Key facts
- S&P Global downgraded Paramount and Warner Bros. Discovery.
- The downgrade is due to credit risks associated with their proposed merger.
- Concerns include debt, execution risk, and long-term industry volatility.
Naveen Sarma, sector lead for U.S. media and telecom at S&P Global, discussed the credit risks surrounding the proposed $111 billion merger between Paramount and Warner Bros. Discovery on the Variety podcast 'Strictly Business.' Sarma explained that while the merger is nearing completion, significant concerns remain regarding the companies' debt levels, the execution risk involved in integrating the two entities, and the inherent volatility of the media and entertainment industry over the long term. These concerns prompted S&P Global to issue a downgrade for the companies.