Paramount’s Junk-Status Credit Rating to Be Downgraded Further Following Warner Bros. Merger to Reflect ‘Major Ongoing Uncertainties,’ S&P Global Says

S&P Global Ratings plans to further downgrade Paramount's already-junk credit rating once the studio completes its acquisition of Warner Bros. Discovery, the ratings agency announced. The move reflects mounting concerns about the combined entity's financial stability and debt load.

Paramount currently sits at "BB+" in junk-status territory, a designation reserved for speculative-grade debt. S&P Global will lower that rating after the merger closes, citing what the firm calls "major ongoing uncertainties" surrounding the deal's integration and the industry's structural challenges.

The downgrade signals investor anxiety about combining two debt-laden media giants at a moment when traditional broadcasting faces existential pressure from streaming competition. Warner Bros. Discovery itself carries substantial debt from Discovery Inc.'s 2022 merger with WarnerMedia. Adding Paramount's liabilities to that equation creates a company burdened with obligations while its core television and film businesses generate shrinking revenues.

The credit downgrade carries real consequences. Lower ratings drive up borrowing costs for the company, making it more expensive to refinance existing debt or raise fresh capital for operations or content investment. For a media firm dependent on sustained spending to remain competitive against Netflix, Amazon, and other deep-pocketed streamers, tighter financial conditions threaten competitive viability.

S&P Global's action underscores how Wall Street views the Paramount-Warner Bros. Discovery combination. Rather than seeing merger synergies offsetting financial risk, investors and ratings agencies perceive a leveraged combination of businesses facing secular decline in their traditional revenue streams. The deal faces regulatory approval hurdles, and even completion offers no guarantee of operational success or debt reduction.

The ratings firm's announcement reflects broader skepticism about whether legacy media companies can stabilize themselves through consolidation. Paramount and Warner Bros. Discovery have argued the merger creates efficiencies and scale, yet credit markets remain unconvinced the combined entity can service its debt while investing adequately in both traditional and streaming content.