Paramount and Warner Bros. Merge Into $111 Billion Giant Amid Major Challenges

Hollywood has been anticipating this moment for months, observing one of the most contentious corporate battles in recent history finally approach a resolution. What began as a fierce bidding war between rival suitors has now evolved into something far more significant: the largest media merger in history is officially clearing its final hurdles. The implications for how audiences consume television and film in the coming years are immense.

Paramount Skydance chief David Ellison has spent months pursuing Warner Bros. Discovery, and this week that pursuit finally bore fruit. Following a settlement with 12 Democratic state attorneys general that resolves the antitrust case threatening to block the deal, the merger is now expected to close within about two weeks, according to a staff memo Ellison sent Monday.

The resulting company, valued at approximately $111 billion, would unite two of the industry’s most recognizable content libraries under one umbrella. However, a new Wall Street analysis indicates that this scale comes with a significant cost: the newly merged Paramount-Warner Bros. is projected to carry over $77 billion in debt, a financial burden that will influence nearly every strategic decision the company makes in the years to come.

Morgan Stanley analysts Sean Diffley and Daniel Duran addressed the tension between scale and debt directly in a research note dated September 22. They described the deal’s outcome as “a clear positive for the pro-forma PSKY + WBD,” especially considering the wide range of feared outcomes that had loomed over the marketplace throughout the deal’s uncertain path to completion.

Much of that optimism hinges on the eventual combination of HBO Max and Paramount+ into a single streaming service. Analysts believe the merged company could rise from being the fourth- and fifth-largest streaming services individually to competing with Disney and Amazon for the second and third spots behind Netflix in premium subscription video, according to Morgan Stanley’s note obtained by Variety. The firm projects that the combined platform could exceed 240 million subscribers by 2030.

That optimism isn’t merely theoretical. Morgan Stanley found about 28% subscriber overlap between HBO Max and Paramount+ today, but also noted that 23% of surveyed consumers who don’t currently subscribe to either service indicated they would likely add the combined platform, while 17% said it would entirely replace another streaming service in their household. Ellison has confirmed plans to eventually merge the two platforms into one consolidated service, although specific timing and structural details have yet to be announced.

The rationale for combining these two companies is clear from a content perspective. Paramount brings franchises like ‘Mission: Impossible,’ ‘Star Trek,’ and ‘Yellowstone’ to the table, while Warner Bros. contributes HBO’s programming lineup alongside properties such as ‘Harry Potter,’ the DC universe, ‘Game of Thrones,’ and ‘Lord of the Rings.’ Analysts expect the new company’s leverage, measured as net debt to adjusted EBITDA, to decrease from roughly six to seven times at deal close down to three to four times within three years, assuming streaming growth outpaces the ongoing decline in linear television cash flows.

That linear decline poses a genuine threat to the merger’s timeline. Traditional TV networks are projected to account for less than half of the company’s pro-forma earnings by 2028 and shrink to around 30% by 2030, highlighting how rapidly the industry’s economics are shifting toward streaming. As part of the antitrust settlement, Paramount has also agreed to maintain its operations in California, committing not to sell the Paramount Studios or Warner Bros. lots for at least five years, while also promising to release a minimum of 30 films annually with a 45-day theatrical window intact.

Not everyone is convinced the transition will be smooth. Industry unions have already expressed concerns about potential layoffs as the two companies work to consolidate overlapping departments and operations, even as officials have attempted to reassure entertainment workers that significant job cuts aren’t part of the plan. With the deal now cleared to close within weeks, the real test of whether this streaming powerhouse can manage its massive debt load is just beginning.

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