The Debt Mountain

Paramount Skydance is buying Warner Bros. Discovery for $110B. That leaves the combined company with $79B in total debt. Drag the sliders to see what it would take to pay it down.

Cable TV decline / year 5%

Streaming subscriber growth / year +6%

Subscription price increase / year 4%

Cost cuts (% of $42B cost base) 5%

Move the sliders to see how the debt mountain changes.

Leverage ratio over time (Net Debt ÷ EBITDA)

— Year 1 EBITDA

$5.7B Interest expense

— Free cash flow

— Reach 3× by

Unsustainable

Move the sliders to explore what would need to be true.

Methodology & Assumptions

Starting Point

Day-1 debt: $79B — the combined obligations of WBD and Paramount Skydance at deal close, per the merged company's own disclosure
Interest rate: 7% blended (WBD's weighted average cost of debt per FY2024 10-K)
Starting EBITDA: ~$12B (WBD FY2024 adjusted EBITDA; Paramount Skydance added at closing)
Capex: $2B/year, held flat
Tax rate: 15% on pretax income

Revenue Model

Streaming: 196M combined subscribers (Max + Paramount+), merging into a single platform, at a blended avg. of $7.76/mo across ad-supported (~$3–5), standard (~$10), and premium (~$16) tiers. Each studio releases 15 films/year with 45-day theatrical windows — shortening the runway to streaming vs. the traditional 90 days
Streaming margin: 7% contribution margin, consistent with Max's reported trajectory
Linear / cable: $11.5B combined annual EBITDA from networks, declining each year at the rate set by the slider. No cable assets are being sold or spun off; sports rights (including UFC) retain flexibility across all cable networks
Licensing: The company plans to continue licensing movies and TV shows to third-party studios and platforms — a meaningful revenue stream not modelled separately here
Cost savings phase in over 3 years (⅓ in Y1, ⅔ in Y2, full in Y3)

Cost Structure

Total cost base: ~$42B combined (WBD FY2024 10-K costs of revenues + SG&A)
Announced synergy target: $6B in cuts (~14% of cost base), focused on tech infrastructure consolidation, real estate, and corporate overheads — disclosed by the merged company
Labor share: ~25% of total costs — derived from WBD's SG&A of $9.3B minus $2.2B advertising (Note 2), leaving ~$7.1B in employee costs; PSKY estimated similarly
Non-labor 75%: content acquisition and production, sports rights, licensing, technology platforms, real estate, and distribution
Cost per employee: $200K all-in (salary + benefits + equity)

Sources: WBD FY2024 Annual Report (10-K filed Feb 2025); Skydance merger proxy and press releases; Paramount Global FY2024 10-K; merged company disclosures on $79B combined debt, $6B synergy target, combined streaming platform, 15-film/45-day theatrical windows per studio, and cable retention strategy. This is a simplified illustrative model — it does not account for refinancing risk, covenants, asset sales, working capital changes, or deal close timing. Real outcomes will differ. Not investment advice.