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The Last Page.
The last page, first.
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Paramount Closes on Warner Bros. Tuesday With $41 Billion of New Debt
Wall Street’s bulls see the next rival to Disney. The loudest skeptic sees the AOL Time Warner deal again, with better movies.
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Paramount is paying as much as 9.125 percent on its riskiest new bonds. The Fed’s next decision arrives October 28.
Larry Benedict generated $274 million in profits for his clients by knowing where money flows when the Federal Reserve shifts.
He says Trump’s Fed Takeover is triggering the most significant shift in U.S. markets in nearly 20 years.
He’s already identified the one ticker he expects billions to flood into, and he’s giving away the name for free.
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The story
A federal judge in San Francisco removed the last obstacle on Wednesday. Paramount now closes its purchase of Warner Bros. Discovery on Tuesday, October 6.
The transaction is valued at about $110 billion, including debt. To help finance the cash purchase and refinancing, Paramount priced $41.4 billion of new notes on Wednesday night. The costliest slice pays 9.125 percent.
The high-yield portion, bonds rated below investment grade, drew more than $23 billion of orders for $12.4 billion on offer. Nearly twice over. Bloomberg called it the biggest sale of its kind on record.
One company will own HBO, CNN, CBS and both studio lots.
Morgan Stanley’s Sean Diffley and Daniel Duran call the result “a streaming powerhouse” that could rival Disney and Amazon. Scott Galloway saw it in March as “the fusion of a dog and a car bumper traveling 80 miles an hour.”
This one reaches you through three doors: the streaming bill, the bond fund and the evening news.
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$77.2 billion
Debt minus cash Morgan Stanley expects the combined company to carry at the end of this year
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$6.37 billion
The interest it projects on that debt for 2027
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$6 billion
The yearly cost savings Paramount pitched to its bond buyers this week, once all of them are in
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Second lien
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A loan that gets repaid only after the first-in-line lenders are made whole. It pays more because it stands further back in the queue.
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Best case
OCTOBER 2028. You open one app for HBO, CBS and the Paramount library, and the second charge on your card is gone. One bill. The two old bills ran $18.49 and $13.99 a month.
The merged one came in under their sum, because a company chasing Netflix cannot charge two prices for one catalog.
The cuts landed the way Paramount pitched them. Two of everything became one of everything, and $6 billion a year came out of the cost line.
So the debt fell toward three times a year of operating earnings, on the schedule the bond buyers were sold. The court-ordered films kept coming, thirty a year with forty-five days in theaters first.
And the 9.125 percent bond in your high-yield fund started to look like the bargain of 2026. Galloway’s car bumper is still a good line at dinner. It just never hit the dog.
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Worst case
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OCTOBER 2028. The savings came in on time, and the interest took them. Cable kept shrinking under TBS, CNN and Comedy Central, and the money those channels threw off shrank faster than the cuts. Every quarter, a little less.
So the single app got a single price, higher than either old one.
The court order kept both lots open and the films coming, since every missing title cost $30 million. The cuts went everywhere else.
Your high-yield fund marked the second-lien bonds down, and the statement showed it before the news did.
Then the old comparison came back to the table. AOL Time Warner wrote off about $99 billion in 2002, about a year after its own deal closed.
And Galloway’s March ending, the whole company sold for parts to Netflix, stopped sounding like a joke.
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How it ends
You get a studio working for its lenders for three years, unless the savings arrive faster than the interest comes due.
We ran it both ways, and the staircase decides it before either scene does.
The savings Paramount pitched and the interest Morgan Stanley projects are nearly the same number. So the first $6 billion of every good year belongs to the people holding the bonds. First in line, every year.
That is why two markets read Wednesday so differently. The bond buyers ordered almost twice what was for sale, while Paramount’s own shares fell the next day.
Interest is contractual. New shows and dividends compete for what is left.
For you it lands at all three doors. One app will be priced by a company paying up to 9.125 percent for its money. That debt makes lower prices harder to sustain.
Your high-yield fund is built to own bonds like these. And CNN and CBS News will answer to one owner. The court ordered a five-member journalist board to watch over both within 180 days of closing.
The worst case needs cable to shrink faster than the cuts. Our verdict has them running close to even, and even only keeps the lenders whole.
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The debt line in the combined company’s first quarterly report, which measures what it owes against a year of operating earnings. The plan Morgan Stanley laid out starts at six to seven times and reaches three to four within three years. If the first report moves the wrong way, the worst case is on schedule.
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Two more places this week’s money story reaches your own.
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The 10-year Treasury yield touched its highest level since 2002 on Thursday.
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A 2025 executive order opened the door for 401(k) plans to hold private investments.
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One story every weekday, finished and filed. If you would rather keep yours open, the exit is below.
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The Last Page.
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