Carr said there were “concerns raised in Washington about the concentration of power” from a Netflix (NFLX) purchase of Warner Bros., though he added that “obviously the level of market share and issue with a Paramount purchase is drastically different,” Carr told the Financial Times in an interview on Monday.

Carr said the majority of the regulatory review of the combination will be done by the U.S. Department of Justice.

“All the information that I’ve seen about that foreign debt . . . is that would qualify under FCC rules as what we call bona fide debt, meaning, it would be a very quick, almost pro forma review,” Carr told the FT.

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The deal is expected to leave the combined entity with roughly $79B in net debt.

Fitch downgraded Paramount Skydance and Paramount Global’s (PSKY) Long-Term Issuer Default Ratings (IDR) to BB+ from BBB-, pushing the company from the lowest rung of investment grade into junk status. The agency also cut the Short-Term IDR to B from F3.

In addition, Fitch lowered PSKY’s senior unsecured debt rating to BB+ from BBB-, assigning a Recovery Rating of RR4. The agency has placed all the ratings on negative watch to reflect uncertainty related to the proposed acquisition of Warner Bros, with potential credit risks including the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage, and limited visibility on post-transaction financial policy and capital structure.

“The downgrade reflects competitive pressures across the media sector and continued FCF headwinds from significant transformation costs. Fitch believes PSKY’s leverage and FCF may remain outside negative rating sensitivities longer than we anticipated,” the agency said.

Paramount (PSKY) agreed to buy Warner Bros. (WBD) last week in a $31 a share takeover. With a total value of $110B, it’s one of the biggest mergers and media deals of all time.

Fitch expects to resolve the RWN once final transaction terms, financing mix, and post-close deleveraging priorities become clearer.

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“There are incredible brands across the combined linear portfolio that we really do believe in being able to transition to a digital future,” Ellison said, according to The Wall Street Journal. Ellison added the merger will “keep the portfolio healthier and prolong the life for longer than they would have as standalone businesses.”

Ellison is the son of Oracle (ORCL) founder Larry Ellison, who is providing financial backing for the deal.

WBD had intended to spin out its cable network assets into a publicly traded company called Global Discovery later this year. Under its new merger agreement with Paramount, those assets will remain in-house.

WBD agreed to a takeover bid by Paramount last week, bowing out of a previously agreed-to merger with Netflix (NFLX). The Paramount bid is being backed by Oracle stock controlled by Ellison’s family.

Seeking Alpha analyst Max Greve said that while Paramount’s merger with WBD should be “transformative,” it carried risks such as a $71B debt load, uncertainty about the health of WBD’s assets, and “unique margin call risks” due to Oracle being an AI stock.

“I still think that the original Paramount had all the tools it needed to succeed. This is a company with fantastic assets that has been horribly mismanaged. Merging it with another mismanaged company won’t necessarily fix that,” wrote Greve in an article posted Monday.

“Even if you think the merger itself is good, the debt load is a major concern, as is the unique AI exposure I described,” he added.

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“As we have said consistently, we are committed to delivering a broad pipeline of high-quality storytelling, including 15 theatrical films per year per studio, for a total of at least 30 films annually,” Ellison said during a conference call with analysts.

On Friday, Paramount sealed the $110B deal with Warner and paid the $2.8B termination fee to Netflix (NFLX).

The deal, among other things, significantly bolsters the combined streaming platform, reaching more than 200M subscribers, which includes more than 130M subs coming just from Warner Bros.

Regulators rightfully expressed worries about the Netflix-Warner merger, which would have brought total streaming subscribers to nearly half a billion users and created a monopoly in the market.

Although, a deal with Paramount brings together two of the “Big Five” Hollywood studios under one roof and further consolidates the movie-making industry.

Ellison, who has expressed his love for the big screen, vowed that movies from Paramount and Warner Bros. will have a 45-day theatrical window before they are shown on home entertainment and streaming platforms.

“When you look at the theatrical space, which is something we deeply, deeply believe in, large franchises and big pieces of intellectual property are launched in theaters, period,” Ellison said. “I personally learned this lesson in 2022. We basically had the largest theatrical box office film with ‘Top Gun: Maverick,’ which became a cultural phenomenon, grossing $1.5 billion.”

Ellison also said on the call that the net debt of a combined Paramount and Warner Bros. would be $79B and ruled out any plan to offload cable assets. A previous report by Reuters said the company was willing to divest some overlapping TV channels if required to satisfy merger conditions.

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In his first interview since walking away, Sarandos said the decision was swift and based on pre-set financial limits.

“We knew right away, when we got the notice on Thursday that they had a superior offer and the details of that deal,” he said to Bloomberg News. “We knew exactly what we were gonna do.”

Netflix (NFLX) had established a strict price ceiling and stuck to it. When rival bidder Paramount Skydance (PSKY) improved its offer and added financing guarantees, Sarandos said the choice was clear.

He dismissed speculation that political pressure or regulatory hostility drove the decision.

“This was completely normal,” he said of the Justice Department’s review. “Yeah, we’re in the clear,” he added, referring to reports of a broader DOJ probe.

Sarandos also downplayed the idea that Netflix (NFLX) needed the acquisition to fuel growth, calling it a strategic opportunity rather than a necessity.

“We definitely wanted this asset. We didn’t need it,” he said. The company, he emphasized, is “builders, not buyers.”

On the potential impact of Paramount’s highly leveraged takeover, Sarandos warned that aggressive cost cuts could ripple through Hollywood. He suggested billions in savings would likely translate into reduced production and fewer jobs.

Despite opposition from theater owners and industry figures during the bidding process, Sarandos signaled Netflix may still expand its theatrical footprint.

“I think we’re gonna find a bunch of cool things to do together going forward,” he said, pointing to new collaborations with cinema chains.

For investors, the takeaway is discipline. Sarandos framed the retreat as proof of capital stewardship, saying Netflix (NFLX) would continue investing organically rather than chasing deals beyond its valuation threshold.

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The Paramount (PSKY) release, produced for about $45 million, benefited from the return of Neve Campbell as Sidney Prescott, along with original cast members Courteney Cox, David Arquette and Matthew Lillard. The previous high-water mark for the series had been Scream VI, which opened to $44.4 million, according to data compiled by Comscore.

Despite weak reviews including a 34% score on Rotten Tomatoes and a “B-” CinemaScore from audiences, the film capitalized on brand recognition and premium large-format screens. Roughly 40% of ticket sales came from IMAX (IMAX) and other premium formats, giving the film a pricing boost previous installments didn’t enjoy. Overseas, it added another $33.1 million.

The strong showing is a bright spot for Paramount during a relatively soft year at the box office. It also comes as the studio’s parent company moves forward with a planned merger with Warner Bros. Discovery (WBD), pending regulatory approval.

Last weekend’s leader, Sony’s (SONY) animated film GOAT, slipped to second place with $12 million in its third frame, bringing its domestic total to $74 million. Emerald Fennell’s Wuthering Heights adaptation took third with $7 million, lifting its three-week total to $72.3 million.

Among new releases, the concert film Twenty One Pilots: More Than We Ever Imagined opened with $3.7 million, while EPiC: Elvis Presley in Concert added $3.5 million in its second weekend.

Top 10 Domestic (U.S. and Canada) Box Office (Estimated)

1. Scream 7 – $64.1 million

2. GOAT – $12 million

3. Wuthering Heights – $7 million

4. Twenty One Pilots: More Than We Ever Imagined – $3.7 million

5. EPiC: Elvis Presley in Concert – $3.5 million

6. Crime 101 – $3.4 million

7. I Can Only Imagine 2 – $3.1 million

8. Send Help – $2.8 million

9. How to Make a Killing – $1.6 million

10. Zootopia 2 – $1.4 million

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Paramount Skydance (PSKY) kept trying until it succeeded, and it did. On late Thursday, Netflix (NFLX) declined to raise its offer for Warner Bros. Discovery (WBD) after being engaged in a months-long bidding war against

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The reaction: The loser is winning on Wall Street, with shares of Netflix (NFLX) surging 7% premarket, though the winner is logging even larger gains. Paramount Skydance (PSKY), which has agreed to cover the breakup fee, is up 9% in early trade as investors digest what the impact will be for both companies. Note that even after factoring in the big gains from this morning, shares of NFLX are still down 12% since it first agreed to the deal with Warner Bros. (WBD), while Paramount Skydance (PSKY) is 18% lower. Their stocks are also down by more than a third since talks got serious in October and November, meaning they both have significant ground to recover.

“We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive,” Netflix (NFLX) said in a statement. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.” Netflix (NFLX) shareholders have also been wary about the theatrical Hollywood deal, worrying that it could compromise the company’s current internet business model, as well as the massive new debt load it would incur to finance the merger to the tune of more than $50B.

In comparison: David Ellison’s Paramount Skydance (PSKY) sees things very differently. The studio is hungry to expand after Skydance Media and Paramount Global closed their merger last summer despite losses that continue to pile up. It sees Warner Bros. (WBD) as the key to its turnaround strategy, staying on top of the industry with a gigantic content library and franchises, and creating a must-have subscription service for consumers. In terms of debt concerns, Larry Ellison, one of the world’s richest people, has personally backstopped much of the deal, giving him an outsized media influence with new stakes in CBS, Paramount, CNN, HBO, and TikTok (through Oracle’s (ORCL) cloud provider relationship).

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The streaming company said a higher price for Warner Bros. (WBD) was no longer financially attractive. The revised Paramount (PSKY) offer was at a purchase price of $31.00 per share in cash, a one-dollar increase from its earlier bid, which valued the company at around $108B.

“This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertaining offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program,” read a statement from Netflix (NFLX).

Warner Bros. Discovery (WBD) is contractually obligated to pay Netflix a $2.8B breakup fee for terminating the original deal.

Shares of Netflix (NFLX) soared 10.2% in postmarket trading as investors looked at the development as a positive. Warner Bros. Discovery (WBD) fell 2.2% in the late session, while Paramount Skydance (PSKY) was 3.8% higher.

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