Merged Paramount-Warner Bros. Will Be a ‘Streaming Powerhouse,’ Wall Street Analysts Say — but Saddled With More Than $77 Billion in Debt — SkimNews
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- Morgan Stanley analysts called the combined HBO Max and Paramount+ a "streaming powerhouse" with a path to 240M+ subscribers by 2030, potentially rivaling Disney and Amazon for the 2nd and 3rd streaming spots behind Netflix.
- The merged Paramount-Warner Bros. will carry $77.2 billion in net debt by end of 2026, with $6.37 billion in annual interest expense, per Morgan Stanley forecasts.
- The settlement with 12 Democratic state attorneys general requires no divestitures but includes a behavioral commitment to release at least 30 films per year with a 45-day theatrical window.
- Morgan Stanley projects more than $6 billion in savings — 11% of operating expenses — through tech stack consolidation, procurement efficiencies, real estate rationalization, and layoffs in redundant corporate and marketing roles.
- Paramount-WBD's free cash flow is forecast to grow from $2.16 billion in 2027 to $8.12 billion in 2030, with net debt-to-adjusted-EBITDA leverage dropping from 6-7x at close to 3-4x within three years.
- David Ellison told staff in a Monday memo the merger is set to close within about two weeks following the settlement.
- Linear TV networks will drop below 50% of pro-forma EBITDA in 2028 and to roughly 30% by 2030 as streaming and studio businesses take over the revenue mix.
Why it matters: Paramount Skydance's David Ellison has just absorbed one of the last major independent U.S. media companies, but the combined entity opens with $77.2 billion in net debt and a 6-7x leverage ratio that Wall Street says must fall to 3-4x within three years — making $6 billion in projected layoffs and cost cuts the linchpin of the entire deal thesis.
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