Bloomberg
(Bloomberg) — Paramount Skydance Corp. shares fell more than 8% after Fitch Ratings downgraded the film and TV company’s debt rating to junk to reflect a surge in borrowings from the $110 billion takeover of Warner Bros. Discovery Inc.
Fitch cut its rating on Paramount to BB-plus, according to a statement late Monday. It was previously BBB-minus, the lowest investment-grade rating. The ratings service also said Paramount is on negative watch pending details on deal terms, financing and deleveraging efforts.
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Shares of Paramount fell as low as $12.25 in New York trading. The merger of the two media companies will saddle the combined business with $79 billion in net debt.
“The downgrade reflects competitive pressures across the media sector” and pressure on free cash flow from transformation costs, Fitch said. Fitch believes its leverage and free cash flow may take longer than anticipated to improve.
Paramount agreed to buy Warner Bros. last week for $31 a share, in one of the biggest mergers and media deals of all time.
(Updates with shares in first and third paragraphs.)
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