Paramount Skydance Corp. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. The filing reflects the "Successor" period following the August 2025 Skydance Transactions, which established a new accounting basis (pushdown of Ultimate Parent's basis) and reorganized the company into three segments: Studios, Direct-to-Consumer, and TV Media. The company is currently in the process of acquiring Warner Bros. Discovery (WBD), with the merger expected to close by the end of Q3 2026.
Key Financial Metrics
| Metric | Q1 2026 (Successor) | Q1 2025 (Predecessor) |
|---|---|---|
| Revenues | $7,347 million | $7,192 million |
| Operating Income | $616 million | $550 million |
| Net Earnings (Parent) | $168 million | $152 million |
| Diluted EPS | $0.15 | $0.22 |
| Adjusted EBITDA | $1,161 million | $732 million |
| Cash and Equivalents | $1,941 million | $2,673 million |
| Total Debt | $15,483 million | $13,658 million |
| Operating Cash Flow | $185 million | $180 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 2% to $7.35 billion, driven by Paramount+ subscriber growth (79.6 million) and higher licensing revenues, partially offset by declines in linear advertising.
- Profitability: Operating income rose 12% to $616 million due to cost savings and lower content costs, despite higher transaction-related expenses ($103 million vs. $85 million in 2025).
- EPS Dilution: Diluted EPS decreased 32% to $0.15, primarily due to the significant increase in weighted average shares outstanding (1.118 billion vs. 678 million) following the Skydance Transactions.
- Depreciation & Amortization: D&A expense surged 311% to $362 million, reflecting the amortization of intangible assets established under the new accounting basis.
- Cash Position: Cash and cash equivalents decreased by $1.33 billion, largely due to a $2.8 billion advance consideration payment for the WBD acquisition (funded by cash and a $2.15 billion credit facility draw).
Outlook, Risks, and Unusual Items
- WBD Merger: Paramount agreed to acquire WBD for $31.00 per share ($80.9 billion equity value). The deal is subject to regulatory approval. A $2.8 billion termination fee was paid to Netflix on behalf of WBD in Q1 2026.
- Financing: The company has secured $54 billion in debt financing commitments and up to $46.7 billion in equity commitments from the Ellison Parties and syndicated investors to fund the WBD acquisition.
- Segment Restructuring: The company transitioned its primary non-GAAP measure from Adjusted OIBDA to Adjusted EBITDA. Segment reporting now consolidates studio operations into "Studios" and moved Paramount+ with Showtime to "Direct-to-Consumer."
- Legal Risks: Multiple lawsuits challenge the WBD Merger and the prior Skydance Transactions, including antitrust actions and shareholder derivative suits. Regulatory scrutiny from the DOJ and state attorneys general is ongoing.
- Unusual Items: Q1 2026 included $103 million in transaction-related costs for the WBD Merger. Q1 2025 included a $35 million gain on dispositions and $65 million in restructuring charges.
Investor Verification Checklist
- Merger Closing Conditions: Verify the status of regulatory approvals (DOJ, FTC, international) required to close the WBD Merger by Q3 2026.
- Financing Execution: Confirm the finalization of the $54 billion debt bridge and the $46.7 billion equity syndication to ensure funding for the WBD acquisition.
- Legal Exposure: Monitor the outcome of pending litigation regarding the WBD Merger and Skydance Transactions, which could result in termination fees or injunctions.
- Debt Servicing: Assess the impact of the projected post-merger debt load (approx. $85 billion) on future cash flows and credit ratings.
- Subscriber Trends: Track Paramount+ subscriber retention and ARPU growth, particularly following the non-renewal of international distribution agreements.