)		Corporate/Eliminations		(73)
Stock-based compensation (d)		(72)		Stock-based compensation (d)		(39)
Depreciation and amortization		(364)		Depreciation and amortization		(87)
Impairment charges		—		Impairment charges		(157)
Restructuring and transaction-related items (d)		(188)		Restructuring and transaction-related items (d)		(181)
Operating income		475		Operating income		399
Interest expense		(255)		Interest expense		(214)
Interest income		29		Interest income		32
Other items, net		(34)		Other items, net		(39)
Earnings before income taxes and equity in loss of investee companies		215		Earnings before income taxes and equity in loss of investee companies		178
Provision for income taxes		(120)		Provision for income taxes		(50)
Equity in loss of investee companies, net of tax		(54)		Equity in loss of investee companies, net of tax		(67)
Net earnings (Parent and noncontrolling interests)		41		Net earnings (Parent and noncontrolling interests)		61
Net earnings attributable to noncontrolling interests		—		Net earnings attributable to noncontrolling interests		(4)
Net earnings attributable to Parent		$41		Net earnings attributable to Parent		$57

-36-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


Successor			Predecessor
	Six Months Ended June 30,				Six Months Ended June 30,
	2026				2025
Studios				Filmed Entertainment
Revenues		$2,597		Revenues		$1,317

Content costs		1,742		Content costs		715
Advertising and marketing		243		Advertising and marketing		311
Other (a)		412		Other (a)		355
Total segment expenses		2,397		Total segment expenses		1,381

Studios Adjusted EBITDA		200		Filmed Entertainment Adjusted OIBDA		(64)
Direct-to-Consumer				Direct-to-Consumer
Revenues		4,872		Revenues		4,204

Content costs		2,407		Content costs		2,300
Advertising and marketing		631		Advertising and marketing		635
Other (b)		1,217		Other (b)		1,221
Total segment expenses		4,255		Total segment expenses		4,156

Direct-to-Consumer Adjusted EBITDA		617		Direct-to-Consumer Adjusted OIBDA		48
TV Media				TV Media
Revenues		6,794		Revenues		8,549

Content costs		2,904		Content costs		4,299
Advertising and marketing		146		Advertising and marketing		269
Other (c)		1,626		Other (c)		2,196
Total segment expenses		4,676		Total segment expenses		6,764

TV Media Adjusted EBITDA		2,118		TV Media Adjusted OIBDA		1,785
Corporate/Eliminations		(675)		Corporate/Eliminations		(174)
Stock-based compensation (d)		(152)		Stock-based compensation (d)		(83)
Depreciation and amortization		(726)		Depreciation and amortization		(175)
Impairment charges		—		Impairment charges		(157)
Restructuring and transaction-related items (d)		(291)		Restructuring and transaction-related items (d)		(266)
Gain on dispositions		—		Gain on dispositions		35
Operating income		1,091		Operating income		949
Interest expense		(493)		Interest expense		(431)
Interest income		67		Interest income		70
Other items, net		(58)		Other items, net		(76)
Earnings before income taxes and equity in loss of investee companies		607		Earnings before income taxes and equity in loss of investee companies		512
Provision for income taxes		(275)		Provision for income taxes		(150)
Equity in loss of investee companies, net of tax		(116)		Equity in loss of investee companies, net of tax		(140)
Net earnings (Parent and noncontrolling interests)		216		Net earnings (Parent and noncontrolling interests)		222
Net earnings attributable to noncontrolling interests		(7)		Net earnings attributable to noncontrolling interests		(13)
Net earnings attributable to Parent		$209		Net earnings attributable to Parent		$209

(a) Other segment expenses for our Studios segment (Successor) and Filmed Entertainment segment (Predecessor) include employee

compensation; costs relating to the distribution of our content; costs for occupancy, technology, and professional services; and

other costs associated with our operations.

-37-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

(b) Other segment expenses for our Direct-to-Consumer segment in both the Successor and Predecessor periods include employee

compensation; revenue-sharing costs, including for third-party distribution; costs for occupancy, technology, and professional

services; and other costs associated with our operations.

(c) Other segment expenses for our TV Media segment in both the Successor and Predecessor periods include employee compensation;

revenue-sharing costs to television stations affiliated with the CBS Television Network; costs relating to the distribution of our

content; costs for research, occupancy, technology, and professional services; and other costs associated with our operations.

(d) Stock-based compensation expense of $9 million for both the three and six months ended June 30, 2026 (Successor), and $4

million for both the three and six months ended June 30, 2025 (Predecessor) is included in “Restructuring and transaction-related

items.”

14) 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’

-38-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

-39-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

of 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.

-40-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

-41-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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.

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PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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

-43-

PARAMOUNT SKYDANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

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.

15) SUPPLEMENTAL FINANCIAL INFORMATION

Supplemental Cash Flow Information


	Successor		Predecessor
	Six Months Ended June 30,			Six Months Ended June 30,
	2026			2025
Cash paid for interest		$448			$411

Cash (received) paid for income taxes		$(32)			$180

Noncash additions to operating lease assets		$38			$76

Warner Bros. Discovery—Advance Consideration

In the first quarter of 2026, under the terms of the WBD Merger Agreement, we paid a termination fee of

$2.8 billion to Netflix on behalf of WBD in connection with the termination of a prior merger agreement between

Netflix and WBD. The termination fee will be included in the total consideration to be allocated to WBD’s assets

and liabilities as of the acquisition date, and accordingly has been included within “Advance consideration for

WBD acquisition” on the Consolidated Balance Sheet as of June 30, 2026 and within Investing Activities on the

Consolidated Statement of Cash Flows for the six months ended June 30, 2026.

Lease Income

We enter into operating leases for the use of our owned production facilities and office buildings. Lease payments

received under these agreements consist of fixed payments for the rental of space and certain building operating

costs, as well as variable payments based on usage of production facilities and services, and escalating costs of

building operations. We recorded total lease income, including both fixed and variable amounts, of $8 million and

$16 million for the three and six months ended June 30, 2026 (Successor), respectively, and $12 million and $21

million for the three and six months ended June 30, 2025 (Predecessor), respectively.

-45-


Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.
	(Tabular dollars in millions, except per share amounts)

Management’s discussion and analysis of the results of operations and financial condition of Paramount Skydance

Corporation 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. 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.

The completion of the WBD Merger remains subject to regulatory clearance in certain jurisdictions. Recent

approvals include the European Commission in July 2026 under both the EU Merger Regulation and EU Foreign

Subsidies Regulation following a Phase 1 review.