Wall Street Calls Paramount-Warner Bros. a ‘Streaming Giant’ — But There’s a $77 Billion Problem

Media merger deals rarely come without complications, but few recent combinations have carried quite as much financial baggage as this one. After months of legal battles and regulatory hurdles, David Ellison’s pursuit of one of Hollywood’s biggest prizes has finally reached the finish line.

That victory, however, comes with an enormous price tag attached. Now that the deal has cleared its final major legal obstacle, attention has shifted from whether the merger would happen to whether the resulting company can actually make the numbers work.

Paramount Skydance’s newly merged entity with Warner Bros. Discovery will be saddled with more than $77 billion in debt, according to Wall Street analysts, even as those same analysts describe the combined company as having genuine potential to become a “streaming powerhouse.” Morgan Stanley analysts Sean Diffley and Daniel Duran outlined the assessment in a September 22 research note following Paramount’s settlement with a coalition of state attorneys general.

The settlement resolving the antitrust case brought by 12 Democratic state attorneys general clears the way for the merger to officially close within roughly two weeks, according to a staff memo from Ellison. Notably, Paramount avoided being forced into any divestitures as part of the agreement, with only minimal behavioral commitments attached, including releasing at least 30 films annually with a 45-day theatrical window.

Morgan Stanley called the outcome “a clear positive for the pro-forma PSKY + WBD,” according to the note reported by Variety, particularly given how much uncertainty had surrounded the deal’s outcome. “We view the combination of HBO Max and Paramount+ as a streaming powerhouse that has the potential to go from the 4th and 5th streaming services to rivaling Disney and Amazon for the 2nd and 3rd spot behind Netflix in premium SVOD,” the analysts wrote.

The scale driving that optimism is significant. HBO Max currently commands roughly 140 million paying global subscribers, while Paramount+ sits at around 79.6 million, putting the combined platforms on track to reach nearly 220 million subscribers immediately, with some analysts projecting more than 240 million by 2030.

There’s some overlap to account for, though. Morgan Stanley estimates roughly 28 percent of subscribers currently pay for both HBO Max and Paramount+, meaning some churn is expected once the services combine. Encouragingly for the company, about 23 percent of consumers surveyed who currently subscribe to neither service said they’d likely add the combined platform, while 17 percent indicated it could replace another streaming service entirely.

Despite the bullish subscriber outlook, the financial reality remains daunting. Analysts estimate the combined company’s net debt will sit at $77.2 billion by the end of 2026, dropping only modestly to $75.1 billion the following year, with interest expenses alone projected at $6.37 billion in 2027.

Morgan Stanley does believe the company can gradually “de-lever” that debt over the next three years, expressing confidence that the merger could generate more than $6 billion in savings, representing roughly 11 percent of operating costs. Whether those projected savings materialize quickly enough to ease investor concerns remains an open question heading into the deal’s official close.

With the legal hurdles now cleared and the merger set to finalize within weeks, Paramount-Warner Bros. faces the difficult task of proving Wall Street’s optimism right while managing one of the largest debt burdens in recent media history. The coming months will likely determine whether the combined streaming platforms can genuinely challenge Disney and Amazon, or whether the weight of that $77 billion debt slows momentum before the “powerhouse” potential fully materializes.

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