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Paramount Skydance Corp. 10-K Summary (Fiscal Year Ended Dec 31, 2025)

Business Context and Reporting Period

This filing covers the fiscal year ended December 31, 2025, for Paramount Skydance Corporation. The reporting period is bifurcated due to a change in control and accounting basis ("pushdown accounting") effective August 7, 2025. Prior to this date, the company operated as "Paramount Global" (Predecessor). On August 7, 2025, Paramount Global and Skydance Media became wholly-owned subsidiaries of the new holding company, Paramount Skydance Corporation (Successor), following the acquisition of National Amusements, Inc. (NAI) by the Ellison Family and RedBird Capital Partners. The company operates in three primary segments: TV Media, Direct-to-Consumer (DTC), and Filmed Entertainment. In Q1 2026, the company will transition to a new segment structure combining Filmed Entertainment and TV Media studio operations into a "Studios" segment.

Key Financial Metrics

Note: GAAP results for the Successor period include significant non-cash amortization of intangible assets and fair value adjustments to debt resulting from the pushdown accounting. Non-GAAP measures exclude these items to reflect underlying operational performance.

Material Changes vs. Prior Period

• Corporate Structure: The company underwent a fundamental restructuring on August 7, 2025, merging Paramount Global and Skydance under a new holding company. This resulted in a new accounting basis where Predecessor and Successor periods are not directly comparable on a GAAP basis.
• Revenue Mix: Pro forma full-year 2025 revenues decreased 3% to $29.39 billion compared to 2024. Advertising revenues declined 11% pro forma, primarily due to the absence of the Super Bowl broadcast (which occurred in Q1 2024) and lower political advertising. Conversely, Affiliate and Subscription revenues grew 4% pro forma, driven by Paramount+ subscriber growth and price increases.
• Segment Performance:
  • TV Media: Pro forma revenues declined 9% due to linear advertising and affiliate fee declines.
  • Direct-to-Consumer: Pro forma revenues increased 12%, with subscription revenue up 20%.
  • Filmed Entertainment: Pro forma revenues decreased 5%, reflecting a softer theatrical slate compared to 2024 (which included Sonic the Hedgehog 3 and Gladiator II).
• Restructuring: The Successor period recorded $650 million in restructuring charges, primarily severance costs associated with transformation initiatives following the merger. The Predecessor period recorded $255 million in similar charges.

Guidance, Outlook, and Risks

Warner Bros. Discovery Tender Offer: On December 8, 2025, Paramount Skydance announced a cash tender offer for all outstanding shares of Warner Bros. Discovery (WBD) at $30.00 per share. On February 24, 2026, the offer was revised to $31.00 per share. The company has secured commitments for up to $57.5 billion in debt financing and $46.6 billion in equity financing (from the Ellison Family and RedBird) to fund this potential acquisition. The offer is subject to conditions and is currently competing with a merger agreement between WBD and Netflix.

Outlook: Management expects to incur up to $800 million in transformation costs in 2026, including severance, capital expenditures for streaming platform upgrades, and professional fees. The company plans to transition to a new three-segment reporting structure (Studios, DTC, TV Media) in Q1 2026.

Key Risks:

• Streaming Profitability: Intense competition and capital intensity in the streaming sector pose risks to achieving profitability goals.
• Linear Decline: Continued erosion of linear TV viewership and advertising revenue.
• Integration Risks: Challenges in integrating Paramount Global and Skydance operations, cultures, and systems.
• Regulatory and Legal: Risks associated with the WBD tender offer, including regulatory approval and potential litigation. Additionally, the company faces ongoing litigation regarding the Skydance transaction and historical asbestos liabilities.

Investor Verification Checklist

• Warner Bros. Offer Status: Verify the current status of the $31.00 per share tender offer for WBD, including regulatory hurdles and the outcome of the competition with the Netflix merger.
• Pushdown Accounting Impact: Review the reconciliation of GAAP to Non-GAAP measures to understand the magnitude of non-cash amortization and debt fair value adjustments impacting the Successor period's reported losses.
• Streaming Metrics: Confirm Paramount+ subscriber growth trends (78.9 million as of Dec 31, 2025) and the impact of the new "paid-only" subscriber counting methodology adopted in Q4 2025.
• Debt Capacity: Assess the company's leverage ratio and ability to service existing debt ($13.66 billion) while potentially adding $57.5 billion in new debt for the WBD acquisition.
• Segment Transition: Monitor the Q1 2026 10-Q for the new segment reporting structure (Studios, DTC, TV Media) to ensure accurate future performance tracking.