The company expects to capture about 30% of the projected savings during the first year after closing, rising to roughly 70% in the second year and reaching the full run rate in year three, disclosures made to eligible debt holders show. The timetable gives credit investors a clearer measure of how quickly management expects the transaction’s economics to translate into lower leverage.
Paramount is simultaneously pursuing one of the largest acquisition-financing exercises in the corporate debt market. It announced on Monday plans to offer about $44.4 billion of senior secured notes, comprising first-lien securities denominated in US dollars and second-lien bonds denominated in dollars and euros. The proceeds, alongside cash, term loans and previously arranged equity financing, are intended to fund the Warner purchase and refinance specified debt.
The bond financing follows Paramount’s launch last week of syndication for a proposed $7.5 billion senior secured incremental term loan. Earlier regulatory disclosures showed the company planning $39.5 billion of first-lien secured debt and $12.4 billion of second-lien secured debt to replace remaining bridge commitments, although the ultimate amounts and structure remain subject to market conditions.
Paramount agreed in February to acquire Warner Bros. Discovery for $31 a share in cash, valuing the target at $81 billion in equity terms and about $110 billion including debt. The transaction combines Paramount Pictures, CBS and Paramount+ with Warner Bros., HBO, CNN and other Warner assets, creating a larger film, television and streaming group.
The savings plan spans technology integration, corporate efficiencies, procurement, property consolidation and broader operational streamlining. Paramount has said it intends to migrate the enlarged business to common enterprise systems and consolidate streaming technology, areas where overlapping infrastructure offers scope for expenditure reductions.
The pace of those savings matters because leverage will rise sharply when the transaction closes. Paramount has told ratings agencies that it and its controlling shareholder are committed to bringing net debt to adjusted earnings before interest, tax, depreciation and amortisation below 3.75 times by fiscal 2028 and below three times by fiscal 2029.
Credit assessors have nevertheless highlighted execution risks. S&P Global Ratings lowered Paramount’s issuer credit rating to BB from BB+ last week, saying leverage would remain elevated for the next two years and was expected to improve from 2028 as synergies are implemented and associated restructuring costs diminish. S&P said its own adjusted leverage measure was not expected to fall below five times until 2029.
S&P assigned a BBB- rating to the proposed first-lien secured notes and a BB rating to the second-lien notes. Its assessment cited the Ellison family’s commitment to the deleveraging targets while warning that integration setbacks, worsening structural pressures on traditional media or adverse economic conditions could slow debt reduction.
The financing is reaching investors during a difficult period for long-dated borrowing costs. US Treasury yields have climbed sharply, raising the base rate against which Paramount’s new securities will be priced and increasing scrutiny of the cash savings underpinning its leverage projections. The scale of the offering also means investors must absorb a large volume of media-sector debt across investment-grade and speculative-grade tranches.
Paramount originally backed the acquisition with $47 billion of equity supported by the Ellison family and RedBird Capital Partners, alongside committed debt financing. The company said when announcing the agreement that, after giving effect to full synergies, net debt to EBITDA at closing would be about 4.3 times, with a path towards investment-grade credit metrics within three years.
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