Skydance Corporation
11/09/2026 | Press release | Distributed by Public on 11/09/2026 16:15
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
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Management's Discussion and Analysis of Results of Operations and Financial Condition.
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(Tabular amounts in millions, except per share amounts)
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Management's discussion and analysis of the results of operations and financial condition of 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.
The NAI Transaction and the Skydance Transactions-On August 7, 2025, pursuant to a purchase and sale
agreement dated July 7, 2024, certain affiliates of investors in Skydance Media, LLC ("Skydance Media"),
comprised of entities controlled by the Ellison Family (as defined below) 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"). 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 Media 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., and now
known as Skydance Corporation, was formed on June 3, 2024 to consummate the Skydance 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 Media as part of the Skydance Transactions. See Note 3 to the
consolidated financial statements.
Following the closing of the Skydance Transactions and the NAI Transaction, NAI, which was renamed Harbor
Lights Entertainment, Inc., and its subsidiaries hold 100.0% of the Skydance Corporation Class A Common Stock.
Holders of shares of Class A common stock of Skydance Corporation ("Skydance Corporation Class A Common
Stock") are entitled to one vote per share with respect to all matters on which the holders of Skydance Corporation
common stock are entitled to vote. Holders of Skydance Corporation Class B Common Stock do not have voting
rights. Accordingly, entities controlled by the Ellison Family (as defined below) indirectly hold approximately
77.5% of 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 the Company ("Ultimate Parent"). For the purpose of determining the controlling ownership
of the Company, 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.
Pushdown of Ultimate Parent's Basis-At the time Paramount Global and Skydance Media became subsidiaries of
Paramount Skydance Corporation, the Ellison Family controlled both Paramount Global and Skydance Media, 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 3 to the consolidated financial statements). 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 Media were already at the Ultimate
Parent's basis, no adjustment to the fair value of net assets was necessary, and Skydance Media was combined with
Paramount Global's net assets at the Ultimate Parent's basis as of this date.
-56-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
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 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.
We have certain contracts that require us to obtain consents from other parties in connection with the NAI
Transaction and the Skydance Transactions. If these consents cannot be obtained, the counterparties to these
contracts (and, as a result, other third parties with which we have contractual agreements) may have the right to
terminate, reduce the scope of or otherwise alter their relationships with us. Accordingly, the failure to obtain such
consents could have a material adverse effect on our business, financial condition and results of operations.
Significant components of management's discussion and analysis of results of operations and financial condition
include:
•Overview-Summary of our business and operational highlights.
•Consolidated Results of Operations-Analysis of our results on a consolidated basis for the three and nine
months ended September 30, 2026 (Successor), the period from August 7 - September 30, 2025
(Successor) and for the periods from July 1 - August 6, 2025 and January 1 - August 6, 2025
(Predecessor).
•Segment Results of Operations-Analysis of our results on a reportable segment basis for the three and
nine months ended September 30, 2026 (Successor), the period from August 7 - September 30, 2025
(Successor) and for the periods from July 1 - August 6, 2025 and January 1 - August 6, 2025
(Predecessor).
•Liquidity and Capital Resources-Discussion of our cash flows, including sources and uses of cash, for the
nine months ended September 30, 2026 (Successor), for the periods from August 7 - September 30, 2025
(Successor) and January 1 - August 6, 2025 (Predecessor), and of our outstanding debt as of September 30,
2026 (Successor), including Supplemental Guarantor Financial Information.
•Legal Matters-Discussion of legal matters to which we are involved.
Warner Bros. Discovery Merger (Subsequent Event)-On October 6, 2026 (the "Closing Date"), we completed the
acquisition (the "WBD Merger") of Warner Bros. Discovery, Inc. ("WBD") pursuant to the previously announced
definitive merger agreement (the "WBD Merger Agreement"). See Notes 2, 8 and 11 to the consolidated financial
statements. Also on October 6, 2026, in connection with the WBD Merger, we amended our certificate of
incorporation (the "charter amendment") to, among other things, change our name from Paramount Skydance
Corporation to Skydance Corporation. References herein to "Skydance," "Skydance Corporation" or the
"Company" refer, prior to such charter amendment, to Paramount Skydance Corporation, and following such
charter amendment to Skydance Corporation, unless the context otherwise requires reference to Paramount
Skydance Corporation. Also effective October 6, 2026, shares of Skydance Corporation Class B Common Stock
trade on the New York Stock Exchange ("NYSE") under the trading symbol "SKYD." WBD will be included in
our results beginning on October 6, 2026 and as a result is not reflected in the below discussion.
-57-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Overview
Operational Highlights - Three Months Ended September 30, 2026 and 2025
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Successor
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Predecessor
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Supplemental Pro Forma Revenues (a)
(Non-GAAP)
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Three Months
Ended
September 30,
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Period From
August 7 -
September 30,
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Period From
July 1 -
August 6,
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Three Months
Ended
September 30,
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Pro Forma
Increase/(Decrease)
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||||||||||||||||||
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Consolidated Results of Operations
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2026
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2025
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2025
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2025
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$
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%
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GAAP:
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||||||||||||||||||||||
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Revenues
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$7,025
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$4,121
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$2,581
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$6,714
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$311
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5%
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Operating income
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$368
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$244
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$80
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Net earnings (loss) attributable to
Parent
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$73
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$(13)
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$(244)
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Diluted EPS
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$.06
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$(.01)
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$(.36)
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Non-GAAP: (b)
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Adjusted EBITDA
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$1,000
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$684
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$313
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Adjusted net earnings (loss)
attributable to Parent
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$506
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$138
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$(162)
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Adjusted diluted EPS
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$.45
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$.12
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$(.24)
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(a) Supplemental Pro Forma Revenues for the three months ended September 30, 2025 reflect the combination of the Successor period
with the Predecessor period from July 1 - August 6, 2025 and also include $12 million of Skydance Media revenues after the
elimination of intercompany revenues from Paramount Global during the Predecessor period from July 1 - August 6, 2025. While
the Successor and Predecessor periods are distinct reporting periods, revenues were not impacted by the new accounting basis
established for Paramount Global's net assets, and are supplementally presented on a pro forma combined basis to help investors
view these revenues in a manner consistent with our management.
(b) See "Reconciliation of Non-GAAP Measures" for reconciliations of these non-GAAP measures to the most directly comparable
financial measures in accordance with accounting principles generally accepted in the United States ("U.S. GAAP" or "GAAP").
Revenues for the third quarter of 2026 and the Successor period of 2025 include Skydance Media, and in each
period reflect the benefit from subscriber growth and pricing increases for Paramount+ as well as linear declines.
On a pro forma basis, revenues increased 5%, principally reflecting higher licensing revenue as well as growth in
Paramount+ subscription revenue, partially offset by declines in linear revenues. The increase in licensing revenue
was driven by higher revenues from content produced for third parties and licensing in the secondary market.
Skydance Media is included in our results in periods following the close of the Skydance Transactions on August
7, 2025. In addition, as a result of the pushdown of the Ultimate Parent's basis, operating income, net earnings
attributable to Parent, and diluted EPS in 2026 and the 2025 Successor period include amortization associated with
the establishment of intangible assets and also reflect the impact on content costs from the net decrease in
programming assets. Net earnings and diluted EPS also include interest expense associated with the adjustment of
Paramount Global's debt to its fair value. See Note 3 to the consolidated financial statements for details relating to
the pushdown of the Ultimate Parent's basis.
-58-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Operating income for the three months ended September 30, 2026 of $368 million includes restructuring charges
and transaction-related items totaling $187 million. In 2025, operating income for the Successor period of $244
million and $80 million for the Predecessor period includes restructuring charges and transaction-related items
totaling $185 million and $188 million, respectively.
Net earnings attributable to Parent of $73 million, or $.06 per diluted share for the three months ended September
30, 2026 includes a gain from non-designated interest rate contracts of $514 million offset by a net discrete tax
provision of $275 million principally from the establishment of a reserve for uncertain tax positions.
Adjusted net earnings attributable to Parent, which excludes the restructuring charges and transaction-related items
as well as the discrete tax provision noted above, was $506 million, or $.45 per diluted share for the three months
ended September 30, 2026, $138 million, or $.12 per diluted share for the 2025 Successor period, and an adjusted
net loss of $162 million, or $.24 per diluted share for the 2025 Predecessor period. The third quarter of 2026
includes the gain on interest rate contracts noted above. Diluted EPS and adjusted diluted EPS in the Successor
periods also reflect shares issued in connection with the Skydance Transactions and the NAI Transaction. See
Reconciliation of Non-GAAP Measures for the definition of adjusted net earnings attributable to Parent and a
reconciliation to net earnings attributable to Parent.
Adjusted EBITDA in the three months ended September 30, 2026 includes increased investment in content for
Paramount+, partially offset by cost savings for our linear programming. The 2026 and 2025 Successor periods
include the impact on content costs from reductions in programming assets resulting from the pushdown of the
Ultimate Parent's basis. See Reconciliation of Non-GAAP Measures for the definition of Adjusted EBITDA and a
reconciliation to net earnings attributable to Parent, the most directly comparable financial measure in accordance
with U.S. GAAP.
-59-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Operational Highlights - Nine Months Ended September 30, 2026 and 2025
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Successor
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Predecessor
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Supplemental Pro Forma Revenues (a)
(Non-GAAP)
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Nine Months
Ended
September 30,
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Period From
August 7 -
September 30,
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Period From
January 1 -
August 6,
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Nine Months
Ended
September 30,
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Pro Forma
Increase/(Decrease)
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Consolidated Results of
Operations
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2026
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2025
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2025
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2025
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$
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%
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GAAP:
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||||||||||||||||||||||
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Revenues
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$21,285
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$4,121
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$16,622
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$21,246
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$39
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-%
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Operating income
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$1,459
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$244
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$1,029
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Net earnings (loss) attributable
to Parent
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$282
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$(13)
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$(35)
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Diluted EPS
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$.25
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$(.01)
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$(.05)
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Non-GAAP: (b)
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Adjusted EBITDA
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$3,260
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$684
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$1,908
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Adjusted net earnings
attributable to Parent
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$972
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$138
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$348
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Adjusted diluted EPS
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$.87
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$.12
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$.51
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(a) Supplemental Pro Forma Revenues for the nine months ended September 30, 2025 reflect the combination of the Successor period
with the Predecessor period from January 1 - August 6, 2025 and also include $503 million of Skydance Media revenues after the
elimination of intercompany revenues from Paramount Global during the Predecessor period from January 1 - August 6, 2025.
While the Successor and Predecessor periods are distinct reporting periods, revenues were not impacted by the new accounting
basis established for Paramount Global's net assets, and are supplementally presented on a pro forma combined basis to help
investors view these revenues in a manner consistent with our management.
(b) See "Reconciliation of Non-GAAP Measures" for reconciliations of these non-GAAP measures to the most directly comparable
financial measures in accordance with U.S. GAAP.
Revenues in the Successor periods include Skydance Media. On a pro forma basis, revenues remained flat,
reflecting higher licensing revenue as well as growth in Paramount+ subscription revenue, partially offset by
declines in linear and theatrical revenue.
As discussed above, periods following the closing of the Skydance Transactions on August 7, 2025 reflect the
inclusion of Skydance Media and the effects of the pushdown of the Ultimate Parent's basis.
Operating income for the nine months ended September 30, 2026 of $1.46 billion includes restructuring charges
and transaction-related items totaling $478 million. In 2025, operating income for the Successor period of $244
million and $1.03 billion for the Predecessor period includes restructuring charges and transaction-related items
totaling $185 million and $454 million, respectively.
-60-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Net earnings attributable to Parent of $282 million, or $.25 per diluted share for the nine months ended
September 30, 2026 includes a net gain from non-designated interest rate contracts of $502 million and the
negative impact of net discrete tax items of $267 million. For the period from August 7 - September 30, 2025
(Successor), and for the period from January 1 - August 6, 2025 (Predecessor), the net loss attributable to Parent
benefited from discrete tax items of $4 million and $64 million, respectively. In addition, during the Predecessor
period from January 1 - August 6, 2025 net earnings attributable to noncontrolling interests was $447 million.
Adjusted net earnings attributable to Parent, which excludes the restructuring charges and transaction-related items,
as well as the discrete tax provision noted above, was $972 million, or $.87 per diluted share for the nine months
ended September 30, 2026, $138 million, or $.12 per diluted share for the 2025 Successor period, and $348
million, or $.51 per diluted share for the 2025 Predecessor period. The 2026 period includes the gain on the interest
rate contracts noted above. Diluted EPS and adjusted diluted EPS in the Successor periods also reflect shares
issued in connection with the Skydance Transactions and the NAI Transaction. See Reconciliation of Non-GAAP
Measures for the definition of adjusted net earnings attributable to Parent and a reconciliation to net earnings
attributable to Parent.
Adjusted EBITDA in the Successor periods includes the impact from reductions in programming assets resulting
from the pushdown of the Ultimate Parent's basis. See Reconciliation of Non-GAAP Measures for the definition of
Adjusted EBITDA and a reconciliation to net earnings attributable to Parent, the most directly comparable
financial measure in accordance with U.S. GAAP.
We are exposed to political risks inherent in conducting a global business such as retaliatory actions by
governments reacting to changes in the U.S. and other countries, including in connection with the imposition of
tariffs and other changes in trade policies, as well as from the conflict involving the U.S., Israel and Iran. Growing
macroeconomic uncertainty may negatively affect our results, in particular from potential impacts on the
advertising market.
-61-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
In the first quarter of 2026 we transitioned our non-GAAP profitability measure from Adjusted operating income
before depreciation and amortization (Adjusted OIBDA) to Adjusted EBITDA, which we define as net earnings
(loss) attributable to Parent before interest expense and income; (provision for) benefit from income taxes; other
items; net gain on derivatives; 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. This change was made to align with how management
began measuring the Company's ongoing operating performance in 2026. While both adjusted measures exclude
items identified as affecting comparability that are not part of our normal operations, including programming
charges, impairment charges, restructuring charges, transaction-related items, other corporate matters, and gain
(loss) on dispositions, each where applicable, Adjusted EBITDA, as we define it, also excludes stock-based
compensation, which is a noncash expense that management does not consider to be part of our underlying
operating performance. Net earnings (loss) attributable to Parent is the most directly comparable financial measure
in accordance with U.S. GAAP. Adjusted earnings before income taxes, adjusted provision for income taxes,
adjusted net earnings attributable to Parent, adjusted diluted EPS, and adjusted effective income tax rate are also
measures of performance not calculated in accordance with U.S. GAAP (together with Adjusted EBITDA, the
"adjusted measures"), and exclude certain items identified as affecting comparability that are not part of our
normal operations, including the items described above, as well as gain (loss) from investments and discrete tax
items, each where applicable.
We use these adjusted measures to, among other things, evaluate our operating performance. These measures are
among the primary measures used by management for planning and forecasting of future periods, and they are
important indicators of our operational strength and business performance. In addition, we use Adjusted EBITDA
to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for
investors because they allow investors to view our performance in a manner consistent with the method used by
our management; and because they exclude items that are not representative of our normal operations, they provide
a clearer perspective on underlying performance, and make it easier for investors, analysts and peers to compare
our operating performance to other companies in the industry and to compare our results across reporting periods.
Because the adjusted measures are measures of performance not calculated in accordance with U.S. GAAP, they
should not be considered in isolation of, or as a substitute for, our results as reported under U.S. GAAP, including
net earnings (loss), (provision for) benefit from income taxes, net earnings (loss) attributable to Parent, diluted
EPS, and effective income tax rate, as applicable, as indicators of operating performance and undue reliance should
not be placed on these adjusted measures. Other companies may define these measures, including Adjusted
EBITDA, differently and, as a result, our adjusted measures may not be directly comparable to similarly titled
measures of other companies.
-62-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
The following tables reconcile the adjusted measures to their most directly comparable financial measures in
accordance with U.S. GAAP. The tax impacts on the items identified as affecting comparability in the tables below
have been calculated using the tax rate applicable to each item.
Three Months Ended September 30, 2026 and 2025
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Successor
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Predecessor
|
|||||||||||
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Three Months
Ended
September 30,
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Period From
August 7 -
September 30,
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Period From
July 1 -
August 6,
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||||||||||
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2026
|
2025
|
2025
|
||||||||||
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Net earnings (loss) attributable to Parent (GAAP)
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$73
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$(13)
|
$(244)
|
|||||||||
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Net earnings attributable to noncontrolling interests
|
||||||||||||
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Equity in loss of investee companies, net of tax
|
||||||||||||
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Provision for (benefit from) income taxes
|
(229)
|
|||||||||||
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Other items, net
|
||||||||||||
|
Net gain on derivatives
|
(514)
|
-
|
-
|
|||||||||
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Interest expense, net
|
||||||||||||
|
Transaction-related items (a)
|
-
|
|||||||||||
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Restructuring charges (a)
|
||||||||||||
|
Stock-based compensation
|
||||||||||||
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Depreciation and amortization
|
||||||||||||
|
Adjusted EBITDA (Non-GAAP)
|
$1,000
|
$684
|
$313
|
|||||||||
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
|||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||
|
2026
|
2025
|
2025
|
||||||||||
|
Net earnings (loss) attributable to Parent (GAAP)
|
$282
|
$(13)
|
$(35)
|
|||||||||
|
Net earnings attributable to noncontrolling interests
|
||||||||||||
|
Equity in loss of investee companies, net of tax
|
||||||||||||
|
Provision for (benefit from) income taxes
|
(79)
|
|||||||||||
|
Other items, net
|
||||||||||||
|
Net gain on derivatives
|
(502)
|
-
|
-
|
|||||||||
|
Interest expense, net
|
||||||||||||
|
Gain on dispositions (a)
|
-
|
-
|
(35)
|
|||||||||
|
Transaction-related items (a)
|
-
|
|||||||||||
|
Restructuring charges (a)
|
||||||||||||
|
Impairment charges (a)
|
-
|
-
|
||||||||||
|
Stock-based compensation
|
||||||||||||
|
Depreciation and amortization
|
1,097
|
|||||||||||
|
Adjusted EBITDA (Non-GAAP)
|
$3,260
|
$684
|
$1,908
|
|||||||||
(a) See notes on the following tables for additional information on items affecting comparability.
-63-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Three Months Ended September 30, 2026
|
Successor
|
|||||||||||||||
|
Three Months Ended September 30, 2026
|
|||||||||||||||
|
Earnings Before
Income Taxes
|
Provision for
Income Taxes
|
Net Earnings
Attributable to
Parent
|
Diluted EPS
|
||||||||||||
|
Reported (GAAP)
|
$626
|
$(464)
|
(d)
|
$73
|
$.06
|
||||||||||
|
Items affecting comparability:
|
|||||||||||||||
|
Restructuring charges (a)
|
(21)
|
.06
|
|||||||||||||
|
Transaction-related items (b)
|
(8)
|
.08
|
|||||||||||||
|
Discrete tax items (c)
|
-
|
.25
|
|||||||||||||
|
Adjusted (Non-GAAP)
|
$813
|
$(218)
|
(d)
|
$506
|
$.45
|
||||||||||
(a) Reflects severance costs and exit costs, as further described under Restructuring and Transaction-Related Items.
(b) Principally reflects legal, advisory, and other professional fees associated with the planned WBD Merger and related
integration.
(c) Primarily attributable to the establishment of a reserve for uncertain tax positions.
(d) The reported effective income tax rate for the three months ended September 30, 2026 was 74.1% and the adjusted effective
income tax rate, which is calculated as the adjusted provision for income taxes of $218 million divided by adjusted earnings
before income taxes of $813 million, was 26.8%. These adjusted measures exclude the items affecting comparability detailed
above.
-64-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Three Months Ended September 30, 2025
|
Successor
|
|||||||||||||||
|
Period From August 7 - September 30, 2025
|
|||||||||||||||
|
Earnings Before
Income Taxes
|
Provision for
Income Taxes
|
Net Earnings
(Loss)
Attributable to
Parent
|
Diluted EPS
|
||||||||||||
|
Reported (GAAP)
|
$122
|
$(85)
|
(d)
|
$(13)
|
$(.01)
|
||||||||||
|
Items affecting comparability:
|
|||||||||||||||
|
Restructuring charges (a)
|
(30)
|
.13
|
|||||||||||||
|
Discrete tax items
|
-
|
(4)
|
(4)
|
-
|
|||||||||||
|
Adjusted (Non-GAAP)
|
$307
|
$(119)
|
(d)
|
$138
|
$.12
|
||||||||||
|
Predecessor
|
|||||||||||||||
|
Period From July 1 - August 6, 2025
|
|||||||||||||||
|
Earnings (Loss)
Before Income
Taxes
|
Benefit from
(Provision for)
Income Taxes
|
Net Loss
Attributable to
Parent
|
Diluted EPS
|
||||||||||||
|
Reported (GAAP)
|
$(8)
|
$229
|
(e)
|
$(244)
|
$(.36)
|
||||||||||
|
Items affecting comparability:
|
|||||||||||||||
|
Restructuring charges (a)
|
(3)
|
.02
|
|||||||||||||
|
Transaction-related items (b)
|
(30)
|
.21
|
|||||||||||||
|
Discrete tax items (c)
|
-
|
(73)
|
(73)
|
(.11)
|
|||||||||||
|
Adjusted (Non-GAAP)
|
$180
|
$123
|
(e)
|
$(162)
|
$(.24)
|
||||||||||
(a) Reflects severance costs, as further described under Restructuring and Transaction-Related Items.
(b) Reflects banking, legal, advisory, and other professional fees relating to the Skydance Transactions, and transaction awards
that became payable to eligible employees upon closing of the Skydance Transactions.
(c) Reflects the reversal of the valuation allowance on our interest limitation carryforward deferred tax asset, partially offset by
the establishment of a reserve for uncertain tax positions.
(d) The reported effective income tax rate for the period from August 7 - September 30, 2025 was 69.7%, primarily reflecting
the timing of foreign inclusions and foreign-derived intangible income deductions between the Successor and Predecessor
periods. The adjusted effective income tax rate, which is calculated as the adjusted provision for income taxes of $119
million divided by adjusted earnings before income taxes of $307 million, was 38.8%. These adjusted measures exclude the
items affecting comparability detailed above.
(e) For the period from July 1 - August 6, 2025, we recorded a tax benefit of $229 million, primarily reflecting the reversal of
valuation allowances on deferred tax assets related to interest deduction limitations as a result of recent U.S. tax legislation.
The reported benefit, as well as the adjusted income tax benefit of $123 million, also reflects the tax impact of earnings
attributable to noncontrolling interests, the timing of foreign inclusions between the Successor and Predecessor periods, and
the tax benefit on the foreign-derived intangible income deduction. The adjusted benefit from income taxes excludes the tax
impacts from the items affecting comparability detailed in the table above.
-65-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Nine Months Ended September 30, 2026
|
Successor
|
|||||||||||||||
|
Nine Months Ended September 30, 2026
|
|||||||||||||||
|
Earnings Before
Income Taxes
|
Provision for
Income Taxes
|
Net Earnings
Attributable to
Parent
|
Diluted EPS
|
||||||||||||
|
Reported (GAAP)
|
$1,233
|
$(739)
|
(d)
|
$282
|
$.25
|
||||||||||
|
Items affecting comparability:
|
|||||||||||||||
|
Restructuring charges (a)
|
(26)
|
.09
|
|||||||||||||
|
Transaction-related items (b)
|
(29)
|
.29
|
|||||||||||||
|
Discrete tax items (c)
|
-
|
.24
|
|||||||||||||
|
Adjusted (Non-GAAP)
|
$1,711
|
$(527)
|
(d)
|
$972
|
$.87
|
||||||||||
(a) Reflects severance costs and exit costs, as further described under Restructuring and Transaction-Related Items.
(b) Principally reflects legal, advisory and other professional fees associated with the planned WBD Merger and related
integration.
(c) Primarily attributable to the establishment of a reserve for uncertain tax positions.
(d) The reported effective income tax rate for the nine months ended September 30, 2026 was 59.9% and the adjusted effective
income tax rate, which is calculated as the adjusted provision for income taxes of $527 million divided by adjusted earnings
before income taxes of $1.71 billion, was 30.8%. These adjusted measures exclude the items affecting comparability detailed
above.
-66-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Nine Months Ended September 30, 2025
|
Successor
|
|||||||||||||||
|
Period From August 7 - September 30, 2025
|
|||||||||||||||
|
Earnings Before
Income Taxes
|
Provision for
Income Taxes
|
Net Earnings
(Loss)
Attributable to
Parent
|
Diluted EPS
|
||||||||||||
|
Reported (GAAP)
|
$122
|
$(85)
|
(e)
|
$(13)
|
$(.01)
|
||||||||||
|
Items affecting comparability:
|
|||||||||||||||
|
Restructuring charges (a)
|
(30)
|
.13
|
|||||||||||||
|
Discrete tax items
|
-
|
(4)
|
(4)
|
-
|
|||||||||||
|
Adjusted (Non-GAAP)
|
$307
|
$(119)
|
(e)
|
$138
|
$.12
|
||||||||||
|
Predecessor
|
|||||||||||||||
|
Period From January 1 - August 6, 2025
|
|||||||||||||||
|
Earnings Before
Income Taxes
|
Benefit from
(Provision for)
Income Taxes
|
Net Earnings
(Loss)
Attributable to
Parent
|
Diluted EPS
|
||||||||||||
|
Reported (GAAP)
|
$504
|
$79
|
(f)
|
$(35)
|
$(.05)
|
||||||||||
|
Items affecting comparability:
|
|||||||||||||||
|
Impairment charges (b)
|
(39)
|
.17
|
|||||||||||||
|
Restructuring charges (a)
|
(61)
|
.29
|
|||||||||||||
|
Transaction-related items (c)
|
(31)
|
.25
|
|||||||||||||
|
Gain on dispositions (d)
|
(35)
|
(33)
|
(.05)
|
||||||||||||
|
Discrete tax items
|
-
|
(64)
|
(64)
|
(.10)
|
|||||||||||
|
Adjusted (Non-GAAP)
|
$1,080
|
$(114)
|
(f)
|
$348
|
$.51
|
||||||||||
(a) Both periods reflect severance charges and also included in the period from January 1 - August 6, 2025 are charges for the
impairment of lease assets, as further described under Restructuring and Transaction-Related Items.
(b) Reflects a charge to reduce the carrying values of FCC licenses in certain markets to their estimated fair values.
(c) Reflects banking, legal, advisory, and other professional fees relating to the Skydance Transactions, and transaction awards
that became payable to eligible employees upon closing of the Skydance Transactions.
(d) Principally reflects a gain associated with the disposition of a noncore business.
(e) Refer to the table above for a discussion of the reported and adjusted tax rates for the period from August 7 - September 30,
2025.
(f) The reported effective income tax rate for the period from January 1 - August 6, 2025 was 15.7%, which primarily reflects
the reversal of valuation allowances on deferred tax assets related to interest deduction limitations as a result of recent U.S.
tax legislation. The reported effective income tax rate also reflects the tax impact of earnings attributable to noncontrolling
interests, the timing of foreign inclusions between the Successor and Predecessor periods, and the tax benefit on the foreign-
derived intangible income deduction. The adjusted provision for income taxes of $114 million divided by adjusted earnings
before income taxes of $1.08 billion, was 10.6%. These adjusted measures exclude the items affecting comparability
detailed above.
-67-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Consolidated Results of Operations
Revenues
Three Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Supplemental Pro Forma Revenues (a)
|
||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 - August 6,
|
Three Months
Ended
September 30,
|
Pro Forma
Increase/(Decrease)
|
||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
|||||||||||||||
|
Revenues by Type:
|
||||||||||||||||||||
|
Advertising
|
$1,889
|
$1,280
|
$664
|
$1,944
|
$(55)
|
(3)%
|
||||||||||||||
|
Affiliate and subscription
|
3,521
|
2,027
|
1,400
|
3,427
|
||||||||||||||||
|
Theatrical
|
-
|
-
|
||||||||||||||||||
|
Licensing and other
|
1,503
|
1,231
|
||||||||||||||||||
|
Total Revenues
|
$7,025
|
$4,121
|
$2,581
|
$6,714
|
$311
|
5%
|
||||||||||||||
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Supplemental Pro Forma Revenues (a)
|
||||||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Pro Forma
Increase/(Decrease)
|
||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
|||||||||||||||
|
Revenues by Type:
|
||||||||||||||||||||
|
Advertising
|
$6,290
|
$1,280
|
$5,329
|
$6,609
|
$(319)
|
(5)%
|
||||||||||||||
|
Affiliate and subscription
|
10,542
|
2,027
|
8,242
|
10,269
|
||||||||||||||||
|
Theatrical
|
(112)
|
(22)
|
||||||||||||||||||
|
Licensing and other
|
4,051
|
2,576
|
3,854
|
|||||||||||||||||
|
Total Revenues
|
$21,285
|
$4,121
|
$16,622
|
$21,246
|
$39
|
-%
|
||||||||||||||
(a) Supplemental Pro Forma Revenues for the three and nine months ended September 30, 2025 reflect the combination of the
Successor period with the Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025, respectively, and
for Licensing and other and total Supplemental Pro Forma Revenues also include $12 million and $503 million of Skydance
Media revenues after the elimination of intercompany revenues from Paramount Global during the Predecessor periods from
July 1 - August 6, 2025 and January 1 - August 6, 2025, respectively. While the Successor and Predecessor periods are distinct
reporting periods, revenues were not impacted by the new accounting basis established for Paramount Global's net assets, and
are supplementally presented on a pro forma combined basis to help investors view these revenues in a manner consistent with
our management.
-68-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Advertising
Advertising revenues are generated primarily from the sale of advertising spots on our global broadcast and cable
networks, television stations, and streaming services. Advertising revenues in each of the periods of 2026 and 2025
were impacted by declines in the linear advertising market. The 2026 periods benefited from political advertising
associated with the U.S. Midterm elections and the 2025 Predecessor period from January 1 - August 6, 2025
benefited from CBS's broadcast in the second quarter of 2025 of the National Semifinals and National
Championship games of the NCAA Division I Men's Basketball Championship (the "NCAA Tournament"), which
we have the rights to broadcast every other year. The Successor and Predecessor periods in 2025 also included
revenue from Telefe and Chilevisión, which were sold in October 2025 and January 2026, respectively.
On a pro forma basis, the 3% decrease in advertising revenues for the three months ended September 30, 2026 was
driven by lower international advertising, including a 2% decrease to total pro forma advertising revenue from the
absence of Telefe and Chilevisión, partially offset by higher domestic advertising revenues, including a 4%
increase to total advertising revenues from higher political advertising. The 5% pro forma decrease for the nine
months ended September 30, 2026 reflects decreases in both international and domestic advertising revenues,
including a decrease of 2% from the absence of Telefe and Chilevisión and 2% from the comparison against CBS's
broadcast in the second quarter of 2025 of the National Semifinals and National Championship games of the
NCAA Tournament. The pro forma decline for the nine months was partially offset by a 2% increase from higher
political advertising. The pro forma comparison in each period also reflects declines in the linear advertising
market and growth for Paramount+.
Affiliate and subscription
Affiliate and subscription revenues are principally comprised of affiliate fees we receive from distributors for their
carriage of our cable networks (cable affiliate fees) and television stations (retransmission fees), as well as fees
received from third-party television stations for their affiliation with the CBS Television Network (reverse
compensation), and subscription fees for our streaming services.
Affiliate and subscription revenues during each of the periods in 2026 and 2025 reflect the benefit from subscriber
growth and pricing increases for Paramount+, but were negatively impacted by linear subscriber declines.
-69-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Paramount+ had 82.2 million subscribers at September 30, 2026 and 77.9 million subscribers at September 30,
2025.
On a pro forma basis, the growth in affiliate and subscription revenues of 3% for each of the three- and nine-month
periods ended September 30, 2026 primarily reflects increases of 8% and 7%, respectively, from growth at
Paramount+, driven by pricing increases and subscriber growth, partially offset by a decrease of 3% in each period
from lower linear affiliate revenues. The comparison for both periods also reflects the impact from the integration
of BET+ into Paramount+ during the second quarter of 2026.
Theatrical
Theatrical revenues for the third quarter of 2026 include revenues from the releases of Paw Patrol 3: The Dino
Movie and Heart of the Beast, and for the nine-month period also include revenues from the second quarter 2026
release of Scary Movie (2026) and the first quarter 2026 release of Scream 7. Theatrical revenues in each of the
2025 Successor and Predecessor periods benefited from the third quarter 2025 releases of The Naked Gun and
Smurfs, and for the 2025 Predecessor periods also benefited from the second quarter 2025 release of Mission:
Impossible - The Final Reckoning. In addition, the 2025 Predecessor period from January 1 - August 6, 2025
included revenues from the fourth quarter 2024 release of Sonic the Hedgehog 3.
Licensing and other
Licensing and other revenues are principally comprised of fees from the licensing of the rights to exhibit our
internally-produced television and film programming on various platforms in the secondary market after its initial
exhibition on our owned or third-party platforms; license fees from content produced or distributed for third
parties; home entertainment revenues, which primarily include revenues from the viewing of our content on a
transactional basis through transactional video-on-demand (TVOD) and electronic sell-through services; fees from
the use of our trademarks and brands for consumer products, recreation and live events; revenues from games and
other interactive content; and revenues from studio rentals and production services.
Licensing and other revenues include Skydance Media revenues in the 2026 periods and the 2025 Successor
period. On a pro forma basis, the increases in licensing and other revenues of 22% and 5% for the three and nine
months ended September 30, 2026, respectively, reflect higher revenues from secondary market licensing and
content produced for third parties.
-70-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Operating Expenses
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Operating expenses by Type:
|
|||||||||||||||||||||||||
|
Content costs
|
$3,410
|
$1,987
|
$1,209
|
$10,457
|
$1,987
|
$8,494
|
|||||||||||||||||||
|
Distribution and other
|
1,246
|
3,497
|
2,793
|
||||||||||||||||||||||
|
Total Operating Expenses
|
$4,656
|
$2,641
|
$1,702
|
$13,954
|
$2,641
|
$11,287
|
|||||||||||||||||||
Content Costs
Content costs include the amortization of costs of internally-produced television content, theatrical film content,
and interactive game development; amortization of acquired program rights; other television production costs,
including on-air talent; and participation and residuals expenses, which reflect amounts owed to talent and other
participants in our content pursuant to contractual and collective bargaining arrangements.
Content costs in the 2026 periods and the 2025 Successor period include costs associated with Skydance Media's
content and also reflect the impact from a net reduction in programming assets resulting from the pushdown of the
Ultimate Parent's basis. Content costs for the three and nine months ended September 30, 2026 also reflect the
impact of higher sports costs for Paramount+ and cost reductions for broadcast and cable programming.
Distribution and Other
Distribution and other operating expenses primarily include costs relating to the distribution of our content,
including marketing and other costs to support our theatrical releases; revenue-sharing costs, including for third-
party distribution and to television stations affiliated with the CBS Television Network; compensation; and other
costs associated with our operations.
Distribution and other operating expenses in each period reflect revenue sharing costs related to revenues for our
streaming services. In addition, theatrical distribution costs were impacted by the mix of films in each period.
-71-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Selling, General and Administrative Expenses
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Selling, general and
administrative expenses
|
$1,443
|
$825
|
$582
|
$4,297
|
$825
|
$3,526
|
|||||||||||||||||||
Selling, general and administrative ("SG&A") expenses include costs incurred for advertising and marketing for
our linear networks and streaming services, research, occupancy, professional service fees, and back office support,
including employee compensation (inclusive of stock-based compensation expense) and technology. Stock-based
compensation expense in the Successor periods reflects the impact from grants following the Skydance
Transactions, and in the Predecessor period in 2025 reflects the impact of accelerated vesting in December 2024 of
certain employees' RSUs and PSUs to help mitigate potential tax impacts that would otherwise arise under
Sections 280G and 4999 of the Internal Revenue Code. SG&A expenses also reflect reductions to employee
compensation costs resulting from our workforce restructuring activities.
Depreciation and Amortization
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Depreciation and amortization
|
$371
|
$226
|
$29
|
$1,097
|
$226
|
$204
|
|||||||||||||||||||
Depreciation and amortization expense reflects depreciation of fixed assets and amortization of finite-lived
intangible assets. Depreciation and amortization for the three and nine months ended September 30, 2026 and the
2025 Successor periods includes amortization of intangible assets established in connection with the pushdown of
the Ultimate Parent's basis (See Note 3 to the consolidated financial statements).
Impairment Charges
During the second quarter of 2025, we performed interim impairment tests of FCC licenses in six markets, which
resulted in an impairment charge of $157 million to write down the carrying values of FCC licenses in these
markets to their then aggregate estimated fair value.
-72-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Restructuring and Transaction-Related Items
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Severance (a)
|
$50
|
$185
|
$13
|
$85
|
$185
|
$190
|
|||||||||||||||||||
|
Exit costs
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Restructuring charges
|
|||||||||||||||||||||||||
|
Transaction-related
items
|
-
|
-
|
|||||||||||||||||||||||
|
Restructuring and
transaction-related
items
|
$187
|
$185
|
$188
|
$478
|
$185
|
$454
|
|||||||||||||||||||
(a) Severance costs include the accelerated vesting of stock-based compensation.
Restructuring Charges
During the three and nine months ended September 30, 2026 (Successor) and the period from August 7 -
September 30, 2025 (Successor), we recorded restructuring severance costs of $50 million, $85 million, and $185
million, respectively, primarily associated with changes in management and actions to align 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. In
addition, during the three months ended September 30, 2026 we recorded exit costs of $39 million associated with
a contract termination.
Restructuring charges for the Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025
included severance costs of $13 million and $190 million, respectively, primarily associated with strategic changes
in our global workforce in order to streamline our organization. In addition, during the Predecessor period from
January 1 - August 6, 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.
During the fourth quarter of 2026, we expect to incur additional restructuring charges for severance in connection
with a plan announced in October 2026 under which severance payments will be provided to certain eligible
employees who voluntarily elected to participate.
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 nine months ended September 30, 2026,
we recorded transaction-related costs of $98 million and $354 million, respectively, principally for legal, advisory,
and other professional fees associated with the planned WBD Merger and related integration. During the
Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025, we recorded transaction-related
costs of $175 million and $199 million, respectively, principally for banking, legal, advisory, and other
-73-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
professional fees relating to the Skydance Transactions, and transaction awards that became payable to eligible
employees upon closing.
Gain on Dispositions
During the first quarter of 2025, we recorded a gain on dispositions totaling $35 million, principally associated
with the disposition of a noncore business.
Interest Expense/Income
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Interest expense
|
$260
|
$138
|
$85
|
$753
|
$138
|
$516
|
|||||||||||||||||||
|
Interest income
|
$31
|
$24
|
$13
|
$98
|
$24
|
$83
|
|||||||||||||||||||
In connection with the pushdown of the Ultimate Parent's basis, our debt was recorded at fair value, which resulted
in a decrease to our total debt balance of $898 million. The adjustments to fair value for each of our senior and
junior debt issuances are being amortized over the remaining term of the applicable issuance within interest
expense. The weighted average interest rate on our senior and junior debt was 5.20% and 5.17% at September 30,
2026 and 2025, respectively. In addition, during the three and nine months ended September 30, 2026 we incurred
$29 million and $70 million, respectively, of interest expense associated with borrowings under our previous credit
facility (see Capital Structure). Credit facility borrowings were repaid in October 2026 with the funding from the
PIPE Transaction described in Note 2 to the consolidated financial statements.
Net Gain on Derivatives
During the three and nine months ended September 30, 2026 we recorded gains on interest rate hedges of
$514 million and $502 million, respectively. See Note 9 to the consolidated financial statements.
Other Items, Net
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Components of other
items, net:
|
|||||||||||||||||||||||||
|
Pension and
postretirement
benefit costs
|
$(18)
|
$(14)
|
$(12)
|
$(53)
|
$(14)
|
$(80)
|
|||||||||||||||||||
|
Foreign exchange
gain (loss)
|
(8)
|
(3)
|
(14)
|
(11)
|
|||||||||||||||||||||
|
Other
|
(1)
|
(1)
|
(6)
|
(1)
|
|||||||||||||||||||||
|
Other items, net
|
$(27)
|
$(8)
|
$(16)
|
$(73)
|
$(8)
|
$(92)
|
|||||||||||||||||||
-74-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Provision for Income Taxes
The provision for income taxes represents federal, state and local, and foreign taxes on earnings before income
taxes and equity in loss of investee companies. For the three and nine months ended September 30, 2026
(Successor), we recorded a provision for income taxes of $464 million and $739 million, reflecting an effective
income tax rate of 74.1% and 59.9%, respectively. Included in the provision for income taxes are the below
items identified as affecting the comparability of our results, which in aggregate increased our effective income
tax rate by 47.3 percentage points and 29.1 percentage points for their respective periods.
|
Impact from Items Affecting Comparability
|
|||||||||||||||
|
Successor
|
|||||||||||||||
|
Three Months Ended September 30, 2026
|
Nine Months Ended September 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 5)
|
$(89)
|
$21
|
$(124)
|
$26
|
|||||||||||
|
Transaction-related items (Note 5)
|
$(98)
|
$8
|
$(354)
|
$29
|
|||||||||||
|
Net discrete tax provision
|
n/a
|
$(275)
|
n/a
|
$(267)
|
|||||||||||
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 Company disagrees with the proposed adjustments and is contesting
the NOPAs through the IRS' administrative appeals process and, if necessary, through judicial proceedings.
While the uncertain tax position meets the more-likely-than-not recognition threshold, in applying the
measurement assessment, the Company currently believes that a portion of the benefit may not be realized upon
settlement and has recorded a reserve during the third quarter of 2026 for this item, which is reflected within the
net discrete tax items above.
For the period from August 7 - September 30, 2025 (Successor), we recorded a provision for income taxes of $85
million and for the periods from July 1 - August 6, 2025 and January 1 - August 6, 2025 (Predecessor), we
recorded a benefit from income taxes of $229 million and $79 million, respectively. Refer to Reconciliation of
Non-GAAP Measures for reported and adjusted effective income tax rates and the related income tax effects of
the adjustments.
Three Months Ended September 30, 2025
|
Impact from Items Affecting Comparability
|
||||||||||||||||
|
Successor
|
Predecessor
|
|||||||||||||||
|
Period From August 7 - September 30,
|
Period From July 1 - August 6,
|
|||||||||||||||
|
2025
|
2025
|
|||||||||||||||
|
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 5)
|
$(185)
|
$30
|
$(13)
|
$3
|
||||||||||||
|
Transaction-related items (Note 5)
|
$-
|
$-
|
$(175)
|
$30
|
||||||||||||
|
Net discrete tax benefit (a)
|
n/a
|
$4
|
n/a
|
$73
|
||||||||||||
n/a - not applicable
-75-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Nine Months Ended September 30, 2025
|
Impact from Items Affecting Comparability
|
||||||||||||||||
|
Successor
|
Predecessor
|
|||||||||||||||
|
Period From August 7 - September 30,
|
Period From January 1 - August 6
|
|||||||||||||||
|
2025
|
2025
|
|||||||||||||||
|
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 5)
|
$(185)
|
$30
|
$(255)
|
$61
|
||||||||||||
|
Transaction-related items (Note 5)
|
$-
|
$-
|
$(199)
|
$31
|
||||||||||||
|
Impairment charges (Note 16)
|
$-
|
$-
|
$(157)
|
$39
|
||||||||||||
|
Gain from dispositions
|
$-
|
$-
|
$35
|
$(2)
|
||||||||||||
|
Net discrete tax benefit (a)
|
n/a
|
$4
|
n/a
|
$64
|
||||||||||||
n/a - not applicable
(a) On July 4, 2025, the U.S. government enacted tax legislation, which included the extension of certain expired or expiring tax provisions,
including a favorable change to the interest deduction limitation, and modifications to certain international tax provisions. The
legislation has multiple effective dates with certain provisions effective in 2025. A favorable change to the interest deduction limitation
resulted in the reversal of the valuation allowance on our interest limitation carryforward deferred tax asset of $114 million. The net
discrete tax benefits for the 2025 Predecessor periods reflect this reversal, partially offset by a reserve for uncertain tax positions.
Equity in Loss of Investee Companies, Net of Tax
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Equity in loss of investee
companies
|
$(66)
|
$(33)
|
$(31)
|
$(180)
|
$(33)
|
$(169)
|
|||||||||||||||||||
|
Tax benefit (provision)
|
-
|
-
|
-
|
-
|
(2)
|
||||||||||||||||||||
|
Equity in loss of investee
companies, net of tax
|
$(64)
|
$(33)
|
$(31)
|
$(180)
|
$(33)
|
$(171)
|
|||||||||||||||||||
-76-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Net Earnings (Loss) Attributable to Parent and Diluted EPS
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Net earnings (loss)
attributable to Parent
|
$73
|
$(13)
|
$(244)
|
$282
|
$(13)
|
$(35)
|
|||||||||||||||||||
|
Diluted EPS
|
$.06
|
$(.01)
|
$(.36)
|
$.25
|
$(.01)
|
$(.05)
|
|||||||||||||||||||
As a result of the pushdown of the Ultimate Parent's basis, net earnings (loss) attributable to Parent and diluted
EPS during the three and nine months ended September 30, 2026 and the 2025 Successor periods include
amortization associated with intangible assets that were established and interest expense associated with the
adjustment to fair value of our debt, as well as the decrease in programming assets.
Segment Results of Operations
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 (together with the segment change, the "new segment presentation"). Certain centralized costs
that were previously allocated at the segment level are now reported within corporate expenses.
The tables below set forth our financial information by reportable segment. 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, we are required to present
segment information for periods prior to August 7, 2025 based on our previous segments, Filmed Entertainment,
Direct-to-Consumer, and TV Media. In addition, in order to provide useful information for investors that is
consistent with the manner in which our management reviews our results, on the following pages we have provided
supplemental non-GAAP presentations reflecting the Predecessor amounts for the periods from July 1 - August 6,
2025 and January 1 - August 6, 2025 recast under the new segment presentation, as well as the related
reconciliations from the GAAP presentation.
-77-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
|
GAAP
|
Non-GAAP (a)
|
|||||||||||||||
|
Successor
|
Predecessor
|
Predecessor
|
||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 - August 6,
|
Period From
July 1 - August 6,
|
|||||||||||||
|
2026
|
2025
|
2025
|
2025
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Studios
|
Studios
|
Filmed
Entertainment (b)
|
Studios
|
|||||||||||||
|
Theatrical
|
$112
|
$39
|
$73
|
$73
|
||||||||||||
|
Licensing and other
|
1,377
|
|||||||||||||||
|
Advertising
|
||||||||||||||||
|
Total
|
1,496
|
|||||||||||||||
|
Direct-to-
Consumer
|
Direct-to-
Consumer
|
Direct-to-
Consumer (b)
|
Direct-to-
Consumer
|
|||||||||||||
|
Advertising
|
||||||||||||||||
|
Affiliate and subscription
|
1,968
|
1,043
|
||||||||||||||
|
Licensing
|
-
|
-
|
-
|
|||||||||||||
|
Total
|
2,510
|
1,344
|
||||||||||||||
|
TV Media
|
TV Media
|
TV Media (b)
|
TV Media
|
|||||||||||||
|
Advertising
|
1,344
|
|||||||||||||||
|
Affiliate and subscription
|
1,553
|
|||||||||||||||
|
Licensing and other
|
||||||||||||||||
|
Total
|
3,024
|
2,042
|
1,428
|
1,198
|
||||||||||||
|
Eliminations
|
Eliminations
|
Eliminations
|
Eliminations
|
|||||||||||||
|
(5)
|
(3)
|
(6)
|
(2)
|
|||||||||||||
|
Total Revenues
|
$7,025
|
$4,121
|
$2,581
|
$2,581
|
||||||||||||
-78-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
|
GAAP
|
Non-GAAP (a)
|
||||||||||||||||
|
Successor
|
Predecessor
|
Predecessor
|
|||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Period From
July 1 -
August 6,
|
||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
||||||||||||||
|
Adjusted EBITDA/OIBDA (c):
|
Adjusted EBITDA:
|
||||||||||||||||
|
Studios/Filmed Entertainment (b)
|
$129
|
$21
|
$(36)
|
Studios
|
$(2)
|
||||||||||||
|
Direct-to-Consumer (b)
|
Direct-to-Consumer
|
||||||||||||||||
|
TV Media (b)
|
1,028
|
TV Media
|
|||||||||||||||
|
Corporate/Eliminations (d)
|
(382)
|
(206)
|
(38)
|
Corporate/Eliminations (d)
|
(107)
|
||||||||||||
|
Stock-based compensation (e)
|
(74)
|
(29)
|
(16)
|
Stock-based compensation (e)
|
(16)
|
||||||||||||
|
Depreciation and amortization
|
(371)
|
(226)
|
(29)
|
Depreciation and amortization
|
(29)
|
||||||||||||
|
Restructuring and
transaction-related items (e)
|
(187)
|
(185)
|
(188)
|
Restructuring and
transaction-related items (e)
|
(188)
|
||||||||||||
|
Operating income
|
Operating income
|
||||||||||||||||
|
Interest expense, net
|
(229)
|
(114)
|
(72)
|
Interest expense, net
|
(72)
|
||||||||||||
|
Net gain on derivatives
|
-
|
-
|
Net gain on derivatives
|
-
|
|||||||||||||
|
Other items, net
|
(27)
|
(8)
|
(16)
|
Other items, net
|
(16)
|
||||||||||||
|
Earnings before income taxes
and equity in loss of investee
companies
|
(8)
|
Earnings before income taxes
and equity in loss of investee
companies
|
(8)
|
||||||||||||||
|
(Provision for) benefit from
income taxes
|
(464)
|
(85)
|
Benefit from income taxes
|
||||||||||||||
|
Equity in loss of investee
companies, net of tax
|
(64)
|
(33)
|
(31)
|
Equity in loss of investee
companies, net of tax
|
(31)
|
||||||||||||
|
Net earnings
(Parent and noncontrolling
interests)
|
Net earnings
(Parent and noncontrolling
interests)
|
||||||||||||||||
|
Net earnings attributable to
noncontrolling interests
|
(25)
|
(17)
|
(434)
|
Net earnings attributable to
noncontrolling interests
|
(434)
|
||||||||||||
|
Net earnings (loss) attributable
to Parent
|
$73
|
$(13)
|
$(244)
|
Net loss attributable to Parent
|
$(244)
|
||||||||||||
(a) As discussed above, revenues and Adjusted EBITDA by segment recast under our new segment presentation are non-GAAP. See
Studios, Direct-to-Consumer, and TV Media on the following pages for reconciliations from the GAAP segment presentation for the
period from July 1 - August 6, 2025 to the non-GAAP recast amounts. All other amounts in this table are presented on a GAAP
basis.
(b) The GAAP Predecessor period from July 1 - August 6, 2025 reflects the historical segment composition for Filmed Entertainment,
Direct-to-Consumer, and TV Media.
(c) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to
Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(d) As noted above, 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, which resulted in higher costs at Corporate. 2026 reflects higher technology
costs and consulting fees.
(e) The increase in stock-based compensation expense between the 2026 and 2025 periods was driven by grants following the Skydance
Transactions and the comparison to lower expenses in 2025 as a result of accelerated vesting in December 2024 of certain
employees' RSUs and PSUs to help mitigate potential tax impacts that would otherwise arise under Sections 280G and 4999 of the
Internal Revenue Code. For the three months ended September 30, 2026 (Successor) and the period from August 7 - September 30,
2025 (Successor), stock-based compensation expense of $27 million and $30 million, respectively, is included in "Restructuring and
transaction-related items." For the Predecessor period from July 1 - August 6, 2025, stock-based compensation expense of $10
million is included in "Restructuring and transaction-related items."
-79-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
|
GAAP
|
Non-GAAP (a)
|
|||||||||||||||
|
Successor
|
Predecessor
|
Predecessor
|
||||||||||||||
|
Nine Months Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
Period From
January 1 -
August 6,
|
|||||||||||||
|
2026
|
2025
|
2025
|
2025
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Studios
|
Studios
|
Filmed
Entertainment (b)
|
Studios
|
|||||||||||||
|
Theatrical
|
$402
|
$39
|
$475
|
$475
|
||||||||||||
|
Licensing and other
|
3,676
|
1,112
|
2,270
|
|||||||||||||
|
Advertising
|
||||||||||||||||
|
Total
|
4,093
|
1,593
|
2,756
|
|||||||||||||
|
Direct-to-Consumer
|
Direct-to-Consumer
|
Direct-to-
Consumer (b)
|
Direct-to-
Consumer
|
|||||||||||||
|
Advertising
|
1,594
|
1,146
|
1,146
|
|||||||||||||
|
Affiliate and subscription
|
5,788
|
1,043
|
3,940
|
4,191
|
||||||||||||
|
Licensing
|
-
|
|||||||||||||||
|
Total
|
7,382
|
1,344
|
5,087
|
5,338
|
||||||||||||
|
TV Media
|
TV Media
|
TV Media (b)
|
TV Media
|
|||||||||||||
|
Advertising
|
4,685
|
4,180
|
4,175
|
|||||||||||||
|
Affiliate and subscription
|
4,754
|
4,302
|
4,051
|
|||||||||||||
|
Licensing and other
|
1,495
|
|||||||||||||||
|
Total
|
9,818
|
2,042
|
9,977
|
8,536
|
||||||||||||
|
Eliminations
|
Eliminations
|
Eliminations
|
Eliminations
|
|||||||||||||
|
(8)
|
(3)
|
(35)
|
(8)
|
|||||||||||||
|
Total Revenues
|
$21,285
|
$4,121
|
$16,622
|
$16,622
|
||||||||||||
-80-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
|
GAAP
|
Non-GAAP (a)
|
||||||||||||||||
|
Successor
|
Predecessor
|
Predecessor
|
|||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period
From
January 1 -
August 6,
|
Period
From
January 1 -
August 6,
|
||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
||||||||||||||
|
Adjusted EBITDA/OIBDA (c):
|
Adjusted EBITDA:
|
||||||||||||||||
|
Studios/Filmed Entertainment (b)
|
$329
|
$21
|
$(100)
|
Studios
|
$49
|
||||||||||||
|
Direct-to-Consumer (b)
|
Direct-to-Consumer
|
||||||||||||||||
|
TV Media (b)
|
3,146
|
2,067
|
TV Media
|
2,148
|
|||||||||||||
|
Corporate/Eliminations (d)
|
(1,057)
|
(206)
|
(212)
|
Corporate/Eliminations (d)
|
(676)
|
||||||||||||
|
Stock-based compensation (e)
|
(226)
|
(29)
|
(99)
|
Stock-based compensation (e)
|
(99)
|
||||||||||||
|
Depreciation and amortization
|
(1,097)
|
(226)
|
(204)
|
Depreciation and amortization
|
(204)
|
||||||||||||
|
Impairment charges
|
-
|
-
|
(157)
|
Impairment charges
|
(157)
|
||||||||||||
|
Restructuring and
transaction-related items (e)
|
(478)
|
(185)
|
(454)
|
Restructuring and
transaction-related items (e)
|
(454)
|
||||||||||||
|
Gain on dispositions
|
-
|
-
|
Gain on dispositions
|
||||||||||||||
|
Operating income
|
1,459
|
1,029
|
Operating income
|
1,029
|
|||||||||||||
|
Interest expense, net
|
(655)
|
(114)
|
(433)
|
Interest expense, net
|
(433)
|
||||||||||||
|
Net gain on derivatives
|
-
|
-
|
Net gain on derivatives
|
-
|
|||||||||||||
|
Other items, net
|
(73)
|
(8)
|
(92)
|
Other items, net
|
(92)
|
||||||||||||
|
Earnings before income taxes
and equity in loss of investee
companies
|
1,233
|
Earnings before income taxes
and equity in loss of investee
companies
|
|||||||||||||||
|
(Provision for) benefit from
income taxes
|
(739)
|
(85)
|
Benefit from income taxes
|
||||||||||||||
|
Equity in loss of investee
companies, net of tax
|
(180)
|
(33)
|
(171)
|
Equity in loss of investee
companies, net of tax
|
(171)
|
||||||||||||
|
Net earnings
(Parent and noncontrolling
interests)
|
Net earnings
(Parent and noncontrolling
interests)
|
||||||||||||||||
|
Net earnings attributable
to noncontrolling interests
|
(32)
|
(17)
|
(447)
|
Net earnings attributable to
noncontrolling interests
|
(447)
|
||||||||||||
|
Net earnings (loss) attributable
to Parent
|
$282
|
$(13)
|
$(35)
|
Net loss attributable to Parent
|
$(35)
|
||||||||||||
(a) As discussed above, revenues and Adjusted EBITDA by segment recast under our new segment presentation is non-GAAP. See
Studios, Direct-to-Consumer, and TV Media on the following pages for reconciliations from the GAAP segment presentation for the
period from January 1 - August 6, 2025 to the non-GAAP recast amounts. All other amounts in this table are presented on a GAAP
basis.
(b) The GAAP Predecessor period from January 1 - August 6, 2025 reflects the historical segment composition for Filmed
Entertainment, Direct-to-Consumer, and TV Media.
(c) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to
Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(d) As noted above, 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, which resulted in higher costs at Corporate. 2026 reflects higher technology
costs and consulting fees.
-81-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
(e) The increase in stock-based compensation expense between the 2026 and 2025 periods was driven by grants following the Skydance
Transactions and the comparison to lower expenses in 2025 as a result of accelerated vesting in December 2024 of certain
employees' RSUs and PSUs to help mitigate potential tax impacts that would otherwise arise under Sections 280G and 4999 of the
Internal Revenue Code. For the nine months ended September 30, 2026 (Successor) and the period from August 7 - September 30,
2025 (Successor), stock-based compensation expense of $36 million and $30 million, respectively, is included in "Restructuring and
transaction-related items." For the Predecessor period from January 1 - August 6, 2025, stock-based compensation expense of $14
million is included in "Restructuring and transaction-related items."
Studios/Filmed Entertainment
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.
Three Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Studios Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
Studios (GAAP)
|
Filmed
Entertainment
(GAAP)
|
Adjustments (a)
|
Studios
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From July 1 - August 6,
|
Three Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (f)
|
|||||||||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
||||||||||||||||||||||
|
Theatrical
|
$112
|
$39
|
$73
|
$-
|
$73
|
$112
|
$-
|
-%
|
|||||||||||||||||||
|
Licensing
and other
|
1,377
|
1,094
|
|||||||||||||||||||||||||
|
Advertising (c)
|
|||||||||||||||||||||||||||
|
Revenues
|
1,496
|
$1,212
|
$284
|
23%
|
|||||||||||||||||||||||
|
Content costs
|
|||||||||||||||||||||||||||
|
Advertising
and marketing
|
|||||||||||||||||||||||||||
|
Other (d)
|
|||||||||||||||||||||||||||
|
Expenses
|
1,367
|
||||||||||||||||||||||||||
|
Adjusted
EBITDA/OIBDA (e)
|
$129
|
$21
|
$(36)
|
$34
|
$(2)
|
||||||||||||||||||||||
(a) Reflects the inclusion of the historical TV Media studio operations and updates to our segment expense allocations to better reflect how
we operate and make cost decisions across the business.
(b) Supplemental Non-GAAP Pro Forma Revenues for the third quarter of 2025 reflect the combination of the Predecessor Non-GAAP
Studios revenues for the period from July 1 - August 6, 2025 with the Successor revenues for the Studios segment for the period from
August 7 - September 30, 2025. Licensing and other and total Supplemental Non-GAAP Pro Forma Revenues also include $12 million
of Skydance Media revenues after the elimination of intercompany revenues from Paramount Global during the Predecessor period
from July 1 - August 6, 2025. While the Successor and Predecessor periods are distinct reporting periods, revenues were not impacted
by the new accounting basis established for Paramount Global's net assets, and are supplementally presented on a pro forma combined
basis to help investors view these revenues in a manner consistent with our management.
(c) Primarily reflects advertising revenues earned from the use of Studios content on third-party digital platforms.
(d) Other segment expenses for our Studios segment 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.
-82-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
(e) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA
to Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(f) Reflects the comparison between the Successor revenues for the three months ended September 30, 2026 to the non-GAAP pro
forma revenues for the three months ended September 30, 2025.
Revenues
Theatrical
Theatrical revenues for the third quarter of 2026 included revenues from the releases of Paw Patrol 3: The Dino
Movie and Heart of the Beast. Theatrical revenues in the 2025 Successor and Predecessor periods included
revenues from the third quarter 2025 releases of The Naked Gun and Smurfs.
Licensing and Other
Licensing and other revenues include Skydance Media revenues in 2026 and the 2025 Successor period.
The pro forma licensing and other revenue increase for the third quarter of 2026 reflects higher revenues from
secondary market licensing and content produced for third parties.
Expenses
Content Costs
Content costs in 2026 and the 2025 Successor period include costs for Skydance Media and certain of our
television studio operations, which were not in the 2025 Predecessor period. Content costs in 2026 and the 2025
Successor period were also impacted by an increase in the value of library content resulting from the pushdown of
the Ultimate Parent's basis.
Advertising and Marketing
Advertising and marketing expenses in the third quarter of 2026 primarily reflect marketing costs associated with
the releases of Paw Patrol 3: The Dino Movie and Heart of the Beast. Advertising and marketing expenses for the
2025 Successor period primarily reflected costs for fourth quarter 2025 releases, and for the 2025 Predecessor
period primarily reflected marketing costs associated with the releases of Smurfs and The Naked Gun.
Adjusted EBITDA
Adjusted EBITDA in the third quarter of 2026 benefited from the increase in pro forma licensing revenues.
-83-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Studios/Filmed Entertainment
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Studios Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
Studios (GAAP)
|
Filmed
Entertainment
(GAAP)
|
Adjustments (a)
|
Studios
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From January 1 - August 6,
|
Nine Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (f)
|
|||||||||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
||||||||||||||||||||||
|
Theatrical
|
$402
|
$39
|
$475
|
$-
|
$475
|
$514
|
$(112)
|
(22)%
|
|||||||||||||||||||
|
Licensing
and other
|
3,676
|
1,112
|
1,158
|
2,270
|
3,468
|
||||||||||||||||||||||
|
Advertising (c)
|
-
|
-
|
|||||||||||||||||||||||||
|
Revenues
|
4,093
|
1,593
|
1,163
|
2,756
|
$3,997
|
$96
|
2%
|
||||||||||||||||||||
|
Content costs
|
2,719
|
1,753
|
|||||||||||||||||||||||||
|
Advertising
and marketing
|
|||||||||||||||||||||||||||
|
Other (d)
|
|||||||||||||||||||||||||||
|
Expenses
|
3,764
|
1,693
|
1,014
|
2,707
|
|||||||||||||||||||||||
|
Adjusted
EBITDA/OIBDA (e)
|
$329
|
$21
|
$(100)
|
$149
|
$49
|
||||||||||||||||||||||
(a) Reflects the inclusion of the historical TV Media studio operations and updates to our segment expense allocations to better reflect
how we operate and make cost decisions across the business.
(b) Supplemental Non-GAAP Pro Forma Revenues for the nine months ended September 30, 2025 reflect the combination of the
Predecessor Non-GAAP Studios revenues for the period from January 1 - August 6, 2025 with the Successor revenues for the
Studios segment for the period from August 7 - September 30, 2025. Licensing and other and total Supplemental Non-GAAP Pro
Forma Revenues also include $503 million of Skydance Media revenues after the elimination of intercompany revenues from
Paramount Global during the Predecessor period from January 1 - August 6, 2025. While the Successor and Predecessor periods
are distinct reporting periods, revenues were not impacted by the new accounting basis established for Paramount Global's net
assets, and are supplementally presented on a pro forma combined basis to help investors view these revenues in a manner
consistent with our management.
(c) Primarily reflects advertising revenues earned from the use of Studios content on third-party digital platforms.
(d) Other segment expenses for our Studios segment 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.
(e) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA
to Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(f) Reflects the comparison between the Successor results for the nine months ended September 30, 2026 to the non-GAAP pro forma
revenues for the nine months ended September 30, 2025.
Revenues
Theatrical
Theatrical revenues for the nine months ended September 30, 2026 included revenues from the previously
mentioned third quarter releases, the second quarter 2026 release of Scary Movie (2026), and the first quarter 2026
release of Scream 7. Theatrical revenues in the 2025 Successor and Predecessor periods benefited from the third
quarter 2025 releases discussed above, and during the Predecessor period from January 1 - August 6, 2025 also
-84-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
benefited from the second quarter 2025 release of Mission: Impossible - The Final Reckoning as well as the fourth
quarter 2024 release of Sonic the Hedgehog 3.
Licensing and Other
Licensing and other revenues include Skydance Media revenues in 2026 and the 2025 Successor period.
The pro forma licensing and other revenue increase for the nine months ended September 30, 2026 reflects higher
revenues from secondary market licensing and content produced for third parties.
Expenses
Content Costs
Content costs in 2026 and the 2025 Successor period include costs for Skydance Media and certain of our
television studio operations, which were not in the 2025 Predecessor period. Content costs in 2026 and the 2025
Successor period were also impacted by an increase in the value of library content resulting from the pushdown of
the Ultimate Parent's basis.
Advertising and Marketing
Advertising and marketing expenses for 2026 and the 2025 Successor and Predecessor periods primarily reflect
marketing costs for the theatrical releases discussed above. Advertising and marketing expenses for the 2025
Predecessor period from January 1 - August 6, 2025 also include marketing costs for the second quarter 2025
release of Mission: Impossible - The Final Reckoning.
Other
Other expenses for the nine months ended September 30, 2026 and the 2025 Successor period include costs for
Skydance Media and certain of our television studio operations, which were not in the 2025 Predecessor period.
Adjusted EBITDA
Adjusted EBITDA for the nine months ended September 30, 2026 benefited from the increase in pro forma
licensing revenues.
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+.
-85-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Three Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Direct-to-Consumer
Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
Direct-to-Consumer (GAAP)
|
Direct-to-
Consumer
(GAAP)
|
Adjustments (a)
|
Direct-to-
Consumer
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From July 1 - August 6,
|
Three Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (f)
|
|||||||||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
||||||||||||||||||||||
|
Advertising
|
$542
|
$300
|
$179
|
$-
|
$179
|
$479
|
$63
|
13%
|
|||||||||||||||||||
|
Affiliate and
subscription
|
1,968
|
1,043
|
1,787
|
||||||||||||||||||||||||
|
Licensing (c)
|
-
|
-
|
-
|
-
|
(1)
|
(100)
|
|||||||||||||||||||||
|
Revenues
|
2,510
|
1,344
|
$2,267
|
$243
|
11%
|
||||||||||||||||||||||
|
Content costs
|
1,320
|
||||||||||||||||||||||||||
|
Advertising
and marketing
|
|||||||||||||||||||||||||||
|
Other (d)
|
(14)
|
||||||||||||||||||||||||||
|
Expenses
|
2,285
|
1,035
|
|||||||||||||||||||||||||
|
Adjusted
EBITDA/OIBDA (e)
|
$225
|
$309
|
$105
|
$32
|
$137
|
||||||||||||||||||||||
|
Successor
|
Predecessor
|
Supplemental Pro Forma
Revenues (b)
|
|||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Three Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (f)
|
|||||||||||||||
|
Paramount+ (Global)
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
|||||||||||||
|
Revenues
|
$2,134
|
$1,060
|
$709
|
$1,769
|
$365
|
21%
|
|||||||||||||
(a) Reflects the inclusion of our premium cable channel, Paramount+ with Showtime, which was included in the TV Media segment in
2025, and updates to our segment expense allocations to better reflect how we operate and make cost decisions across the business.
(b) Supplemental Non-GAAP Pro Forma Revenues for the third quarter of 2025 reflect the combination of the Predecessor Non-GAAP
Direct-to-Consumer revenues for the period from July 1 - August 6, 2025 with the Successor revenues for the Direct-to-Consumer
segment for the period from August 7 - September 30, 2025. While the Successor and Predecessor periods are distinct reporting
periods, revenues were not impacted by the new accounting basis established for Paramount Global's net assets, and are
supplementally presented on a pro forma combined basis to help investors view these revenues in a manner consistent with our
management.
(c) Primarily reflects revenues from the licensing of content rights acquired by BET+.
(d) Other segment expenses for our Direct-to-Consumer segment 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.
(e) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to
Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(f) Reflects the comparison between the Successor results for the three months ended September 30, 2026 to the non-GAAP pro forma
revenues for the three months ended September 30, 2025.
-86-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
|
Successor
|
Predecessor
|
|||||||||||
|
Three Months
Ended
September 30,
|
Three Months
Ended
September 30,
|
Increase /(Decrease)
|
||||||||||
|
2026
|
2025
|
$
|
%
|
|||||||||
|
Paramount+ Global
|
||||||||||||
|
Subscribers (a)
|
82.2
|
77.9
|
4.3
|
6%
|
||||||||
|
ARPU (in dollars) (b)
|
$8.69
|
$7.62
|
$1.07
|
14%
|
||||||||
(a) Subscribers include customers who are registered for Paramount+, either directly through our owned and
operated apps and websites, or through third-party distributors. Subscribers also include customers who are
provided with access through a subscription bundle with a domestic linear video streaming service (vMVPD)
or an international third-party distributor. Our subscriber count includes only paid subscriptions and reflects
the number of subscribers as of the applicable period-end date.
(b) We calculate average revenue per subscriber ("ARPU") as total Paramount+ revenues during the applicable
period divided by the average of Paramount+ subscribers at the beginning and end of the period, further
divided by the number of months in the period.
Revenues
Advertising
The 13% pro forma increase in advertising revenues was driven by growth in impressions for Paramount+ and
higher political advertising sales. Advertising revenues in 2026 benefited from the streaming of UFC events on
Paramount+ under our new rights agreement that began in January 2026.
Affiliate and Subscription
Affiliate and subscription revenues for the third quarter of 2026 benefited from pricing increases and growth in
Paramount+ subscribers. Compared with September 30, 2025, Paramount+ subscribers increased 4.3 million, or
6%, driven by growth in domestic subscribers. Compared with the third quarter of 2025, ARPU grew 14% to
$8.69. The 10% pro forma increase in affiliate and subscription revenue reflects growth for Paramount+, partially
offset by a negative impact of 6% from combined revenue declines for BET+ and Paramount+ with Showtime. As
discussed above, BET+ was integrated into Paramount+ during the second quarter of 2026. The Paramount+ with
Showtime decrease reflects declines in linear subscribers.
During the third quarter of 2026, Paramount+ subscribers increased 0.6 million, or 1%, compared with 81.6 million
at June 30, 2026.
-87-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Expenses
Content Costs
Content costs for the third quarter of 2026 reflect higher costs associated with sporting events on Paramount+,
mainly for the UFC, and ongoing investment in original programming, partially offset by the impact of the
reduction in programming assets from the pushdown of the Ultimate Parent's basis.
Advertising and Marketing
Advertising and marketing expenses for the third quarter of 2026 include marketing costs for UFC events on
Paramount+.
Other
Other expenses for the third quarter of 2026 reflect higher revenue-sharing costs, mainly for third-party
distribution.
Adjusted EBITDA
Adjusted EBITDA in the third quarter of 2026 reflects the impact from incremental costs associated with sporting
events and investment in original programming, partially offset by the pro forma revenue growth.
-88-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Direct-to-Consumer
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Direct-to-Consumer
Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
Direct-to-Consumer (GAAP)
|
Direct-to-
Consumer
(GAAP)
|
Adjustments (a)
|
Direct-to-
Consumer
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From January 1 - August 6,
|
Nine Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (f)
|
|||||||||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
||||||||||||||||||||||
|
Advertising
|
$1,594
|
$300
|
$1,146
|
$-
|
$1,146
|
$1,446
|
$148
|
10%
|
|||||||||||||||||||
|
Affiliate and
subscription
|
5,788
|
1,043
|
3,940
|
4,191
|
5,234
|
||||||||||||||||||||||
|
Licensing (c)
|
-
|
-
|
(2)
|
(100)
|
|||||||||||||||||||||||
|
Revenues
|
7,382
|
1,344
|
5,087
|
5,338
|
$6,682
|
$700
|
10%
|
||||||||||||||||||||
|
Content costs
|
3,727
|
2,712
|
2,772
|
||||||||||||||||||||||||
|
Advertising
and marketing
|
|||||||||||||||||||||||||||
|
Other (d)
|
1,870
|
1,473
|
(78)
|
1,395
|
|||||||||||||||||||||||
|
Expenses
|
6,540
|
1,035
|
4,934
|
4,951
|
|||||||||||||||||||||||
|
Adjusted
EBITDA/OIBDA (e)
|
$842
|
$309
|
$153
|
$234
|
$387
|
||||||||||||||||||||||
|
Successor
|
Predecessor
|
Supplemental Pro Forma
Revenues (b)
|
|||||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (f)
|
|||||||||||||||
|
Paramount+ (Global)
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
|||||||||||||
|
Revenues
|
$6,169
|
$1,060
|
$4,166
|
$5,226
|
$943
|
18%
|
|||||||||||||
(a) Reflects the inclusion of our premium cable channel, Paramount+ with Showtime, which was included in the TV Media segment in
2025, and updates to our segment expense allocations to better reflect how we operate and make cost decisions across the business.
(b) Supplemental Non-GAAP Pro Forma Revenues for the nine months ended September 30, 2025 reflect the combination of the
Predecessor Non-GAAP Direct-to-Consumer revenues for the period from January 1 - August 6, 2025 with the Successor revenues
for the Direct-to-Consumer segment for the period from August 7 - September 30, 2025. While the Successor and Predecessor
periods are distinct reporting periods, revenues were not impacted by the new accounting basis established for Paramount Global's
net assets, and are supplementally presented on a pro forma combined basis to help investors view these revenues in a manner
consistent with our management.
(c) Primarily reflects revenues from the licensing of content rights acquired by BET+.
(d) Other segment expenses for our Direct-to-Consumer segment 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.
(e) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to
Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(f) Reflects the comparison between the Successor results for the nine months ended September 30, 2026 to the non-GAAP pro forma
revenues for the nine months ended September 30, 2025.
-89-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Revenues
Advertising
The 10% pro forma increase in advertising revenues was driven by growth in impressions for Paramount+.
Advertising revenues in 2026 benefited from the streaming of UFC events on Paramount+.
Affiliate and Subscription
Affiliate and subscription revenues for the nine months ended September 30, 2026 benefited from pricing increases
and growth in Paramount+ subscribers. The 11% pro forma increase reflects growth for Paramount+, partially
offset by a negative impact of 3% from combined revenue declines for BET+ and Paramount+ with Showtime.
Expenses
Content Costs
Content costs for the nine months ended September 30, 2026 reflect higher costs associated with sporting events on
Paramount+, mainly for the UFC, and ongoing investment in original programming, partially offset by the impact
from the net reduction in programming assets resulting from the pushdown of the Ultimate Parent's basis.
Other
Other expenses in 2026 reflect higher revenue-sharing costs, mainly for third-party distribution.
Adjusted EBITDA
Adjusted EBITDA for the nine months ended September 30, 2026 benefited from the pro forma revenue growth,
and the impact on content costs from the net reduction in programming assets resulting from the pushdown of the
Ultimate Parent's basis, partially offset by higher costs associated with sporting events on 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 television studio operations and the premium cable network, Paramount+
with Showtime.
-90-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Three Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
TV Media Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
TV Media (GAAP)
|
TV Media
(GAAP)
|
Adjustments (a)
|
TV Media
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From July 1 - August 6,
|
Three Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (e)
|
|||||||||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
||||||||||||||||||||||
|
Advertising
|
$1,344
|
$977
|
$485
|
$(1)
|
$484
|
$1,461
|
$(117)
|
(8)%
|
|||||||||||||||||||
|
Affiliate and
subscription
|
1,553
|
(40)
|
1,640
|
(87)
|
(5)
|
||||||||||||||||||||||
|
Licensing and
other
|
(189)
|
(12)
|
(9)
|
||||||||||||||||||||||||
|
Revenues
|
3,024
|
2,042
|
1,428
|
(230)
|
1,198
|
$3,240
|
$(216)
|
(7)%
|
|||||||||||||||||||
|
Content costs
|
1,115
|
(153)
|
|||||||||||||||||||||||||
|
Advertising
and marketing
|
(7)
|
||||||||||||||||||||||||||
|
Other (c)
|
(73)
|
||||||||||||||||||||||||||
|
Expenses
|
1,996
|
1,482
|
1,146
|
(233)
|
|||||||||||||||||||||||
|
Adjusted
EBITDA/OIBDA (d)
|
$1,028
|
$560
|
$282
|
$3
|
$285
|
||||||||||||||||||||||
|
Successor
|
Predecessor
|
TV Media Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
TV Media (GAAP)
|
TV Media
(GAAP)
|
Adjustments (a)
|
TV Media
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From July 1 - August 6,
|
Three Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (e)
|
|||||||||||||||||||||||
|
Advertising revenues
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
|||||||||||||||||||||
|
Domestic
|
$1,177
|
$818
|
$395
|
$(1)
|
$394
|
$1,212
|
$(35)
|
(3)%
|
|||||||||||||||||||
|
International
|
-
|
(82)
|
(33)
|
||||||||||||||||||||||||
|
Total
|
$1,344
|
$977
|
$485
|
$(1)
|
$484
|
$1,461
|
$(117)
|
(8)%
|
|||||||||||||||||||
(a) Reflects the transfer of the historical TV Media studio operations to the Studios segment and our premium cable channel, Paramount+
with Showtime, to the Direct-to-Consumer segment, and updates to our segment expense allocations to better reflect how we operate
and make cost decisions across the business.
(b) Supplemental Non-GAAP Pro Forma Revenues for the third quarter of 2025 reflect the combination of the Predecessor Non-GAAP
TV Media revenues for the period from July 1 - August 6, 2025 with the Successor revenues for the TV Media segment for the period
from August 7 - September 30, 2025. While the Successor and Predecessor periods are distinct reporting periods, revenues were not
impacted by the new accounting basis established for Paramount Global's net assets, and are supplementally presented on a pro
forma combined basis to help investors view these revenues in a manner consistent with our management.
(c) Other segment expenses for our TV Media segment 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) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to
Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(e) Reflects the comparison between the Successor results for the three months ended September 30, 2026 to the non-GAAP pro forma
revenues for the three months ended September 30, 2025.
-91-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Revenues
Advertising
Advertising revenues in the third quarter of 2026 were primarily impacted by declines in the linear advertising
market. The 8% pro forma advertising revenue decline also includes a decrease of 3% from the absence of
advertising revenues from Telefe and Chilevisión, which were sold in October 2025 and January 2026,
respectively, offset by an increase of 3% from higher political advertising revenues.
Affiliate and Subscription
Affiliate and subscription revenues in the third quarter of 2026 were impacted by declines in linear subscribers.
Licensing and Other
Licensing and other revenues in 2026 and the 2025 Successor period primarily include revenues from the licensing
of first-run syndicated programming. Revenues from our television studios are not included in 2026 and the 2025
Successor period, but were included in the 2025 Predecessor period.
Expenses
Content costs, advertising and marketing expenses, and other expenses in the third quarter of 2026 benefited from
cost savings initiatives.
Adjusted EBITDA
Adjusted EBITDA in the third quarter of 2026 reflects the impact of cost savings initiatives.
-92-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
TV Media
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
TV Media Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
TV Media (GAAP)
|
TV Media
(GAAP)
|
Adjustments (a)
|
TV Media
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From January 1 - August 6,
|
Nine Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (e)
|
|||||||||||||||||||||||
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
||||||||||||||||||||||
|
Advertising
|
$4,685
|
$977
|
$4,180
|
$(5)
|
$4,175
|
$5,152
|
$(467)
|
(9)%
|
|||||||||||||||||||
|
Affiliate and
subscription
|
4,754
|
4,302
|
(251)
|
4,051
|
5,035
|
(281)
|
(6)
|
||||||||||||||||||||
|
Licensing and
other
|
1,495
|
(1,185)
|
(12)
|
(3)
|
|||||||||||||||||||||||
|
Revenues
|
9,818
|
2,042
|
9,977
|
(1,441)
|
8,536
|
$10,578
|
$(760)
|
(7)%
|
|||||||||||||||||||
|
Content costs
|
4,019
|
4,956
|
(980)
|
3,976
|
|||||||||||||||||||||||
|
Advertising
and marketing
|
(43)
|
||||||||||||||||||||||||||
|
Other (c)
|
2,434
|
2,626
|
(499)
|
2,127
|
|||||||||||||||||||||||
|
Expenses
|
6,672
|
1,482
|
7,910
|
(1,522)
|
6,388
|
||||||||||||||||||||||
|
Adjusted
EBITDA/OIBDA (d)
|
$3,146
|
$560
|
$2,067
|
$81
|
$2,148
|
||||||||||||||||||||||
|
Successor
|
Predecessor
|
TV Media Supplemental
Pro Forma Revenues (b)
(Non-GAAP)
|
|||||||||||||||||||||||||
|
TV Media (GAAP)
|
TV Media
(GAAP)
|
Adjustments (a)
|
TV Media
(Non-
GAAP)
|
||||||||||||||||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From January 1 - August 6,
|
Nine Months
Ended
September 30,
|
Pro Forma
Increase/
(Decrease) (e)
|
|||||||||||||||||||||||
|
Advertising revenues
|
2026
|
2025
|
2025
|
2025
|
$
|
%
|
|||||||||||||||||||||
|
Domestic
|
$4,149
|
$818
|
$3,585
|
$(5)
|
$3,580
|
$4,398
|
$(249)
|
(6)%
|
|||||||||||||||||||
|
International
|
-
|
(218)
|
(29)
|
||||||||||||||||||||||||
|
Total
|
$4,685
|
$977
|
$4,180
|
$(5)
|
$4,175
|
$5,152
|
$(467)
|
(9)%
|
|||||||||||||||||||
(a) Reflects the transfer of the historical TV Media studio operations to the Studios segment and our premium cable channel, Paramount+
with Showtime, to the Direct-to-Consumer segment, and updates to our segment expense allocations to better reflect how we operate
and make cost decisions across the business.
(b) Supplemental Non-GAAP Pro Forma Revenues for the nine months ended September 30, 2025 reflect the combination of the
Predecessor Non-GAAP TV Media revenues for the period from January 1 - August 6, 2025 with the Successor revenues for the TV
Media segment for the period from August 7 - September 30, 2025. While the Successor and Predecessor periods are distinct
reporting periods, revenues were not impacted by the new accounting basis established for Paramount Global's net assets, and are
supplementally presented on a pro forma combined basis to help investors view these revenues in a manner consistent with our
management.
(c) Other segment expenses for our TV Media segment 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) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to
Adjusted EBITDA. See Note 14 to the consolidated financial statements.
(e) Reflects the comparison between the Successor results for the nine months ended September 30, 2026 to the non-GAAP pro forma
revenues for the nine months ended September 30, 2025.
-93-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Revenues
Advertising
Advertising revenues for the nine months ended September 30, 2026 were impacted by declines in the linear
advertising market. The 2025 Predecessor period from January 1 - August 6, 2025 benefited from CBS's broadcast
in the second quarter of 2025 of the National Semifinals and National Championship games of the NCAA
Tournament, which we have the rights to broadcast every other year.
On a pro forma basis, advertising revenues decreased 9%, which includes a decrease of 3% from the comparison to
the NCAA Tournament, as well as a decrease of 2% from the absence of advertising revenues from Telefe and
Chilevisión, which were sold in October 2025 and January 2026, respectively, partially offset by an increase of 2%
from higher political advertising revenues.
Affiliate and Subscription
Affiliate and subscription revenues for the nine months ended September 30, 2026 were impacted by declines in
linear subscribers.
Licensing and Other
Licensing and other revenues in 2026 and the 2025 Successor period primarily include revenues from the licensing
of first-run syndicated programming. Revenues from our television studios are not included in 2026 and the 2025
Successor period, but were included in the 2025 Predecessor period.
Expenses
Content costs, advertising and marketing expenses, and other expenses for the nine months ended September 30,
2026 benefited from cost savings initiatives. Content costs for the nine months ended September 30, 2026 and the
2025 Successor period from August 7 - September 30, 2025 also reflect the impact from the net reduction in
programming assets resulting from the pushdown of the Ultimate Parent's basis. Content costs for the 2025
Predecessor period from January 1 - August 6, 2025 included costs associated with the broadcast of the National
Semifinals and National Championship games of the NCAA Tournament in the second quarter of 2025.
Adjusted EBITDA
Adjusted EBITDA for the nine months ended September 30, 2026 reflects the impact of cost savings initiatives and
the pushdown of the Ultimate Parent's basis.
Liquidity and Capital Resources
Sources and Uses of Cash
We project anticipated cash requirements for our operating, investing and financing needs as well as cash flows
expected to be generated and available to meet these needs. Our operating needs include, among other items,
expenditures for content for our broadcast and cable networks and streaming services, including television and film
programming, sports rights, and talent contracts, as well as advertising and marketing costs to promote our content
and platforms; payments for leases, interest, and income taxes; and pension funding obligations.
Our investing and financing spending includes capital expenditures; acquisitions; funding of investments, including
our streaming joint venture, SkyShowtime, under which we and our joint venture partner committed to support
-94-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
initial operations over a multiyear period; discretionary share repurchases; dividends; and principal payments on
our outstanding indebtedness. Our long-term debt obligations due over the next five years (including the
borrowings under our Unsecured Credit Facility defined and described below in Capital Structure) were $5.91
billion as of September 30, 2026. Following the completion of the WBD Merger, and the related financing
transactions described in Capital Structure, long-term debt obligations due over the five years from the Closing
Date (excluding finance leases) were $20.29 billion. We routinely assess our capital structure and opportunistically
enter into transactions to manage our outstanding debt maturities, which could result in a charge from the early
extinguishment of debt.
In connection with the WBD Merger we issued or assumed additional debt with an aggregate principal amount of
$72.1 billion. We used the proceeds of the new borrowings, together with cash on hand and the proceeds of the
PIPE Transaction, to fund the acquisition consideration, repay WBD's term loans, purchase notes of the WBD
Issuers in the Tender Offers, repay all borrowings under the Unsecured Credit Facility, and pay related fees and
expenses. Our $5.0 billion senior secured revolving credit facility was undrawn at closing and is available for
general corporate purposes. As a result of the increase in our indebtedness, we expect our interest payments to
increase significantly in future periods, with annual interest payments expected to be approximately $6 billion. See
Capital Structure below for a description of our debt instruments, including their interest rates, maturities and
covenants.
In addition, we expect to pay down and terminate WBD's $4.0 billion accounts receivable securitization program
(of which $3.9 billion was utilized at the time of the WBD Merger) within 90 days of the Closing Date.
Funding for both our short-term and long-term operating, investing and financing needs will come primarily from
cash flows from operating activities, cash and cash equivalents, which were $1.38 billion as of September 30,
2026, and our ability to refinance our debt. Any additional cash funding requirements are financed with short-term
borrowings, including commercial paper, if available, and borrowings under the Revolving Credit Facility (defined
below), and long-term debt.
Our access to capital markets and the cost of any new borrowings are impacted by factors outside our control,
including economic and market conditions, as well as by ratings assigned by independent rating agencies, which
also affect the applicable margins on borrowings under the Pro Rata Credit Agreement (see "Capital Structure"
below). As a result, there can be no assurance that we will be able to access capital markets on terms and
conditions favorable to us.
-95-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Cash Flows
The changes in cash and cash equivalents were as follows:
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
|||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||
|
2026
|
2025
|
2025
|
||||||||||
|
Net cash flow provided by operating activities
|
$627
|
$268
|
$164
|
|||||||||
|
Net cash flow used for investing activities
|
(3,253)
|
(42)
|
(276)
|
|||||||||
|
Net cash flow provided by (used for) financing activities
|
(821)
|
(159)
|
||||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
(33)
|
|||||||||||
|
Net decrease in cash and cash equivalents
|
$(1,897)
|
$(588)
|
$(201)
|
|||||||||
Operating Activities
Net cash flow provided by operating activities includes payments of $475 million for the nine months ended
September 30, 2026 (Successor), $80 million for the period from August 7 - September 30, 2025 (Successor), and
$226 million for the period from January 1 - August 6, 2025 (Predecessor) associated with restructuring,
transaction-related items and transformation initiatives. Our transformation initiatives are related to advancing our
technology and operations, including the unification and evolution of systems and platforms, and migration to the
cloud.
Investing Activities
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
|||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||
|
2026
|
2025
|
2025
|
||||||||||
|
Investments
|
$(224)
|
$(1)
|
$(205)
|
|||||||||
|
Capital expenditures (a)
|
(242)
|
(46)
|
(134)
|
|||||||||
|
Advance consideration for WBD acquisition (b)
|
(2,800)
|
-
|
-
|
|||||||||
|
Proceeds from dispositions (c)
|
||||||||||||
|
Other investing activities
|
(6)
|
-
|
(3)
|
|||||||||
|
Net cash flow used for investing activities
|
$(3,253)
|
$(42)
|
$(276)
|
|||||||||
(a) Includes payments associated with the implementation of our transformation initiatives of $42 million for the nine
months ended September 30, 2026 (Successor), $1 million for the 2025 Successor period, and $2 million for the 2025
Predecessor period.
(b) Reflects the termination fee paid to Netflix, on behalf of WBD (See Note 2 to the consolidated financial statements).
(c) 2025 Predecessor period primarily reflects proceeds received from the disposition of a noncore business, and all periods
include the collection of receivables associated with the 2022 sale of a 37.5% interest in The CW.
-96-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Financing Activities
Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
|||||||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||
|
2026
|
2025
|
2025
|
||||||||||
|
Borrowings under credit facility
|
$3,595
|
$-
|
$-
|
|||||||||
|
Repayment of credit facility borrowings
|
(1,930)
|
-
|
-
|
|||||||||
|
Repayment of notes and debentures
|
(347)
|
-
|
-
|
|||||||||
|
Repayment of Skydance Media credit facility
|
-
|
(720)
|
-
|
|||||||||
|
Dividends paid on common stock
|
(174)
|
(33)
|
(101)
|
|||||||||
|
Payment of payroll taxes in lieu of issuing shares for stock-based
compensation
|
(122)
|
(63)
|
(26)
|
|||||||||
|
Payments to noncontrolling interests
|
(190)
|
(2)
|
(32)
|
|||||||||
|
Other financing activities
|
(70)
|
(3)
|
-
|
|||||||||
|
Net cash flow provided by (used for) financing activities
|
$762
|
$(821)
|
$(159)
|
|||||||||
Common Stock Dividends
The following table presents dividends declared per share and total dividends for Skydance Corporation Class A
and B Common Stock for the Successor periods and Paramount Global's Class A and Class B Common Stock for
the Predecessor periods.
Three and Nine Months Ended September 30, 2026 and 2025
|
Successor
|
Predecessor
|
Successor
|
Predecessor
|
||||||||||||||||||||||
|
Three Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
July 1 -
August 6,
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
September 30,
|
Period From
January 1 -
August 6,
|
||||||||||||||||||||
|
2026
|
2025
|
2025
|
2026
|
2025
|
2025
|
||||||||||||||||||||
|
Class A and Class B
Common Stock
|
|||||||||||||||||||||||||
|
Dividends declared per
common share
|
$.05
|
$.05
|
n/a
|
$.15
|
$.05
|
$.10
|
|||||||||||||||||||
|
Total common stock
dividends
|
$60
|
$58
|
n/a
|
$179
|
$58
|
$70
|
|||||||||||||||||||
-97-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Capital Structure
The following table sets forth our debt.
|
At
|
At
|
||||||
|
September 30, 2026
|
December 31, 2025
|
||||||
|
Senior debt
|
$11,760
|
$12,038
|
|||||
|
Junior debt
|
1,617
|
1,617
|
|||||
|
Borrowings under unsecured credit facility
|
1,665
|
-
|
|||||
|
Obligations under finance leases
|
|||||||
|
Total debt (a)
|
15,044
|
13,658
|
|||||
|
Less current portion
|
|||||||
|
Total long-term debt, net of current portion
|
$14,376
|
$13,225
|
|||||
(a) In connection with the pushdown of the Ultimate Parent's basis, our debt was recorded at fair value as of August 7,
2025, which resulted in a net decrease to our total debt balance of $898 million, reflecting the reversal of a net
unamortized discount of $390 million and unamortized deferred financing fees of $71 million, and a reduction of
$1.36 billion to adjust our debt to its fair value (see Note 3 to the consolidated financial statements). The adjustments
to fair value for each of our senior and junior debt issuances are being amortized over the remaining term of the
applicable issuance within interest expense. At September 30, 2026 and December 31, 2025, the total net unamortized
fair value adjustments for our senior and junior debt was $1.25 billion and $1.32 billion, respectively. The face value
of our total debt at September 30, 2026 and December 31, 2025 was $16.29 billion (including unsecured credit facility
borrowings discussed below) and $14.98 billion, respectively.
Senior Debt
At September 30, 2026, our senior debt was comprised of senior notes and debentures due between 2026 and 2050
with interest rates ranging from 2.90% to 7.875%.
In January 2026, we repaid our $347 million of 4.0% senior notes at maturity and in October 2026 we repaid our
$86 million of 3.70% senior notes at maturity.
Junior Debt
At September 30, 2026, our junior debt was comprised of $628 million 6.25% junior subordinated debentures due
2057 and $989 million 6.375% junior subordinated debentures due 2062. The subordination and extended term, as
well as an interest deferral option of our junior subordinated debentures, provide significant credit protection
measures for senior creditors.
-98-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Supplemental Guarantor Financial Information
Paramount Global is a 100% owned subsidiary of Skydance Corporation. Upon the closing of the Skydance
Transactions, Skydance Corporation provided a full and unconditional parent guarantee of Paramount Global's
senior and junior debt. None of Skydance Corporation's other subsidiaries are guarantors of Paramount Global's
debt.
The tables below present combined summarized financial information for Skydance Corporation, the parent
guarantor, and Paramount Global, the issuer (jointly the "Obligor Group") as standalone companies after
elimination of intercompany transactions and balances, and do not include nonguarantor and nonissuer
subsidiaries. This summarized financial information has been prepared and presented pursuant to the Securities and
Exchange Commission Regulation S-X Rule 13-01, "Financial Disclosures about Guarantors and Issuers of
Guaranteed Securities" and is not intended to present the financial position or results of operations of the Obligor
Group in accordance with U.S. GAAP.
|
Summarized Statement of Operations
|
|||||||
|
Nine Months
Ended
September 30,
|
Period From
August 7 -
December 31,
|
||||||
|
2026
|
2025
|
||||||
|
Operating loss
|
$(358)
|
$(82)
|
|||||
|
Interest expense, net
|
$(718)
|
$(306)
|
|||||
|
Intercompany interest
|
$(242)
|
$(132)
|
|||||
|
Net loss
|
$(845)
|
$(546)
|
|||||
|
Summarized Balance Sheets
|
|||||||
|
At
|
At
|
||||||
|
September 30, 2026
|
December 31, 2025
|
||||||
|
Current assets
|
$791
|
$1,350
|
|||||
|
Noncurrent assets
|
$290
|
$293
|
|||||
|
Debt, current
|
$667
|
$432
|
|||||
|
Current liabilities
|
$627
|
$664
|
|||||
|
Long-term debt
|
$14,375
|
$13,223
|
|||||
|
Noncurrent liabilities
|
$2,229
|
$2,222
|
|||||
|
Notes payable to nonguarantor subsidiaries
|
$1,898
|
$975
|
|||||
Commercial Paper
At both September 30, 2026 and December 31, 2025, we had no outstanding commercial paper borrowings.
-99-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Unsecured Credit Facility
In April 2026, we entered into an amendment to our previous credit facility (the "Unsecured Credit Facility"),
increasing the commitments from $3.50 billion to $5.00 billion. The Unsecured Credit Facility was used for
general corporate purposes and to support commercial paper borrowings, if any and also allowed us to borrow, at
our option, in certain foreign currencies up to specified limits. In the first quarter of 2026, in connection with the
$2.8 billion termination fee paid to Netflix (see Note 2 to the consolidated financial statements), we borrowed
$2.15 billion under the Unsecured Credit Facility. As of September 30, 2026, outstanding borrowings totaled
$1.67 billion at a weighted average interest rate of 5.83% and the remaining availability was $3.3 billion. On the
Closing Date, in connection with the consummation of the WBD Merger, we repaid all borrowings with the
funding from the PIPE Transaction described in Note 2 to the consolidated financial statements and terminated all
credit commitments outstanding under the Unsecured Credit Facility.
The Unsecured Credit Facility had one principal financial covenant which set a maximum Consolidated Total
Leverage Ratio, which was 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 Unsecured Credit Facility) for the trailing twelve-month period at the end of each quarter.
The maximum ratio was 4.50x as of September 30, 2026 and we met the covenant.
Other Bank Borrowings
At both September 30, 2026 and December 31, 2025, there were no outstanding bank borrowings under Miramax's
$50 million credit facility that matures in November 2027.
Subsequent Events in Connection with the WBD Merger
In connection with the WBD Merger we issued or assumed additional debt with an aggregate principal amount of
$72.1 billion. This amount consists of (i) $56.9 billion of debt incurred to finance the WBD Merger, comprised of
$5.0 billion of borrowings under the Term A Loan Facilities and $9.5 billion of Term B-1 Loans, each under the
Pro Rata Credit Agreement, $30.0 billion of First Lien Senior Secured Notes (the "First Lien Notes"), and
$12.4 billion of Second Lien Senior Secured Notes (the "Second Lien Notes"), (ii) $12.6 billion of Second Lien
Senior Secured Notes issued in the Exchange Offers (the "Second Lien Exchange Notes"), and (iii) $2.7 billion of
other outstanding unsecured notes and debentures of the WBD Issuers that we assumed. The newly issued debt is
further discussed below.
Pro Rata Credit Agreement
The Pro Rata Credit Agreement provides for (i) a $5.00 billion five-year senior secured revolving credit facility
(the "Revolving Credit Facility"), (ii) a $2.5 billion three-year senior secured term loan A-1 facility and (iii) a
$2.5 billion five-year senior secured term loan A-2 facility (together, the "Term A Loan Facilities"). The
availability and initial funding of the facilities under the Pro Rata Credit Agreement were subject to the
consummation of the acquisition of WBD, the termination of the Unsecured Credit Facility, and other customary
conditions and no amounts were outstanding as of September 30, 2026.
-100-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
On the Closing Date, in connection with the completion of the WBD Merger, we borrowed the full $2.5 billion
under each of the Term A Loan Facilities. The commitments under the Revolving Credit Facility became available
on the Closing Date, and no amounts were drawn. Also on the Closing Date, we entered into Amendment No. 1 to
the Pro Rata Credit Agreement ("Credit Agreement Amendment No. 1"), which provided for a senior secured
incremental tranche of term B loans consisting of (i) $8.5 billion of seven-year U.S. dollar-denominated term B-1
loans (the "Dollar Term B-1 Loans") and (ii) €850 million of seven-year euro-denominated term B-1 loans (the
"Euro Term B-1 Loans" and, together with the Dollar Term B-1 Loans, the "Term B-1 Loans"). We borrowed the
full amount of the Term B-1 Loans on the Closing Date. The Term B-1 Loans mature on the seventh anniversary of
the Closing Date.
The loans drawn under the Term A Loan Facilities and the Revolving Credit Facility bear interest at a rate
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 Skydance's corporate family 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 EURIBOR, SONIA and TIBOR, respectively.
The Dollar Term B-1 Loans bear interest, at our option, at a rate per annum equal to either the Alternate Base Rate
(as defined in the Pro Rata Credit Agreement) or Term SOFR plus a margin based on our Leverage Ratio that
ranges between 1.75% and 1.50% for Alternate Base Rate loans and 2.75% and 2.50% for Term SOFR Rate loans.
The Euro Term B-1 Loans bear interest at a rate per annum equal to EURIBOR plus a margin based on our
Leverage Ratio that ranges between 2.75% and 2.50%. Beginning with the quarter ending December 31, 2029, the
Dollar Term B-1 Loans will amortize at 1.00% of the initial principal amount per annum in quarterly installments,
with the remaining balance payable at maturity. No regular amortization is required with respect to the Euro Term
B-1 Loans.
Interest rates on benchmark rate borrowings under the Pro Rata Credit Agreement, including the Term A Loan
Facilities and the Term B-1 Loans, reset at the beginning of each interest period, and as a result, interest expense
on these borrowings will fluctuate with changes in market interest rates. In addition, the applicable margins may
change based on changes in our corporate family rating or the Leverage Ratio, as applicable.
Priority
The obligations under the Pro Rata Credit Agreement have been secured on a first lien basis on all or substantially
all of the assets of Skydance and its U.S. subsidiaries (including Paramount Global, Skydance Media, LLC, and
each of its respective U.S. subsidiaries) that are guarantors, excluding real property and subject to other customary
exceptions and a cap on the amount of assets and property of Paramount Global that can be subject to a lien
securing the Pro Rata Credit Agreement. On the date Skydance achieves certain credit ratings and satisfies certain
other conditions as specified in the Pro Rata Credit Agreement (such date, the "Investment Grade Fall-Away
Date"), the obligations under the Pro Rata Credit Agreement will become unsecured, and the guarantee of such
obligations by the subsidiary guarantors will be released (subject to certain exceptions).
-101-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Covenants
The Pro Rata Credit Agreement contains customary representations and warranties and also contains financial
covenants that require our Leverage Ratio and First Lien Net Leverage Ratio (each as defined in the Pro Rata
Credit Agreement) not to exceed 5.50x and 3.25x, respectively, in each case, at the end of each fiscal quarter. On
and after the Investment Grade Fall-Away Date, the First Lien Net Leverage Ratio financial covenant will cease to
apply and the Leverage Ratio financial covenant will be modified requiring that our Leverage Ratio not exceed
4.50x at the end of each fiscal quarter.
Optional Redemption
The loans under the Pro Rata Credit Agreement may be voluntarily prepaid, and unutilized commitments
thereunder may be voluntarily reduced, without penalty, other than customary breakage costs and, in the case of
the Term B-1 Loans, a 1.00% premium on Term B-1 Loans that are prepaid, converted or subjected to a pricing
reduction within six months after the Closing Date.
Senior Secured Notes
On October 5, 2026, we issued, in private placements exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), $30.0 billion aggregate principal amount of First Lien Notes and $11.4 billion
aggregate principal amount of Second Lien Notes, together with €885 million aggregate principal amount of
Second Lien Notes denominated in euros (First Lien Notes together with the Second Lien Notes, the "Senior
Secured Notes"). The Senior Secured Notes bear interest at fixed rates, payable semi-annually in arrears, and
consist of the following:
|
Issuance of Senior Secured Notes
|
Face Value
|
||
|
6.300% First Lien Notes due 2028
|
$3,500
|
||
|
6.550% First Lien Notes due 2029
|
3,500
|
||
|
7.050% First Lien Notes due 2031
|
6,500
|
||
|
7.550% First Lien Notes due 2033
|
5,250
|
||
|
7.900% First Lien Notes due 2036
|
5,250
|
||
|
8.650% First Lien Notes due 2046
|
1,250
|
||
|
8.750% First Lien Notes due 2056
|
3,500
|
||
|
8.900% First Lien Notes due 2066
|
1,250
|
||
|
8.250% Second Lien Notes due 2031
|
6,000
|
||
|
8.875% Second Lien Notes due 2034
|
4,000
|
||
|
9.125% Second Lien Notes due 2036
|
1,400
|
||
|
7.000% Euro Second Lien Notes due 2031 (€885 million)
|
1,003
|
(a)
|
|
|
Total Senior Secured Notes
|
$42,403
|
||
(a) Translated at the spot rate at the time of pricing.
-102-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Priority
The First Lien Notes are secured by first-priority liens on all or substantially all of the assets of Skydance and the
Guarantors (as defined below) (the "Collateral"), subject to permitted liens and certain exceptions. The First Lien
Notes are guaranteed on a senior secured basis by each of Skydance's existing and future wholly owned domestic
subsidiaries that is a borrower under or guarantees obligations under the Pro Rata Credit Agreement (collectively,
the "Guarantors"), subject to certain exceptions. The Second Lien Notes are secured by second-priority liens on the
Collateral, subject to permitted liens and certain exceptions. The Second Lien Notes are guaranteed on a senior
secured basis by the Guarantors. Upon the occurrence of an Investment Grade Event (as defined in the applicable
supplemental indenture for each series of notes with respect to the Senior Secured Notes, subject to certain
conditions (including the concurrent release of liens and guarantees securing other secured debt and the Company
having no greater than $250 million of term B loans outstanding at such time), the liens on the Collateral securing
such series of notes will be released and the note guarantees with respect to such series will be released. In
addition, certain covenants set forth in the applicable supplemental indenture relating to asset sales and future
subsidiary guarantors will cease to apply to such series of notes. These releases and covenant suspensions are
permanent and will not be reinstated upon any subsequent downgrade or withdrawal of the applicable investment
grade ratings.
Registration Rights
Pursuant to the registration rights agreement, dated as of October 5, 2026 (the "First Lien Senior Secured Notes
Registration Rights Agreement"), we have agreed to use commercially reasonable efforts to (i) file a registration
statement with respect to a registered offer to exchange each series of the First Lien Notes for new notes with terms
substantially identical in all material respects to such series of the First Lien Notes (such new notes, the "Exchange
Notes") and cause the registration statement to be declared effective under the Securities Act within 730 days of
October 5, 2026, or (ii) in certain circumstances, file a shelf registration statement with respect to resales of the
First Lien Notes. The Second Lien Notes do not have any registration rights.
Optional Redemption and Change of Control Provisions
Each series of First Lien Notes may be redeemed at our option, in whole or in part, at a "make-whole" premium
prior to the applicable par call date and at 100% of principal on or after that date. For each series of First Lien
Notes, the par call date is within one to six months of maturity. For the Second Lien Notes, prior to October 15,
2028 (2031 Euro and 2031 Second Lien Notes), October 15, 2029 (2034 Second Lien Notes) and October 15, 2031
(2036 Second Lien Notes), we may redeem each series, in whole or in part, at a "make-whole" premium.
Thereafter each series of Second Lien Notes can be redeemed at call premiums starting at 3.500% to 4.563% of
principal and declining to zero one year prior to maturity (2031 Euro and 2031 Second Lien Notes) and three years
prior to maturity (2034 and 2036 Second Lien Notes). In addition, before October 15, 2028 (2031 Euro and 2031
Second Lien Notes) or October 15, 2029 (2034 and 2036 Second Lien Notes), we may redeem up to 40% of a
series of Second Lien Notes with the proceeds of equity offerings at 107.0% to 109.125% of principal, and up to
10% of such a series per calendar year at 103% of principal, plus in each case accrued and unpaid interest.
In addition, upon a change of control triggering event, holders of our Senior Secured Notes may require us to
repurchase their notes at 101% of principal plus accrued and unpaid interest.
-103-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
WBD Exchange Offers and Tender Offers
In May 2026, we commenced offers to exchange any and all of certain outstanding senior notes issued by the
WBD Issuers for Second Lien Exchange Notes newly issued by Skydance and also commenced offers to purchase
for cash two additional series of senior notes of the WBD Issuers. The Exchange Offers expired on October 6,
2026 following the closing of the WBD Merger, and holders of approximately 99.15% of the notes eligible to
participate in the Exchange Offers validly tendered their notes. Accordingly, upon settlement on October 9, 2026,
we issued to such holders $11.98 billion aggregate principal amount of dollar-denominated Second Lien Exchange
Notes and €546.5 million aggregate principal amount of euro-denominated Second Lien Exchange Notes. Such
notes were issued in private placements exempt from registration under the Securities Act. The dollar-denominated
notes pay interest semi-annually, and the euro-denominated notes pay interest annually, in each case in arrears. The
Second Lien Exchange Notes consist of the following:
|
Senior Secured Exchange Notes
|
Face Value
|
||
|
6.304% Second Lien Exchange Notes due 2029
|
$1,344
|
||
|
6.25% Second Lien Exchange Notes due 2029
|
|||
|
4.875% Second Lien Exchange Notes due 2030
|
|||
|
4.904% Second Lien Exchange Notes due 2032
|
2,674
|
||
|
5.00% Second Lien Exchange Notes due 2037
|
|||
|
6.35% Second Lien Exchange Notes due 2040
|
|||
|
4.95% Second Lien Exchange Notes due 2042
|
|||
|
5.05% Second Lien Exchange Notes due 2042
|
4,065
|
||
|
4.875% Second Lien Exchange Notes due 2043
|
|||
|
5.20% Second Lien Exchange Notes due 2047
|
|||
|
5.30% Second Lien Exchange Notes due 2049
|
|||
|
5.141% Second Lien Exchange Notes due 2052
|
|||
|
5.802% Second Lien Exchange Notes due 2030 (€235 million)
|
|||
|
5.068% Second Lien Exchange Notes due 2033 (€311 million)
|
|||
|
Total Senior Secured Exchange Notes
|
$12,595
|
||
The Exchange Offers have been accounted for as debt modifications. Accordingly, the Second Lien Exchange
Notes were recorded at the carrying amount of the exchanged WBD notes.
The Second Lien Exchange Notes are senior secured obligations, guaranteed by the Guarantors and secured by
second-priority liens on the Collateral. They are junior in lien priority to the First Lien Notes and the loans and
commitments under the Pro Rata Credit Agreement, and equal in lien priority to the Second Lien Notes.
The Second Lien Exchange Notes are redeemable at our option. Most series may be redeemed at a "make-whole"
price before their par call date, which is between one and six months before maturity, and at 100% of principal on
or after that date, plus accrued and unpaid interest in each case. The 2032 Second Lien Exchange Notes and 2052
Second Lien Exchange Notes follow the same terms but cannot be redeemed before March 15, 2027. The 6.35%
2040, 4.95% 2042, and 4.875% Second Lien Exchange Notes have no par call date and may be redeemed at any
time at a "make-whole" price. The euro-denominated Second Lien Exchange Notes may also be redeemed in
whole at par upon certain changes in U.S. tax law. The change of control, tender offer, covenant and Investment
Grade Event provisions of the Second Lien Exchange Notes are substantially the same as those of the Second Lien
Notes issued on October 5, 2026 described above. The Second Lien Exchange Notes do not have registration
rights.
-104-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
Concurrent with the Exchange Offers, on October 9, 2026 we purchased $2.40 billion in aggregate principal
amount of senior notes of the WBD Issuers (approximately 98.83% of the outstanding principal amount of those
series) for $2.38 billion in cash, plus accrued and unpaid interest, and the purchased notes were cancelled.
Guarantees
Letters of Credit and Surety Bonds
At September 30, 2026, we had outstanding letters of credit and surety bonds of $711 million that were not
recorded on the Consolidated Balance Sheet, including $454 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, contains customary representations and warranties and covenants substantively similar to the Credit
Facilities under the Pro Rata Credit Agreement, including the same principal financial covenant (see Note 8 to the
consolidated financial statements), and is secured on a first lien basis by the same collateral as the Pro Rata Credit
Agreement effective 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.
Accounting Pronouncements Not Yet Adopted
See Note 1 to the consolidated financial statements.
Legal Matters
See Legal Matters section in Note 15 to the consolidated financial statements.
Cautionary Note Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains both historical and forward-looking statements, including statements
related to our future financial results and performance, potential achievements and transactions (including in
connection with our completed merger with WBD) and their expected benefits, and industry trends and
developments. All statements that are not statements of historical fact are, or may be deemed to be, forward-
looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Similarly,
statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-
looking statements reflect our current expectations concerning future results and events; can generally be identified
by the use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee,"
"likely," "will," "may," "could," "estimate" or other similar words or phrases; and involve known and unknown
risks, uncertainties and other factors that are difficult to predict and which may cause our actual results,
performance or achievements to be different from any future results, performance or achievements expressed or
implied by these statements. These risks, uncertainties and other factors include, among others: risks that the
expected benefits, synergies and opportunities of the WBD Merger may not be realized or may take longer to
realize than expected; risks and costs associated with the integration of the business of WBD, including our ability
-105-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular amounts in millions, except per share amounts)
to integrate successfully and to achieve anticipated synergies and financial targets; risks that we may not achieve
the expected run-rate synergies or other financial goals within the expected time frames or at all; risks related to the
commitments we made under the states consent decree; potential disruption to business operations and
relationships, including our and WBD's business and commercial relationships, as a result of the WBD Merger and
ongoing integration; the risk of stockholder litigation and other litigation relating to the WBD Merger, including
litigation that could result in the payment of damages; risks related to our streaming business; the adverse impact
on our advertising revenues as a result of changes in consumer behavior, advertising market conditions and
deficiencies in audience measurement; risks related to operating in highly competitive and dynamic industries; the
unpredictable nature of consumer behavior, as well as evolving technologies and distribution models; risks related
to our decisions to invest in new businesses, products, services and technologies, and the evolution of our business
strategy; the potential for loss of carriage or other reduction in or the impact of negotiations for the distribution of
our content; damage to our reputation or brands; losses due to asset impairment charges for goodwill, content and
long-lived assets, including finite-lived intangible assets; liabilities related to discontinued operations and former
businesses; increasing scrutiny of, and evolving expectations for, sustainability initiatives; evolving business
continuity, cybersecurity, privacy and data protection and similar risks; challenges in protecting and maintaining
our intellectual property rights; domestic and global political, economic and regulatory factors affecting our
businesses generally; the inability to hire or retain key employees or secure creative talent; disruptions to our
operations as a result of labor disputes; risks and costs associated with the integration of, and our ability to
integrate, the businesses of Paramount Global, Skydance Media, LLC and WBD successfully and to achieve
anticipated synergies, including in the amounts or on the timelines anticipated to realize such synergies; litigation
relating to the Skydance Transactions potentially resulting in substantial costs; volatility in the price of our Class B
Common Stock; the effect our dual-class capital structure and the concentrated ownership may have on the price of
our Class B Common Stock or business; risks related to a private sale of a controlling interest in our Company,
including that our stockholders may not realize any change of control premium on shares of our Class B Common
Stock and that we may become subject to the control of a presently unknown third party; risks associated with our
status as a "controlled company" under New York Stock Exchange rules, including our exemption from certain
corporate governance requirements; risks associated with the lack of voting rights of our Class B Common Stock;
risks that anti-takeover provisions in our amended and restated certificate of incorporation ("Charter") and
amended and restated bylaws, and under Delaware law could deter, delay, or prevent a change of control; risks that
exclusive forum provisions in our Charter could limit a stockholder's choice of forum for certain claims and
discourage lawsuits against our directors and officers; risks that corporate opportunity provisions in our Charter
could permit certain persons to pursue competitive opportunities that might otherwise be available to us; risks
associated with our holding company structure, including our dependence on distributions from our subsidiaries to
meet our tax obligations and other cash requirements; risks to our business, financial condition or results of
operations as a result of the incurrence of substantial costs and indebtedness in connection with the WBD Merger;
risks related to our ability to incur substantially more debt and our ability to meet the financial and other covenants
contained in the agreements governing our substantial indebtedness; risks relating to our ability to deleverage the
business in accordance with management's targets, including risks arising from assumptions, uncertainties and
contingencies that may affect our ability to reduce indebtedness; risks relating to management's ability to execute
on our strategic plan and improve our financial profile and cash flows from operations; risks relating to any capital
or other financing we may have to raise in order to reduce our indebtedness following the WBD Merger; risks of
reduced ownership and economic interest by our previous stockholders as a result of the WBD Merger; risks
related to our Warrants; and other factors described in our news releases and filings with the Securities and
Exchange Commission, including but not limited to our most recent Annual Report on Form 10-K and our reports
on Form 10-Q and Form 8-K. There may be additional risks, uncertainties and factors that we do not currently
view as material or that are not necessarily known. The forward-looking statements included in this Quarterly
Report on Form 10-Q are made only as of the date hereof, and we do not undertake any obligation to publicly
update any forward-looking statements to reflect subsequent events or circumstances.
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Skydance Corporation published this content on November 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 09, 2026 at 22:15 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]