Paramount Skydance Credit Rating To Drop Again Post Merger

本站添加: 2026-05-22

[00:00:00]I mean, obviously we've been following this Paramount Sky Dance uh Warner Brothers merger for months and originally of course included I for a while we kind of forget but Comcast was part of that NBC >> uh Universal and uh Netflix and of course Netflix eventually dropped out sadly if it was going to anyone I wanted to go to Netflix and I think we can see by announcements recently that Netflix is truly actually dedicated to theatrical which was kind of shocking but smart. Um, but we're going to be looking at a little bit of a deep dive here on Paramount. Um, first off, Paramount's junk status. So, just so you guys know, Paramount Skyance is already its credit rating with investors is junk status. It's it's current is BB plus. Um, but anyway, Paramount's junk status credit rating to be downgraded further following Warner Brothers merger to reflect major ongoing uncertainties. This is from S&P Global.

[00:01:00]So, we'll just kind of get into this. I kind of have to read it because it's a lot of >> Yeah. Yeah.

[00:01:04]>> But, uh, S&P Global ratings already has placed Paramount Skyance credit rating in junk status territory, indicating that the media conglomerate debt securities are considered speculative grade. But if and when Paramount completes its mega deal for Warner Brothers Discovery, the credit rating firm will take it down another notch.

[00:01:21]Currently, uh, S&P Global has a BB plus issuer credit rating from on Paramount.

[00:01:27]On Wednesday, the firm said it will lower the issuer credit rating on PSKY, that's the ticker for Paramount Sky Dance to BB uh when its acquisition of WBD uh closes, assuming no material changes to the structure of the terms uh take place. Um and this is taking into geopolitical factors and secular pressures. Um yeah, not a great time for uh for this studio. S&P Global defines the BB rating like this. So a BB rating is a BB credit rating indicates that an entity is less vulnerable in the near term but faces major ongoing uncertainties. This rating reflects a speculative nature suggesting that the ent entity may be more impacted by economic downturns or other adverse conditions. So while the BB-rated uh entities might currently manage their organizations uh investors should be cautious due to the potential uh vulner volatility. Why would this happen? Well, they already have their own debt and the purchase, the acquisition will cost them $111 billion and part of that purchase will be taking on $30 billion of Warner Brothers debt and then the responsibility to pay the uh interest on that debt might become insurmountable.

[00:02:44]Um that's in addition to tens of billions the article goes on to say of debt uh it is amassing to fund the merger. Paramount restructured the financing, reducing the aggregate longterm debt commitments to from 54 to 49 billion, but that would still leave a combined Paramount WBD in a highly leveraged position. Um, so also just to put this in context, it's uh the ratio the leverage ratio for this company is 7.6 six times its uh adjusted IBIDA which is earnings before interest, taxes, depreciation, and amortization.

[00:03:22]And even by 2029, it'll only it'll be a 5x still. So, it's it's a massive amount of debt for the amount of money Paramount is earning. So, we're going to go into a little more about what's happening with Paramount, but let's bite this into this right now. Rob, what do you feel about this?

[00:03:38]I you know again with the entertainment business never being a sure thing.

[00:03:45]>> Yeah.

[00:03:45]>> To incur this much debt I think is risky.

[00:03:49]>> Mhm.

[00:03:49]>> And I think at the end of the day, look, I want I want to see Warner Brothers.

[00:03:53]Warner Brothers is still a very it's it's going strong. I love Warner Brothers. I love Paramount. I just don't understand the need the need to make such a purchase. I I you know I think both obviously they're going to do it but I just hate to see both comp both both companies compromise like this. I don't know. I don't like it. Don't like it Jonathan.

[00:04:17]>> Yeah. No, I mean they are now put into a very precarious situation which I understand a lot of people are like and we'll actually get into this. People are saying like oh oil money. Uh well, yeah, that's great, but people don't just like to pile billions and billions of dollars into a losing um investment, and they can just as easily pull that money away and put it somewhere else. Um I understand that there might be some influence they get with that money, but is it worth it? And if it ultimately capitulates, you know, that's that's uh throwing good money after bad.

[00:04:48]>> Yep.

[00:04:48]>> Um and then where does this place then?

[00:04:53]If you have Paramount in hot water now debtwise and they just purchased Warner Brothers, then they both go up for sale and then who acquires that? It's kind of a death spiral.

[00:05:05]>> Yeah. And at the end of the day, is this going to lead to great entertainment?

[00:05:09]>> Mhm.

[00:05:09]>> You know, I want I want one thing from Paramount. I want great Star Trek again.

[00:05:13]Make Star Trek great again. Uh make it make it relevant. Make it smart.

[00:05:19]um make it timeless and dare I say universal. And with Warner Brothers, let them let them cook with their diverse slate of of of kinds of movies they're making. They've just announced their new label, Warner Brothers Clockwork, which I think is amazing. Their second movie, they they announced Shawn Baker's new movie, Tayamo, but their first release is going to be Ken Russell's The Devils.

[00:05:40]They just debuted it in Khan from 1971.

[00:05:44]By the way, shout out to Damon Packard, filmmaker Damon Packard. Look out for his AI film about the release of the devils. Damon Packard is going to be the first guy that's going to make an AI feature film that is going to be actually palatable. But his thing that he did on the release of the devils genius.

[00:06:02]Um, but yeah, so I'm very excited to see what Warner Brothers is doing. But why why destabilize both companies? I mean, I get it.

[00:06:11]>> Yeah. But >> well, going a little further into this, uh, it's not all roses for Paramount. uh going forward also because as this article from Variety brings out, Senate Democrats implore FCC chair to conduct rigorous review of Paramount Warner Brothers merger foreign investment deal raises national security alarms. Let's get into this. Democratic senators are again urging the SEC to not rubber stamp their 111 billion takeover of Warner Brothers, citing concerns over foreign investors, including Middle Eastern wealth funds that are backing the pact.

[00:06:43]Um, the pending Paramount uh merger raises national security alarms. They say the group sent a letter May 20th to the FCC chairman Brendan Carr outlining their concerns that came after another group of Senate Democrats sent the agency chief a similar letter two months ago. Um, let's get into the numbers here. The crux of their misgivings. In April, Paramount disclosed to the FCC filing that the merged Paramount WB deal would be 49.5%.

[00:07:13]So just under 50% owned by foreign investors with about 38 a.5% of that equity coming from the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. Paramount's filings uh seek a declar declaratory ruling from the FCC permitting foreign ownership. Uh this is interesting and in fact ask the agency to authorize up to 100% foreign equity ownership in its broadcast licenses.

[00:07:42]Okay, so typically Congress has set the limit to 25% and they're asking for 100% in their broadcast license.

[00:07:48]>> That's insane.

[00:07:49]>> The scale, concentration, and scope of this proposal raise serious questions. I I would assume foreign governments hostile to free and independent press could exert unprecedented influence over media conglomerate vital to American journalism. Uh the senator said um we'll go on, but react to that.

[00:08:07]Well, I I don't want I mean Qatar has already orqatar has already had tremendous influence over our educational institutions over the last 25 years and look at how that's worked out for us. So I I don't think this is a good idea at all. I mean, I understand, you know, that you you let Arab money into the United States, obviously, they don't have our they have different cultural norms. And if they can control what's going out, I mean, they've they've already the the disinformation campaigns that they've launched against this country over the last 25 years are, you can go look at them now. Who wants them to own our broadcast rights? Well, and I would I would say that not just about Saudi money or Qatar money, but I would say that about any foreign investment in the United States, no matter where it came from.

[00:08:54]>> Well, if from all over the world, I mean, we don't want our way of life or what we believe in to be um controlled by a foreign power cuz they do not have our best interests at heart. No one. But we do.

[00:09:08]>> Well, yeah. I mean, it just makes sense.

[00:09:09]It's not even it's not even a negative statement. It's like, of course, they're going to have their own interests at heart. We want to take a second to thank a sponsor of today's video, Pocket Hose.

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[00:10:58]>> No. Um, and it's it would be what they're asking for is complete control.

[00:11:03]It's not even like a percentage. It's an investment. It's 100% control. That's >> well, latestage capitalism, you know, everyone's for sale. Doesn't matter.

[00:11:13]Just give me mine because I'm only living here for a small amount of time.

[00:11:16]And, you know, I want to buy art. And >> so, girls, the question is where does this go? because they've got a lot of hurdles now with the way the Senate is is I I here's the thing. I feel like the Ellison's kind of hitch their horse to the wrong to the wrong stage coach here because the trend in the next four to seven years is not moving in their direction.

[00:11:43]Now that's just trends, >> right? And you can see even today kind of both sides of the Senate are working together in ways I never thought before. Things are getting tedious with this deal. And it's kind of funny because further in the article, I won't get into it anymore, but you know, Paramount is still complaining. They're saying, "Well, you know, this is Ted Sarandos doing Netflix is is behind is influencing these things." It's like, "No, man. You bit off more than you can chew is my opinion." and is and Ted Sandos may be waiting in the uh you know may be waiting in the wings for this to all fall apart and they can come in and sweep up the pieces but this is more than just Ted Sandos at work.

[00:12:27]>> I the the fact that now their their credit rating is reduced below junk status.

[00:12:35]um what they're asking for is completely unprecedented and I don't think they're going to get the political will of the people behind this and the Senate and the House are now feeling this and I know a lot of times they can ignore it but you can only ignore it >> to a certain point. That's why we see this wave is is changing things.

[00:12:52]>> I just don't see a clear path for the Ellison's and uh Paramount.

[00:12:57]>> I mean I what I want to hear is that they're going to make great entertainment.

[00:13:00]>> That's you know and none of >> Wouldn't it be nice for us to be talking about movie studios making movies?

[00:13:04]>> Yeah. I mean, they can't even figure out what they're going to do with Star Trek.

[00:13:08]So, you know, I it's it's frustrating.

[00:13:10]It's frustrating to see, but those that's the way of things, you know.

[00:13:14]>> Well, and I and I wonder too where, you know, they come up with the promise of 30 Well, when 50% nearly 50% of your promise is already coming from Warner Brothers of 30 films a year. Okay. Um, >> well, how are you gonna make you have to borrow money to make movies >> and you have bad credit and and what what are your stories? Because right now your slate is kind of bare and what you're Okay, Top Gun 3, wonderful. What else? That's one year.

[00:13:42]>> And look at how long Top Gun 2 is in development, right?

[00:13:44]>> I mean, it could take a very long time.

[00:13:46]And you know, let's say you want to make 30 movies a year and you want to make, let's say you make 10 of those tent poles. Where are you going to get that $150 million plus for each one of those movies? You know, as people understand, you all know that studios aren't sitting on mountains of cash. They are borrowing mo money from banks to finance the making of their films.

[00:14:08]>> And you've got interest rate payments on that. That's why you want to get them out and pay >> 7.6 6 factor against Ibida which again is earnings before uh >> uh taxes uh interest rate payments that you have to pay on huge amounts of debt that you've taken on uh amortization uh you know so that's earnings before so now reduce all of that from your earnings they're in a sketchy time here man I I know Papa Ellison's wealthy but he also lost tens of billions of dollars >> uh himself recently And if this AI bubble does indeed pop, Oracle is going to be in bigger trouble.

[00:14:47]>> Um there's a lot going on with OPEC and world oil markets and >> there's just a lot to to to take on right now.

[00:14:55]>> Yes, there is.

[00:14:56]>> They've got a they're going to be dealing with a different Senate and a different possibly a different Senate, definitely a different House of Representatives.

[00:15:03]>> Um >> and in a political environment that is not friendly to them. So, this isn't the heyday of MAGA. And that's not that's not me taking aside or anything. I'm just talking about trends, guys. It's all out there.

[00:15:17]>> Yeah. I mean, it's not it's not about what your political affiliation is. I'm just looking at the trends.

[00:15:21]>> Yeah. We're talking e we're talking economics and trends. I mean, >> it's right now I don't think that there's any American uh who can say that they're doing really well right now because there's so many different factors going against us in terms of rising prices, gas prices. I I'm I'm shocked at how especially here in California, I mean, we we already had the highest gas prices in the country.

[00:15:44]>> Oh, yeah.

[00:15:44]>> Because of our clean gas and and all of that, but it's it's just insane.

[00:15:49]>> Yeah. Yeah. It's becoming untenable.

[00:15:52]Well, anyway, that's where we're at now with the ever going uh uh drama of Warner Brothers. And meanwhile, Zazlav is probably like, "Yeah, guys, don't worry about it. This ain't happening."

[00:16:04]That's just my speculation. He's already put that memo out that said this might not even happen. So, I just feel like they're like, "Yeah, sure. $31 a share.

[00:16:12]Go for it. Let's do this." And whatever.

[00:16:15]All right, guys. Look, what do you guys think about this whole uh ever growing mess and tangled webs of Warner Brothers Paramount Sky Dance foreign investment?

[00:16:27]>> It's all so crazy.

[00:16:28]>> Let us know in the comments what uh you guys think.

[00:16:31]>> Hey guys, thanks so much for watching this video. Make sure you like the video, leave a comment, and subscribe to our channel. And don't forget, we have a daily podcast called The John Campy Show Podcast available on Apple Podcast, Spotify, or your favorite podcasting app of choice. Go and subscribe to it today so it'll be there when you need