Fitch Ratings late on Monday cut the credit ratings of Paramount Skydance and Paramount Global to speculative, or "junk," status after Paramount announced a deal to acquire Warner Bros Discovery. The rating agency said it expects Paramount’s leverage to rise substantially if the proposed transaction closes, and it placed the company on watch for the possibility of a further downgrade until the acquisition’s final terms and financing plan are clear.
In its note, Fitch analysts pointed to several specific credit concerns that underlie the downgrade and watch placement. Among them are the likely debt-funded nature of the transaction, Fitch’s expectation of materially higher leverage for the combined company, and the limited visibility on what the post-transaction financial policy and capital structure will look like.
Paramount announced the agreement last Friday to acquire Warner Bros Discovery in a transaction valued at $110 billion, a deal that followed Netflix’s decision not to proceed with an arrangement for the owner of HBO Max. The companies said the merger, which they expect to close in the third quarter, will be supported by $54 billion of debt commitments.
Paramount has reported that the combined entity will carry about $79 billion of net debt if the transaction completes. Fitch noted that Paramount itself entered the transaction with roughly $14 billion of outstanding debt at year-end 2025, a figure that included senior unsecured and junior subordinated obligations.
Fitch also cited pressure from competition within the media sector as a factor in its ratings action. The analysts highlighted ongoing free cash flow headwinds the company will face related to the acquisition and the elevated spending requirements on content for the combined business.
Other major rating firms had already signaled heightened scrutiny of Paramount’s credit profile. On February 27, Moody’s and S&P Global Ratings placed Paramount on watchlists for potential downgrades. At the time of those notices, Moody’s maintained a lower-investment-grade rating on Paramount, while S&P assigned speculative-grade ratings.
For now, Fitch’s move makes clear that the rating agency expects significant financing and leverage-related questions to shape Paramount’s credit trajectory as the companies finalize the Warner Bros Discovery transaction and outline how they will service and structure the resulting debt burden.