Paramount Skydance Corporation

05/04/2026 | Press release | Distributed by Public on 05/04/2026 15:17

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Results of Operations and Financial Condition.
(Tabular dollars in millions, except per share amounts)
Management's discussion and analysis of the results of operations and financial condition of Paramount Skydance Corporation should be read in conjunction with the consolidated financial statements and related notes in the Annual Report on Form 10-K for the year ended December 31, 2025 of our Predecessor, Paramount Global. References to "Paramount," the "Company," "we," "us" and "our" refer to Paramount Skydance Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Warner Bros. Discovery Merger-On February 27, 2026, Paramount and Warner Bros. Discovery, Inc. ("WBD") announced a definitive merger agreement (the "WBD Merger Agreement") under which Paramount will acquire WBD (the "WBD Merger"). The WBD Merger is expected to close by the end of the third quarter of 2026, subject to customary closing conditions, including regulatory clearances.
Under the terms of the WBD Merger Agreement, Paramount will pay $31.00 per WBD share to acquire all outstanding shares of WBD, which at the time of the WBD Merger Agreement represented an equity value of $80.9 billion, and will assume WBD's net debt. At December 31, 2025, WBD's debt (excluding finance leases) was comprised of $17.8 billion of senior notes and $15.0 billion of borrowings from a bridge facility, which we expect to refinance with the debt commitments discussed below. Furthermore, a per share "ticking fee" of $0.00277778 will be paid upon closing by Paramount to WBD stockholders for every day the WBD Merger is not closed past September 30, 2026, up to a maximum of $0.25 per WBD share per 90 calendar day period. Also under the terms of the WBD Merger Agreement, in the first quarter of 2026 Paramount paid a termination fee of $2.8 billion to Netflix, Inc. ("Netflix") on behalf of WBD in connection with the termination of a prior merger agreement between Netflix and WBD. This payment was initially funded with cash on hand and a $2.15 billion borrowing from our credit facility (see Capital Structure) and, in accordance with the Subscription Agreements described below, entered into by the Ellison Parties (as defined below), such amount will ultimately be funded by the $46.7 billion to be received from the Ellison Parties.
Concurrent with the execution of the WBD Merger Agreement (i) The Lawrence J. Ellison Revocable Trust, u/a/d 1/22/88, as amended (the "Trust"), and Lawrence J. Ellison (together with the Trust, the "Ellison Parties") and (ii) RedBird Capital Partners Fund IV (Master), L.P. ("RedBird" and, together with the Trust, the "Equity Investors") entered into subscription agreements (collectively, the "Subscription Agreements") providing for a private placement investment in Class B common stock of Paramount Skydance Corporation ("Paramount Skydance Corporation Class B Common Stock"), for an aggregate amount of up to $46.7 billion (subject to increase if the Ticking Consideration, as defined in the WBD Merger Agreement or certain other additional amounts as defined in the WBD Merger Agreement are required) from the Trust and $250 million from RedBird pursuant to the terms of the Subscription Agreements.
In April 2026, we announced that the Equity Investors had determined, as permitted under the Subscription Agreements, to assign their subscription rights thereunder (the "Equity Syndication") to a group of institutional investors (each, an "Equity Syndication Party"), comprising affiliates of the Ellison Parties and RedBird, The Public Investment Fund, L'Imad 1st SPV 2 Exempt RSC LTD (an investment vehicle of L'Imad Holding, an Abu Dhabi sovereign wealth fund), QIA TMT Holding LLC (an investment vehicle of the Qatar Investment Authority), and LionTree Investment Fund, L.P. The aggregate allocations cover the full amount committed by the Equity Investors. At closing, Paramount will issue to each Equity Syndication Party a number of newly issued nonvoting Paramount Skydance Corporation Class B shares (or securities convertible into shares) equal to its allocated amount divided by the Syndication Purchase Price, defined as the 20-trading-day daily volume-weighted average price of Paramount Skydance Corporation Class B Common Stock determined as of the third business day prior to the closing of the WBD Merger, subject to a ceiling of $16.02 per share and a floor of $12.00 per share. This syndication does not relieve the Equity Investors of their contractual commitments made to the Company. Following the closing, the Ellison Family (as defined below) and RedBird will remain the sole holders of Paramount Class A Common Stock, representing 100% of the voting shares of Paramount. For the purpose of
-38-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
determining the controlling ownership of Paramount, the Ellison family is comprised of Lawrence J. Ellison and David Ellison (the "Ellison Family"). David Ellison is the son of Lawrence J. Ellison, and Lawrence J. Ellison and David Ellison are accordingly considered immediate family members.
We have also secured commitments for debt financing totaling $54 billion, which include a $49 billion 364-day senior secured bridge loan facility, which we plan to reduce or replace with permanent financing (which may include issuance of debt securities) on or prior to the closing of the WBD Merger and, in connection with a credit agreement entered into in April 2026 (the "Pro Rata Credit Agreement"), $2.50 billion three-year senior secured term A loans and $2.50 billion five-year senior secured term A loans. The term A loans will be made in a single borrowing on the closing date of the WBD Merger. We expect to use the committed financing to refinance the $15.0 billion WBD bridge facility. The Pro Rata Credit Agreement also provides for a $5.00 billion five-year senior secured revolving credit facility, which will be used for general corporate purposes, and will replace our existing revolving credit facility (see Capital Structure). The availability and initial funding of the facilities under the Pro Rata Credit Agreement and the bridge loan facility (if not replaced by permanent financing) are subject to the satisfaction or waiver of customary conditions set forth in the Pro Rata Credit Agreement and the bridge commitment papers, including the closing of the WBD Merger.
Also in April 2026, we announced that, in lieu of a previously planned rights offering at $16.02 per share, each holder of Paramount Skydance Corporation Class B Common Stock (excluding any Equity Investor or affiliate thereof) as of a record date to be determined will receive, without payment of any consideration, one 10-year warrant (each, a "Warrant") for each share held, exercisable at any initial exercise price per share equal to the Syndication Purchase Price and subject to customary anti-dilution and fundamental change make-whole adjustments. Beginning on the third anniversary of issuance, we may call the Warrants if the closing price of our Class B Common Stock equals or exceeds $30.00 for at least 20 trading days in any 30 consecutive trading day period. Paramount intends to apply to list the Warrants for trading on Nasdaq separately from the Class B Common Stock, subject to applicable approvals.
If antitrust or regulatory approval for the WBD Merger is not received, Paramount will owe WBD a $7.0 billion termination fee. In accordance with the Subscription Agreements, this termination fee and the previously paid $2.8 billion Netflix termination fee described above would be funded by the Ellison Parties in exchange for shares of Paramount Skydance Corporation Class B Common Stock at $16.02 per share.
WBD will owe Paramount a $3.0 billion termination fee under certain circumstances, including if WBD terminates the WBD Merger Agreement to enter into a definitive agreement for an alternative acquisition proposal.
The NAI Transaction-On August 7, 2025, pursuant to a purchase and sale agreement dated July 7, 2024, certain affiliates of investors in Skydance Media, LLC ("Skydance"), comprised of entities controlled by the Ellison Family and affiliates of RedBird Capital Partners (collectively the "NAI Equity Investors"), purchased all of the outstanding equity interests of Paramount Global's controlling stockholder, National Amusements, Inc. ("NAI") from the shareholders of NAI (the "NAI Transaction").
The Skydance Transactions-Also on August 7, 2025, following the completion of the NAI Transaction and pursuant to the Transaction Agreement dated as of July 7, 2024, Paramount Global and Skydance became wholly-owned subsidiaries of Paramount Skydance Corporation (the transactions contemplated by the Transaction Agreement, the "Skydance Transactions"). Paramount Skydance Corporation, formerly known as New Pluto Global, Inc., was formed on June 3, 2024 to consummate the Transactions and was a wholly-owned direct subsidiary of Paramount Global until, through a series of mergers, it became the holding company of Paramount Global and Skydance as part of the Skydance Transactions.
-39-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Concurrent with the NAI Transaction, the NAI Equity Investors and certain other affiliates of investors in Skydance made an investment of $6.0 billion into Paramount Skydance Corporation (the "PIPE Transaction") in exchange for 400 million newly issued shares of Paramount Skydance Corporation Class B Common Stock for a purchase price of $15.00 per share, and the NAI Equity Investors also received warrants to purchase 200 million shares of Paramount Skydance Corporation Class B Common Stock at an initial exercise price of $30.50 per share (subject to customary anti-dilution adjustments), which expire five years after issuance. $4.45 billion of the PIPE Transaction investment was used to fund the cash-stock election discussed below and $1.52 billion of cash was provided to the Company.
The Skydance Transactions also included: (1) a transaction pursuant to which each outstanding Skydance membership unit held by Skydance investors and each Skydance Phantom Unit was converted into the right to receive the applicable portion of 316.7 million shares of Paramount Skydance Corporation Class B Common Stock (313.8 million shares after reduction in connection with certain tax withholding requirements), and (2) a cash-stock election offered to holders of Paramount Global common stock pursuant to which (a) shares of Paramount Global Class A Common Stock held by stockholders other than NAI or its subsidiaries were converted, at the stockholders' election, into the right to receive either $23.00 in cash ("Class A Cash Consideration") or 1.5333 shares of Paramount Skydance Corporation Class B Common Stock ("Class A Stock Consideration"), and (b) shares of Paramount Global Class B Common Stock held by stockholders other than NAI or its subsidiaries, the NAI Equity Investors and certain other affiliates of investors in Skydance referred to above were converted, at the stockholders' election, into the right to receive either $15.00 in cash ("Class B Cash Consideration"), subject to proration, or one share of Paramount Skydance Corporation Class B Common Stock ("Class B Stock Consideration"). The shares of Paramount Class A Common Stock held by NAI and its subsidiaries converted into shares of Class A common stock, par value $0.001 per share. Shares of Paramount Global Class A Common Stock for which elections to receive Class A Cash Consideration or Class A Stock Consideration were not made or were validly revoked were automatically converted into Class A Stock Consideration. Shares of Paramount Global Class B Common Stock for which elections to receive Class B Cash Consideration were not made or were validly revoked were converted automatically into one share of Paramount Skydance Corporation Class B Common Stock.
Holders of shares of Class A common stock of Paramount Skydance Corporation ("Paramount Skydance Corporation Class A Common Stock") are entitled to one vote per share with respect to all matters on which the holders of Paramount Skydance Corporation common stock are entitled to vote. Holders of Paramount Skydance Corporation Class B Common Stock do not have voting rights. Following the closing of the Skydance Transactions and the NAI Transaction, NAI, which was renamed Harbor Lights Entertainment, Inc., and its subsidiaries held 100.0% of the Paramount Skydance Corporation Class A Common Stock. Accordingly, entities controlled by the Ellison Family indirectly hold approximately 77.5% of the Paramount Skydance Corporation Class A Common Stock through their collective approximate 77.5% ownership interest in Harbor Lights Entertainment, Inc., and as a result the Ellison Family is the controlling stockholder and the ultimate parent of Paramount ("Ultimate Parent").
Pushdown of Ultimate Parent's Basis-At the time Paramount Global and Skydance became subsidiaries of Paramount Skydance Corporation, the Ellison Family controlled both Paramount Global and Skydance, and as a result, this transaction has been accounted for as a transaction between entities under common control. As a transaction between entities under common control, the net assets were combined at the Ultimate Parent's basis, which for Paramount Global was deemed to be the estimated fair value as of August 7, 2025, the date of the closing of the NAI Transaction, which was the point at which the Ellison Family obtained control of Paramount Global. As a result, the net assets of Paramount Global were recorded at their fair values as of this date. Since the net assets of Skydance were already at the Ultimate Parent's basis, no adjustment to the fair value of net assets was necessary, and Skydance was combined with Paramount Global's net assets at the Ultimate Parent's basis as of this date.
-40-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars 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 Paramount Skydance Corporation and are identified as "Successor." In addition, we are required to present segment information for the Predecessor period based on our previous segments, Filmed Entertainment, Direct-to-Consumer, and TV Media.
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 months ended March 31, 2026 (Successor), including a comparison to the three months ended March 31, 2025 (Predecessor).
•Segment Results of Operations-Analysis of our results on a reportable segment basis for the three months ended March 31, 2026 (Successor).
•Liquidity and Capital Resources-Discussion of our cash flows, including sources and uses of cash, for the three months ended March 31, 2026 (Successor), including a comparison to the three months ended March 31, 2025 (Predecessor), and of our outstanding debt as of March 31, 2026 (Successor), including Supplemental Guarantor Financial Information.
•Legal Matters-Discussion of legal matters to which we are involved.
-41-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Overview
Operational Highlights - Three Months Ended March 31, 2026 and 2025
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
Consolidated Results of Operations 2026 2025 $ %
GAAP:
Revenues $ 7,347 $ 7,192 $ 155 2 %
Operating income $ 616 $ 550 $ 66 12 %
Net earnings attributable to Parent $ 168 $ 152 $ 16 11 %
Diluted EPS $ .15 $ .22 $ (.07) (32) %
Non-GAAP: (a)
Adjusted EBITDA $ 1,161 $ 732 $ 429 59 %
Adjusted net earnings attributable to Parent $ 261 $ 195 $ 66 34 %
Adjusted diluted EPS $ .23 $ .29 $ (.06) (21) %
(a) 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 increased 2% to $7.35 billion, principally reflecting growth at Paramount+ and higher licensing revenues, reflecting the inclusion of Skydance in the current year, partially offset by lower revenues from our linear networks.
Skydance is included in our results in periods following the close of the Skydance Transactions. 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 include amortization associated with the establishment of intangible assets and also reflect the net decrease in programming assets. Net earnings and diluted EPS also include interest expense associated with the adjustment of our debt to its fair value. See Note 2 to the consolidated financial statements for details relating to the pushdown of the Ultimate Parent's basis.
Operating income of $616 million for the three months ended March 31, 2026 increased 12%, driven by the impact from cost savings initiatives and lower content costs, including from reductions in programming assets resulting from the pushdown of the Ultimate Parent's basis, partially offset by amortization of intangible assets. Operating income in 2026 also includes transaction-related costs of $103 million while 2025 includes restructuring charges and transaction-related items totaling $85 million and gain on dispositions totaling $35 million.
Net earnings attributable to Parent of $168 million, or $.15 per diluted share increased 11% compared with net earnings attributable to Parent of $152 million, or $.22 per diluted share, for the same prior-year period. Adjusted net earnings attributable to Parent increased 34% to $261 million, or $.23 per diluted share from $195 million, or $.29 per diluted share, reflecting higher tax-effected operating income. The decrease in diluted EPS and adjusted diluted EPS reflects 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 grew 59% primarily reflecting lower compensation and marketing costs as a result of cost savings initiatives, and lower content costs, including 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
-42-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
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.
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; 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 allows 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.
-43-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars 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.
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Net earnings attributable to Parent (GAAP) $ 168 $ 152
Net earnings attributable to noncontrolling interests 7 9
Equity in loss of investee companies, net of tax 62 73
Provision for income taxes 155 100
Other items, net 24 37
Interest expense, net 200 179
Gain on dispositions - (35)
Transaction-related items (a)
103 20
Restructuring charges (a)
- 65
Stock-based compensation 80 44
Depreciation and amortization 362 88
Adjusted EBITDA (Non-GAAP) $ 1,161 $ 732
(a) See notes on the following tables for additional information on items affecting comparability.
-44-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Successor
Three Months Ended March 31, 2026
Earnings Before Income Taxes Provision for Income Taxes Net Earnings Attributable to Parent Diluted EPS
Reported (GAAP) $ 392 $ (155)
(b)
168 $ .15
Items affecting comparability:
Transaction-related items (a)
103 (6) 97 .08
Discrete tax items - (4) (4) -
Adjusted (Non-GAAP) $ 495 $ (165)
(b)
$ 261 $ .23
(a) Reflects legal, advisory and other professional fees associated with the planned WBD Merger.
(b) The reported effective income tax rate for the three months ended March 31, 2026 was 39.5% and the adjusted effective income tax rate, which is calculated as the adjusted provision for income taxes of $165 million divided by adjusted earnings before income taxes of $495 million, was 33.3%. These adjusted measures exclude the items affecting comparability detailed above.
Predecessor
Three Months Ended March 31, 2025
Earnings Before Income Taxes Provision for Income Taxes Net Earnings Attributable to Parent Diluted EPS
Reported (GAAP) $ 334 $ (100)
(d)
$ 152 $ .22
Items affecting comparability:
Restructuring charges (a)
65 (16) 49 .08
Transaction-related items (b)
20 - 20 .03
Gain on dispositions (c)
(35) 2 (33) (.05)
Discrete tax items - 7 7 .01
Adjusted (Non-GAAP) $ 384 $ (107)
(d)
$ 195 $ .29
(a) Primarily reflects charges for the impairment of lease assets, as further described under Restructuring and Transaction-Related Items.
(b) Reflects legal, advisory, and other professional fees relating to the Skydance Transactions.
(c) Principally reflects a gain associated with the disposition of a noncore business.
(d) The reported effective income tax rate for the three months ended March 31, 2025 was 29.9% and the adjusted effective income tax rate, which is calculated as the adjusted provision for income taxes of $107 million divided by adjusted earnings before income taxes of $384 million, was 27.9%. These adjusted measures exclude the items affecting comparability detailed above.
-45-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Consolidated Results of Operations
Revenues
Three Months Ended March 31,
Successor Predecessor Increase/(Decrease)
% of Total Revenues % of Total
Revenues
2026 2025 $ %
Revenues by Type:
Advertising $ 2,442 33 % $ 2,513 35 % $ (71) (3) %
Affiliate and
subscription 		3,501 48 3,397 47 104 3
Theatrical 152 2 148 2 4 3
Licensing and other 1,252 17 1,134 16 118 10
Total Revenues $ 7,347 100 % $ 7,192 100 % $ 155 2 %
Advertising
Advertising revenues are generated primarily from the sale of advertising spots on our global broadcast and cable networks, television stations, and streaming services.
The 3% decrease in advertising revenue reflects declines in the linear advertising market, partially offset by 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 grew 3%, reflecting an increase of 7% from pricing increases and subscriber growth for Paramount+, partially offset by a decrease of 4% from lower linear affiliate revenues. Paramount+ had 79.6 million subscribers at March 31, 2026 and 77.8 million subscribers at March 31, 2025.
Theatrical
Theatrical revenues increased 3%, driven by the success of the first quarter 2026 release of Scream 7 and the fourth quarter 2025 release of The SpongeBob Movie: Search for SquarePants. The first quarter of 2025 benefited from the fourth quarter 2024 releases of Sonic the Hedgehog 3 and Gladiator II.
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.
-46-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Licensing and other revenues increased 10%, driven by the inclusion of Skydance following the Skydance Transactions in August 2025.
Operating Expenses
Three Months Ended March 31,
Successor Predecessor
% of Operating Expenses % of Operating Expenses Increase/(Decrease)
2026 2025 $ %
Operating expenses by Type:
Content costs $ 3,780 78 % $ 3,861 78 % $ (81) (2) %
Distribution and other 1,075 22 1,100 22 (25) (2)
Total Operating Expenses $ 4,855 100 % $ 4,961 100 % $ (106) (2) %
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 decreased 2%, primarily reflecting reductions in programming assets resulting from the pushdown of the Ultimate Parent's basis and other cost reductions for cable programming, partially offset by the inclusion of Skydance in the current-year period and higher sports costs for Paramount+.
Distribution and Other
Distribution and other operating expenses primarily include costs relating to the distribution of our content, including marketing for 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 decreased 2%, driven by lower employee costs.
Selling, General and Administrative Expenses
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
2026 2025 $ %
Selling, general and
administrative expenses 		$ 1,411 $ 1,543 $ (132) (9) %
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 and technology. SG&A expenses decreased 9%, principally reflecting lower marketing costs and lower compensation costs resulting from our workforce restructuring activities.
-47-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Depreciation and Amortization
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
2026 2025 $ %
Depreciation and amortization $ 362 $ 88 $ 274 311 %
Depreciation and amortization expense reflects depreciation of fixed assets and amortization of finite-lived intangible assets. The increase primarily reflects amortization of intangible assets established in connection with the pushdown of the Ultimate Parent's basis (See Note 2 to the consolidated financial statements).
Restructuring and Transaction-Related Items
During the three months ended March 31, 2026 and 2025, we recorded the following restructuring charges and transaction-related items.
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Restructuring charges $ - $ 65
Transaction-related items 103 20
Restructuring and transaction-related items $ 103 $ 85
Restructuring Charges
During the three months ended March 31, 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 and create cost synergies.
Transaction-Related Items
During the three months ended March 31, 2026, we recorded $103 million of transaction-related costs, principally for legal, advisory, and other professional fees associated with the planned WBD Merger. During the three months ended March 31, 2025, we recorded legal, advisory, and other professional fees relating to the Skydance Transactions of $20 million.
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.
-48-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Interest Expense/Income
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
2026 2025 $ %
Interest expense $ 238 $ 217 $ 21 10 %
Interest income $ 38 $ 38 $ - - %
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% at March 31, 2026 (Successor) and 5.17% at March 31, 2025 (Predecessor). In addition, during the first quarter of 2026 we incurred $11 million of interest expense associated with a $2.15 billion borrowing under our Credit Facility at an interest rate of 5.39% (see Capital Structure). Credit facility borrowings outstanding at the closing of the WBD Merger are expected to be repaid with the funding from the private placement described in Note 1 to the consolidated financial statements.
Other Items, Net
The following table presents the components of "Other items, net."
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Pension and postretirement benefit costs $ 18 $ 34
Foreign exchange loss 4 3
Other 2 -
Other items, net $ 24 $ 37
Provision for Income Taxes
The provision for income taxes represents federal, state and local, and foreign taxes on earnings (loss) before income taxes and equity in loss of investee companies. For the three months ended March 31, 2026 (Successor), we recorded a provision for income taxes of $155 million, reflecting an effective income tax rate of 39.5%. Included in the provision for income taxes are the following items identified as affecting the comparability of our results, which in aggregate increased our effective income tax rate by 6.2 percentage points, reflecting an adjusted effective income tax rate of 33.3%.
Impact from Items Affecting Comparability
Successor
Three Months Ended March 31, 2026
Earnings Before Income Taxes Benefit from
Income Taxes
Transaction-related items $ (103) $ 6
Net discrete tax benefit
n/a $ 4
n/a - not applicable
-49-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
For the three months ended March 31, 2025 (Predecessor), we recorded a provision for income taxes of $100 million, reflecting an effective income tax rate of 29.9%. Included in the provision for income taxes are the following items identified as affecting the comparability of our results, which in aggregate increased our effective income tax rate by 2.0 percentage points.
Impact from Items Affecting Comparability
Predecessor
Three Months Ended March 31, 2025
Earnings (Loss) Before Income Taxes Benefit from (Provision for) Income Taxes
Restructuring charges $ (65) $ 16
Transaction-related items $ (20) $ -
Gain from dispositions $ 35 $ (2)
Net discrete tax provision n/a $ (7)
n/a - not applicable
Equity in Loss of Investee Companies, Net of Tax
The following table presents equity in loss of investee companies for our equity-method investments.
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
2026 2025 $ %
Equity in loss of investee companies $ (62) $ (74) $ (12) (16) %
Tax benefit - 1 (1) n/m
Equity in loss of investee companies,
net of tax 		$ (62) $ (73) $ (11) (15) %
n/m - not meaningful
Net Earnings Attributable to Parent and Diluted EPS
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
2026 2025 $ %
Net earnings attributable to Parent $ 168 $ 152 $ 16 11 %
Diluted EPS $ .15 $ .22 $ (.07) (32) %
For the three months ended March 31, 2026 (Successor), we reported net earnings attributable to Parent of $168 million, or $.15 per diluted share, compared with a net earnings attributable to Parent of $152 million, or $.22 per diluted share, for three months ended March 31, 2025 (Predecessor). The decrease in diluted EPS reflects shares issued in connection with the Skydance Transactions and the NAI Transaction (see Note 10 to the consolidated financial statements).
-50-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
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, which makes our results of operations not comparable between the Successor and Predecessor periods, we are required to present segment information for the Predecessor for the first quarter of 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 first quarter of 2025 recast under the new segment presentation, as well as the related reconciliations from the GAAP presentation.
GAAP
Non-GAAP (a)
Successor Predecessor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
2026 2025 2025
Revenues:
Studios Filmed Entertainment Studios
Theatrical $ 152 $ 148 $ 148
Licensing and other 1,127 476 1,006
Advertising 4 3 5
Total 1,283 627 1,159
Direct-to-Consumer
Direct-to-Consumer (b)
Direct-to-Consumer
Advertising 517 473 473
Affiliate and subscription 1,881 1,571 1,678
Total 2,398 2,044 2,151
TV Media
TV Media (b)
TV Media
Advertising 1,921 2,038 2,036
Affiliate and subscription 1,620 1,826 1,719
Licensing and other 125 674 129
Total 3,666 4,538 3,884
Eliminations Eliminations Eliminations
- (17) (2)
Total Revenues $ 7,347 $ 7,192 $ 7,192
-51-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
GAAP
Non-GAAP (a)
Successor Predecessor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
2026 2025 2025
Adjusted EBITDA:
Adjusted OIBDA(b):
Adjusted EBITDA:
Studios $ 164 Filmed Entertainment $ 20 Studios $ 82
Direct-to-Consumer 251
Direct-to-Consumer (c)
(109) Direct-to-Consumer (4)
TV Media 1,055
TV Media (c)
922 TV Media 951
Corporate/
Eliminations 		(309) Corporate/
Eliminations 		(101) Corporate/
Eliminations 		(297)
Stock-based
compensation 		(80) Stock-based
compensation 		(44) Stock-based
compensation 		(44)
Depreciation and
amortization 		(362) Depreciation and
amortization 		(88) Depreciation and
amortization 		(88)
Transaction-related
items 		(103) Restructuring and
transaction-related
items 		(85) Restructuring and
transaction-related
items 		(85)
Gain on dispositions - Gain on dispositions 35 Gain on dispositions 35
Operating income 616 Operating income 550 Operating income 550
Interest expense, net (200) Interest expense, net (179) Interest expense, net (179)
Other items, net (24) Other items, net (37) Other items, net (37)
Earnings before
income taxes and
equity in loss of
investee companies 		392 Earnings before
income taxes and
equity in loss of
investee companies 		334 Earnings before
income taxes and
equity in loss of
investee companies 		334
Provision for income
taxes 		(155) Provision for income
taxes 		(100) Provision for income
taxes 		(100)
Equity in loss of
investee companies,
net of tax 		(62) Equity in loss of
investee companies,
net of tax 		(73) Equity in loss of
investee companies,
net of tax 		(73)
Net earnings (Parent
and noncontrolling
interests) 		175 Net earnings (Parent
and noncontrolling
interests) 		161 Net earnings (Parent
and noncontrolling
interests) 		161
Net earnings attributable to noncontrolling
interests 		(7) Net earnings attributable to noncontrolling
interests 		(9) Net earnings attributable to noncontrolling
interests 		(9)
Net earnings
attributable to Parent 		$ 168 Net earnings
attributable to Parent 		$ 152 Net earnings
attributable to Parent 		$ 152
(a) As discussed above, 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 first quarter of 2025 to the non-GAAP recast amounts. All other amounts in this table are presented on a GAAP basis.
(b) 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 13 to the consolidated financial statements for further discussion.
(c) Reflects the historical segment composition for Direct-to-Consumer and TV Media.
-52-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
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, Television, and Interactive/Games, and Paramount Sports Entertainment. 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 March 31, 2026 and 2025
GAAP Non-GAAP
Successor Predecessor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
Increase/(Decrease) (e)
2026 2025 2025 $ %
Studios Filmed Entertainment
Adjustments (d)
Studios
Theatrical $ 152 $ 148 $ - $ 148 $ 4 3 %
Licensing and
other 		1,127 476 530 1,006 121 12
Advertising (a)
4 3 2 5 (1) (20)
Revenues 1,283 627 532 1,159 124 11
Content costs 816 321 417 738 78 11
Advertising and
marketing 		100 116 1 117 (17) (15)
Other (b)
203 170 52 222 (19) (9)
Expenses 1,119 607 470 1,077 42 4
Adjusted EBITDA/
Adjusted OIBDA (c)
$ 164 $ 20 $ 62 $ 82 $ 82 100 %
(a) Primarily reflects advertising revenues earned from the use of Studios content on third-party digital platforms.
(b) 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.
(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 13 to the consolidated financial statements.
(d) 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.
(e) Reflects the comparison between the Successor results for the three months ended March 31, 2026 to the non-GAAP Predecessor results for the three months ended March 31, 2025.
Revenues
Theatrical
Theatrical revenues for the first quarter of 2026 benefited from the success of Scream 7 and the fourth quarter 2025 release of The SpongeBob Movie: Search for SquarePants. The first quarter of 2025 benefited from the fourth quarter 2024 releases of Sonic the Hedgehog 3 and Gladiator II.
Licensing and Other
Licensing and other revenues include Skydance revenues in 2026.
-53-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Expenses
Content Costs
Content costs in 2026 include costs for Skydance and our television studio operations, which were not in the Predecessor segment results. In addition, content costs associated with films in theaters during the period were lower in 2026.
Advertising and Marketing
Advertising and marketing expenses in each quarter reflect the mix of films in theaters.
Other
Other expenses in the first quarter of 2026 include costs for Skydance and our television studio operations, which were not in the Predecessor segment results. The 9% decrease on a non-GAAP basis was driven by lower costs associated with the distribution of theatrical library titles.
Adjusted EBITDA
Adjusted EBITDA in the first quarter of 2026 benefited from the mix of titles licensed.
-54-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Direct-to-Consumer
Our Direct-to-Consumer segment consists of our portfolio of domestic and international pay and free streaming services, including Paramount+, Pluto TV, and BET+, as well as our domestic premium cable network, Paramount+ with Showtime. For the Predecessor period, the Direct-to Consumer segment excluded Paramount+ with Showtime.
Three Months Ended March 31, 2026 and 2025
GAAP Non-GAAP
Successor Predecessor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
Increase /(Decrease) (d)
2026 2025 2025 $ %
Direct-to-Consumer Direct-to-Consumer
Adjustments (c)
Direct-to-Consumer
Advertising $ 517 $ 473 $ - $ 473 $ 44 9 %
Affiliate and
subscription 		1,881 1,571 107 1,678 203 12
Revenues 2,398 2,044 107 2,151 247 11
Content costs 1,246 1,215 15 1,230 16 1
Advertising and
marketing 		315 341 18 359 (44) (12)
Other (a)
586 597 (31) 566 20 4
Expenses 2,147 2,153 2 2,155 (8) -
Adjusted EBITDA/
Adjusted OIBDA (b)
$ 251 $ (109) $ 105 $ (4) $ 255 n/m
n/m - not meaningful
(a) 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.
(b) 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 13 to the consolidated financial statements.
(c) 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.
(d) Reflects the comparison between the Successor results for the three months ended March 31, 2026 to the Non-GAAP Predecessor results for the three months ended March 31, 2025.
-55-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Increase /(Decrease)
Paramount+ (Global) 2026 2025 $ %
Revenues $ 1,974 $ 1,686 $ 288 17 %
Subscribers (in millions) (a)
79.6 77.8 1.8 2 %
ARPU (in dollars) (b)
$ 8.30 $ 7.30 $ 1.00 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 increase in advertising revenues reflects growth in impressions for Paramount+. 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 first quarter of 2026 benefited from pricing increases and growth in Paramount+ subscribers. Subscriber growth of 0.7 million from December 31, 2025 benefited from the UFC on Paramount+ and the continued success of Landman in the first quarter of 2026. The increase in subscribers was partially offset by a decrease of 1.2 million subscribers from the nonrenewal of an international distribution agreement.
Compared with March 31, 2025, subscribers increased 1.8 million, or 2%, driven by growth in domestic subscribers, partially offset by a decline in international subscribers, primarily due to the nonrenewal of international distribution agreements.
-56-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Expenses
Content Costs
Content costs during the first quarter of 2026 include costs associated with the streaming of UFC on Paramount+, as well as the impact from a net reduction in programming assets resulting from the pushdown of the Ultimate Parent's basis.
Advertising and Marketing
Advertising and marketing expenses for the first quarter of 2026 include the impact from cost savings initiatives, which led to the 12% decrease compared with the non-GAAP Predecessor presentation.
Other
Other expenses for the first quarter of 2026 reflect the impact from higher revenue sharing costs, mainly for third-party distribution.
Adjusted EBITDA
Adjusted EBITDA in the first quarter of 2026 benefited from increases in pricing and subscribers for Paramount+.
-57-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
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.
Three Months Ended March 31, 2026 and 2025
GAAP Non-GAAP
Successor Predecessor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
Increase/(Decrease) (d)
2026 2025 2025 $ %
TV Media TV Media
Adjustments (c)
TV Media
Advertising $ 1,921 $ 2,038 $ (2) $ 2,036 $ (115) (6) %
Affiliate and
subscription 		1,620 1,826 (107) 1,719 (99) (6)
Licensing and
other 		125 674 (545) 129 (4) (3)
Revenues 3,666 4,538 (654) 3,884 (218) (6)
Content costs 1,719 2,343 (447) 1,896 (177) (9)
Advertising and
marketing 		80 153 (20) 133 (53) (40)
Other (a)
812 1,120 (216) 904 (92) (10)
Expenses 2,611 3,616 (683) 2,933 (322) (11)
Adjusted EBITDA/
Adjusted OIBDA (b)
$ 1,055 $ 922 $ 29 $ 951 $ 104 11 %
(a) 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.
(b) 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 13 to the consolidated financial statements.
(c) 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.
(d) Reflects the comparison between the Successor results for the three months ended March 31, 2026 to the Non-GAAP Predecessor results for the three months ended March 31, 2025.
-58-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
GAAP Non-GAAP
Successor Predecessor Predecessor
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Increase/(Decrease)
2026 2025 2025 $ %
Advertising revenues TV Media TV Media Adjustments TV Media
Domestic $ 1,737 $ 1,798 $ (2) $ 1,796 $ (59) (3) %
International 184 240 - 240 (56) (23)
Total $ 1,921 $ 2,038 $ (2) $ 2,036 $ (115) (6) %
Revenues
Advertising
Advertising revenues in the first quarter of 2026 were impacted by declines in the linear advertising market, and a 2% impact from the absence of advertising revenues from Telefe and Chilevisión, which were sold in October 2025 and January 2026, respectively. These decreases were partially offset by a 1% increase from higher political advertising revenues.
Affiliate and Subscription
Affiliate and subscription revenues in the first quarter of 2026 were impacted by declines in linear subscribers.
Licensing and Other
Licensing and other revenues in 2026 primarily include revenues from the licensing of first-run syndicated programming.
Expenses
Content costs, advertising and marketing expenses, and other expenses in the first quarter of 2026 benefited from cost savings initiatives. Content costs in the first quarter of 2026 also reflect the impact from a net reduction in programming assets resulting from the pushdown of the Ultimate Parent's basis.
Adjusted EBITDA
Adjusted EBITDA in the first quarter of 2026 reflects the impact of cost savings initiatives.
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 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, which includes the
-59-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
borrowings under our Credit Facility described below, were $6.40 billion as of March 31, 2026. 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.
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 $1.94 billion as of March 31, 2026, and our ability to refinance our debt. Any additional cash funding requirements are financed with short-term borrowings, including commercial paper, and long-term debt. To the extent that commercial paper is not available to us, the borrowing capacity under our Credit Facility, which increased from $3.5 billion to $5.0 billion in April 2026 (see Capital Structure) is sufficient to satisfy short-term borrowing needs. In the first quarter of 2026, in connection with the payment of the $2.8 billion termination fee to Netflix, we borrowed $2.15 billion under the Credit Facility. As of May 1, 2026, the remaining availability under the Credit Facility was $2.85 billion. Credit facility borrowings outstanding at the closing of the WBD Merger are expected to be repaid with the funding from the private placement described in Note 1 to the consolidated financial statements.
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. As a result, there can be no assurance that we will be able to access capital markets on terms and conditions favorable to us.
Cash Flows
The changes in cash and cash equivalents were as follows:
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Net cash flow provided by operating activities $ 185 $ 180
Net cash flow used for investing activities (2,976) (69)
Net cash flow provided by (used for) financing activities 1,484 (139)
Effect of exchange rate changes on cash and cash equivalents (26) 40
Net (decrease) increase in cash and cash equivalents $ (1,333) $ 12
Operating Activities
Net cash flow provided by operating activities includes payments of $172 million for the three months ended March 31, 2026 (Successor) and $108 million for the three months ended March 31, 2025 (Predecessor) associated with restructuring, transaction-related items and transformation initiatives. Our transformation initiatives are related to advancing our technology, including the unification and evolution of systems and platforms, and migration to the cloud.
-60-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Investing Activities
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Investments $ (92) $ (73)
Capital expenditures (a)
(89) (57)
Advance consideration for WBD acquisition (b)
(2,800) -
Proceeds from dispositions (c)
11 61
Other investing activities (6) -
Net cash flow used for investing activities $ (2,976) $ (69)
(a) Includes payments associated with the implementation of our transformation initiatives of $9 million for the 2026 period.
(b) Reflects the termination fee paid to Netflix, on behalf of WBD (See Note 15 to the consolidated financial statements).
(c) 2025 primarily reflects proceeds received from the disposition of a noncore business, and both periods include the collection of receivables associated with the 2022 sale of a 37.5% interest in The CW.
Financing Activities
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Borrowings under credit facility $ 2,150 $ -
Repayment of debt (347) -
Dividends paid on common stock (61) (36)
Payment of payroll taxes in lieu of issuing shares for stock-based
compensation 		(74) (26)
Payments to noncontrolling interests (183) (77)
Other financing activities (1) -
Net cash flow provided by (used for) financing activities $ 1,484 $ (139)
Common Stock Dividends
The following table presents dividends declared per share and total dividends for Paramount Skydance Corporation Class B Common Stock for the Successor period and Paramount Global's Class A and Class B Common Stock for the Predecessor period.
Successor Predecessor
Three Months Ended March 31, Three Months Ended March 31,
2026 2025
Class A and Class B Common Stock
Dividends declared per common share $ .05 $ .05
Total common stock dividends $ 60 $ 35
-61-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Capital Structure
The following table sets forth our debt.
At At
March 31, 2026 December 31, 2025
Senior debt $ 11,714 $ 12,038
Junior debt 1,617 1,617
Borrowings under credit facility 2,150 -
Obligations under finance leases 2 3
Total debt (a)
15,483 13,658
Less current portion 662 433
Total long-term debt, net of current portion $ 14,821 $ 13,225
(a) At March 31, 2026 and December 31, 2025, our total senior and junior debt was net of unamortized fair value adjustments of $1.30 billion and $1.32 billion, respectively, recorded in connection with the pushdown of the Ultimate Parent's basis (see Note 2 to the consolidated financial statements). The face value of our total debt at March 31, 2026 and December 31, 2025 was $16.78 billion and $14.98 billion, respectively.
Senior Debt
At March 31, 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.
Junior Debt
At March 31, 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 and, as a result of these features, the debentures received a 50% equity credit by Standard & Poor's Rating Services, Fitch Ratings Inc., and Moody's Investors Service, Inc.
-62-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Supplemental Guarantor Financial Information
Paramount Global is a 100% owned subsidiary of Paramount Skydance Corporation. Upon the closing of the Skydance Transactions, Paramount Skydance Corporation provided a full and unconditional parent guarantee of Paramount Global's senior and junior debt. None of Paramount Skydance Corporation's other subsidiaries are guarantors of Paramount Global's debt.
The tables below present combined summarized financial information for Paramount 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
Three Months Ended March 31, Period From August 7, - December 31,
2026 2025
Operating loss $ (104) $ (82)
Interest expense, net $ (203) $ (306)
Intercompany interest $ (75) $ (132)
Net loss $ (414) $ (546)
Summarized Balance Sheets
At At
March 31, 2026 December 31, 2025
Current assets $ 565 $ 1,350
Noncurrent assets $ 274 $ 293
Debt, current $ 661 $ 432
Current liabilities $ 637 $ 664
Long-term debt $ 14,820 $ 13,223
Noncurrent liabilities $ 2,183 $ 2,222
Notes payable to nonguarantor subsidiaries $ 1,601 $ 975
Commercial Paper
At both March 31, 2026 and December 31, 2025, we had no outstanding commercial paper borrowings.
Credit Facility
In April 2026, we entered into an amendment to our revolving credit facility (the "Credit Facility"), increasing the commitments from $3.50 billion to $5.00 billion, which will be reduced to $4.94 billion in January 2027 through maturity in January 2028. The Credit Facility is used for general corporate purposes and to support commercial paper borrowings, if any. We may, at our option, also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the time of each borrowing and are generally based on either the prime rate in the U.S. or an applicable benchmark rate plus a margin (based on our senior unsecured debt rating), depending on the type and tenor of the loans entered into. The benchmark rate
-63-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
for loans denominated in U.S. dollars is Term SOFR, and for loans denominated in euros, sterling and yen is based on EURIBOR, SONIA and TIBOR, respectively. In the first quarter of 2026, in connection with the $2.8 billion termination fee paid to Netflix, we borrowed $2.15 billion under the Credit Facility, which remained outstanding at March 31, 2026, at an interest rate of 5.39% based on SOFR on the borrowing date plus 1.625%. The remaining availability under the Credit Facility at March 31, 2026 was $1.35 billion and at May 1, 2026 was $2.85 billion. Credit facility borrowings outstanding at the closing of the WBD Merger are expected to be repaid with the funding from the private placement described in Note 1 to the consolidated financial statements.
The Credit Facility has one principal financial covenant which sets a maximum Consolidated Total Leverage Ratio ("Leverage Ratio") at the end of each quarter. The maximum Leverage Ratio was 4.50x for the quarter ended March 31, 2026 and will remain at this level until maturity. The Leverage Ratio reflects the ratio of our Consolidated Indebtedness, net of a maximum of $3.0 billion of unrestricted cash and cash equivalents at the end of a quarter, to our Consolidated EBITDA (each as defined in the credit agreement) for the trailing twelve-month period. We met the covenant as of March 31, 2026.
Other Bank Borrowings
At both March 31, 2026 and December 31, 2025, there were no outstanding bank borrowings under Miramax's $50 million credit facility that matures in November 2027.
Guarantees
Letters of Credit and Surety Bonds
At March 31, 2026, we had outstanding letters of credit and surety bonds of $2.06 billion that were not recorded on the Consolidated Balance Sheet, including $1.82 billion issued under a $1.9 billion standby letter of credit facility. In accordance with the contractual requirements of one of our commitments, the letter of credit outstanding under this facility increases and decreases consistent with the related contractual commitment. Letters of credit and surety bonds are primarily used as security against non-performance in the normal course of business under contractual requirements of certain of our commitments. The standby letter of credit facility, which matures in May 2027, is subject to provisions similar to the Credit Facility, including the same principal financial covenant (see Note 7 to the consolidated financial statements).
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 14 to the consolidated financial statements.
-64-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
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 pending merger with Warner Bros. Discovery, Inc.) 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 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 and Skydance Media, LLC successfully and to achieve anticipated 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 Nasdaq 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; disruptions the WBD Merger may cause to our and WBD's business and commercial relationships; the negative impact that a failure to consummate the WBD Merger could have on our business, financial condition, results of operations and stock price; the risk that the WBD Merger may be prevented or delayed or the anticipated benefits reduced if we do not obtain certain regulatory approvals; the risk that the WBD Merger Agreement may be terminated in accordance with its terms, including if any conditions to the closing of the WBD Merger are not satisfied; the risk that litigation relating to the WBD Merger could prevent or delay the closing of the WBD Merger or result in the payment of damages after closing; challenges realizing synergies and other anticipated benefits expected from the WBD Merger, including integrating WBD's business successfully;
-65-
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
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 of reduced ownership and economic interest by our existing stockholders as a result of the WBD Merger; 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.
-66-
Paramount Skydance Corporation published this content on May 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 04, 2026 at 21:18 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]